EU Central Bank will bail out Greek banks directly

The EU Central Bank intends to bail out Greek banks directly, bypassing the Greek government.

Greece has pretty much reached the end of the road as far as bailouts are concerned and will almost certainly drop out of the €uro. As the threats and scaremongering escalate, Greeks are withdrawing more money out of their banks and causing even more damage to the decimated Greek economy.

Directly bailing out Greek banks allows the ECB to give Greece the money it needs to prevent their banks from losing a terminal amount of capital without being seen to be caving in in the face of the Greek government's obstinance.

If the Greek government can't convince enough people that their money is safe in Greek banks then they'll have to impose capital controls to prevent the transfer of cash from banks to individuals. This is what happened in Cyprus after the Cypriot government was forced to go cap in hand to the EU when they were unable to secure Russian finance because the EU wouldn't allow Cyprus to give Russia priority creditor status.

Eurozone bailout fund downgraded

The €urozone bailout fund has been downgraded by the rating agency, Fitch, from AAA to AA+.

It isn't much of a drop but it's a sign of an increasing lack of confidence in the €urozone and the ability of the Germans to bail out most of the continent.  Standard & Poors downgraded the bailout fund in January and France was downgraded earlier this year from AAA to AA+ which Fitch have cited this as one of the reasons for the €urozone bailout fund downgrade.

Germans get agreement on plundering bank accounts

The Germans have got the agreement they wanted that all EU member states will legalise the theft of citizens' money in the event of a bank failure.

Under the new rules which the British government backtracked on and supported, national governments will be prevented from bailing out a bank unless they have already written off large share and bond holdings, emptied corporate bank accounts and stolen anything over €100k in any bank account that hasn't yet been plundered.  Only then can they step in and financially support the bank to prevent it collapsing and that support will be limited to just 5% of the bank's liabilities.

Cllr Donna Edmunds wrote in favour of this proposal the other day - something that was met with scepticism from other UKIPpers in the ensuing Twitter debate.  In a nutshell, Donna says that it's better that they're open about their intention to steal your money up front and it shows people that the EU is prepared to steal from citizens to further its agenda which will surely damage the EU.  To a certain extent I agree with the logic - it's unusual for the EU to be so open about an abuse of trust and natural justice - but this "bail in" concept is a dangerous one.

The banking system is built on trust.  You put your money in the bank because you trust that it is safer in a bank than it is in a box under your bed but this shows that it's anything but safe in a bank.  Most people won't have anything like £85k in the bank but who's to say the £85k won't be dropped to £50k or even £1k if the government, on a whim, decides to do it?  There was no legal basis to steal anything over €100k from bank accounts in Cyprus so the Cypriot government simply ordered that all bank accounts were to be frozen  until they could pass a law to make it legal.  The British government could just as easily freeze and confiscate money - any amount of money - from bank accounts in the UK.

The idea of emptying corporate bank accounts is also a worrying one.  Left wing politicians and media like to cast big business as the bogeyman but they are responsible for a big proportion of what goes into the public purse and employ millions of people.  Depriving them of capital could bankrupt them or damage their creditworthiness making it harder for them to do business resulting in job losses and the destruction of entire local economies that rely on the supply chain of large employers.

Then there's the increased likelihood of institutional investors and multinationals pulling out of the UK and the EU as a whole to insulate themselves from potential losses from the kind of "solidarity" wealth confiscation system that you would normally associate with repressive regimes in third world countries and communist states.

Barclays Bank are quite happy with the "bail in" idea and the quote from their analysts gives away the reason:

good news, in our view, and paves the way for a start to discussions on the establishment of a single resolution mechanism, the second leg of the banking union

Complying with different banking rules and regulations in the 27 vassal states of the EU is an expensive business and a minefield for banks.  It's only natural that they would support a banking union that would reduce the cost of doing business across the continent and of course they don't care where the money comes from that supplies the safety net for when they get things wrong and run out of money.  Just because banks are experts on banking doesn't mean that what they support is in the best interests of their customers and this is certainly one example of where it isn't.

It's a damning indictment of our clueless and weak politicians when it's safer to keep your money in a box under your bed than it is to keep it in the bank.

