European Financials report for August 30, 2011
1) … Between The Hedges reports
PIMCO writes European Austerity Is Not Enough.
ZDF TV reports Euro-area governments will need to transfer additional sovereign functions to the European Union if they want to establish a European economic government, citing an interview with Luxembourg Prime Minister Jean Claude Juncker.
Financial Times Deutschland reports Andrea Enria, chairman of the European Banking Authority, demanded that the European Financial Stability Facility be allowed to give funds directly to banks to shield them from financial difficulties, citing a letter to be sent to the council of European finance and economy ministers. Currently, the 725 billion-euro fund may give money only to governments, which can then pass it on to lenders. The majority of the 27 EBA members approve of the plan, while Germany is opposed, citing a person close to the German government .
Bloomberg reports Merkel Bloc may lack majority for EFSF Bill, Handelsblatt Says. German Chancellor Angela Merkel’s ruling bloc of Christian Democrats and Free Democrats may lack a majority to secure passage of a bill to expand the euro’s temporary rescue fund, the Handelsblatt reported. As many as 23 coalition lawmakers may reject the bill that’s due in parliament next month, said the newspaper, without citing names. That underscores her dependence on the opposition to ensure ratification. To gain passage of the bill on the coalition’s own strength, Merkel needs 311 votes in favor of the changes among the 620 lawmakers sitting in parliament’s lower chamber in Berlin. Her bloc comprises 330 lawmakers, implying that the German chancellor may lack 4 votes to achieve a coalition majority if 23 vote against the bill, Handelsblatt said. Euro-region leaders have pressed parliaments to secure fast-track approval to revamp the fund, called the European Financial Stability Facility, relieving or partly relieving the European Central Bank’s emergency debt purchase program.
Bloomberg reports European Banks need bigger writedowns on Greek Bonds, Standards Board says. Some European banks haven’t sufficiently written down the value of Greek government bonds and other “distressed sovereign debt” they own, the organization that sets accounting rules in the region said. Banks and other financial institutions are valuing the bond holdings in a way that, in some cases, reflects internal models instead of market prices, the International Accounting Standards Board said in a letter published on its website today. “It is hard to imagine that there are buyers willing to buy these bonds at the prices indicated,” the IASB said in the letter, dated Aug. 4 and sent to the European Securities and Markets Authority. “This is a matter of great concern to us.” “Although the level of trading activity in Greek government bonds has decreased, transactions are still taking place,” meaning market prices can be assessed, Hoogervorst said. “A company cannot ignore relevant market data.”
Wall Street Journal reports Eurozone considers bank shares as collateral for Greek aid. The euro zone is considering providing donor members including Finland with collateral in the form of Greek banking shares to secure the next aid package for Athens, Germany’s Handelsblatt reported.
2) … Euro Intelligence in its for fee newsletter reports
Finland wants a Luxembourg vehicle to hold Greek collateral Reuters has the story that Finland wants Greece to form a Luxembourg-based vehicle that holds the collateral. The proposal was already drafted in June, but remains a central plank of Finnish demands. In the proposal, Finnish officials set out how the Greek authorities would authorise the transfer of assets to a holding company based in Luxembourg, whose shares would be fully owned by the Greek privatisation agency, but held in custody by a third party. The holding company would operate under Luxembourg law. (The structure essentially suggests that Finland completely mistrusts Greece.)
3) … Moneyness will not come from the EFSF Monetary Authority but rather from a European Fiscal Union and the Word, will and way of a European Chancellor and His European Banker.
Nikolaus Blome, of Bild, warned in Editorial against a United States of Europe relating that Nobody wants the United States of Europe, especially not if introduced through the back door. The Euro crisis has been created by the government in their respective capitals and it is up to the governments in their respective capitals to solve them. It would be wrong to hand over new competencies in fiscal and economic policies to Brussels.
Clearly from the news reports, the EFSF Monetary Authority will not be forth coming reality. Out of soon coming Gotterdammerung, that is the clash of the gods, specifically, the investors and the European leaders, a new moneyness will be deployed, that is not built on sovereign debt, but rather on diktat.
Mrs Merkel spoke out of the 1974 Clarion Call of the Club of Rome for regional economic government, and she spoke with its Authoritarian Imperative, as Bloomberg reports Merkel rejects euro region breakup. And Handelsblatt reports Angela Merkel saying, “All times have their own specific demands.” The Chancellor is keenly attuned to the fact that the global economic, investment and political teutonic plates have shifted, as the Milton Friedman Free To Choose Floating Currency regime ended when world stocks turned lower in May 2011, and when investors became aware that a debt union has formed in Europe, and fled the stock market on Black Thursday. Chancellor Merkel’s and President Sarkozy’ Joint Communique of August 2011, calling for “true European Economic Government” reflects the political realty of regime change.
A bloodless Eurozone coup d etat is underway.
The soon coming Europe Super Government will feature a sacrifice of national fiscal authority and a forfeiture of institutional holdings, such as infrastructure, banking, and utilities from the European periphery to its core, that is from the PIIIGS to Brussels, Paris and Berlin, to establish a Fiscal Union. And according to the Merkel and Sarkozy vision, the One Europe Government will have a leader. This Sovereign will be accompanied by the Seignior, meaning top dog banker who takes a cut. Neoliberalism featured wildcat finance, a Doug Noland term But Neoauthoritarianism will feature wildcat governance, where leaders bite, tear and rip one another, as the most fierce rise to the top, as governments created under Neolilberalism fail. WSWS reports Slovenia government on verge of collapse. The Slovenian government led by Premier Borut Pahor faces collapse following unpopular austerity measures and allegations of corruption. Diktat will replace freedom, choice, and liberty. The word will and way of the Sovereign and the Seignior will be the basis of the seigniorage, that is moneyness.