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Eurogroup’s Dijsselbloem Says "Banks Should Save Themselves"
The by-now infamous Dutch FinMin Jeroen Dijsselblom - and head of the Eurogroup of finance chiefs - made some fascinating comments this morning with Reuters and the FT that are changing the shape of European markets rapidly. From banks need to save themselves to forcing "all financial institutions, as well as investors, to think about the risks they are taking on because they will now have to realize that it may also hurt them," he is making a lot of sense - though we suspect Mr. Draghi will not be amused as his 'promise' looks like being tested. Simply put, Dijsselblom is saying that a balance sheet can be 'normalized' not only by boosting assets (courtesy of the ECB) but by collapsing liabilities (or remarking bad loans to market) - something that no one in power has admitted to date. While this is upsetting to markets - so used to the visible hand of central planning saving themfrom themselves - this is very positive step for 'real people' as taxpayers appear to be 'off the hook' and the responsible parties beginning to be punished.
Via Bloomberg:
Dijsselblom's direct quotations in the interview were confirmed by his spokeswoman, Simone Boitelle.
• “What we’ve done last night is what I call pushing back the risks,” Dijsselbloem says in the interview
• “If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalize yourself?’. If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders,” he says
• “If we want to have a healthy, sound financial sector, the only way is to say, ‘Look, there where you take on the risks, you must deal with them, and if you can’t deal with them, then you shouldn’t have taken them on,’” he says
• “The consequences may be that it’s the end of story, and that is an approach that I think, now that we are out of the heat of the crisis, we should take,” he says
• “It means deal with it before you get in trouble. Strengthen your banks, fix your balance sheets and realise that if a bank gets in trouble, the response will no longer automatically be that we’ll come and take away your problem. We’re going to push them back. That’s the first response we need. Push them back. You deal with them,” he says
• “We should aim at a situation where we will never need to even consider direct recapitalization,” he says
• “If we have even more instruments in terms of bail-in and how far we can go on bail-in, the need for direct recap will become smaller and smaller,” he says
• “I think the approach needs to be, let’s deal with the banks within the banks first, before looking at public money or any other instrument coming from the public side. Banks should basically be able to save themselves, or at least restructure or recapitalise themselves as far as possible,” he says
• “Now we’re going down the bail-in track and I’m pretty confident that the markets will see this as a sensible, very concentrated and direct approach instead of a more general approach,” he says
• “It will force all financial institutions, as well as investors, to think about the risks they are taking on because they will now have to realise that it may also hurt them. The risks might come towards them,” he says
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Jeff Berwick launching his first Bitcoin ATM in Cyprus? Then IRAN?
http://dollarvigilante.com/blog/2013/3/25/worlds-first-bitcoin-atm-is-an...
Save yourself (as long as you are small enough and not based in one of the major European economies, in which case the tax payers will bail you out)!
So he says banks should "go [save] themselves", huh?
Well, I guess this explains what the ECB has always meant when they said, "Relax -- we're here to [save] you!"
Good to know the lexicon....
His talk will go over like a fart in church - hope he has some bodyguards because he is damn sure pissing off TPTB
Fuck TPTB and the ass they rode in on. Off with their heads and anyone who 'supports' them---Ben Bernanke and his cronies surely included...
MONEY should save itself.
Too bad that is a mathematical impossibility when money is debt.
<--- This statement was approved by the Troika
<--- He went off the reservation
D-Boom sounds reasonable, at first blush. It's what makes sense: equity, debt and uninsured "savers" get whacked. In context of recent events, however, this sounds kind of evil. Just setting the table for the main course, as it were.
In this context, capital controls make perfect sense to preserve The Bank to the benefit of all.
The ONLY reason Cyprus happened as it did was due to the size of the banking sector relative to the GDP and population size. In a large economy they would have nationalized the banks and put the losses on the backs of the taxpayers. That they are pretending this is some advocacy to protect taxpayers is a fucking joke. The reality is that they could have stolen every single penny from the Cypriot people and it wouldn't have made a dent in the problem, therefore they had to do something else.
+1 Redpill.
I honestly do not get his remarks. My understanding is the central banks buy the government debt so how will they solve the problem as long as they continue to buy soverign debt? I am all for letting the banks fail if they fucked it up but not failing because central government screwed the bank.
There is no way to cover this. Am I looking at this wrong?
There's a lot to be said, though, for scaring large depositors into German, French, and Dutch banks. Look out, Luxembourg.
[save] or [fu(k]?
