ECB Suffers from “Corporate Capture at its Most Extreme”

Many of these banks are implicated in the biggest financial crimes.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

No single institution has more influence over the lives of European citizens than the European Central Bank. It sets the interest rates for the 19 Member States of the Eurozone, with a combined population of 341 million people. Every month it issues billions of euros of virtually interest-free loans to hard-up financial institutions while splashing €60 billion each month on sovereign and corporate bonds as part of its QE program, thanks to which it now boasts the biggest balance sheet of any central bank on Planet Earth.

Through its regulatory arm, the Single Supervisory Mechanism, it decides which struggling banks in the Eurozone get to live or die and which lucky competitor gets to pick up the pieces afterwards, without taking on the otherwise unknown risks.

In short, the ECB wields a bewildering amount of power and influence over Europe’s financial system. But how does it reach the decisions it makes? Who has the ECB’s institutional ear?

The ECB has 22 advisory boards with 517 seats in total that provide ECB decision-makers with recommendations on all aspects of EU monetary policy. A new report by the non-profit research and campaign group Corporate Europe Observatory (CEO) reveals that 508 of the 517 available seats are assigned to representatives of private financial institutions.

In other words, 98% of the ECB’s external advisors have some sort of skin in the game. Of the nine seats not taken by the financial sector, seven have gone to non-financial companies such as German industrial giant Siemens and just two to consumer groups, according to the CEO report.

In response to questions by CEO, the ECB said that its advisory groups help it to gather information, effectively “discharge its mandate”, and “explain its policy decisions to citizens.”

The 508 finance industry representatives sitting on these 22 groups represent a total of 144 companies and trade associations and are made up of a variety of financial market agents including banks, investment funds, insurance firms, clearing houses and central securities depositories.

But there is a very clear core of institutions that, through the number of seats they hold on the advisory groups, appear to enjoy disproportionate influence over ECB decision making:

  1. Euroclear, a Belgium-based clearing company that is the largest international central securities depository in the world (23 seats)
  2. Deutsche Bank (18 seats)
  3. BNP Paribas (17 seats)
  4. Société Générale (16 seats)
  5. Unicredit (15 seats)
  6. Commerzbank (13 seats)
  7. Clearstream, one of the world’s largest settlement and custody firms for domestic and international securities. (12 votes)
  8. Citi (13 seats)
  9. Crédit Agricole (11 seats)
  10. Intesa Sanpaolo (11 seats)
  11. Nordea (11 seats)
  12. Santander (10 seats)
  13. Monte Titoli, an Italian securities settlement system (10 seats)
  14. BNY Mellon (10 seats)
  15. HSBC (9 seats)
  16. ING (9 seats)

Taken together, the above institutions hold 208 of the 517 seats, or 40%, on the ECB’s advisory groups. With the exception of Euroclear, Clearstream and Monte Titoli, which are not banks, and Italy’s Intesa Sanpaolo, all of them feature on the Financial Stability Board’s list of global-systemically important banks (G-SIBs). Four of them — Deutsche, BNP Paribas, Citi and HSBC — are among the six biggest, most dangerous banks on the planet.

Many of the above institutions were implicated in two of the biggest financial crimes of this century, the Forex and Libor scandals. In fact, according to CEO, banks involved in a separate forex manipulation scandal that emerged in 2013 have been heavily represented on the ECB’s Foreign Exchange Contact Group.

In other words, these banks are supposed to be under direct ECB supervision, and yet they have been repeatedly caught committing serious financial crimes. And now it turns out that they enjoy more influence over ECB decision making than anyone else, begging the question: how can the Eurozone’s most powerful financial regulator possibly regulate European financial institutions when it receives most of its advice and guidance from their senior executives?

Nor is it any wonder that the ECB’s Chairman, Mario Draghi, and the Chair of the ECB’s Supervisory Board, Daniele Nouy, have a clear bias for large banks when most of the time they’re being counselled by representatives of those selfsame banks.

