Banks Ready to Kill Greek Bailout
- Posted on October 17, 2011 at 5:17pm by
Becket Adams
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Sarkozy said that he and Merkel were confident the eurozone crisis would be solved “before the month is over.” However, the two leaders still need to settle their disagreement over how to use the $590 billion available from the European Financial Stability Facility.
Several large banks, with Deutsche Bank (DB) in the lead, are prepared to kill a bailout of Greece. Well-known DB chief Josef Ackermann says that plans to make banks take a greater burden of the aid package would cripple the industry. Furthermore, he points out that this could not come at a worse time as these same banks are a pillars of stability in the region. Banks hold enough Greek sovereign paper that they could end rescue efforts completely.
The problems with the attempts to save Greece have seesawed back and forth between those nations that will have to fund much of the new loans to Greece and financial firms that have been asked to take write-offs on old loans.
The trouble becomes more complex because banks may have to be bailed out themselves if their balance sheets are hurt badly enough by the latest proposed Greek bailout.
The major difference between banks and sovereign lenders and the IMF is obvious. However, it is worth repeating. Bank boards and shareholders are not beholden to interests that would sustain the eurozone’s existence.
The boards of these financial firms may risk severe regional financial problems, which include contagion, to keep themselves from the kind of catastrophe that American banks had in the 2008 credit crisis. There is no TARP-like facility in place in the EU yet, and there may never be one.
EU banks agreed to a contribution to the bailout in July. They are now being asked to increase that contribution. These firms had the agreement of most of their investors to accept the financial damage of the first deal. A harsher agreement almost certainly will be turned down as one that would tear balance sheets apart and send banks in a rush to find more capital.
Until recently, it was the confused debate among countries like Germany and France about how much each was able to put into a new rescue fund. The banks are about to walk away just as those debates have ended in agreement to salvage Greece.
(Douglas A. McIntyre—24/7 Wall St./The Blaze)
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jaylew
Posted on October 18, 2011 at 11:58pmGreece…..even the citizens there STILL don’t get it. The general populace of Greece still believe even as I type this that someone somewhere will bail them out as after all…having over 60 percent of the population as either active or retired public employees was some sort of viable and sustainable economic model. Oh Greece Oh Greece…the so-called cradle of civilization….NOT. Oh Greece Oh Greece….the only cradle you are now….is one that is soon to be left swaying in the wind. It is a financial scene of your own making…and it will be one that you will have to resolve yourselves.
Report Post »Co-opted Confederate
Posted on October 18, 2011 at 11:53pmAs the sun sets slowly in the west so does Greece. one of the pillars of socialism finally going down the toilet of bye Ya’ll!. Not one scent of U.S. Tax Payer mony should “BAIL OUT” ANY ENTITY EVER!
Report Post »lukerw
Posted on October 18, 2011 at 12:59pmOMG… Socialists demanding that people take Responsibility for their Actions?
Report Post »ccfonten
Posted on October 18, 2011 at 11:02amNo, the banks should not bail out the Greeks or any other country/institution who is so irresponsible with their money and resources. And that includes the people who are too lazy to work.
Report Post »Let them go down and start over again.
major11
Posted on October 18, 2011 at 9:17amThis goes both ways. Banks should not bailout countries and sovereign nations should not bailout its banks. It would be better for the financial environment long term. Thus, purging ourselves of these irresponsible banks and socialistic governments. It is impossible to support either institution because one doesn‘t know how to control its greed and the other doesn’t know how to respect other people’s money. In the short term NOT bailing institutions will surely hurt; on the other hand, bailing out banks/sovereign nations will hurt much longer causing uncontrollable inflation. By the way, don’t let George Soros get anywhere near the solutions. One way or another he plans to prosper!
Report Post »Molaki
Posted on October 18, 2011 at 6:47amIt would be nice if the banks showed some testicular fortitude and actually said no to their “haircut” thus forcing Greece to crash and burn so that it can rise from the ashes as a stronger nation.
Report Post »maxedout
Posted on October 18, 2011 at 2:18amSocialism….what a concept. Don’t ya just love it?
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