1995-2012: Jacques Cheminade's fight against financial peril

Paris, October 27, 2011 -  The member countries of the euro zone have by no means established a solid plan to combat the sovereign debt crisis, as Nicolas Sarkozy will no doubt have us believe this evening.

The reality is thatAngela Merkel and Nicolas Sarkozy, with the approval of the leaders of the other member states, continue Europe's monetarist headlong rush towards the abyss of hyperinflation. The measures decided upon will contribute at best to gaining time, at worst to accelerating the fall.

First of all, the destructive austerity policy will continue everywhere and we will soon be able to notice it in France. Austerity and hyperinflation will thus lead to the destruction of the economic and social substance of States. The ferment of revolt against what is inadmissible is already spreading. My role is to open up avenues for him towards major projects of mutual economic development, creators of qualified jobs, financed by a public productive credit system, made possible by stopping in its tracks the senseless speculations of mad finance by a separation between investment banks, on the one hand, and deposit and credit banks, on the other.

Then, the aid that has been decided will not go to Greece, its economy and its people, but to the banks holding Greek bonds. These will certainly have to agree to a 50% discount on the Greek securities they own. However, this will be in the form of an exchange, by buying back new bonds, the value of which will be reduced by half compared to the old ones, but guaranteed at 20% (or more probably 30%) by the European Financial Stability Fund (EFSF). ). What's more, redemptions will take place as the old bonds mature, between January 2012 and 2020. An effort spread over time and quite benign compared to the profits that the banks have previously made on these securities thanks to their very high interest rates! Worse still, the European Central Bank will continue to serve as a spare wheel by buying public debt securities from fragile States on the secondary markets, that is to say from the same banks from which, moreover, the "sacrifices" are being asked .

Finally, the leverage effect that is claimed to be obtained in order to create "a strike force of around 1000 billion euros" is far from certain: we take into account the possible amount of insurance provided by the EFSF on new bonds issued by countries in difficulty to the tune of 20 to 30%, as for Greece, and the impact of a special vehicle linked to this same EFSF and to the International Monetary Fund (IMF), to which we hopes to involve international actors such as China, Russia or Brazil! This means hoping to be cured by communicating one's illness to others, themselves already suffering from a similar illness, but a little less so.

At the same time, it is announced that the banks will have to be recapitalised so that their solvency ratios, equivalent to their core capital, can reach 9% by 30 June 2012. The European Banking Authority estimates the needs at 106 billion euros. euros, which is a flagrant undervaluation. The figure discussed at the IMF is 200 billion, and Goldman Sachs, judge and party, estimates it at 298 billion, discounting more realistically the bonds of “fragile” countries.

The decisions taken therefore only amount to increasing the perfusion fluid supplied to the large sick body. The markets first hailed the pound of flesh of this body that was provided to them, then, insatiable, they will soon begin to demand more.

The only solution is a world without the City or Wall Street, or the huge bad bank stuffed with toxic effects that is becoming Europe. There is an urgent need to finally adopt a policy of public credit to re-equip man and nature, because the ship of fools is approaching the reefs.

source: Cheminade2012 via Chalouette

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