Why is it that 17 nations have to fundamentally reorganize themselves and shift sovereignty away from national parliaments to new layers of transnational, beyond-control bureaucracies that can extract untold wealth from taxpayers—just to save the banks?
The ECB and the national central banks of the Eurozone set out to collect “micro-level information” on household wealth. A massive bureaucratic undertaking. Surveys went out in 2010. Results are now ready. No one in Europe had ever done a survey on that scale before. And no one might ever do it again. Because, in the era of bailouts, the results are so explosive that the Bundesbank is keeping its report secret—and word has leaked out why.
Euros entered circulation on January 1, 2002. For six years, they grew on trees in southern Europe. But the bubble got pricked. Since then, the monetary union has been in crisis. Almost half of its existence! Until suddenly, its problems were solved. But now confidence in the monetary union is weaker than ever. With a hue of resignation in Germany.
By the irony of timing, the Dow hit an all-time high as markets opened. Exuberance wafted through the air. Hype was flowing thickly. Happy days were back. New highs beget new highs. And everyone knew why: the Fed’s money-printing and asset-purchase operations. By the irony of timing… because 30 minutes later, kitchen-table reality polluted the scene.
Bank bailouts have made owners of otherwise worthless bank debt whole through a circuitous process by which taxpayers transferred their money to investors. Even in Greece. Even a bank that had siphoned off $1 billion through fraud and embezzlement. It wasn’t fair. But fairness had nothing to do with it. That’s how bailouts were done. Until now.
Deutsche Bank, long coddled by the German government, is mired in “matters” from Libor rate-rigging to carbon-trading tax-fraud. Now a new “matter” seeped out: the bank had known for years about the impact of commodities speculation on food prices and the havoc it wreaked on people in poor countries. And it lied about it to the German Parliament.
“I’m sitting on cash,” Felix Zulauf said when he was asked in an interview where he was putting his money. With decades of asset management experience under his belt, he’d founded Zulauf Asset Management in Switzerland in 1990. But now he was worried—and has turned negative on just about everything.
The announcement couldn’t have been more glorious in crisis-struck Italy: Ferrari booked records sales and profits in 2012. Dazzling in every aspect. Not a single cloud darkened the horizon. Except in Italy where sales collapsed. And in the rest of the world, where central-bank printer ink stained the records.
Hasbro, second largest toymaker in the US, confessed it would miss revenue estimates. Christmas wasn’t kind. Despite “double digit growth” in emerging markets, revenues fell by 2% for 2012 and by 3.8% for the quarter. Other corporations are in a similar predicament. But substantive inflation would have covered it up—not that the Fed hasn’t been trying.
“I cannot be disillusioned because I no longer have any illusions about Europe,” muttered Euro Group President Jean-Claude Juncker last week after the horse trading over Greece’s bailout had failed once again. But he isn’t the only one who lost his illusions. “There are better alternatives to the bailout policies of Chancellor Merkel,” declares the man who’ll run against her in 2013; alternatives that “protect taxpayers and don’t only benefit the banks.”