In 2008 The Banking Insolvency Issue Was Turned Into A Sovereign Insolvency Issue

Gonzalo Lira relates in article Tidal Forces Are Pulling Europe Apart writes: “In 2008 was a banking insolvency issue was turned into a sovereign insolvency issue.

But more than their social programs, it was really the European governments’ willingness to back-stop the private sector banks which did in European sovereign balance sheets.

I’m with the journalist Wolfgang Münchau, who very accurately pinpoints the moment when the Irish government decided to fully back its banks—September 30, 2008—as “the most catastrophic political decision taken in post-War Europe.” As Münchau points out, it wasn’t that just the Irish decided to fully back their insolvent banks – their decision obliged all the European governments to back their insolvent banks too.

Like their American counterparts, the Eurozone bureaucrats lacked the political will to implement the Sweden ‘92 solution: Nationalize the insolvent banks, liquidate the shareholders, give buzzcuts to all the bank bondholders, and clean up the banks’ balance sheets of all the crap debt, before sending them back out into the world, smaller but healthier.

Instead – for perverse political reasons and blinkered short-term-ism – the Irish and then the rest of the Eurozone governments took up as their own the burden of the insolvent European banks.

Take the Irish case: It was bad enough that they went and allowed Allied Irish Bank and Bank of Ireland to grow to be as big as they did – at year’s end 2008, AIB had total liabilities of €172 billion and Bank of Ireland total liabilities of €181 billion, while the total GDP of the Republic of Ireland was €164 billion.

But when the Global Financial Crisis happened in 2008, what did the Irish government go and do? They nationalized the banks’ losses! Prime Minister Brian Cowen in September of ‘08 went and threw a blanket-protection over the Irish banks – banks whose liabilities were twice the gross domestic product of Ireland! Cowen went and guaranteed the private debts of the Irish banks – effectively socializing the bank losses.

And not just the Irish – just about every European government basically did the same thing: All the teetering banks have all been back-stopped by their respective governments. So what in 2008 was a banking insolvency issue was turned into a sovereign insolvency issue because of terrible decision-making. (I do not think it was because of terrible decision-making; I believe it was a plan to integrate banking and government into one — establish state corporatism under the umbrella of regional, that is European economic governance).

So clearly, a political decision is coming up, which has to be answered by the nations of the European Union. ”

Open Europe in Press Summary for December 24, 2010 relates that in NRC Handelsblad article: ‘Van Rompuy: Eurozone Wordt Politieke Unie’, EU President Herman Van Rompuy stated: “the eurozone will become a political union”.

A catastrophe is coming out of rising sovereign debt interest rates, as well out of further global competitive currency devaluations at the hands of the currency traders, resulting in a financial market place implosion. The European Financial Institutions, EUFN, will fall quickly falling in value, taking the entire global financial system down, resulting in Götterdämmerung, an investment flame out, bringing forth a new age.

The Apostle John writing in the Book of Revelation presents a vision of today’s events: a Chancellor, that is a Sovereign, will rise to rule, Revelation 13:5-10. It might be Angela Merkel or John Redwood or Tony Blair, who will come to govern. It might even be the philosopher Herman van Rompuy who will rise to be the Federal Leader.

And  Revelation, 13:11-17,  foretells a Banker, that is a Seignior, will rise to provide credit. It might be Wolfgang Schäuble or Olli Rehn or Jean-Claude Trichet or Gordon Brown or Jose Manuel Barroso.  The Seignior will have fiscal sovereignty to control deficit spending, enforce internal country devaluations, provide a common EU Treasury for both taxation and transfer payments, assure mutual guarantees of the EU debt, and as Timothy Geithner called for, implement unified regulation of banking globally. All seigniorage, both credit and fiscal will come and go through the Seignior, who will make decisions on where money is spent. The Seignior will coordinate all aspects of economic policy, includes taxes, wages.

I foresee national sovereignty passing away throughout the world, as Leaders’ Framework Agreements establish ten regions of global governance as called for by the Club of Rome in 1974; hence people will no longer be citizens of sovereign nation states, rather residents living in a region of global government.


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