From Volume 38, Issue 8 of EIR Online, Published Feb. 25, 2011

Western European News Digest

Sinn Féin: Bailouts Risk Sovereign Default

Feb. 15 (EIRNS)—Sinn Féin's Finance spokesman Pearse Doherty warned that further money from the taxpayer should not be used to shore up deeply indebted banks, because the country is in danger of defaulting on its national, sovereign debt, reported RTE News Feb. 15. "We need to wake up here; we need to recognise that Ireland is in danger of defaulting on its sovereign debt, and it's not just me saying that; there are Nobel prize-winning economists saying that," Doherty said.

He said the massive private bank debt dumped onto the sovereign debt needs to be separated out, and, should Sinn Féin enter government after the election, it would tell the European Union that Ireland needs to reduce its deficit. He said Sinn Féin would not put any more taxpayer money into banks until a new state bank is created from the merger of Allied Irish Bank (a member of the Rothschild Inter-Alpha Group) and Bank of Ireland. That bank can only be in a position to lend, by getting rid of the bad debts.

Germans Question Legality of Bailout Plan

Feb. 15 (EIRNS)—German legal experts have concluded in a report, that the European Union's envisaged European Stability Mechanism (ESM), the post-2013 successor to the EU750 billion ($1 trillion) rescue fund European Financial Stability Facility (EFSF), needs the approval of the parliament, not by a simple majority, but by a two-thirds vote, because the changes at the EFSF would be so substantial, that they "risk breaching constitutional budget rules."

The report is a reminder to Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble that these EU schemes cannot be pushed through, bypassing the parliament, as the two politicians had originally pretended, but that the Constitutional Court can rule the whole thing to be void. Getting a two-thirds majority in the parliament is not easy, especially as there is strong opposition to the EFSF plan in Merkel's own minor coalition partner, the Free Democrats (FDP), which also commissioned the legal report, and Merkel would need a considerable section of opposition votes for the plan to be passed anyway.

Merkel controls 332 seats in the 622-seat Bundestag, which suffices for a simple majority. Yet a two-thirds majority would—if all 332 government votes were secured—still need 83 opposition lawmakers to come on board to achieve the 415 votes necessary to pass the law. The ESM would, furthermore, need approval of the upper house, the Bundesrat, where Merkel lacks a majority, according to the report. Ceding fiscal powers to the supranational EU on a scale as intended by the ESM, is hardly possible to foresee, said the report, warning that democratic legitimacy for German support is that much higher, the graver the risks are for future generations beyond the current legislative period.

Ireland's Kenny Asks Merkel: Why Bail Out the Hedge Funds?

Feb. 15 (EIRNS)—The majority of Irish sovereign debt is no longer held by the original banks and investors, but by hedge funds and other speculators. Irish Fine Gael leader Enda Kenny informed German Chancellor Angela Merkel of this unsurprising fact during a 45-minute meeting in Berlin yesterday.

Today's Irish Times writes, "Mr. Kenny told the German leader he is anxious to reconfigure Ireland's banking debt problem by taking a closer look at burden-sharing with senior bondholders. An analysis conducted for Fine Gael by a major bank suggests that less than half of Irish sovereign bonds are still in possession of their original European owners. A majority are now owned by hedge funds and other investors from Luxembourg to New York 'having a punt on Ireland,' as one Fine Gael official put it, thus making 'haircuts' for private investors less politically problematic."

None of this was even reported in the German press, which chose to only mention the conflict over Ireland's low corporate tax rate. Kenny said he had insisted that the issue was "of absolute, fundamental importance to Ireland and that we could not concede any movement on these."

Brits Told: Courts May Restrict German Options

Feb. 18 (EIRNS)—Germany's Minister for European Affairs Werner Hoyer, speaking at the German Embassy in London, told journalists that the so-called "eurobonds" are "politically unrealistic and legally impossible," because of the forthcoming ruling by the German Constitutional Court on last May's bailout of Greece. This is one reason why, he said, that Germany will have to proceed with "caution" in relation to increasing the European Union's bailout fund.

Hoyer, a member of the Free Democratic Party (FDP)—the minor coalition government partner, many of whose leading politicians oppose the EU bailouts—added that there is "no agreement" as yet on the size of any future bailout fund, and that "restructuring" its sovereign debt remains an option for Greece.

Banksters Descend on Greece

Feb. 19 (EIRNS)—Inspectors from the EU, IMF, and the European Central Bank were in Greece last week to check on that nation's compliance with the conditionalities attached to the $145 billion emergency loan that was agreed to last year. The inspectors said Greece needs to privatize, or sell off, $68 billion in state assets and speed up reforms to "keep its recovery on track."

Greece's government spokesman Giorgos Petalotis said that the bankers' comments were unacceptable and amounted to interference into Greek domestic affairs. He said that, while Greece is in need, it also has its limits. He said the Greek government only takes orders from the people of Greece, and that no state land would be sold. Greece already approved a 2011 budget with new austerity measures that include cuts in health and defense spending, along with pension freezes and higher taxes.

There have been large demonstrations in Greece against these savage austerity measures.

A Call for a Tax on Short Selling

Feb. 13 (EIRNS)—In what appears to be one of the first fruits of the publication of the U.S. FCIC report (the Angelides Report) in Europe, the Financial Times website features a column by one John Chapman, today, which calls for reversing "the dangerous usurpation of financial markets by hedge funds." Chapman specifically cites the FCIC report's documentation on the role of the hedge funds in amplifying the 2007-09 crisis, as part of his argument.

According to Chapman, there is a draft regulation calling for disclosure and curbs on short sales and credit default swaps, and then a tax on short selling, being considered by the European Union. He urges that this be adopted, especially because of the enormous prevalence of short sales, and hedge funds, in the markets.

Moody's Fears Danish Burning of Bondholders

Feb. 17 (EIRNS)—With the fear that the era of burning bankholders is already upon them, the financial oligarchy's attack dogs, the rating agencies, have downgraded Danish banks, because the Danish government burned the creditors for the first time by allowing Amagerbanken to go into bankruptcy last week without paying off the creditors.

Citing the Feb. 6-7 bankruptcy of Amagerbanken, Moody's said that Copenhagen "is now far less willing to continue to support bank creditors at the expense of taxpayers" than just a few months ago. "Last week's bankruptcy of Amagerbanken demonstrated the willingness and ability of the government to allow depositors and senior creditors of Danish banks to take losses in bankruptcy, where bank operations are continued as a going concern," Moody's analyst Oscar Heemskerk said.

According to the Financial Times, the agency downgraded its rating for Danske Bank's long-term, senior unsecured debt by one notch, to "A1", and put it on review for a further possible downgrade. Danske Bank is the country's largest.

British Paper Calls on Readers To Mobilize for Glass-Steagall

Feb. 14 (EIRNS)—The first issue for 2011 of the British newspaper The U.K. Column, which is published several times per year in over 100,000 print copies and on the Internet, has called on its readers to mobilize for a global Glass-Steagall, and for a Glass-Steagall for the U.K.

The issue contains several articles on the economy, as well as articles on: the insanity of windmills vs. fusion power; the Irish bailout as a bailout of Rothschild's Inter-Alpha Group; the euthanasia policy at the National Health Service; British control of the Afghanistan opium trade; Robert Locke (the Straussian who wants ethnic cleansing of the Palestinians); Jeremy Bentham as the hitman of the British Empire; social brainwashing programs in the U.K. to pacify the population in the face of the collapse; and the history of the Venetians, from Venice to the British Empire to Hitler to today.

All rights reserved © 2011 EIRNS