Tuesday, June 19, 2012

One big idea: Banking Oversight? Please.

Emerging from their resort world leaders have come up with one idea that just might work. Banking Oversight. No seriously, this is what they are spending money coming up with. Click the link, see for yourself. Of course their brand of banking oversight is new. It's nothing like the banking oversight already in place which was never enforced, no no.. this is all new. Unified banking oversight, genius!

This article is filled with luscious quotes, so lets begin:
European leaders are considering a makeover of their banking sector that would prevent struggling financial institutions from causing more problems for their debt-burdened governments.
You're going to hold them accountable?
At the conclusion of G20 meetings in Los Cabos, Mexico, Tuesday, European leaders said they were entertaining the idea of a common bank supervisor, which would provide guarantees for bank depositors and oversee the wind-up of troubled banks across the region.
A "common bank supervisor", great.
The goal would be to shield already debt-riddled governments, such as Greece, Spain and Italy, from potential bailouts needed in their banking sector. Such changes are needed to end the “feedback loop” caused when struggling banks turn to their governments for help, requiring more debt to stabilize the lender and prevent a run on the bank.
Here we go, another ingenious plan to avoid any accountability what-so-ever and set the stage for future fraud at the same time. The proposal is that European nations give up what little sovereignty they have left over their banking sector in favour and trust of a centralised banking authority to deal with the banks. Notice the language here, "shield them from bailouts" and "provide guarantees for bank depositors". Why does a government need to be shielded? Well because they currently provide guarantees for bank depositors. Hmm.

So if the European nations don't have the funds to bailout their banks, where would the European bank supervisor get the funds from? Hint: It probably won't be out of the banker's pockets.

Now, here is a real double-think brain twister: "Such changes are needed to end the “feedback loop” caused when struggling banks turn to their governments for help, requiring more debt to stabilize the lender and prevent a run on the bank". Of course, they are "struggling banks" not fraudulent or bankrupt banks. That's not an option. The bailouts are absolute, the "solutions" they're trying to find are new ways to perpetuate bailouts, new ways to continue the global ponzi scheme economy. They really only have one idea, print money. What changes is what they should call it. What P.R. is necessary now to convince the public that more money printing is actually a good thing? What P.R. is needed to have people "restore their confidence" in the market? They are of course desperate to prevent a bank run, not to protect you, but to protect themselves.

Greek withdrawals soar as poll nears

That's a lot to cover, so let's summarise before we move on. The G20 leaders believe it's a good idea for European nations to surrender their sovereignty in the banking sector and any remaining control their governments have over banking bailouts to a centralized "supervisor" body. This is a good idea because the governments that these people currently operate in have been drowned in debt at the behest and promotion of these same leaders. This new supervisor body will somehow get the funds to "provide guarantees for bank depositors".

Some in the G20 don't agree though, they think they have a better way to continue avoiding accountability.
The pledges come as the G20 tries to push ahead with new capital reforms designed to stabilize the industry that may be delayed by ongoing problems in Europe.
After talk in recent weeks that leaders might press for an easing of global banking reforms, given the problems in the euro zone, the global Financial Stability Board stated clearly Tuesday that it was pressing ahead.
The new rules, which require the world’s banks to carry more capital on their books that can be easily liquidated in the event of a crisis, will not be watered down or delayed, Mark Carney, the Governor of the Bank of Canada and the head of the FSB, said in a letter Tuesday.
There had been speculation that capital rules would be delayed or eased to give struggling European banks more time to shore up their operations. Mr. Carney said delaying the new banking rules, which are not designed to be onerous, would do more harm to economic recovery than they would help the situation.
“Credit growth has resumed in those countries where financial institutions have decisively strengthened their balance sheets. Banks that have raised capital are reaping the benefits of greater access to and lower costs of market funding,” he said.
“In contrast, inadequately capitalized financial institutions are contributing to increased funding costs for sovereigns and diverting scarce resources from measures to increase jobs and growth,” Mr. Carney said.While a European financial and banking union is widely viewed as a way out of Europe’s unrelenting debt crisis, it remains unclear as to when it would become a reality – if ever.
This is a really long winded and fancy way of saying "recapitalize the banks, banks that have tried this are doing better than those that haven't". Capitalization is a fancy way to say "actually have the money to back up what you have lent out". Amazing, why hasn't anyone thought of this yet?

The question really is, why are all of these banks not already "capitalized"? Well this comes back around to the lack of growth largely attributed to peak oil, the holes in balance sheets showing up as a result, the bailouts used to plug them which result in an exponentially growing debt obligation for the countries stuck in this sick game of global roulette. The "supervisor" which will somehow be able to back the bad loans made by banks will probably be getting the funds directly from the European people.

Low interest rates, extremely low capital reserve requirements, fiat currency, and compound interest have set the stage for this disaster. Riskier and riskier banking practices have been used to counter an equally exponential rise in oil price (energy price). At the cost of the future and diverting scarce resources from precious energy investment I might add.

The funds have to come from somewhere and if the "goal" as it were is to remove the burden from the governments but maintain the bailout obligation to the fraudulent banks then a banking supervisor is a way to remove the governmental middle man and have the people pay the banks directly. Remember, they really really want these no good citizens to "pay their tax". This is not a "tax" to provide them with services but rather to pay for the debts incurred by the banks which were not properly "capitalized" in the first place to the even larger international banks which run in the same circles as the other banks which "started" this crisis in the first place.

It all comes back to the same banks, the same people, and these are the people in control. their solution? Give them more control as they just didn't have enough control to prevent the problems. Existing laws, accountability? That's long gone. There are two types of solutions, those the people would like to see, and those the likes of the G20 are willing to implement to save their own skin. Whatever solution they do come up with, in the end you can certainly bet that it's coming out of your pocket book, one way or another.

Everyone wants banking oversight, but this certainly is not it. It doesn't matter what they want to call it, it's more bailouts without the ability of say the pesky Greek elections to interfere with the Greek's "paying their tax".

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for CenturyLink

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

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