All right, call this clown on the carpet TODAY. Let's mark every asset and bond "mark to market" TODAY. Let's see how many banks and funds implode overnight.
What if there is no market for an "asset"? I suspect the big banks have substantial holdings of unique "assets" for which the market is inestimable.
no reservation e-bay auctions?
It seems to me most banks can handle a lot of markdowns before they run through equity and the bondholders. What is left is less frightening to the uninsured depositors...if there are any.
"Save yourself" means when we can't steal anymore, we are going to cannibalize the banks. Bankers are cannibals by nature. The TBTF's decide who will fail to feed them. See Bear Stearns. See Lehman. See Laiki.
I’m pretty confident that the markets will see this as a sensible approach,” he says
Uh, not looking good so far, Dieselboom. The EUR/RUB is getting hammered as Russian 'garks find ways to turn their euros back into Putin bucks. Stock markets--they hate it. This is the end of banking as we've known it. It's just a question of how long before the message "All your savings are belong to us" sinks in around the world.
Allow me to translate: If you want to keep depositor's money in your banks, raise interest rates or risk capital flight.
Allow me to translate: If you take depositors money to make risky bets that explode in your stupid face; we are going to liquidate the bank assets, fuck the investors (who deserve what they get- they took the risk)liquidate any depositor we can claim is uninsured....... then he is left hannging on insured depositors. They sure were not claiming that insured depositors should not get a haircut, only after the globe yelled "holy Shit" did they back off of depositors insured up to 100K. I am fine right up to the point that they were willing to allow the Cyprus government to steal insured deposits.
Depositor money or taxpayer money? At least with depositor money there's no moral hazard.... D-Boom might be on to something.
no more Too Big To Fail? I,m confused.....
I wish it was that simple... the sad part is that with government/central bank meddling in the worldwide economy, those "deposits" cannot be practically separated from moral hazard. Those deposits invariably contain tax money... along with a myriad of other things, the source of which is all the same.
Now it's clear to me how Bernanke plans to sell off his hoard of Treasuries. "You got some big deposits you're worried about?"
No moral hazard taking the depositors money?!
Who the fuck is in charge, here?
T R O I K A
I agree, the intermediate bottom will only be reached when Draghi says something.
Nobody. It's a financial wildfire and it's going to have to burn its self out.
Sonic Diesel-Boom.
Fuck the banks, save the people!
it's too late for the people, the whales and seals
http://enenews.com
Save themselves? Like the drowning man catching the anvil?
Most of these drowning men should have grabbed an anvil before they hit the water. That makes for a swifter and less painful death. (The cannonball grab in Master and Commander provides a nice image...Citi Board grabs one and ....)
If only Hank Paulson had said this (and meant it) in '08, things would be quite different right now.
I think from now, the solution to the problems of the banks go through that bankers, investors and large deposit holders carry part of the responsibility. If this happens, the bankers think twice before taking risks. We may be seeing the beginning of a change in the solution of financial problems.
That corrupt POS didn't (and still doesn't) have the integrity or character to say such a thing. Like most in Washington and on Wall St., he has no soul and hides behind the veil of power. When the people 'wake up', he will not be able to escape the carnage.
The people aren't waking up......ever! This is going to go on for a long time. The sheep today are content watching reality TV and guzzling down McPuke.
Did we just hit the iceberg? I think so.
'Tis but a scratch, and the band is still playing, so all is well.
no, not just hit it ,more like backed up and hit again.
"Attention citizens of Cyprus--may I have your attention please. In an attempt to promote stability and confidence in the financial sector, the currency formerly known as the Euro has been replaced by the new and improved Klepto. Do not be alarmed..."
Sounds like he finally got the translations of the Ron Paul speeches that he requested.
I gather Dijselflower is NOT a Goldmanite??
Ain't it amazing.
Bunch a low life politicians and petty bureaucrats trying to act like high financiers and look what happens
Holy shit.....
And the Democrats were worried about Palin
At least Palin could open her mailbox...
Beginning to look like a faction fight y'think?
One faction's held all the cards for several years. They've just been afraid to play them. They got pushed too far. Now they get their moment to prove what they said last year: "Bring down your risk, manage your banks and spending, or else we'll choose to either A. Squeeze you out of the euro zone or B. If you openly rebel, we'll just leave. I'm interested in what the French reaction will be when the next set of bank liquidations begins.
Is "open her mailbox" a euphemism?
it certainly doesn't sound like it. The euro's dropping like a little bitch, but silver and oil seem to like what he has to say.
Last one out turn off the lights.
