European summits in ivory towers

By Paul de Grauwe, Professor of international economics, University of Leuven, member of the Group of Economic Policy Analysis, advising the EU Commission President Manuel Barroso, and former member of the Belgian parliament. Cross-posted from VoxEU.

The Eurozone crisis plays on to a familiar tune. Finance ministers meet on the weekend only for markets to dismiss their efforts the following Monday. This column argues that Europe’s leaders have lost touch, that the ECB has the firepower but is not prepared to use it, and that the outcome of all this is depressingly clear: Defeat by the financial markets.

Imagine an army going to war. It has overwhelming firepower. The generals, however, announce that they actually hate the whole thing and that they will limit the shooting as much as possible. Some of the generals are so upset by the prospect of going to war that they resign from the army. The remaining generals then tell the enemy that the shooting will only be temporary, and that the army will go home as soon as possible. What is the likely outcome of this war? You guessed it. Utter defeat by the enemy.The ECB has been behaving like the generals. When it announced its programme of government bond buying it made it known to the financial markets (the enemy) that it thoroughly dislikes it and that it will discontinue it as soon as possible. Some members of the Governing Council of the ECB resigned in disgust at the prospect of having to buy bad bonds. Like the army, the ECB has overwhelming (in fact unlimited) firepower but it made it clear that it is not prepared to use the full strength of its money-creating capacity. What is the likely outcome of such a programme? You guessed it. Defeat by the financial markets.

Financial markets knew that the ECB was not fully committed and that it would stop the programme. As a result, they knew that the stabilisation of the price of government bonds would only be temporary and that after the programme is discontinued prices would probably go down again. Few investors wanted to keep these bonds in their portfolios. As a result, government bonds continued to be sold, and the ECB was forced to buy a lot of them.

There is no sillier way to implement a bond purchase programme than the ECB way. By making it clear from the beginning that it does not trust its own programme, the ECB guaranteed its failure. By signalling that it distrusted the bonds it was buying, it also signalled to investors that they should distrust these too.

Surely once the ECB decided to buy government bonds, there was a better way to run the programme. The ECB should have announced that it was fully committed to using all its firepower to buy government bonds and that it would not allow the bond prices to drop below a given level. In doing so, it would create confidence. Investors know that the ECB has superior firepower, and when they get convinced that the ECB will not hesitate to use it, they will be holding on to their bonds. The beauty of this result is that the ECB won’t have to buy many bonds.

Why has the ECB not been willing to use this obvious and cheaper strategy?

Part of the answer has to do with the objections that have been raised against the idea that the central bank should be a lender of last resort in the government bond markets of a monetary union. Some are serious (moral hazard); others are phony (inflation risk). I discussed these in De Grauwe (2011) (see also Wyplosz 2011). My impression, however, is that these objections hide another more fundamental reason. The people sitting around the table in Frankfurt continue to believe that financial stability is not part of their core business, and, to use the words of Trichet, that there is only one needle on the Frankfurt compass and that is inflation. As long as this view prevails the ECB will be reluctant to do the obvious.

The result of this failure of the ECB to be a lender of last resort has been that a surrogate institution, the EFSF/ESM, had to be created that everybody knows will be ineffective. It has insufficient firepower and has an unworkable governance structure where each country keeps its veto power. In times of crisis it will be paralysed. As markets know this, its credibility will be weak.

To hide these shortcomings European leaders are now creating the fiction that by some clever leveraging trick the resources of the EFSF/ESM can be multiplied, allowing the ECB to retire to its Panglossian garden of inflation targeting. European leaders should know, however, that leverage creates risk, very large risks. These appear with full force when liquidity crises erupt. Thus when the leverage trick will be most needed, it will fail as it will show how risky the positions are of those who have guaranteed the leverage construction. Governments which now enjoy AAA creditworthiness will take the full blow of a 100% loss on their equity tranches and will lose their creditworthiness in one blow. The whole risky construction will collapse like other clever financial constructions of the recent past.

