From Volume 38, Issue 18 of EIR Online, Published May 6, 2011

Western European News Digest

ECB's Orphanides Demands Orderly Bankruptcy

April 29 (EIRNS)—European Central Bank governing council member and governor of the Cypriot Central Bank, Athanasius Orphanides, has called for orderly bankruptcy procedures to allow banks to fail and avoid government bailouts. "The central question is: How to allow a financial institution to fail without bringing down the system," Orphanides stated in a seminar organized on the Financial Stability Report 2001 of the Central Bank of Luxembourg. "No institution should be too big to fail."

He expressed skepticism about the strength of the newly-established European Systemic Risk Board, arguing that warnings and recommendations—the main tools the European Union regulator has at his disposal—may not be incisive enough. "The ESRB lacks direct enforcement power," Orphanides noted.

Swedes Blast EU Commissioner as 'Soft On Banks'

April 30 (EIRNS)—At an open hearing with the Parliament Financial Committee April 14, Swedish officials and parliamentarians ganged up on EU Commissioner for Internal Markets Michel Barnier (France) to demand he impose stricter rules against Swedish banks. The Swedes claimed that the Swedish banking system is so big, that they put the nation in extra risk. Sweden, with banking assets four times the nation's GDP, is only surpassed among the other 26 EU nations by Great Britain and Holland, and also Switzerland.

"Sweden needs a higher capital ratio [in the banks] than other countries," Minister of Finance Peter Norman charged. The most liberal member of the Parliament Financial Committee, Carl B. Hamilton, attacked Barnier for raising the argument of the bankers, that a higher capital ratio would be a burden to them. Hamilton charged: "Why do you raise the bankers' argument? The confidence in the bankers is used up. The whole discussion here is about how to regulate the banks."

Eurozone Public Debt Growing, Growing ... Groan!

April 29 (EIRNS)—The unabated increase of the public debt in the Eurozone and the European Union is the reason for concern voiced in a new report of the Austrian Central Bank. The figures for 2010 show that total debt of the 17 Eurozone countries rose to 85.1% of Gross Domestic Product—way above the 60% level set by the euro treaty and the European Central Bank. In 2009, total debt was at "only" 79.3%, and in 2008, before the outbreak of the big crisis in 2007, it was at 66.2%. Austrian debt is now 72.3% of GDP, and 13 other EU countries have a debt above the Maastricht Treaty's 60% mark.

Greece (at the top) with 142.8%, is followed by Italy (119.0%), Belgium (96.8%), Ireland (96.2%), and Portugal (93.0%). Furthermore, Germany (83.2%), France (81.7%), Hungary (80.2%), Great Britain (80.0%). Also Malta (68.0%), the Netherlands (62.7%), Cyprus (60.8%) and Spain (60.1%) were above the Maastricht mark.

Irish Bank Deposits Fall By EU16.7 Billion

April 30 (EIRNS)—The Irish Times reports that there was a record fall in bank deposits in March, according to figures published by the Central Bank April 28. There was an outflow of EU16.7 billion of deposits last month, of a total deposit base of EU630.7 billion.

Cumulatively, in the seven months from September of last year to March of this year, almost 30% of deposits have been withdrawn.

Household deposits fell by EU438 million. Irish companies, in contrast to households, accelerated the pace of their withdrawals in March. Collectively, they pulled almost EU1 billion from accounts in March. Their total deposits stood at just over EU32 billion.

Sarkozy-Berlusconi Summit: Draghi to ECB and Italian Bombs on Tripoli

April 27 (EIRNS)—After the summit between French Prime Minister Nicolas Sarkozy and Italy's Premier Silvio Berlusconi yesterday, it was announced that the French government is sponsoring Bank of Italy boss Mario Draghi as the successor to Jean-Claude Trichet as president of the European Central Bank. It was also announced that Italy is going to join air raids on Libya.

The French support for Draghi comes after an earlier German announcement in the same direction by Finance Minister Wolfgang Schäuble, and makes Draghi's appointment almost certain. Until he won a legal suit against its use, Draghi was called Mr. Britannia in Italy, for his collusion with the British in destroying the Italian currency in 1992. He is also notorious for his former career with Goldman Sachs.

The Libya decision is a major shift, since Italy had resisted so far because of its colonial past with Libya. The decision has opened a crack in the government; Lega Nord head Umberto Bossi express special shocked at having read the news in the wires. "Wars should not be made, and especially not be announced in this way," Bossi told ANSA.

Franco-German Green Nazis Push Anti-Nuclear Hysteria in France

April 26 (EIRNS)—Some 10,000 French and German Greenies demonstrated in France April 23-25, taking advantage of the 25th anniversary of the Chernobyl accident on April 26, and tying in the March 11 Fukushima accident, as a means to ramp up their organizing to close down the Fessenheim, Alsace nuclear reactor, the oldest in France, which has been in operation since 1977.

Demonstrators gathered especially along the border areas; on the Rhine bridges; in the Strasbourg area and going into Switzerland. They also gathered near the Cattenom nuclear power plant; at Flammanville, on the Normandy coast; 350 near the Golfech power station in the south; and in Tarn et Garonne.

British Adopt Monetarist Approach to Water Shortages

April 24 (EIRNS)—Britain is facing a water shortage, and the solution being discussed by water utilities is metering and seasonal surcharges to cut use. The World Wildlife Fund and 11 other environmental groups are calling for national metering, which presently doesn't exist in Britain. There is no discussion of increasing water supply, with the exception of a planned Thames estuary desalination plant, but even that is contingent on establishing nationwide metering.

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