I think this is the wrong reaction. Basically the ECB is saying they won't be running to rescue anyone, thus not throwing good money after bad. It should serve to strengthen the Euro.
The ECB is also making the US and Japan look like idiots with their free money policy.
It's easy to do with a country that is a pimple on the ass of the euro... it's like some county in BFE U.S. going bankrupt... "see, we're like totally sincere about this n'stuff"
Not really.
If you think as a (short-termist) investor, then the best place to park your money is the one where financials and the markets are being proped-up by sucking the money away from everybody else.
Thus if the Eurozone is not willing to further impoverish taxpayers to prop-up banks and markets, then it becomes a bad place for the fleet-footed short-term capital.
For those whose investment horizons are measured in decades it's the reverse, but there are very few of those around in the modern financial system (even pension money is moved around a lot by money managers to increase churn and comissions).
This is exactly what happened during the bank run in 2008... prompting the FDIC to issue a statement and change its deposit guaranty, etc. Local and regional banks got all of their money sucked out to the TBTF.
psst, I whispered it into his ear and the penny dropped. I think he reads ZH!
lol, awesome, somebody in the Euro group is now getting the private banksta story contextualised...the gorilla in the financial world.
Eventually the only rally cry will be "you're all on your own".......meanwhile the sound of jet engines starting up for bugout destinations can be heard
Every corpse in an alley has the bullet of an idealist in him.
"Save Themselves"... Law, Guarantee, Trust, Confidence... definitely gone out the window in a way that even a common man can understand.
This dude must be drunk; about to blow up what little EUR depositor confidence there is. LOL
Alcohol is a well-known truth serum. Just ask Mel Gibson.
WTF, go all the way...
Hunter S Thompson the thing, get it weird
Maybe some good entertainment is called for....
@knuckles
Charlie Sheen, Apocolypse Now, whiskey, cocaine, hotel room, heart attack....
Time for Diesel-Boom to bust out the ether.
Hooray?
Dude, this free market mumbo jumbo is heresy...
collapsing liabilities = stealing deposits
Right, "if necessary the uninsured deposit holders".
Necessary by who?
He is saying, no money is safe in a bank anymore.
*long mattresses
NOTHING to see here!! ALL is WELL! Remain calm, and leave your funds within the pirates grasp! And dont forget tp buy moar STAWKS!
Refreshing. I can only agree. They just need to add a Nuremburg-like trial from internal bankers.
One problem with this anylasis .............
That bank double entry horseshit of "assets & liabilities" also forms the basis of the fucking token / national equity money fucking supply.
Two completely fucking different thingies.
Something about people who live in glass houses comes to mind...
Great! Got it! Seems good! But didn't the Cyprus banks pass a bureaucrat administered Bank Stress Test a few months ago? How is anyone to know what is really safe, or not, anymore.
Oh, even I know the answer to that one.
Nothing is safe any more.
Yes, agreed. Should have added sarcasm off afterward.
Wow the language this guy uses must be music to Bernanke's ears!
The rate this is going Europe may well end up with sound money.
USA meh, not so much.
Disintermedition, bitchez!
1st order effect - No one will want to have a deposit over 100K in the banks, therefore a deposit outflow.
2nd order effect - When borrowing from a bank the money becomes a deposit in your account, so no one will want to borrow over 100K as it could be confiscated and you'd still be on the hook for the capital and interest of the full amount, so all leveraged assets, houses etc will go down in price, impairing banks balance sheets even more, this is called a death spiral.
Oh shit
Must be either very born-again or quite desperate to say this. I'm guessing that they now prefer controlled burns over a forest fire.
Run For(r)est, run!
"“Now we’re going down the bail-in track and I’m pretty confident that the markets will see this as a sensible, very concentrated and direct approach instead of a more general approach,” he says"
I couldn't give a rat's testicle what "the market" thinks. My money is coming out of the damn banks even faster than it was before.
http://www.marketoracle.co.uk/Article39630.html
It is a sensible as Bernie Madoff sending out accurate account statements.
He's starting to tear off the Band-Aid. I'm not sure the patient realizes it, but the markets certainly have.
It'll be walked back by tomorrow night.
I am thinking of going to Vegas and investing in casino chips.
Dijsselbloem = King! He already wanted to cut Senior Bondholders in the SNS case, but Mario himself prevented that from happening since they "promised" no senior bail in until 2018... blablabla
Dijsselbloem = King! He already wanted to cut Senior Bondholders in the SNS case, but Mario himself prevented that from happening since they "promised" no senior bail in until 2018... blablabla
Mario doesn't have any money. There are better ways to fight deflation than to let banks become hopeless zombies wrapped in central bank linen.
