Remember at the “end” of the financial crisis when everyone from Timothy Geithner to Barack Obama to assorted members of British Parliament promised that “Never again” would anyone need to hand trillions of dollars to bail-out banks? That was just a one time thing, right?
We’re all past that now. Right?
Wrong. Well, at least not Europe.
While the European Central Bank president says a program to hand as much as 1 trillion euros ($1.4 trillion) to banks has built-in incentives to spur lending to the real economy, analysts from Barclays Plc to Commerzbank AG have doubts on how well it will work.
Mario Draghi, president of the European Central Bank is prepping Europe’s version of financial “shock and awe”: A one trillion euro gift to bankers ($1.4 trillion USD).
Never mind that the specific amount needed to restore the health of Europe’s economy is apparently a nice round number, or that once again public coffers are being fleeced to prevent Europe’s wealthiest .1% from losing their shirts, or that banking stocks are not being zeroed, or that debt is not being crammed into equity: The most amazing part is that this plan appears to be a repeat of everything that was widely condemned as being utterly unjust. And it didn’t work the first time around.
Weren’t there supposed to be pitchforks and torches in the streets if this ever happened again?
But don’t worry, we’re sure these lucky banks will turn around and inject that money directly into the real economy… and not just buy risk-free, non-productive assets…
“Banks may increase lending but can also use the funding for purchases of other assets, such as corporate bonds, commercial paper and government paper, which will help bring down rates across the board,” the bank said on its website last month
Oh sure. That sounds fair. Bankers can expect to earn hundreds of millions of Euros in risk-free revenue courtesy of tax-payers, and in return the rest of the muppets will be able to borrow at slightly cheaper rates. All in favor say “aye”. Oh wait, never mind — there won’t be a vote.
This is not capitalism. In capitalism, failed institutions fail. Stocks are zeroed. Management fired. When you fleece your populace and hand the spoils to the lords in the manor — that’s called despotism.