Academics have the reputation of living in an ivory tower far away from the realities of the world. My impression is that instead of the academics, it is the European leaders who have been living in an ivory tower. Disconnected from the economic and financial realities, they have created an institution that does not work and will never do so properly. Now they are creating a financial gimmick that, in their fantasies, they expect to solve the funding problems of major Eurozone countries. It is time for the European leaders to step back into the real world.

De Grauwe, P, (2011), The ECB as a lender of last resort,, 18 August.

Wyplosz, C, (2011), They still don’t get it,, 25 October.

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  1. David Pearson

    The lender of last resort function is intended to provide liquidity to the banking system against good collateral, not permanent financing to prop up insolvent institutions.

    Your real beef is with European voters and with democracy itself. Those voters — the ones in solvent countries — don’t want to lend to insolvent ones. There is a democratic process in Europe that allows their will to influence policy. Unfortunately, that influence caused the EFSF fiscal transfer mechanism to come up short of what markets wanted. As a result, you want to resort to extra-democratic means. When a central bank lends against bad collateral and suffers losses, it transfers those losses to the fiscal authority, and it is then forced upon taxpayers without their consent.

    Sometimes democracy is inconvenient, as in when taxpayers refuse to transfer their income to risk-taking financial actors to make them whole.

    1. Francois T

      As long as these voters are willing to endure the full brunt of the consequences of their refusal, no problem.

      Alas, I have the nagging feeling that they don’t even understand what will happen. For instance, German voters ought to ask themselves who do they export to.

      1. don

        “. . . German voters ought to ask themselves who do they export to.”

        Does this not reflect the deeper, structural imbalances that lie at the heart of the sovereign debt issue? Is perpetuating this the solution?

        For the life of me, and try as I might, I have yet to come to grips with the notion that central bank digital “printing” will resolve anything. I find this nothing short of magically thinking.

        I fully understand the need for arresting the decline of national economies like that of Greece, Spain, Italy . . . but once accomplished are we then to assume econ. growth. Are we to assume also that once the econ. growth is back on track that the structural imbalances will then be addressed resulting in balances? How realistic is this? Do we really believe these issues will be dealt with, as if we live in some laboratory, where social engineering is carried out, and that out of all this will come some inter-state balance of export/import of the Euro countries?

        This entire process, all the debates, questioning, solutions offered, rants, etc., gets real exhausting. My fault, I guess, for spending the time reading this excess.

        1. shtove

          This exchange sums up the conundrum.

          The article ridicules German ECB council members for resigning, but fails to point out that the bond purchases are illegal under Art 123 of the Lisbon Treaty – a treaty that the Irish people were forced to vote on twice, until they got it right.

          The money printers really can’t get enough. And the result of them constantly falling short of their desire and demanding more will be the end of democracy. All for a daft experiment to prove a weird theory.

          Yet the consequences of failing to print will be very serious in the short term.

          Long term? I prefer to keep democracy and money that means something to the people who earn and spend it.

    2. Jim

      I agree.

      Too many NK readers who would otherwise have a huge problem with the Republicans stomping on democracy have no problem with the ECB and the EuroCrats doing the same.

      Over 75% of Germans don’t want more Europe. A majority of citizens in northern European countries don’t want their tax dollars going to the south.

      Are Germans too “ignorant” to know what’s best for Germany?

      If so, what’s the difference between this and the GOP believing that Americans are too “ignorant” to realize that the best way forward for Medicare is a voucher program?

      1. MikeJake

        How is the ECB acting like a proper central bank “stomping on democracy?” The 1930s should already have taught us that economies and banking systems aren’t well-oiled machines; they will grind to a halt without certain safeguards and interventions. One of those interventions happens to be a willingness to act as a lender of last resort. If a central bank is unable or unwilling to do that, then it’s doomed to be an ineffective institution.

