Western European News Digest

Hungary Is Next To Follow Greece, Spain...

June 4 (EIRNS)—Five days after taking office on May 29, Hungary's new Prime Minister announced that the outgoing Socialist government had lied about the extent of the budget deficit, and that the country was facing a "very grave situation." A spokesman for Prime Minister Viktor Orban even raised the specter of a sovereign debt default, saying such a possibility is "not an exaggeration."

The markets responded with predictable hysteria, driving the Hungarian forint through the floor; raising spreads on Hungarian, Greek, Spanish, and other bonds; and wondering nervously, as Deutsche Bank put it in a letter to its customers: "Are we on the brink of something more serious?"

Is the sky blue?

So what has been foolishly referred to as the "Greek" sovereign debt crisis—Lyndon LaRouche said all along it was a meltdown of London's entire Eurozone banking system—has now become the Greece-Spain-Portugal-U.K.-Italy-France-and— last-but-not-least-Hungary crisis.

It's time to put the whole mess through Glass-Steagall bankruptcy reorganization.

Germany Plans Expanded Ban on Short-Selling

June 3 (EIRNS)—The German government today decided to widen a ban on speculative trades, expanding restrictions on naked short-selling to include all shares. The planned legislation, which must pass both houses of Parliament, adds to regulations set up May 15. Finance Minister Wolfgang Schäuble, speaking at a news conference, said he expected the new ban to pass both the Bundestag and Bundesrat by early July.

Some proposed rules included in the bill came up against stiff resistance, and were watered down at the last minute: for example, an outright ban on euro currency derivatives was dropped. The Finance Ministry will instead be authorized to ban euro currency derivatives by decree if it would serve to "avoid or dispel serious drawbacks to the stability of the financial markets, or faith in [their] operational capability."

Swedish EAP Interviewed by Financial Daily

STOCKHOLM, June 4 (EIRNS)—Provoked by the article about Inter-Alpha Group in the LaRouche Movement in Sweden-EAP's new election pamphlet, the daily Realtid.se decided to interview the movement's Hussein Askary. The Internet daily, which covers mostly financial affairs, with a policy to break some of the media control, started the interview with the Scandinavian Inter-Alpha bank Nordea, but went from there into the collapse of the euro, the destructive role of derivatives, naked short selling, fixed currencies, and more.

Hussein detailed the Glass-Steagall policy, the American System of economy, and what type of investments a real economy needs.

The interview, below the fold on the front page, is run in Q&A format, giving, a first extensive picture in the Swedish mass media of the policy of the LaRouche Movement in the 2010 election campaign.

German Economist Calls for Glass-Steagall-Like Bank Separation

June 5 (EIRNS)—In an exclusive interview yesterday with the Frankfurter Rundschau news daily, Hans Joachim Voth, formerly at the Frankfurt stock exchange, now professor of economics at the Pompeu Fabra University in Barcelona, called for state intervention to "put an end to speculation with deposits," to return banks to their traditional role as administrators of savings accounts and lenders to industry and other private clients.

"This was the lesson drawn by the U.S.A. from the banking crash of the 1930s. Until 1999, the Glass-Steagall Act made sure that investment banks could not have deals with deposits. That is where we have to get back to. The business of the investment banks is not in the interest of the common good, that is why they should be banned from taking deposits and refinance themselves via the central bank." Bankers should be personally liable for what they are doing, Voth said, "That is how private bankers got along for centuries without causing systemic crises."

European Central Bank Attacks Glass-Steagall

June 1 (EIRNS)—Following the major international mobilization led by Lyndon LaRouche for a global Glass-Steagall policy, the European Central Bank has attacked the Glass-Steagall separation of investment and commercial banking. Its latest Financial Stability Review devotes a two-page explanation as background to a one paragraph attack on the Volcker Rule, which it purposefully and lyingly confuses with the strict Glass-Steagall principle.

Entitled "Separating Banking and Securities Business: Glass-Steagall Revisited," the ECB writes that the "Volcker Rule" initiative "brings back to the regulatory landscape a modified version of the Glass-Steagall restrictions on banks' securities business." As background to the discussion, it presents an "overview of the main arguments and analytical results—including its limitations—surrounding the original Glass-Steagall Act in the light of the recent crisis from a European perspective." It goes so far as to present a study claiming that there was no need to introduce Glass-Steagall in the first place. Blurring the difference between Glass-Steagall and the Volcker Rule, it writes that the Volcker Rule style of regulation "runs counter to the European established model of universal banking" and would "hamper further financial integration of the Single Market."

More Support for Ban of Naked Short Sales

June 4 (EIRNS)—Austrian Deputy Finance Minister Andreas Schieder said this morning that his country should follow the German example of an expanded ban on naked short sales, and prepare legislation for that. Austria already has a select ban in effect, pending a review in November.

Support also came from Luxembourg's Prime Minister Jean-Claude Juncker, present chairman of the Eurogroup of Eurozone member countries, who, in a panel discussion with former French Presidential advisor Jacques Attali in Luxembourg, yesterday, said that a ban on short sales of the kind that Germany made into law, should be on the agenda of the June 26-27 G20 summit in Canada, and of the EU Commission. Juncker also called for a total ban on highly speculative banking operations, saying, banks that operate this way should not have business in the G20 countries. He issued a call for banks to return to traditional lending.

Juncker's remarks are the more surprising, as Luxembourg is one of the leading inland "offshore" fiscal paradises.

French Departments in Critical Condition

June 3 (EIRNS)—On the evening of June 1, French Prime Minister François Fillon called an emergency meeting at the Prime Minister's Office on the dangerous indebtedness of the French departments, as France's 100 local administrative units are called. Fillon and four other ministers met for two hours with a delegation from the Association of French Departments (ADF).

ADF president Claudy Lebreton (Socialist), said that the situation is very bad for 11 of the departments, but that in total, it is "some 30 departments" that are on the verge of suffocating. "Their situation is dramatic," he said, adding that "they could find it impossible to disburse their social allocations by the end of the year." A report was transmitted to the government in April, showing that 11 departments have undergone "a very brutal degradation of their financial situation" since 2008. This situation further deteriorated in 2009, and "the end of the first semester 2010 will be crucial."

'We Are All Greeks': German Unions To Hold Demonstrations

June 2 (EIRNS)—Mass-strike ferment against the bankers' dictatorship and its austerity policy is being expressed through trade union actions across Europe. The ferment has prompted the leading European trade union federations to call for a mass demonstration in Brussels.

In Germany, the multi-services trade union, VER.DI, has taken a lesson from Percy Bysshe Shelley's famous line, from his Classical tragedy Hellas: "We are all Greeks...." The union called for a mass rally in support of the Greek population, against the brutal EU austerity policy, in Stuttgart on June 12, under the slogan "We Are [All] Greeks."

The resolution for the rally states that Greece is the poor-house of Europe already, with minimum wages and pensions 50% below the European Union's average. With average wages at EU750, there is not much to cut in living standards. The bankers are trying to cover up their worst failure since the financial market collapse of 1929, and they should carry the burden, not the workers—"Not on our backs," the resolution proclaims.