CEO’s report comes hard on the heels of an investigation by the Berlin-based NGO Transparency International that raised concerns about the ECB’s conflicts of interests, lack of transparency, and incestuous relationship with the very institutions it is meant to supervise, as well as monetarily support through its myriad financial welfare programs: the big banks.

The central bank is also under investigation by the EU Ombudsman for the close involvement of a number of its high-level officials with the Group of 30, a secretive forum of influential academics, policy makers and senior financial executives representing banks like UBS, Credit Suisse, JP Morgan Chase, Santander and Goldman Sachs.

Even for Corporate Europe Observatory, which has been investigating and exposing the effects of corporate lobbying on EU policy making for the last 20 years, the extent of corporate capture at the ECB is staggering. “The industry bias across the ECB’s advisory groups is the worst we have seen at any of the EU institutions so far,” says the report’s author Kenneth Haar. “With more than 98% of advisers coming from private finance companies, this is corporate capture at its most extreme.”

If the last ten years are any indication, it’s that nothing will change. After all, the biggest advantage of being a major central bank is you’re independent from oversight, which essentially means you’re answerable to virtually no one — apart from, of course, the senior financial executives that help design your monetary policy. By Don Quijones.

Europe needs “brave banks” willing to conquer new territory. Read…  ECB Wants to Weed Out Smaller Banks to Cut Competition

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  46 comments for “ECB Suffers from “Corporate Capture at its Most Extreme”

  1. raxadian says:

    And here we see yet another eason why the Euro zone is sinking. I had no idea the corruption was that blatant and easy to see. Although I wonder if Euroclear has another business we are not aware of.

    • Joan of Arc says:

      The Eurozone had sunk but over the past 6 year it is flying. The economy and stock markets are all percolating. If I controlled a central bank, I would line my pockets with money too.

      • raxadian says:

        I would not the call Brexit “flying” and that one will akso have negative consecuences to the Euro zone not just the UK.

        • d says:

          “I would not the call Brexit “flying” and that one will akso have negative consecuences to the Euro zone not just the UK.”

          A large % of German Cars and other a large appliances go to England.

          If that German English trade is disrupted. So will be the economy of the largest remaining Contributor to the EU Budget.

          Yet the Dipsomaniac EU president cant get out of a bottle long enough to even consider this 1 simple important fact.

          Probably as the Majority of Luxembourg’s GDP, and tax take, that does not come from sweetheart tax deals for Corporate’s, (set up by the Dipsomaniac in Question) comes from Banking, Financial Engineering, and Financial engineers.

  2. Maximus Minimus says:

    I am almost shocked.
    On a related note, who decides about the replacement for Mario after he has fulfilled his service, and moves to the next rank in global ruling elite?
    Any rumours going around?

    • Joan of Arc says:

      Does it matter? The corporate capturers will appoint another captive. Mario should be very well off financially by now.

    • Wolf Richter says:

      Draghi’s term ends in 2019. The Germans want Bundesbank Prez Jens Weidmann in that job. The French and Italians have already expressed their misgivings about that choice. They want a dedicated money-printer in that job. Everything is being discussed behind the scenes and as soon as something is leaked, it’s officially denied.

      • d says:

        The Other Massive imbalance in the voting is the bias towards Southern Europe

        Otherwise know as Club Med which across the board has the Biggest NPL ledger outside china. Possibly Bigger than china’s although the true size of neither can be easily established.

        As china keeps making parts of its NPL mountain evaporate. By instructing semi private bank’s to turn NPL’S owed by Zombie State entities into worthless equity with ridiculously high book value which said banks are the forbidden to sell. Something that does not yet directly occur in the “ever closer union” Eu.

        The “AID the Club – Med Banks” get from the ECB. Would by many others be termed “Unfair State Aid”.

        C Eu States like Ireland which has exited its bailout and may not need another soon, are the only ones that run up against that Label.