        The point about whether Germany realizes where its prime export markets are is dead on. The Germans are trying to have their cake and eat it too. It’s akin to doing the bidding of Wall Street lobbyists while the rest of America stagnates. Is that democracy?

        1. Jim

          MikeJake, you want the ECB to act like the Fed? Fine. Hold referendums in every EZ state, asking the citizens whether they would accept being part of the United States of Europe, with 17 governors and 1 president in Brussels. Let them know that a “YES” vote would mean one team representing the United States of Europe at the FIFA World Cup.

          At that point, if every country ratifies those changes, I imagine that the ECB’s monetization would be legal. Until then, according to the ECB charter, it is ILLEGAL, FRAUDULENT and ANTIDEMOCRATIC.

          1. MikeJake

            And utterly unworkable.

            I see Europe is as short-sighted and prone to magical thinking as we are.

        2. JTFaraday

          Erm…I don’t know, I could lose the money trail on this one, but I think it’s: the Germans bailout the Greeks, the Greeks bailout the banks.

          I don’t see how the helicopter drop lands in Greece at all.

  2. Foppe

    There seems to be something wrong with the main page.. It looks as though the second and subsequent stories are being rendered as a blockquote inside this story.

  3. MyLessThanPrimeBeef

    Basically, these Ero-Zone leaders don’t get together for the 99%, but to stimulate each other or the 1%.

  4. Maju

    Absolutely, Yves: they live in an ivory tower and would like to remain that way. Only popular uprising will force them to step down… or bring the tower down with these smirky megalomaniacs inside.

    I was ‘lucky’ of visiting the BBC’s front page at a key timing yesterday because this story is already out and difficult to find (I found through my browser’s history): the fact that Sarko and Merkel are taking all relevant decisions ignoring the southern states, the fact that Sarko particularly (who is so arrogant that it hurts) is smirking and almost openly laughing while he’s asking to major EU partners (Italy is at the same level of representation as Germany or France, Spain just behind and these are the “big four” of the Eurozone, all the rest being small countries) to take drastic measures is so insultingly colonialist that even the anti-Berlusconi majority of Italy has rallied around him this time.

    Meanwhile there’s not hint of euro devaluation which is the only measure that could make any sense and save the Mediterranean and other Latin economies (the French and Belgian ones too). It will happen unavoidably but it will be too little too late.

    Too bad.

    1. xct

      Meanwhile there’s not hint of euro devaluation which is the only measure that could make any sense and save the Mediterranean and other Latin economies (the French and Belgian ones too).
      Never an economist here, but from what I understand, the euro becomes more valuable with respect to the dollar when the “markets” prefer to buy stocks instead of dollars (or US treasury bonds). A lower dollar helps US exports, a higher Euro doesn’t help EU exports outside the Eurozone.
      Isn’t the export of EU-made goods the way out of the debt?
      If somebody wants to explain please, why is the ECB not printing more euros to help with the EU exports to China, Brazilia, US or whereever they export to?

  5. Jim Haygood

    The ECB should have announced that it was fully committed to using all its firepower to buy government bonds and that it would not allow the bond prices to drop below a given level. In doing so, it would create confidence.‘ — Paul de Grauwe

    This is a succinct summary of the conventional wisdom according to central banksters. Note that it contains two insolent assumptions: (1) that experts know better than the market at what prices sovereign bonds should trade; (2) that confidence can be ‘created’ by feeding false price signals to the market.

    Here in a nutshell is the vainglorious presumption of the eurocrats: no one shall question our structurally flawed creation. We will manipulate prices to the levels that our expert judgment dictates, and thereby validate our infallible wisdom.

    Quelle folie!

    1. psychohistorian

      I just read the George Washington piece at ZH and came over here to see what is happening with the EU but it is hard to concentrate.

      Hello World,

      America is now shooting its own war veterans to protect this insane class system that has overrun our budding republic. It makes me very angry to know this emerging fact.