Germany wants to force all EU member states to steal from savers' accounts

The Germans are trying to get an agreement to force all EU countries to adopt the Cypriot model of stealing peoples' savings to bail out failing banks.

We're from the ECB, we'd like the make a withdrawal

There was a lot of anger in Cyprus and around the world when the EU instructed the Cypriot government to freeze bank accounts and steal anything over €100k to pay its share of an EU bailout.  The Russians were particularly unhappy as they had invested heavily in Cyprus following the Russian government's decision to bail Cyprus out so they could avoid EU austerity.  It was this Russian bail out that resulted in the particularly punishing and degrading terms of the bail out Cyprus had to get from the EU when it was unable, under EU law, to give Russia preferential creditor status to secure more funding.

At the time, the Germans said they wanted the Cypriot method of stealing money off citizens and cancelling bonds owned by investors such as pension funds and charities to be the blueprint for future bailouts.  They backtracked when it was reported in the media and was widely condemned but have been quietly pushing for it behind the scenes.

Talks have been held in Luxembourg which have come to nothing with the Irish finance minister describing them as chaotic but €urozone finance ministers will meet again on Wednesday to try and get agreement.  The German plan is to create a €500bn bailout fund made available only to eurozone countries but the rules requiring the theft of savers' money to shore up failing banks will apply to all.

Cyprus punished heavily in EU bailout deal

We knew the terms of the EU bailout deal for Cyprus would be punishing because they went to the Russians first but what has been agreed overnight is worse than anyone would have imagined.

Accounts held with the Popular Bank of Cyprus (Laiki) with deposits over €100k will be confiscated and used to pay the bank's debts and what is left will be moved to the Bank of Cyprus.  Laiki will then be closed down and its toxic assets will be transferred to a "bad bank".  Savings over €100k in Bank of Cyprus will also be plundered by an unspecified amount.  Bond holders in Laiki will be "wiped out" according to the Dutch Finance Minister, Jeroen Dijsselbloem.

As well as the legalised theft of peoples' savings Cyprus will be subjected to a destructive and degrading EU austerity programme.  The Cypriot economy hasn't just been wounded, it's been comprehensively destroyed and all because they went to Russia for money rather than subject themselves to EU austerity.

Nigel Farage has already warned people to take their money out of Spanish banks because he predicts the collapse of the Spanish banking system and now the EU has shown that it is prepared to sanction the theft of ordinary peoples' savings you would be foolish not to follow his advice.  The whole banking system is based on trust and that trust has been fatally undermined not just in Cyprus but the whole €urozone.  The "save the €uro at all costs" mantra really does mean at all costs, even if it means stealing citizens' savings.

Cypriot government agrees 20% savings tax

Not happy

The Cypriot government have agreed a punishing EU savings tax that will see as much as 20% of savings stolen to contribute towards a bailout.

Anyone with a bank account at the Bank of Cyprus with over €100k will have 20% of their savings confiscated with 4% being confiscated from accounts held at other banks.  The Bank of Cyprus is the largest bank on the island.

Cyprus' Finance Minister, Michael Sarris, tried in vain to get Russia to bail them out instead of the EU but the Russians weren't interested in the Cypriot gas investments they were offered in exchange.  That was the third time the Cypriots have tried to avoid the EU's destructive bailouts so they will be severely punished when the terms are agreed.

Cyprus does deal with EU to steal savings

Cyprus has agreed a bailout deal with the EU and IMF that involves the legalised theft of up to 9.9% of savings held in Cypriot banks.

The deal has been agreed today and the Cypriot government is expected to pass an emergency law tomorrow to make it legal.  Monday is a public holiday so depositors won't be able to go into branches until Tuesday to get their money out.  Accounts are already being emptied via cash machines.

The new tax on bank savings is 9.9% on savings of €100k or more and 6.75% on anything below €100k.  Banks have already been instructed to take the money out of accounts.

It is highly likely that we will see runs on all Cypriot banks on Tuesday and I would expect most of them to close before lunchtime and for the Cypriot government to order them to remain closed for a few days.  The Bank of Italy permitted Italian bank BNI to freeze all accounts for a month last year and Cyprus is in a far worse financial position than Italy.