    • MC says:

      Draghi is not so steathly and subtly campaigning for re-election.
      While it’s unlikely he’ll get his way, the chances he gets to “recommend” his own replacement to the ECB Member Board are extremely high, surely far higher than those of Jens Weidmann and other proponents of more disciplined monetary policies.

      One only needs to look at the ECB QE “taper”. The present program has been extended to October 26 and the ECB still hasn’t decided what shape will take, if any at all. It’s still possible the taper will be postponed, perhaps indefinetely.
      Some blame this indeciveness on “lack of market signals”, meaning each time a different form of taper was floated security markets failed to give any signal, positive or negative, to the ECB.
      But the cause is most likely to be infighting among the many factions inside the ECB. Note that all central banks have seen a lot of infighting recently: even in the Bank of Japan all recent measures were passed with the slimmest margin (one vote) during Board meetings.

      If the sundry ECB factions cannot even agree, or be made to agree, on the basically harmless taper (the sums floated are far lower than those already announced for the similar program in the US), the chances of them agreeing any time soon on the man who will get to “embody” monetary policies for the foreseeable future are close to zero. At that point “the devil you know” may become an attractive option for all parts involved.

    • p1nkfish says:

      DQJ, thank you for this article.

      Words fail to do this “capture” justice or its potential to lead to corruption at every level upto the price of money.

      It does indicate one thing – the total systemic buy-in to the SURVIVAL of the Eurozone. It must SURVIVE. No price will be too high to pay to ensure it. No population will be allowed to stop it. No pain is too high. No unemployment level too high.

      The zealots will stop at nothing to maintain the Euro and its dependent status quo.

    • cdr says:

      Whoever replaces him will excel at Euro-kick-the-can. The Euro is forever according to their statements while Kick-The-Can embodies their actions. His eventual replacement will use ECB QE as a way of life and, I suspect, Brussels will coordinate with new rules to force the cost of kicking the can onto the people of the Eurozone. The future Eurozone will print money to cover living expenses and pay for it using negative interest rates or some new confiscation schemes until they can’t. The current Eurozone is doing much the same thing, but without anyone complaining.

  3. Hiho says:

    Too much for the supposedly independent central banks. Now we know that the meaning of independent is: it caters foe the right interests

    • Joan of Arc says:

      Power can only be countered with power. The ECB has the power and there is no counter power. He who has the gold rules.

  4. Stevedcfc72 says:

    Thanks Wolf, great article, just shows you how corrupt things are.

    It would be interesting to see how much money all of these banks on this list have borrowed in interest free loans off the ECB.

    • kam says:

      When Too Big To Fail was translated into the original intent of Too Big To Jail, then the message is clear. Corruption rules. Until it doesn’t.

      Only behind the scenes corruption would ever have allowed banks to grow/consolidate to the point where they are exempt from all laws, of men, and the gods. And the gods are not amused.

      Many of these corrupt, careless demi-Tsars have bought a ticket to Ekaterinburg.

  5. Cynic says:

    Well, there we are : the government of Europe? The ‘Group of 30’.

    Recalls the ‘Council of Ten’ in old Venice – which had ‘traitors’ secretly imprisoned and strangled.

    The student children of these privileged ones will be among the ‘international students’ living in super-prime apartments in the best parts of Europe’s major cities.

    Meanwhile, the hopeless mass of young people in Italy, Spain, France, etc, see no improvement in their prospects, whatever ‘youth initiatives’ are announced by Brussels.

    It must be unwise to give so much power to bankers who, by definition, are wholly indifferent to the welfare of citizens.

    It is, quite simply, not their business.

    They have always been able to contemplate the distress of others with equanimity.

  6. Gershon says:

    Europeans, like ‘Muricans, have a dim perception that they are losing ground economically, but lack the intelligence to figure out the full magnitude of the swindles being perpetrated against them by the central bankers and their oligarch wire-pullers, or to make the connection between voting for corrupt, oligarch-captured Establishment political parties and the crony capitalist status quo.