      It is time to laugh the global inherited rich out of control of our society and into rooms at the Hague. The society that these people control is now using immoral, unethical, and anti-humanistic force against undeserving citizens who have fought to defend their system.

      They need to understand that they have crossed the line in America and the only safe place for them now is in jail somewhere. The corrupt politicians that are their puppets and lackeys need to also understand that they continue to run this sick system controlled by the global inherited rich at their peril. Not all humans can direct their anger in positive ways and the sooner we deal with the crux of our societal dysfunction the less bloodshed there will be.

      We need millions in the streets that just say NO MORE THIS WAY!!!!

  6. Jim Haygood

    The grubby market — for which Eurocrats display a contempt mirroring that of the British aristocracy for parvenus who made their wealth from ‘the trades’ — takes a dim view of their chances of success:

    The Irish bookmaker Paddy Power has a book running on the death of the Eurozone. (You would probably get banged up with Bernie Madoff for doing this here in the US, where they don’t really like you gambling on anything but state lotteries, so to be clear: this is just a bit of fun.)

    They have Greece at 2/7 to leave the euro, with Portugal at 6/1. Germany is at 16/1 – but it was 25/1 indicating punters increasingly believe that the Germans could pull the plug on Europe. It is 6/5 that the Eurozone will be non-existent by 2015.

    Chances are that privately, eurocrats are placing the same bets. When can I buy some ‘when issued’ Deutschmark futures?

  7. JohnB

    Keep on ragging the EU doing it their way, perhaps you boys should focus on ur own criminal banksta cum on Wall Street,!

  8. PT Barnum

    It’s a bailout of the bankers.

    I have no idea what the *bleep* you are talking about.

    Yeah, I know, some people don’t like the idea of government money being used to bail out private wealth. They are evil. Governments exist only for the purpose of making sure rich people never lose anything no matter how stupid and greedy and evil they are.

    Thanks for informing me of that.

    I’m “so sorry” some random people still have limited ethics in the ECB and get a little worried about the “Greenspan Put” coming to Europe. They are fools. I have no idea why, except that they hurt rich peoples feelings.

    But isn’t that enough?

  9. Jim Haygood

    This WSJ story is from ten days ago, but it’s revealing. It features a graph showing the first EFSF bond (issued in Jan. 2011 in connection with the Irish bailout) suddenly leaping in early October to a 37 basis point premium over asset swaps.

    Since asset swaps are based on the interest rates paid by AA-rated banks, the additional yield demanded by buyers of the EFSF bonds implies that it is regarded as AA quality at best, and perhaps AA minus.

    As eurocrats pile on ever more ambitious plans to expand and leverage the EFSF, watch for the EFSF’s triple-A rating to evaporate like an gelato ice cream cone in the mezzogiorno sun.

  10. FaustCarton

    Please excuse my lack of education, I have been reading NC for the last few months and it has been a great revelation,however could one of you illuminate me – without cynacism or sarcasim, what is going on here? Is it the weak Euro politicians versus the looting bankers? Are there ANY good and intelligent people at play here? Is it basically the same in the US? (Am writing from Aus).Thankyou in anticipation.

    1. FaustCarton

      Mispelt sarcasm,I know most comments are made with sincerity but a few come in with what seems like more mud, I am just hoping one of you can breiefly set up, in plain jargon-less language, what is going on.If the politicians, the bankers and the ‘markets’ are not doing the right thing then what is the alternative?
      There are a lot of good minds in this place, please help spell out what the dickens is going on. Thankyou.

    2. Hugh

      It’s kleptocracy whether we are talking the US, Europe, or China. Kleptocracy is an elite construction. It’s not the bankers taking advantage of the politicians. Rather they work together along with the media and academia to create and maintain conditions for looting. This is not a monolithic enterprise, a backroom conspiracy. Even among kleptocrats there are relative winners and losers. They will loot each other, but overall their interests are aligned in that most of their depredations take place against the 99%.

      de Grauwe’s idea to empower the ECB fails not because it is a bad idea but because it is woefully incomplete. Europe doesn’t have one problem that can be solved by an activist ECB. It has a group of problems revolving around trade, the lack of a fiscal/debt union, a weak ECB, insolvent criminally managed banks, corrupt political systems at both the national and European levels, and more generally kleptocratic elites.

