banks lent $3.8trillion less since 2008...

accelerating the downward spiral:

ET The Economic Times:
Bank lending shrinks by 1.9 trillion in 2009: BIS

Lending fell by $1.9 trillion in 2009 and has contracted by $3.8 billion since September 2008 - or 11 percent - according to BIS, the coordinating body for the world's central banks. The statistics - the only ones to chart cross-border lending around the world - show it is taking time for lending to pick up.

Well, whether and when it ever will pick up again depends upon the banks' will to switch from gambling on currencies and commodities betting against themselves and the rest of the world and find their way back to the roots providing finance to industry and trade. As this is a boring business, margins are small, risky too (as no government backs it up, yet) it is much less attractive than the "fast buck" in the world's casinos.

The decrease in lending at such a rate is a killer to all systems that make our economies. At the same time Greece, even though it tried ever so hard, can no longer hold it off:

FT: Greece to seek activation of EU/IMF aid

So the EURO now breeches all the set rules, all laws once set in stone in Maastricht.

Carpe diem!

warming up the leftovers...

... but who will deal with the failed!

It is very close to 12 months ago when I blogged on an interview with US economist James K. Galbraith; I did this because I thought at that time that his summary was very accurately describing the situation then.

Why do I pick it up again? Because the situation is no different but worse, Galbraith's answers are very much up-to-date and the recipes to solve the crisis explained how insolvent banks should be dealt with:

In a situation when a bank has suffered losses sufficient to impair its capital, you need to have regulatory supervision in place.

This does not mean that you necessarily close the bank. The way it usually works in the USA is that a bank is closed on Friday and re-opened on Monday under a new name, with a new leadership and with a team of examiners who are going through the books, trying to sort the good business loans and personal loans from those which are hopeless. Then you isolate the hopeless stuff, you force a write down of the equity and the subordinated debts of the people who put in risk capital -- so they have to take their losses as they should. And then you break up the bank into pieces which have a better prospect to gain viability soon. That's a process of re-organization and re-capitalization.

A change of management is essential, because firstly, the incumbents are responsible, whether they were culpable or not, and secondly, you need new people who are in line with the public purpose of this re-organization. It's the same principle in the navy: When a ship runs aground, the captain is removed, no matter if he caused the accident or not. No one would think it's a good idea to have the subsequent investigation headed by the ones who are to be investigated.

For another up-to-date interview click here.

Any kind of stimulus programmes, any new debts or any new, distortable balance sheets (e.g. EMF or similar) will not offer any sustainable solution unless independent governments are setting and enforcing new rules for new banks; I don't see those coming and I also doubt any new government will be anywhere near a position to finally clean up the mess.

So the crunch(-es) will go on; the credit-crunch will feed the EURO/currency-crunch, the climate-crunch will enhance the water- and energy-crunches or all vice versa; we better get used to it.

Btw: are you aware of an island called "Diego Garcia"? Or "Camp Justice"? It would not be the first time the world would seek its hail in war; preparation is on as you can read in the HeraldScotland.


Carpe diem!

in dubio pro banks

Citi Notice Causes Customer Angst

Citigroup added a note to the banks statements to their customers:

"Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change."

It comes through the back door and hardly is worthwhile a note in the news.

Is this just to be prepared?

Carpe diem!

what took you so long, oh lord?

telegraph: Lord Mandelson backs state investment bank plan

The Business Secretary believes that a state-run bank could create funding streams for sectors that traditional banks might otherwise ignore.

It took the politicians far more than 12 months to finally understand that the collapse and then absence of "traditional banking" in connection with the banksters' egoism is drying out the economy; now of all things the German kfw has been detected as the possible bank-business-model that could help supplying the markets with credit. That's a joke?! Just remember the IKB disaster!

1
By the way, the proposed €5bn that Germany has to throw into Greek's hat to collect the €25bn will be printed by the same kfw. What a career from the Marshall Plan to the "global economic crunch super print shop"?

2
kfw = "Kreditanstalt fuer Wiederaufbau" meaning something like the "bank institute for reconstruction".

3
Why seek far afield and go through all the expense to "learn" from kfW? We own the RBS where "RBS" could well stand for "Re-Build-from-Scratch"!


Carpe diem!

Golden Sachsens everywhere!

Matt Taibbi, American journalist, on the "Great American Bubble Machine".

I am aware of the fact that is is a lot to read and listen to, to digest and understand: at the same time it is very likely that the big players are aware of just that fact as well and therefore get away with what the get away with.



and part two:


Please also see:
Do you believe in miracles?
Max Keiser, part 1
Max Keiser, part 2

Carpe diem!

Ought to Know Max Keiser, part 1

Refreshing to listen, hear and digest...



Wait till you hear him in part 2...

Carpe diem!