    Their DELIVERANCE-style reaming will continue apace until they cast off their parasitic, larcenous globalist masters.

    • Winston says:

      “but lack the intelligence”

      I don’t think it’s a matter of intelligence, more like a combination of inattention, a lack of necessary understanding of complex subjects combined with propaganda (a study showed that 6 out of 10 Americans only read headlines and then pass those on as fact – I’ve seen many clickbait headlines which are contradicted or put into much better perspective in their associated text – how easily are 6 out of 10 thereby manipulated?).

      This is all a mix of bits from both 1984 and Brave New World.

      • Maximus Minimus says:

        Just read a rant which hopefully isn’t copyrighted, and doesn’t break the guidelines: “1984 was written as a warning, not as a f***ing manual!!!”

        • MD says:

          So was ‘Machiavelli’s ‘The Prince’.

          That became a manual too.

          Plus ca change, plus c’est la meme chose…and it’s going to take hundreds of thousands of more years of evolution away from apes before we escape the prisons of our limbic desires. And religious wars.

      • p1nkfish says:

        The mass media are signed up to perpetrate and defend the status quo.

        Populations are brainwashed by TV news, broadsheets and radio interviews.

        The EU knows how to propagandise and cover its actions.

  7. walter map says:

    “If the last ten years are any indication, it’s that nothing will change.”

    If the last hundred years are any indication, it is going to get worse. A lot worse.

    … the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations . . .
    This group is comprised of the leading family dynasties of the Canada, United States, Britain, Germany, France, Italy, Japan, Russia and China. This self-perpetuating group has developed an elaborate system of control that enables them to manipulate government leaders, consumers and people throughout the world. They are in the last stages of developing a World Empire that will rival the ancient Roman Empire. However, this new Empire will rule the entire world, not just a goodly portion of it as Rome did long ago, from its ultra-secret world headquarters in Germany. This group is responsible for the death and suffering of over 180 million men, women and children. They were responsible for World War I, World War II, the Korean War, and Vietnam, etc. They have created periods of inflation and deflation in order to confiscate and consolidate the wealth of the world. They were responsible for the enslavement of over two billion people in all communist nations—Russia, China, Eastern Europe, etc., inasmuch as they were directly responsible for the creation of communism in these nations. They built up and sustain these evil totalitarian systems for private gain . . . For the last two and one half centuries wealth and power have been concentrating in the hands of fewer and fewer men and women. This wealth is now being used to construct and maintain the World Empire that is in the last stages of development. The World Empire is partly visible and partly invisible today . . .

    Introduction by Michael L. Chadwick

    Quigley, Carroll. Tragedy and Hope: A History of the World in Our Time. New York: Macmillan, 1966. Print.

    All very insidious.

    Interestingly, every political, military, and business leader in the world of any significance apparently takes the above assessment practically for granted, including every US president since Jefferson, and they seem to have no illusions about TPTB who really run the world, and none about where the world is heading. Any close and objective reading of the major social, scientific, ecologic, economic, and political trends leads inevitably to a terminally unhappy destiny for humanity, a ghastly and surreal dystopia at best, even if civilization survives.

    You can watch it happen in real time.

    • Ishkabibble says:

      Excellent comment, Walter. You too, Wolf.

      I agree with Walter that “things” — the behavior of the masters of the world (MOW) — are going to get much worse, obviously worse, and OBVIOUSLY more illegal, even to the brains of the usually-bewildered herd, but the MOWers will makes sure that their “illegal” behavior of the past and present will either be ignored or instantly made “legal” by their political slaves in Washington, the European Parliament, Tokyo, Berlin, etc.

      Speaking of Tokyo and the modern-day Japanese capitalist miracle, take a good look at an article at the “Business Insider UK” entitled “8 signs Japan has become a ‘demographic time bomb'” (I’m now very reluctant to post a link because I don’t want my comment to be “moderated” out of existence.)

