Troubled bank balance sheets had the potential to “choke the engine of
recovery” in the 17-nation bloc, and “exert a more persistent drag on economic
growth,” said Mr Coeuré, who sits on the executive board of the European Central
Bank (ECB). Mr Coeuré said ailing banks had to be repaired or shut down. Failure to do so
could result in a decade of stagnant growth in the eurozone, similar to Japan in
the 1990s. He said the eurozone crisis risked creating a Japanese-style wave of “zombie
banks” in which lenders, fearful of falling foul of capital rules, chose to
“evergreen” - or roll over - bad loans instead of recognizing losses on their
books. This had led to the “perverse” practice of banks extending credit to
insolvent borrowers, rather than lend to creditworthy firms, said Mr Coeuré.
Banks then “gambl[ed] on the hope that [firms] would recover or that the
government would bail them out”. Mr Coeuré called on leaders to complete the steps needed to implement the
eurozone’s banking union. He also said measures were needed to tackle youth
unemployment...
Meanwhile, Olli Rehn, an incompetent idiot, the European commissioner for economic and monetary
affairs, said the next tranche of Greece’s bail-out could be paid in installments
amid growing frustration with Athens’ slow pace of reform.
“It is possible, but not certain,” Mr Rehn said on Friday. “It all depends on
whether Greece can meet all requirements that they are committed to.” A separate report by the European Commission and the ECB showed that Spain’s
troubled lenders did not need further taxpayer support. The eurozone’s fourth
largest economy has so far received €41.3bn to recapitalize its banks....
German politicians have been vocal in their opposition to the EU
Commission's plans for a single bank resolution authority, concerned that it
could override a national decision on how to deal with a struggling bank.
Yesterday finance minister Wolfgang Schaeuble warned that the plans could
require treaty change. I would strongly ask the commission in its proposal for a
[single resolution mechanism] to be very careful, and to stick to the limited
interpretation of the given treaty. We have to stick to the given legal basis,
as otherwise we risk major turbulence. More on the plans for the so-called
"single resolution mechanism" to be proposed by the EU Commission today. If
plans go ahead at the planned pace, a new agency within the European Central
Bank will be in charge of the wind-down or rescue of failed banks by 2015. The
eventual aim is for the ECB to draw from a common multibillion euro fund,
supplied by eurozone banks. However, since it will take years to accumulate the
€60bn needed for a bank resolution fund, it will be limited to overseeing
national-level bank bail-outs to begin with.
5 comments:
Yew, loaned and then immediately gave them back to northern banks... Since they now have a primary budget surplus, and the loans cover only debt roll-overs. But they will have to repay that loan with interest. BTW, most Northern countries borrow that money with interest rates below inflation (ie negative real interest rates) due to the capital flight from the south. Also, all Southern deposits have moved to Northern banks.
The point is where is the "unloaned" capital and how did it get there? Answer, if you look at the EZ current account balances: The moment non-competitive countries joined the euro, their current accounts took a 10,000% fall, and they kept at it until 2008. And the money went to the North.
Ofcourse there is also the theory that the course of international politics and economics in the eurozone is this because of their leader's goodness of their hearts. Or their naivety. They're being taken by these lazy brown stealing socialist Southerners. I'm sure that's why they're lending the money, yeah, that's probably it.
The Europeans and the IMF have long been at odds on the terms and targets of the Greek bailout, worth €240bn in total, the world's biggest, with the IMF worried that Greek national debt levels will remain unsustainable
In other words, every man, woman and child in Greece was leant over $27,000 by the IMF and ECB.
That money will be repaid...when pigs learn to fly.
Eurozone throws Greece a €3bn lifeline
Meeting of eurozone finance ministers decides on €2.5bn in loans this month plus a further €500m in October
Wow, 3 billion for destroying a whole country - pretty cheap thrills, I think!
Would've been much cheaper to let the Greeks just have their Drachma back and sit back and watch the crooked politicians, bankers and businessmen flee the country pronto - along with the illegals!
Much cheaper thrills in the end!!!
Oh no! We got one of those proponents of Austrian economics... Austrian economics is what has brought us to this mess, implemented by Reagan and Thatcher: it rejects the scientific method, it rejects mathematical models, and it's infallible, which automatically makes it a pseudo-science. Pretty much all economists reject Austrian economics. Austrian economics is attractive because it's simplistic and because you don't need to understand any maths to understand it. Only economically illiterate people, such as Ron Paul and his supporters, espouse Austrian economics.
BRUSSELS—Greece's international creditors reported Monday that all isn't well with the country's mammoth bailout program, but euro-zone finance ministers decided the problems weren't enough for them to stop the flow of financial aid to Athens.
The ministers agreed to unlock €4 billion ($5 billion) in financing due to the Greek government—provided Athens moves to trim government payrolls and adopt other measures demanded by its creditors by July 19.
The International Monetary Fund is due to release another €1.8 billion for Greece once the fund's board meets July 29. The money will be used to keep the government operating
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