Cyprus was forced to go cap in hand to the EU after Russia refused a second big loan because Cyprus was unable to give it preferential creditor status because of EU rules.  We said in October last year that the terms of any bailout for Cyprus would be "punishing to send a message to any other €urozone country that is thinking of suckling at another teat" and we weren't wrong.  Thousands of military personnel based in Akrotiri and Dhekelia have had their money stolen as well as the many thousands of ex-pats living in Cyprus and Cypriot ex-pats living overseas.

Cyprus told to plan for austerity

A meeting of €urozone finance ministers last week told the Cypriot government that it wasn't doing enough to get emergency aid.

The EU isn't happy with Cyprus for going to the Russians more than once for bailouts rather than submit to the EU's repressive and regressive austerity measures that are attached to a €uro bailout and the terms of any possible bailout will be punishing to send a message to any other €urozone country that is thinking of suckling at another teat.

The Russians were happy to lend €2.5bn to Cyprus a year ago but when they asked for a €5bn loan this year the Russians wanted preferential creditor status which Cyprus was unable to offer as the EU must be the preferential creditor under EU law so they said no.  This means Cyprus must now go to the EU for a bailout unless it can find another rich communist government to lend it some money and pay the price for disloyalty.

Catalonia demands independence and bailout

A pro-independence rally in Barcelona today attracted 1.5m people demanding more money from the Spanish government and independence for Catalonia.

Spain's regions all have a degree of autonomy with the most antagonistic regions - Catalonia and Baque -getting more independence from Madrid than the rest.  They have the power to set their own taxes and to borrow money, all underwritten by the Spanish central bank which has very little control over the debts the regions rack up.  While the going is good and the regions can pay the debts they build up the arrangement works perfectly because it directly links spending to income but when the going gets tough the lack of responsibility for those debts leads to the problem Spain is seeing now where the regional governments can't afford to pay and the federal government has to foot the bill.

The Catalans are demanding more money from the federal government because they pay a lot more into the Spanish treasury than they get back.  They're demanding a €5bn bailout and a change to Spain's tax rules to close the gap between tax bills and budgets.

Devolved governments spending money they don't have, lack of fiscal responsibility, one "region" paying more tax than they get from the central government.  This is all sounding very familiar.  What we are seeing in Spain isn't just a warning about the folly of the EU single currency, it's a warning about what happens when you allow devolved governments to borrow money without proper supervision by the central bank guaranteeing the loans.

It's important that devolved governments have the direct link between tax and spend but taking on sovereign debt should be the preserve of the central bank and if devolved, the central bank needs to keep a tight reign on what debts are being taken on.

Lord Stoddart obtains eurozone guarantee figures

Independent eurosceptic Labour peer, Lord Stoddart of Swindon, has got some interesting information out of the Treasury on how much of our money the British government have committed to bailing out the €urozone.

In a response to a written question from Lord Stoddart, the Commercial Secretary to the Treasury, Lord Sassoon revealed the following figures:

• The Bank of England has deposited €2bn with the EU Investment Bank and has promised a further €35.7bn in guarantees
• The British government has committed €1.6bn towards a €10bn increase in the EU Investment Bank's capital
• The UK's share of the €60bn EU Financial Stability Mechanism fund is €8.7bn

Assuming or guaranteeing the liabilities of other EU member states is illegal under EU law but that would be a bit inconvenient when they want to shovel more and more money into the black hole that is the €urozone so they just ignore the fact that it's illegal and carry on regardless.

Cyprus starts EU presidency with bailout request

With a certain inevitability, Cyprus has become the fifth EU country to ask for a bailout.

The Cypriot and Greek banking systems are pretty co-dependent with Cypriot banks being heavily exposed to Greek public and private sector debt.  Cyprus' top three banks had to write off 50% of the nominal value of the €5.3bn of Greek government bonds they had bought under the EU's bailout rules.

Although Cyprus has requested an EU bailout, they are still in talks with Russia and China over a bilateral loan to try and avoid the punishing EU austerity that has devastated the Greek economy and ultimately lead to their own demise.

Cyprus takes on the EU presidency this week which is pretty symbolic - a divided, bankrupt country whose economy has been undermined by EU austerity in Greece, which is run by a communist and has such little faith in the EU bailout process that it would rather go to Russia or China than its own EU partners for help.  The headlines will be writing themselves in the next few weeks.