      These problems need to be solved together. If they are not, and short of revolution they won’t, the kleptocrats will loot to a crash and then try to take advantage of the crash. Leading up to or as a result of the crash, it is quite likely that some or all of the eurozone will fall apart.

      1. FaustCarton

        Thanks Hugh,appreciate your insight.
        So this talk of letting the stakeholders in the banks take a loss, ie bondholders,shareholders, is not on the cards and would not alleviate the situation because of all the other obstacles you mention? It seems that your scenario of the kleptocracy willing a crash (and even making a quid out of that)is therefore quite likely. Will this have the knock-on effect on the US (and hence China) and eventually Aus?
        If enough people are aware of this, such as the readers of this site, can anything be done to reverse the seemingly inevitable?

          1. FaustCarton

            Okay, thanks jw, have had a look at this material and am feeling much better informed, although this certainly shows me the enormity of the problem in front of us all.
            I thought I had a reasonable understanding of the way of the world, but I can see just how far of the mark I have been.
            What a mess! Where do I sign up?

  11. Dan G

    Paul Grauwe supports the use of creation to bail out the banks like in 2008:
    “Part of the answer has to do with the objections that have been raised against the idea that the central bank should be a lender of last resort in the government bond markets of a monetary union. Some are serious (moral hazard); others are phony (inflation risk). I discussed these in De Grauwe (2011) (see also Wyplosz 2011currency)
    His theory referencing the inflation concerns as phony rely on too simplistic notions of Money base and supply differences. He doesn’think the banks do anything with the reserves because they are not lending out as money supply to create inflation.
    The banks/investment branches speculate with the extra money base reserve to drive up the costs of things people need like food and oil while incomes to buy these things are deflated. It is finacial repression. Incomes are deflated because of resessionary cycle forces that the central banks will not let bottom on their own; thus it will be worse getting there, as the failed policies build up more debt that cannot be paid back.

  12. Mbuna

    I question the whole framing of this “Euro Crisis” although I really don’t know much about the political/lobbying scenario in Europe. So therefore I want to ask about this. Here in the USA the Fed is a creature of the banks by the banks and for the banks. Is the ECB somehow different and free from cronyism, lobbying and political pressure? This article uses an example of the ECB and the European banks as enemies but haven’t the banks in Europe bought and paid for the politicians as they have here in USA? I fail to understand why anything other than what has actually happened is to be expected or even hoped for. It seems to me that any number of global banks now have more actual political power than some of the smaller European countries and that they have used their power for profit- that is, after all, their mandate. You can substitute the Fed for the ECB and talk about all the firepower the Fed has to do what would be considered right and effective, but they haven’t done that nor would I expect them to at this point.
    I tend to presume that the ECB is bought and paid for and that it is the € signs in the eyes of the banksters that run everything by default. Therefore we only have to wait to see the details of the how the crisis plays out- the rest is all baked into the cake. I’m missing all the nuances and details of the EU here but I really just want to know if the Euro crisis is fundamentally different than what I am familiar with on this side of the pond. It seems to me that it is not.

    1. Dan G

      Although they (US and Europe) both have their own currencies, the US has treasury bonds for a debt vehicle, but Europe has to deal with varying degrees of good and bad debt from many different countries. The problems associated with the differences in Germany’s debt and Greece’s makes accentuates the problem. Even though their are large differences in Califronia’s and North Dakota’s munuicapal debt, they do not represent treasury national debt.They have a unitede currency but a very ununited debt in their bonds.

      1. Dan G

        By the way, I am not trying to minimize the US problems, but just pointing out the difference that will allow the Euro to fall apart quicker than the dollar.