      I bring up Japan — an economic “situation” that is IMO analogous to that of Europe and, for that matter, the rest of the world– because Japan should be the every human being’s canary in the coal mine of modern-day capitalism and fiscal and monetary and economic policy as it is “operated” by the MOWers.

      As I have already told Wolf via very lengthy (too lengthy and political for Wolf’s Street) email, it is because the MOWers that control Japan is are at this very second “deciding” how it will handle what I cogently argue is the modern-day capitalist system’s inevitably fatal flaw — “a tiny percentage of the human population owns the vast majority of wealth and large-scale capital equipment upon which the remainder of humanity vitally depends” — that Japan should be under every human being’s microscope.

      As I state in a small part of my tome-of-a-tweet to Wolf,

      “Population size by itself is important, but it is the economic and political ramifications that accompany, or even force, an increase in population that are even more important. For example, what the Bank of Japan and Japanese government are both doing, hand in hand, is the one and only possible response that a formerly-growing, IMO GROWTH-REQUIRING, capitalist system can have to a national economy that has a stable, let alone shrinking, population.

      To put Japan’s untenable situation very simply, just as it is impossible to contain liquid hydrogen in an un-vented steel tank at room temperature without that tank eventually exploding as a result of the “natural” physical properties of hydrogen and steel at room temperature, I say that the constrained internal “pressure” of the present Japanese capitalist system will likewise “naturally” increase until the Japanese people are literally forced to either have more babies, or, more importantly, import more people, thereby increasing the population and causing “economic growth” which is, again, right or wrong, the present fatally-flawed criteria of judging the success or failure of an economy.

      The explosion must inevitably occur or the fundamentals that form the “foundation” of the present economic system must be replaced. (Unfortunately, those people or corporations that benefit from, or, more importantly, are invested in, the present system will do, as Mario Draghi has put it, “whatever it takes” in their financial and political power to keep the system exactly as it is in order to prevent or infinitely delay the realization of losses on investments– the economic equivalent of the hydrogen tank exploding.) Let me explain why those are the only two possibilities without any reference to “money”.

      In the God-created imaginary situation that I described above (which also applies to our real world), the life-expectancy of each generation determines or restricts the total number of generations that can be alive at any moment. As long as the 2-child-per-couple rule is followed, a stable population will be reached (again, assuming no early deaths) in a relatively few decades.”

      And I go into much greater detail with arguments that surround and support my initial proposition of the fatal flaw.

      The article in the Business Insider UK describes the demographic percentages very well and what their ramifications are on the Japanese CAPITALIST economy. But it is the reaction (behavioral response) of the younger generations to that capitalist system that is IMO most important. For example, “Long work hours are leading to a rise in cases of karoshi, or “death from overwork.” ” Just exactly WHY are young Japanese working themselves literally to death and “granny dumping”? And just exactly WHY must/will prisons inevitably turn into nursing homes?

      We who live outside of the portion of our earth that human beings have agreed to call “Japan” must, and I do mean MUST, answer those questions because the human beings that live their lives on the rest of the surface of Mother Earth (which is only a much larger Japan) are, sooner rather than later IMO, going to be living/behaving exactly the same way, because we will be facing exactly the same “pressures” as Japan is today.

      Unfortunately, if all we are capable of doing is begging the Elite to behave better, and typing comments on Wolf Street, we will suffer increasingly severe austerity until we, like the cornered human mice living on the island of Japan, desperately, mindlessly lash out not only at the Elite, but, eventually, even at our equally-desperate neighbors across the street and all over the world.

      During their first meeting, Morpheus asks Neo the most important question about their world of “The Matrix” — “Do you want to know what ‘it’ is?”

      In order to live in a decent world, we must all ask ourselves essentially the same question. What is “it” that keeps failing for the vast majority of people and preventing things from improving? The Elite and their MSM do NOT have the answer, and they’re NOT going to allow any discussion in their MSM about alternatives to the present fatally flawed economic system.