It's time to ban loans to €urozone countries

So, Greece has elected a pro-EU, pro-austerity, pro-bailout government again which will soon be implementing even more of the punishing EU-mandated austerity that led to riots earlier this year in return for increasing its crippling national debt. You can't make this stuff up.

Europhile politicians have declared the Greek result as a victory for "Europe" (they mean the EU but they don't acknowledge the existence of a Europe outside of the EU) and for the €uro.  What they refuse to accept, though, is that the result is irrelevant to the future of both the EU and the single currency.  The €uro will fail whether Greece is in it or not.  The Greece-shaped economic black hole in the €urozone is mere pocket money compared to France, Spain and Italy.

Spain is the fourth largest economy in the €urozone and they've just had to go cap in hand to the EU bailout fund to get their banks recapitalised.  The Spanish economy is in such a poor state that the yield on 10 year bonds (kind of like the interest rate on a loan) has tipped over 7% - that's the psychological barrier between moderate risk and high risk and Ireland, Portugal and Greece all crossed that line prior to collapse.  Cyprus, the €urozone country tipped to fall over next, is averaging almost 16% yields on 10 year bonds and has apparently been talking to the Russians about a loan to bail out one of its banks next week.


Spain is currently waiting for €100bn of capitalisation for its banks who have unexpectedly found that having entire towns of half-finished houses, toxic mortgages and billions of €uros of loans to bankrupt countries making up the bulk of their assets means that they might not be able to pay their bills which even more inexplicably seems to be putting institutional investors off the idea of loaning them even more money.  Spain is too big to be bailed out - there isn't enough money in the EU - which is why its banks are being bailed out directly by the EU bailout fund that is only supposed to be used to bail out countries.


Italian 10 year bonds are at just over 6% and we've yet to see the effects of Italian bank BNI freezing customer accounts for a month.  It's reasonable to assume we'll see a run on the bank when it unfreezes the accounts again and it's also reasonable to assume that as happened here with Northern Rock, a run on BNI could very well trigger the virtual collapse of the Italian banking system and force the Italian government to bail out its banks.  The big difference between a bailout of UK banks and a bailout of Italian banks is the cost - the British government is paying 4% interest on 10 year bonds, the Italian government is paying around 6%.  This might not sound like a big difference but it adds 50% onto the Italian government's cost of borrowing compared to the British government.  To put it into context, it cost £850bn to bail out RBS - with a 4% yield, that means the British government would have to pay back an extra £34bn on top of the £850bn in 10 years' time.  If the Italian government had borrowed £850bn at 6% they would be paying back £51bn on top of the £850bn - that's 3 times the GVA of Birmingham.

The €urozone is in terminal decline, UK banks need to call in their €urozone loans and the British government needs to ban any further high risk loans to €urozone countries to protect the economy from over-exposure to the €uro's imminent collapse.

Nigel Farage on the insanity of the Spanish bank bailout

Nigel Farage doing what he does best: exposing the absolute insanity of the EU and the €urozone.  Italy is forced to borrow €100m at 7% interest on the open market to loan to Spanish banks at 3% interest and this is called an example of what a success the €uro has been!

Spain requests financial assistance for banks

The Spanish Prime Minister, Mariano Rajoy and Treasury Minister, Cristobal Montoro, have asked the EU to recapitalise its banks, saying that they can no longer afford to borrow money on the international markets.

You may as well fill your pockets
with bottle tops

The Treasury Minister went a step further and admitted that the EU can't afford to bail out Spain, saying "technically, we can't really be rescued".

This comes as no surprise to most of us who have known for some time that Spain is on the brink of collapse and is too big to be bailed out.  The frankness of Señor Montoro's admission is surprising though as such honesty is taboo.

Montoro and Rajoy have asked "Europe" to recapitalise Spanish banks directly rather than loan the Spanish government billions of pounds they can't afford to pay back and impose crippling austerity measures on them precisely because not enough money exists in the EU to bail Spain out.  It's not a technicality as Señor Montoro suggests, it's a cold hard fact.

The Spanish are awaiting Angela Merkel's unilateral decision on how the €urozone will respond to Spain's request but as German banks are opposed to the idea, she is unlikely to concede without her pound of flesh.

