From today’s Open Europe news summary:
In its latest financial stability report, released yesterday, the ECB warned of potential volatility and stress on global financial markets from the US Federal Reserve’s decision to taper. The ECB also warned that banks’ provisioning against potential losses has “barely kept pace with the deterioration in asset quality” and further “additional reserves” will likely be needed. FT City AM
With this report the European Central Bank as much as admits that its own policies have failed. Bailouts, monetary stimulus, Long Term Repurchasing Operations (LTRO), etc. have done nothing to prevent the further deterioration of bank assets. The increased capital injections amount to nothing more than money down the proverbial rat hole. This will continue to be the case, even if Basel III is implemented, because the ECB and the Basel regulators do not understand the source of the problem; i.e.,the socialization of money and banking in the EU. All socialist enterprises, which perfectly describes the European Monetary Union, end in capital destruction, poverty, and social chaos. Further political and economic integration will merely ensure that this process continues…but at a faster pace. Angela Merkel foolishly believes that her so-called “contracts” with deficit nations will work. But the deficit nations are sovereign entities answerable only to their own citizens. If they try to implement Merkel’s policies, the Germans will be blamed for the necessary hardships that must accompany the restructuring of their economies. At that point the deficit nations will dishonor their so-called “contracts”. New governments will disown the actions of previous governments, and the EU will have done nothing to cure its inherently unsustainable, unworkable, and unjust continent-wide social experiment. Patrick Barron
