World Video | Defence | Foreign Affairs | Natural Events | Trade | NZ in World News | NZ National News Video | NZ Regional News | Search


Banks fear collapse ‘within weeks’

26th of August 2011

Banks fear collapse ‘within weeks’

European bankers are terrified that a financial shock will hit in September or October, according to The Telegraph in London.

Insurance costs on the debt of several of Europe’s biggest banks, including the Inter-Alpha Group’s Royal Bank of Scotland, skyrocketed to all-time highs on 24th August, even higher than during the September 2008 GFC.

Europe’s interbank lending market has frozen up as banks flat-out refuse to lend to each other—an exact echo of 2008—so the banks are parking their funds overnight in the European Central Bank (ECB) instead, 129 billion euros on Monday, three times the year’s average.

The Telegraph reported one senior London-based bank executive saying, “The problem is a shortage of liquidity–that is what is causing the problems with the banks. It feels exactly as it felt in 2008.”

A senior credit banker at a major European bank was quoted saying, “I think we are heading for a market shock in September or October that will match anything we have ever seen before.”

The only thing keeping up the present fiction that these banks are somehow still alive, is a tsunami of dollars, courtesy of U.S. President Barack Obama and the U.S. Federal Reserve—as Lyndon LaRouche has been reporting for weeks. On 23rd August, Bloomberg got around to admitting, that, although the Fed has officially wound down the bank bailout known as the Troubled Asset Relief Program (TARP), they are still bailing like mad, given that “[o]ne of the few exceptions was the central-bank liquidity swap lines that provide dollars to the ECB and other central banks so they can in turn auction off the dollars to banks in their own jurisdictions.”

Faced with this, the world’s stock markets hit new levels of insanity this week, with a rally that was attributed not to a turnaround in the crisis, but to the recognition that because the crisis was so dire, the U.S. Fed would have no choice but to resume overt money printing in the form of Quantitative Easing 3 (QE3) to bail out Europe’s banks, and provide a flood of new, hyperinflationary liquidity to cover over the problem … for now.

No alternative to Glass-Steagall

As Mr LaRouche called it at the time, the global financial system collapse began in July 2007, and the banking system blew out in September 2008; instead of re-enacting the Glass-Steagall law as Mr LaRouche had demanded, the subsequent bailouts brought the world to this even worse crisis today.

Forbes magazine contributing editor David Trainer belatedly wrote this week, “Repealing Glass-Steagall was one of the biggest mistakes ever made.”

Re-enacting Glass-Steagall, to again separate financial gamblers and their derivatives mess from the institutions that provide financial services to the real economy, is the only hope to fix the crisis—legislation to do so is before the U.S. Congress right now.

Citizens Electoral Council leader Craig Isherwood emphasised today that the near-collapse of Australia’s banks when the global crisis last hit these levels in September 2008, showed they were at just as much risk as those in the rest of the world, so all Australians should support the global campaign to demand Glass-Steagall too.



© Scoop Media

World Headlines


UN: Conflict, COVID, Climate Crisis, Likely To Fuel Acute Food Insecurity In 23 ‘Hunger Hotspots’

Life-saving aid to families on the brink of famine is being cut off in several countries by fighting and blockades, the UN's Food and Agriculture Organization (FAO) and World Food Programme (WFP) said in a new report issued on Friday... More>>

Oxfam: Vaccine Monopolies Make Cost Of Vaccinating The World Against Covid At Least Five Times More Expensive Than It Could Be

The cost of vaccinating the world against COVID-19 could be at least five times cheaper if pharmaceutical companies weren’t profiteering from their monopolies on COVID-19 vaccines, campaigners from the People’s Vaccine Alliance said today...

Afghanistan: Record Number Of Women And Children Killed Or Wounded

More women and children were killed and wounded in Afghanistan in the first half of 2021 than in the first six months of any year since records began in 2009, a United Nations report revealed on Monday... More>>

Focus On: UN SDGs

Food Systems: More Than 100 Countries Discuss Visions For Futures To Accelerate Global Action Ahead Of September Summit

More than 100 countries came together over the course of three-days to discuss how they will transform their national food systems to drive progress against the Sustainable Development Goals by 2030... More>>

Food Systems: Italian & Rwandan Leaders Join Urgent Call To Transform World’s Food Systems As Pre-Summit Begins

Italian Prime Minister Mario Draghi and Rwandan President Paul Kagame stress need for more inclusive, sustainable and holistic approaches ahead of the Summit in New York in September... More>>

UN: Play:Fair For People And Planet – A Major United Nations Music Activation
organized by the UN SDG Action Campaign in partnership with Music Innovation Hub, Keychange, the city of Milan, the Milan Triennale, and partners from the SDG Music Network, will be held at an unexpected location in the center of Milan, Italy, taking into account safety measures with a limited on-site audience consisting of activists and fans... More>>