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Squabbling over the Impossible in Middle of Collapsing Trans-Atlantic Financial System

Oct. 9, 2017 (EIRNS)—The editors at Bloomberg news service published an editorial yesterday warning that European regulators are threatening the bank resolution agreements put in place after the last big crash (Lehman 2008). Stay the course on international bank resolution cooperation, Bloomberg insists.

The dispute is between two drowning parties squabbling over which kind of equally non-existant flotation device to cling to.

After they barely managed to "save" Spain’s Banco Popular last June, the European Central Bank and European Union want more power to freeze deposits to stop a bank run when the next European bank goes under. Bloomberg argues that that might save a bank, but could spread "panic to the whole financial system."

Each proposes a form of "bail-in;" one argues for stealing deposits; the other for seizing the assets of junior bondholders. Neither works. The news here is that both clearly know their system is blowing up.