This problem isn't "European" and the solution also isn't "European".  It's a €urozone problem and it's up to the €urozone to fix it (assuming the Spaniards don't want to grow a pair and leave).  It's not up to us to fix the €urozone, nor is it up to the Swiss, Norwegians, Icelanders, Liechtensteiners, Swedes, Danes, Czechs, Hungarians, Romanians, Bulgarians, Latvians, Lithuanians or Poles.  The more of our money the British government puts into the €urozone, the more we will lose when it fails.  The more they get involved in trying to sort out their mess, the more it looks like we are scared we won't survive the €uro's collapse when in reality they are lamenting the failure of their beloved EU.

It is long past the time to put our hands up and say "You know what? This is none of our business. You made your bed, you sleep in it. We can manage perfectly fine without you".  And we can manage perfectly fine, just like we always have done.  Our banks are exposed to the €uro but they're well capitalised.  Gordon Brown sold our gold for a pittance and bought €uro instead but the pound is still one of the currencies countries buy to back their own currency and the collapse of the €uro will prompt other countries to buy more sterling.

We have very little to lose and much to gain by the collapse of the single currency.  The amount of negative impact we experience will depend entirely on how far we distance ourselves from what is happening on the continent.

Osborne offers £10bn to bail out €uro again

George Osbourne has said that he is willing to hand over £10bn more of our money, extorted from us on pain of imprisonment, to give to the IMF so it can bail out the €uro.

Unemployment is through the roof, companies are going under at a rate of knots, services are being cut to save money and the Chancellor thinks that a good use of our hard earned money is to give it to the IMF money laundering operation to prop up the failing €uro.

And this is from a Tory government that fought the last election claiming it was eurosceptic.

Beware Greeks bearing debts

An agreement has been reached for a second bailout loan for Greece, plunging the country further into unsustainable debt.

I wonder if they think taking on another
€130bn of debt is a "historic moment"

The terms of the pay day loan are still vague and it all hinges on private creditors "voluntarily" writing off of 53.5% of their debts.  The Greek government is passing a law in case they don't agree to the "voluntary" write-off to force them to "voluntarily" write off the 53.5%.

Prior to the meeting, the EC, ECB, IMF, Netherlands, Austria and Germany had all said that they wouldn't be moved on a target of 120% debt to GDP ratio (ie. national debt would be no more than 120% of the total amount of money the Greek economy produces in a year) by 2020 but they caved in and upped it to 123%.

One of the conditions of the €130bn loan is even deeper austerity measures which is frankly bizarre given that a joint EC/ECB/IMF report was leaked last night that says the EU-imposed austerity measures have weakened the Greek economy and made it harder for them to meet their demands.

The BBC reports that the Greek government has agreed to "enhanced and permanent" external monitors to oversea the economic recovery.  This is clearly a reference to the Dutch demands for permanent representation of the EC/ECB/IMF in Greece to make their financial decisions for them.  The EU-funded BBC's wording suggests the agreement on this is a little softer than what the Netherlands were demanding but the Independent is more equivocal and it would seem that the Greeks have agreed to hand over permanent control of tax and spend to an unelected group of economists.

The unelected, EU-appointed Greek Prime Minister, Lucas Papademos, has called the loan and further damaging austerity measures that are being inflicted on the Greeks a "historic moment".  The protesters who've been rioting in Greece for the last few weeks might have a different opinion.  As I said yesterday: this isn't a bailout, it's a coup d'état.

Greek bailout masks EU coup d'état attempt

Talks started about half an hour ago on Greece's pay-day loan which has to be agreed today to avoid a default next month.

Finland has said for a long time that it is unwilling to bail out Greece again unless it has some hard guarantees for its loan but was talked down from that position last October.  It is a sign of how desperate Greece is that it has signed a bilateral collateral agreement with Finland today.

The German Finance Minister, Wolfgang Schäuble, has clearly had a good talking to and is now confident that a deal can be found to lend Greece more money to make repayments on the existing loans it can't afford to pay back, having previously told Greece there is no hope of survival and to declare itself bankrupt.

The most outrageous demand so far today is by the Dutch government who want permanent representation from the EC/ECB/IMF in Greece taking permanent control of Greek spending and borrowing.  They already have an EU-appointed unelected Prime Minister, now they want to permanently bypass elected government with unelected foreign technocrats answerable to the EU Commission, EU Central Bank and IMF making all the decisions on the Greek economy.