      I am here to tell you that “it” is NOT any president. “It” is NOT the Fed. “It” is NOT the constitution. And “it” is most definitely NOT an incorrectly adjusted interest rate.

      “It” resides between human ears.

      “It” is an inevitably-fatal, deeply-inculcated, religious-like belief in the infallibility of human greed (NOT of greed’s existence or power, but, again, capitalism’s belief in greed’s INFALLIBILITY) — that all every single human being of 7.4 billion individuals has to do is attempt to satisfy his\her insatiable greed and everything will turn out just fine for the collective whole of humanity.

      It won’t.

      Greed, my fellow humans, is NOT good. Why? Because “it” will, by “whatever it takes”, OVERCOME (“legalize”) any well-intended measure (from constitutions to Glass Stegalls to TARPs to QEs to NIRPs to fiat money to banning cash) that that same human mind can invent to attempt to control ‘it’. History has PROVEN with absolute certainty that this is true. The proof is in the pudding (incessant war).

      What we all, as individuals, must somehow, some way come to recognize and accept as truth is something that we have been brainwashed by a capitalist system from Day 1 to believe is not true.

      Therefore, the one and only thing that will save humanity from itself (us from each other) is the EXACT OPPOSITE of greed, and that is to “Do unto others as you would have them do unto you.”

      I am an atheist.

    • Nick Kelly says:

      How this paranoid drivel is allowed to go unchallenged I have no idea.

      • walter map says:

        Tragedy and Hope has been peer-reviewed and fact-checked by professional historians and historical societies for sixty years. Quigley’s scholarship is generally considered unimpeachable, but you’re certainly welcome to conduct your own research if you have a few years.

        To be sure, Quigley does present a number of very disturbing revelations about the Financial Industrial Complex, particularly so because of their historical context and scope and because the results were so notorious. But those revelations are really no more disturbing than some discussed on this blog, which one might reasonably expect to also be of historical significance in due course.

        I find history fascinating. It’s amazing to see what kind of crap people have pulled over the centuries. And they’re still doing it.

  8. cdr says:

    “Europe needs “brave banks” willing to conquer new territory.”

    Great article. Re the quote from it: Too late for that.

    After Draghi went full money printer to end the “European Debt Crisis” the die was cast. The only inevitable end of ECB QE includes the end of the Eurozone and the largest financial failures ever conceivable. The only uncertainty is when … next month or next year of in a few years.

    The only new territory options ahead are 1) Bold new forms of ECB QE, 2) Some form of totalitarian changes to delay the end of the Eurozone due to poor financial management, 3) Even more negative rates to pay for ECB QE, 4) Wars of conquest to confiscate resources to pay for the cost of ECB QE, 5) Outright asset confiscation from citizens to pay down debt.

    To act responsibly would require the Eurozone to raise rates to market levels, cut public spending by reducing free services, and raise taxes. Euro kick-the-can mentality prevents this, and the cost by now would be astronomical.

    There are no pretty pictures ahead. The Eurozone is a failing monster.

    • Bobber says:

      This is a good reason to eliminate interest rate targeting all together. The only legitimate function of a central bank is emergency liquidity for periods of months, not decades.

      Put a constant supply of money out there and let it ride. There will be booms and busts, but nothing like the massive bubbles the central banks create.

      • cdr says:

        Agree. There’s no reason to not have an occasional sale on money just like retail stores have an occasional sale to boost demand for a little while. A 10 year sale on money is abnormal. It implies total ignorance or cronyism without regard for the well being of the 99%. Any theory that justifies it is absurd and should be illegal.

  9. RvC says:

    Thanks Don Q for yet another informative contribution to the CB subject.

    Giving the power the Central Banks have accumulated, I can’t help but wondering WHY? What is the goal or their end game?

    Came across this tmho interesting and insightful missive, describing the function of inflation, deflation and hyperinflation as tools to transfer wealth by bankers:

    • MD says:

      End game is the transfer of all global wealth to the financial speculator class, I’d say. The ones doing ‘God’s work’.