  13. mario

    “that instead of the academics, it is the European leaders who have been living in an ivory tower. Disconnected from the economic and financial realities, they have created an institution that does not work and will never do so properly.”

    Probably will end up imposing some sort of “federal” income tax as a collateral.

  14. RueTheDay

    Excuse me, but it’s now 9:38 PM Eastern time (1:38 AM GMT) and near as I can tell there’s no resolution. Just mumbling about increasing the EFSF “several fold”, a vague mandate to increase regulatory bank capital by 108 billion by next June (which has been known for weeks), and what’s increasingly looking like punting on even trying to come to resolution on the Greek situation (maybe someone suddenly realized the absurdity of a 60% haircut not being a credit event and decided to just give up altogether). Was anything at all actually accomplished at the summit?

  15. F. Beard

    Governments should have nothing to do with banks other than to punish them for fraud and enforce the laws against insolvency.

    There should be:

    1) No lender of last resort.
    2) No government deposit insurance.
    3) No government borrowing.
    4) A government provided, risk-free, fiat storage and check clearing service that makes no loans and pays no interest.

    “Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.” Josiah Charles Stamp quote from

    Really now. We can’t do better than a money system based on usury and theft of purchasing power (especially from the poor) and that requires both heavy government privileges and heavy regulation?

    1. mansoor h. khan

      F. Beard,

      You will also need to protect the public by outlawing FRB from shadow banks (e.g., non-FDIC insured money market mutual funds). Shadow banks indirectly expand the money supply and expect to get bailed out when they get caught “with their pants down” (i.e., when there is a run on their deposit balances or when they acquire bad assets).

      I am ok with private monies. But this would be a much bigger adjustment (change in tax laws, tax collection methods, etc.)

      Even if there were private monies I strongly suspect that government issued fiat in bank deposit form will come out as a winner due to the strong desire of most people to NOT take risks. Which means that the government will be able to deficit spend without creating inflation.


      1. F. Beard

        You will also need to protect the public by outlawing FRB from shadow banks (e.g., non-FDIC insured money market mutual funds). mansoor h. khan

        The goal should be to get government out of regulating banking. Once the public has a 100% safe place to store its fiat and once all government deposit insurance and other privileges for the banks are abolished then only the hardiest gamblers would put their money into banks.

        I am ok with private monies. But this would be a much bigger adjustment (change in tax laws, tax collection methods, etc.) mansoor h. khan

        The benefits of genuine private monies are potentially enormous. It would be the difference between genuine capitalism and our current system – banker fascism. Just eliminating FRB is not sufficient since usury would remain. We need to allow non-usury based money forms to compete equally.

        Even if there were private monies I strongly suspect that government issued fiat in bank deposit form will come out as a winner due to the strong desire of most people to NOT take risks. Which means that the government will be able to deficit spend without creating inflation. mansoor h. khan

        The private money supplies would tend to keep fiat honest and vice versa.

  16. psychohistorian

    So it looks like they have a plan to kick the can down the street until next June when the banks are supposed to be sufficiently capitalized (any bets?)

    Can the plan come together in mid November….stay tuned?

    Who is teeing up to kick the can next?