This isn't a bailout, it's the next stage of an EU coup d'état.  Italy has already gone through phase one (replacing the head of the government with an unelected EU-appointed technocrat), they'll be more than a little concerned if phase two is implemented in Greece.

Greeks will have to wait for their pay day loan

The meeting of €urozone ministers which was due to rubber stamp Greece's pay day loan tomorrow has been downgraded to a conference call which won't be able to approve the bailout loan.

Apparently, Greece hasn't done enough to convince the EU that they will implement their damaging and deeply unpopular austerity demands so they'll have to wait even longer to get their hands on the cash.  Without the cash Greece would default and bring down the €uro so they will get the money anyway, this is just the EU reminding the Greeks who's boss.

Greek PM begs for support for EU austerity measures

Lucas Papademos, the Greek Prime Minister, has gone on TV today calling for calm as about 4,000 protesters protested outside the Greek parliament (they're allowed to do that in more enlightened countries) and begging MPs to vote in favour of the EU's crippling austerity measures designed to try and keep the €uro going for a bit longer while they await divine intervention.

Just smile and nod Lucas, it always works for me

Appearing next to the EU ring of stars logo probably wasn't the cleverest move when Greeks are rioting about the EU's austerity measures (even burning German flags to protest at the fourth reich's interference in Greek affairs) but then if he was a clever man, Papademos would have told the EU to bugger off by now and defaulted.  Iceland was in technical default a couple of years ago but are now predicting a 3% growth in the economy and a budget surplus next year.  Iceland let its banks fail, looked after its own citizens, stuck two fingers up to foreign investors and devalued its currency.  Greece isn't allowed to let its banks fail, it has to look after all EU citizens, it's not allowed to stick two fingers up to foreign investors and it can't devalue its currency.

Greece needs to find €14.5bn in 5 weeks time to make bond repayments and it doesn't have the money.  The only plan the Greek government has is to borrow the money from the EU and IMF but in return, the EU wants devastating cuts in Greek spending, EU control of the Greek budget and their sockpuppet heading the government.  Greece can't afford to pay back the loans it's already taken out, let alone billions more.

Back in November (before the EU effected a coup to remove Papandreou from office) we said that Greece needs to forget about the EU/IMF bailout plan, default on its debts, withdraw from the €uro and reintroduce the drachma at a cheap rate to stimulate the domestic market.  There is no conceivable way out of the current economic mire that Greece finds itself in whilst remaining a member of the EU and the €urozone.

Attempts to oust Papandreou show the EU is out of control

The BBC gleefully reported that the Greek Prime Minister, George Papandreou, was expected to resign after an emergency cabinet meeting this afternoon.  They must have been very disappointed to hear that the rumour was untrue.

According to the BBC, Greek MPs are worried about the EU cutting off the money supply which "would give the heavily indebted Greek government 130bn euros (£111bn; $178bn) and a 50% write-off of its debts, in return for deeply unpopular austerity measures".

You can't blame the EU-funded BBC for trying can you?  The €130bn isn't a gift, it's a loan.  As in, they would be expected to pay it back.  And the 50% debt write-offs would be from private banks and investors, the largest proportion of which are Greek.  So Greek banks will find themselves downgraded and undercapitalised and assuming they survive intact, they will be forced to lay off large numbers of staff who then won't be working and won't be paying taxes (not that many of them do anyway) to help pay back the €300bn loan.

Sarkozy and Merkel summoned Papandredou to a meeting to dictate to him what he can and can't do in his own country.  Greece has been threatened with expulsion from the eurozone, expulsion from the EU and the EU is withholding bailout money it has already agreed until after the referendum.

Greece needs to leave the eurozone and the EU, re-establish the Drachma at a weak rate rate and slash interest rates but its politicians are wedded to the EU as a source of "free" money and the dream of a continent-wide Soviet republic, so the threats - despite being just what Greece needs - are diplomatic blackmail.

The EU is attempting to bully the Greek government into not holding a referendum on the bailout and to bring down George Papandreou.  Merkel and Sarkozy are acting ultra-vires - they and the EU have no authority to try and bring about regime change or prevent national governments from holding referenda.  The EU - and in particular, France and Germany - are out of control.