Spiegel: Europe’s leaders want to overturn the Treaty of Lisbon
In silence the governments of EU members have agreed not to reduce the Brussels Commission – although that is provided in the Lisbon Treaty that. In the future, each member country should be able to appoint a commissioner to SPIEGEL ONLINE information. It costs the taxpayers millions.
Externally, the governments of the EU Member States currently celebrating their disagreement. The North insists on fiscal discipline, south complains about the austerity measures, the German-French engine stutters a planned joint paper by President Hollande and Chancellor Merkel on the future of the monetary union is not made.
All the more surprising that the 27 EU leaders have agreed secretly and in great unanimity on a decision, which is to give the taxpayers financially and content, hardly. Merkel Hollande and Co. want to set next Wednesday at the European Council, the European Commission in Brussels not like the Lisbon Treaty is reduced provided.
Portugal Banks Warn European Leaders: “You Can’t Keep Playing With Fire”
While we are told day after day that not only is Europe ‘fixed’ but that Cyprus was not a template, it seems the bankers in the peripheral nations are a little less confident (never mind their record amount of reach-around-based domestic bond buying).European “leaders need to moderate their language,” warned one bank CEO, and as the FT reports, another feared a “Cyprus virus,” adding that “you can’t keep playing with fire.” The comments come in the wake of the depositor haircuts in Cyprus as a rush of clients wanted to move cash from deposit accounts to vaults: “most clients in Portugal don’t trust deposit guarantees… they choose vaults instead.” Fixed indeed… and why would these bankers worry about the ‘precedent’ if it were not a ‘template’ for future bail-ins?
The Most Dangerous Country In Europe
One of the primary focuses of “Out of the Box” is on where you might get hurt and, more importantly, seriously hurt. “Preservation of Capital,” the first ten rules of my thinking, has reached epic seriousness in a world with interest rates at unsustainable lows and underlying economic fundamentals that cannot support today’s yields. The irrational game goes on based upon one thing and one thing only which is the creation of capital by all of the world’s central banks. The money must go somewhere and so it does but the disconnect between the equity markets and bond yields from the real world is frightening.
“Begot of nothing but vain fantasy.”
Nowhere on the planet is it scarier than in Europe. Made-up numbers, un-counted liabilities, four years of inaccurate projections from the ECB and the IMF and securitizations parked at the European Central Bank that have all of the credit worthiness of an empanada restaurant in Lisbon. Money flows in, yields go down, the amount of debt increases and few pay any attention to the entire equation which states that what must be paid is the interest rate times the amount of debt as the Draghi bravado overcomes everything. Scant mention these days of the total amount of debt accumulated by the sovereigns as the 3.00% debt limit has become the most elastic of road signs or a trivialized fairy tale by many accounts.
With the banking system in Europe now posting non-performing loans that have reached all-time highs while the recession on the Continent deeps and worsens with the passing of each week I have cast a weathered eye at Europe. Most of us are aware of the dangers in Greece, Cyprus, Portugal and Spain but a careful analysis reveals that these are not the most dangerous of countries. They have problems, they are in dire straits but they do not hold the title of the greatest risk in Europe.
That title, in my opinion, belongs to France.
The Germans ballyhoo and point fingers at Cyprus, Luxembourg, Malta and the like as being financial centers where the banks are much larger than the economy. Yet nowhere in Europe is this issue so pointed as in France. The French banking system is 400% bigger than the economy of France and this is the worst ratio in all of Europe. Please compare this to the American situation where our banks are roughly equivalent (100%) with our economy.