      This is the nub of Neoliberalism, a dogma under which people who create any product other than debt aren’t worth a tinker’s cuss.

      Under the auspices of that system we – the little people – are supposed to survive due to the munificence of this class as they offer us trickle-down crumbs from their table (voluntarily of course – they certainly don’t intend to be paying any taxes!)

  10. BananaRepublic says:

    “how can the Eurozone’s most powerful financial regulator possibly regulate European financial institutions when it receives most of its advice and guidance from their senior executives?

    Almost sounds like you are describing the Federal Reserve bank of the United States.

    • Joan of Arc says:

      A thousand years ago Europe was a land of a few castles and millions of surfs. The principles of conservation have preserved that set up today. Only the names have changed to protect the innocent ad guilty. The same principles apply to all animal and insect societies. The only way out is to seek new lands on other planets as this planet is fully inhabited.

    • FDR Liberal says:

      Banana Republic,

      I was scrolling down in the comments to discover if anyone noticed that this article could’ve been written about the Federal Reserve with the lion’s share of it’s regional banks represented by banksters then by industrialists. Thx for mentioning that the US monetary regulators at the FED are also in bed with their masters the TBTF banks, et al.

    • The Fed has its Charter Banks and it can review or open the books on any of them individually, and adjust their reserve levels. So the Fed is a regulatory agency.
      Then the Fed interfaces with the ECB when last year they instructed some large US banks to buy DBs impaired derivatives. The outcome was that the large banks failed their stress tests on account of the unregistered securities, but have since come clean, because the Fed is the ultimate fence of stolen or illegal property. The problem with such large bureaucratic institutions is that they allow a great deal of graft and corruption so they must be held accountable by outside agencies, which by analogy Trump considers too restrictive, and the longer that laisse faire goes on, the higher the market goes, and the more wholesale theft is allowed to build until some point, like 2007 when the limits are reached, the rich thieves take their money offshore and the economy collapses, until the CBs ride in like knights on white horses to save us (from them) all over again.

  11. MD says:

    Yes indeed the world has come to be dominated by some incredibly greedy people, who seek to legitimize their greed by relabeling it ‘aspiration’ (so neatly side-stepping the sin of greed and still assured of a place in their Heaven – nifty!) and dressing it up in academic BS and the ‘philosophy’ of Ayn Rand (an A-grade, window-licking weirdo and in no way a properly-formed human being. A-grade hypocrite, too).

    What to do..?

    Number one most important thing is STAY OUT OF DEBT – a truly revolutionary act in our times – thus starving the beast.

    • Robert says:

      You may set a good example by personally staying out of debt, but if Congress decides to massively expand the national debt, as it has done ever since Bill Clinton’s administration, it is you who will be starving because of the attendant inflation, and not “the beast.” There is a Confucian saying, “Out of debt, out of danger,” and much truth in it. (I wonder what Confucius would have to say on the subject of central banking, or fractional reserve banking, or paper money, for that matter, which did not appear until 2000 years after his death, and as Mario Draghi, or Carlo Ponti know, but would never admit publicly, there is a lot to be gained (for themselves) by surreptitiously cranking up the printing presses.
      They ran a show on PBS today about workers’ riots early in the 20th century over wage cuts- the Draghis of the world have learned it is much easier to screw them through inflation without having to to cut anyone’s wages- and brag of a rising GDP in the process.

      • Wolf Richter says:

        Correction: “…if Congress decides to massively expand the national debt, as it has done ever since Bill Clinton’s administration…”

        Actually, Reagan and the Congress at the time kicked this off. Ask David Stockman :-]

        • d says:

          AS it was the Republican congress (A leftover from Reagan bush) under Clinton, that forced the repeal of “Glass Stegal” on Clinton.