  17. Linus Huber

    SCARE 20.12.2012
    (Stop Corruption And Repression Effective 20.12.2012)
    Banks were given a very important privilege to create money in the form of extending credit. This function requires diligence and careful consideration in regard to individual credit risks as well as to overall credit levels in the system. The financial crisis revealed that the banks were operating at too high a leverage and with too much risk. They were used to be saved by the Central Banks and certain that in times of difficulties the Central Banks were there to save them. They were like trained dogs and their master Greenspan or Bernanke would always be there to rescue them when unforeseen difficulties arose.
    That may be true but that does not absolve them from their obligation to monitor overall debt levels in the system as well as being diligent in evaluating the debtors ability to not only service a debt but to be able to repay it over time. The banks clearly failed in this function that is the core function of banking but focused mainly on their compensation packages. The way these bankers enriched themselves in the process of driving the financial system into a wall was appalling and the average income earner was never able to comprehend their schemes but preferred to simply ignore them. Of course, the bankers explained their outrages income levels with free market principles of supply and demand, where the best simply could be hired with those kinds of benefits only. In hindsight those superior managers seem to have missed their mark considerably. The most interesting aspect of all of this is the fact that, after we have been more than 3 years in this financial crisis, the bankers continue to loot the system as if nothing ever happened.
    True to form the Central Banks “saved” the financial system by saving those great financial institutions without whom the system would have collapsed, as was argued. Hardly were we out of the danger of collapse, the banks immediately went back to their old ways and were certain that this was a problem that would occur just once in a lifetime and now all was clear again. The real problem, however, had not been addressed but had simply been muddied.
    In actuality, the losses produced of extending unsustainable levels of credit by the banks have been transferred to the public. Different ways were chosen to achieve this task in the form of free money for the banks, injection of government funds into some institutions, increase of basic money supply and so on.
    The threat of system collapse would have been labelled blackmail if it would have occurred in another setting. However the bankers were able to influence the media, the legislators and regulators in their favour with all the financial resources available to them. Nobody was made to take any responsibility and no one was taken to account.
    This represents a serious violation of the spirit of the Rule of Law that is the basis of western society. It seems that now the new rule is Might is Right. This changes many parameters in the compass of the social system within the western world. No one can be sure on what level and when one will be subjected to the financial abuse of those elites. Presently, the people in charge are trying to enhance financial repression of which one form is to keep interest rates below the level of inflation which affects mainly those that lived within their means over the past many years; another clear violation of the spirit of the Rule of Law as it transfers losses from bad investments to the innocent and decent part of the population. In addition, the increased level of government debt puts in doubt all those benefits promised by governments the world over.
    It is interesting how the banks were able to confuse the public who was/is unable to grasp the actual situation. But considering the banker’s great financial resources, it seems not that much of a miracle to influence the media and the legislator and having politicians do their bidding. The question is what the heck can WE, THE PEOPLE do about it.
    Usually, we could address such things on a political level as we are a democracy, right? But it seems that the system has been corrupted by all the money sloshing around and it is extremely difficult to find any electable person that will act against those powerful interests. In addition, it will take many years until sufficient numbers of persons with the new thinking and with integrity not to be corrupted by those lobbying efforts will be elected to office that will implement the changes needed. So, what should we do? Start a revolution?
    Well, the blackmail used by the banks may be the only way to address the injustices that have occurred over the past few years. They showed us how to leverage one’s limited resources to achieve one’s goal. Therefore the following proposal to start the movement “SCARE 20.12.2012” should be seen in this context. The idea is that if by that time (20.12.2012) some serious injustices have not been removed from the system, people will start to withdraw their money from all financial institutions driving them into default. And it might work, because those who hesitate to support this threat may be left with no money as the banks will have to close down before all has been paid out.
    Now, what demands are made if that scenario is to be avoided.
    1. Bankers and past Bankers (all those working in the financial industry that earned in excess of $500k plus annually for more than 2 years during the past 15 years and this without any downside risk i.e. risk of financial losses, except the possibility of losing their job) have to be made personally accountable for their past activities and be removed from any such position that might directly or indirectly have influence on the money creation and lending aspects of the economy (this includes regulating agencies and politics) before 20.12.2012.
    2. Present and past regulators have to be made personally accountable for their past activities and be removed from any such position that might directly or indirectly have influence on the money creation and lending aspects of the economy (this includes financial institutions and politics) before 20.12.2012.
    3. Politicians that accept any financial support from institutions that are involved in the money creation and lending aspects of the economy will have to face a jail term of no less than 2 years without the possibility of parole.
    When these 3 points are implemented before 20.12.2012, we the public will not destroy the financial system but support the way to find back to the RULE OF LAW and away from the idea of MIGHT IS RIGHT.

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