When a bank is allowed to collapse, the lies behind its financial statements come out of the woodwork—and Dexia, the bailed-out French-Belgian mega-bank that re-collapsed in early October, is no exception: a report surfaced with the damning results of an earlier investigation by French regulators. And then? Nothing.
Germany and France kissed and made up before the G-20 powwow in Paris last weekend. A contrived show of unity to boost the markets. And it worked. But already, Germany is sniping at France again. Over money. Because German taxpayers might have to subsidize a French company. Via Greece.
Fighting over taxpayer money.
The Eurozone debt crisis gets worse. Bankers interfere. And the truth comes out:
“The dreams to see the crisis ended by Monday couldn’t be realized,” says the German government. Easy solutions have evaporated.
“Tax fraud is a national plague,” said Greece’s finance minister after he found that Greeks owed $50 billion in back taxes. But it’s complicated. And not much will happen to collect them though Greece might go bankrupt in weeks. Meanwhile, civil servants paralyze the country with strikes because salaries and bonuses are on the chopping block—the most curious bonuses….
“We don’t have any doubt about the solidity of French banks,” said the French government—a week after the collapse of Dexia. All eyes are now on Société Générale and BNP Paribas. BNP is the world’s largest bank with assets of $2.8 trillion, dwarfing France’s $2.1 trillion economy. And they’re desperately trying to sell assets to stay afloat.
During his congressional testimony, Geithner fretted that the crisis in Europe could undermine confidence. Alas, bank stress tests were supposed to inspire confidence—yet one of the “safest” banks just collapsed. If inspiring confidence isn’t based on facts and transparency, it’s a con game.
Bailed-out Dexia, a major Belgian-French bank, is kaput again and will be broken up. Bondholders and counterparties will be bailed out. As usual, taxpayers will foot the bill. But remember the “stress tests” in July?
None of the financial shenanigans that the Greek government engages in on a routine basis, as shocking as they used to be, surprise anyone anymore … until there’s something that surprises everyone.
Another avalanche of demands and plans to bail out Greece rolls over the Eurozone, but Greek society is digging in its heels. The prime minister talks a good game with foreign leaders when he promises reforms, but his own ministries just pulled the rug out from under him.
“We’re not doing this for the Greeks, but for us,” said Angela Merkel amidst a cacophony of doomsday scenarios. It’s all about propping up German banks and exporters. For the French, however, the European debt crisis doesn’t seem to exist.