The Banker take-over in Europe

The European Stabilisation Mechanism Inaugurated Means The Bankers Have Taken Over!

Aotearoa: a Wider Perspective,

9 October, 2012

This morning the European Stabilisation Mechanism has been inaugurated. This was made possible because the German high court decided it was OK to give up financial independence to a group of unknown unelected Banking technocrats.

Here is a video lining out some of the conditions these people have created for themselves to operate under:

And here is what Zero hedge had to say about it:

Now that the  ESM has been officially inaugurated, to much pomp and fanfare out of Europe this morning, many are wondering not so much where the full debt backstop funding of the instrument will come from (it is clear that in a closed-loop Ponzi system, any joint and severally liable instrument will need to get funding from its joint and severally liable members), as much as where the equity “paid-in” capital will originate, since in Europe all but the AAA-rated countries are insolvent, and current recipients of equity-level bailouts from the “core.”

As a reminder, as part of the ESM’s synthetic structure, the 17 member countries have to fund €80 billion of paid-in capital (i.e. equity buffer) which in turn serves as a 11.4% first loss backstop for the remainder of the €620 billion callable capital (we have described the CDO-like nature of the ESM before on many occasions in the past). The callable capital is highly amusing: as part of the finalized structure, the capital call process is as follows: “ESM shareholders irrevocably and unconditionally have undertaken to pay on demand such capital within 7 days.” The irony of a country like Greece precommiting to a €19.7 billion capital call, or Spain to €83.3 billion, or Italy to €125.4 billion, is simply beyond commentary. Obviously by the time the situation gets to the point where the Greek subscription of €20 billion is the marginal European rescue cash, it will be game over. The hope is that it never gets to that point.