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Reply #19: Why should the banks losses be socialized when their profits were privatized? [View All]

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suffragette Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-22-11 01:35 PM
Response to Reply #9
19. Why should the banks losses be socialized when their profits were privatized?
The banks and financiers gambled on risky investments, raked in the profit and now want citizens of the countries to pay for the risk the bankers took.

There have been, and still are, shady games going on, but a major role in these games has being conducted by the same people who created this situation - the financiers.

And now they want to use the disaster they have created as cover to grab Greece's public land and assets.

Let's take a closer look at some of them, shall we?

German Banks Reported Still to Be Taking Risks
Published: November 25, 2010

FRANKFURT The Bundesbank, the German central bank, said on Thursday that the countrys banks were better off now than they were a year ago, benefiting from a strong domestic economy. But, the bank said, German institutions continue to engage in risky practices that make them vulnerable to a rise in interest rates.

Thanks to stable returns and improved capital, German banks have increased their ability to withstand risk, Andreas Dombret, a member of the central banks executive board, said Thursday at a news conference. But as before the German bank system still displays vulnerabilities and structural weaknesses.

Despite Germanys economic growth, its banks are among Europes weakest. Moodys, the ratings agency, ranks the average health of German banks below those of most other Western European countries as well as nations like Brazil, Jordan and Mexico.

In its annual financial stability report, the Bundesbank warned that German banks had increased their dependence on short-term financing, a profitable but risky practice because institutions can be caught short if interest rates rise.

Deutsche Bank profit almost a record

Deutsche Bank, the biggest German bank, today posted the second best quarterly profit in its history, owing to a combination of strong investment banking activities, retail banking and asset management.


'We will continue to invest in our franchise and are confident that we will deliver on our ambitious target of income before income tax of 10 billion euros from our business divisions,' Deutsche Bank chairman Josef Ackermann said.

Deutsche Banks Chief Casts Long Shadow in Europe

From this seat at the nexus of money and politics, Mr. Ackermann, for better or worse, is helping to shape Europes economic and financial future. He regularly advises politicians and policy makers on the most pressing economic issues of the day: the smoldering debt crises in Greece; the widening gulf between the economically strong nations of Europe, like Germany, and weaker ones like Ireland and Portugal; and the future of Europes economic and monetary union and that grand ventures most manifest expression, the euro.

But it is no secret where Mr. Ackermanns financial allegiances lie: with the banks. For instance, he has insisted that providing some sort of debt relief for Greece would be a huge mistake. Such a move a restructuring, in banking parlance would involve writing down Greeces debt, which is now more than 140 percent of its gross domestic product, deferring payments and cutting interest rates.


Mr. Ackermann, like many of his counterparts in the United States, has also argued against tighter regulation of the post-crisis financial industry. His visibility as an industry advocate stems in part from his chairmanship of the Institute of International Finance, an association of the worlds biggest banks, including American ones like Goldman Sachs, Morgan Stanley and Citigroup. The group has released studies contending, among other things, that compelling banks to reduce their use of leverage a move that would almost certainly reduce banks profits would cause a credit crunch. Thats ridiculous, some economists counter.

Most of the arguments made by the bankers and the I.I.F. in particular are just fallacious, says Martin Hellwig, an economist and a director of the Bonn branch of the Max Planck Institute.

So, German banks are making record profits, still making risky decisions and a major CEO of one of the largest banks is against regulation and for (other people's) austerity and forcing a nation's citizens to sell off its publicly held assets.
Sound familiar, yet?

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