          All the Partisan Clintoin/Democrat haters need to be regularly reminded of these little facts that caused Catastrophes, their actions brought about.

          America Isn’t going anywhere, but backwards. Until it gets around/past these partisan based infantile squabbles. Driven by the Republican “Revenge for Nixon, Get Clinton” mentality.

          That is now morphing into some very unpleasant things in American Society.

          These PArtisan and alt right elements are goin to cause serious Problems for the FED an dteh US Economy for decades to come.

          Yes NAFTA could do with a “tune up” to eliminate third paty abuse of it..

          On negotiation/Demand position, it appears the P 45 team ( it is not the US team as it is not acting in the best long term interest of the US) has deliberately set out to destroy NAFTA, not “Tune it”.

  12. August says:

    This makes a lot of sense! I too am a witness of the collusion between the money printing central bank Federal Reserve and the 19 member banks. When I worked for Wells Fargo in the 80s I saw officer Tim Sloan of the Federal Reserve with his office right next to Carl Reichardt COB and subsequently Paul Hazen. When Wells needs money Tim picks up the phone to money print central. I knew if the banks ever imploded I would put all my money in Wells Fargo stock. When it happened in 2006 I made this investment in not only Wells but Citi and BofA. I retired at an early age in Hawaii and renovated my wife’s house in Thailand. I now give back to my community by donating all my time to the public schools in Hawaii with my 9 year old daughter. I have said thank you to the Federal Reserve many many times. Sad that no one else was even aware of this collusion or how to benefit.

  13. KiwiinCanada says:

    The main asset the ECB is “investing” in is debt securities issued by Euro Zone governments. This has the effect of allowing these entities to maintain a social safety net to offset the loss of employment due to the single currency. Peripheral Europe is not competitive and the core is hyper competitive. In simple terms Italy should be allowed to devalue and overtime Germany should be facing a stronger currency due to its well organized export industries. The Euro project in effect allows Germany to compete with the new industrial powers of Asia which would be unlikely if the Euro had not created such a competitive exchange rate.

    The ECB in effect allows the Euro to work. As the ECB cannot expand its balance sheet indefinitely it has a time limit on working its magic. In the end game the Euro is likely to collapse, probably through political events in the periphery, but by then the Asian economies would have matured and Germany won’t need the benefit of the low exchange rate. At this stage things would revert back to normal. Peripheral Europe would have a large amount of debt for the most part locked in at a low rate. Would be hamstrung in issuing new debt at anything close to a reasonable rate but would have the option of massive devaluations.

    As most of this Peripheral Euro denominated Debt is held by the ECB this entity and by extension the nation states of the Eurozone as a whole will be left holding the can. The taxpayers of these nation states will probably have to look forward to participating in the disposition of this debt.

    The above possible unfolding of events will not necessarily be described in the history books as smooth sailing.

  14. MONTE TITOLI is not anymore an ITALIAN firm but it’s LONDON BASED

  15. Robinson Crusoe says:

    Print the names of the seat holders,addresses………just sayin

  16. RINO_Hunter says:

    Nice write up. I work at a G-SIB and the structure of world finance is certainly far from free.

    The last paragraph may not be true. Central banks answer to their populace when inflation gets out of control. Given the magnitude of printing and borrowing in the same currencies over the last 10 years, the next 10 years could see massive stress between the institutions and their subjects.

    During a time like that, the populace could take back what’s theirs, if only they knew how. Chasing after the people on these boards is a fool’s errand. Disposing of them won’t change the system, only the players.

    If people start with the question of, “how much value should my money lose over time?” they may be able to institute a standard that prevents the hidden and insidious inflationary transfer of wealth from them to the elite.

    Also, focusing on the owners of central banks is also a wild goose chase. A central bank could be owned publicly; by the government. Instead of a few private individuals benefiting at the expense of the masses, it’s a few public officials and their friends. Structurally it’s nearly identical. The money-changing mechanism that siphons the wealth in one direction is nearly identical.

Comments are closed.