Bit late for that chum... when ING blows up I don't think it will work very well for Netherlands - in fact the entire EU is well beyond the point of no return - the deflationary consequences of really unwinding teh vast amount of bank leverage would be revolutionary in the 1789 sense - even the welfare cosseted Euro-masses woul dnot put up with it
I like how this guy has no idea what fractional reserve banking is. The only way it can possibly succeed is with a Central Banking backstop. This guy is an idiot. Everyone knows the money isn't in the bank. What they thought was the Central Bank would put it there when needed. This guy is a complete buffoon. Anyone with a bank account in Europe should immediately RUN to the bank and pull out everything.
I've never understood how depositor money becomes the bank's money. Probably my ignorance of banking, but how is it that money placed with a bank is available to pay off the bank's bad investments? This is like giving money to a trustee and losing it in the trustee's divorce.
A bank isn't a vault. A bank borrows money from you and lends it to someone else. Banking is a bet that you have an overdone psychological preference for immediate availability that you won't actually actuate (you'll leave the money there), whereas it has a shrewd willingness to lend your "instant money" longer term, and take the spread in rates. The US has a long history of banking. While everyone seems to stare at the Fed system, previous to the Fed system banking was still the same process, intermediating between demand and term deposits. There was always lots of risk involved. Our 'money' system has changed, but not the function of banks overall. No? (And I'm not talking about bank direct investments and financial investments, which really shouldn't be part of a commercial bank. That's obvious and the bastards who undid it to make Citi and Chicago "can't get a mortgage" guys happy should be thrown in the ocean.
Google "Carr vs Carr 1811". Yes it's been the way it is now for 200 years so there's no fucking excuse.
I'm confused. Was this guy in part behind the inversion of liability from bond/share holders to depositors for Cyprus, but now is advocating some kind of revesion back to some [ambiguous] standard of operation?
Is dealing with banks within banks include the new precedent exposure of depositor funds? Is there implied a new hierarchy of liability here?
Unsecured claimants want to know.
Brave words that sound like an exit from QE-style endless money. I doubt it. This still looks like a one-off. No way could this work with Spain.
Unbelievable, an official speaks the truth. He must be crucified. Who will be first to attack and when will the attack start?
Good to see he recovered from his coma, now he will go back into one once he sees what the fuck been going on since he was resting
Taking risks might come back to hurt you? That's crazy talk!
Yeah, the comments from Dijsselblum don't make any sense. Are people who put their savings in a bank investors who take unresponsible risks? From a ZH fiat = crap perespective he's right but I can't believe he is seeing it that way.
Yes. They are.
They have no idea what a bank is or how it works but blithely hand over their cash anyway.
People think things like this will never happen to them. Most people didn't blink about GM's bond holders getting screwed and will think about as seriously about this too. I'm sure some of the people with 60% of their money left in Cyprus are innocent retirees wondering how this could be happening to them; they like government.....
I'm a well connected guy so I called in a favor and asked one of the insiders if my money was save, www.wavlist.com/soundfx/014/cricket-2.wav
Mmm, thanks
This guy is nothing more than a german rent boy bitchez
What we are seeing is more clown circus coordination.
He's member of one of the biggest loser party in holland. Look at him , just look! :D
http://upload.wikimedia.org/wikipedia/commons/b/b3/Jeroen_Dijsselbloem_2012_%28highres%29.jpg
Unlike his predecessor, the idiot Juncker, Mr. Dijsselbloem aparently cares 1sta bout the people.
Anway, what statement of him exactly is wrong, and why?
What happened to the days of
When your bank is running low on cash they
1) fire people and downsize to reduce cost
2) close branches to reduce cost
3) Sell assets to pay their debts/depositors
When a buisness is HUGE and having problems, the obvious solution is to downsize (shrink and streamline) the business so you stay afloat and recover.
Why the fuck is everything about keeping things broken and bailing it all out nowadays?
Bureaucrats always go for bigger. Smaller is against their religion.
He want's to change the article at Reuters.
The things he said are true but the context are not the way they are presented. LOL bit to late Loser DIJSSEBLOEM :D :D
Short the Euro anyway, takes bottom out big time,. see at least another 50 pip drop from here.
Thanks Jeroen Dijsselbloem. :-)
His head is so far up his ass.
These Bankers and Politicians are so far removed from the real world that stealing other people's money seems rational.
The whole point of a bank is to PROTECT your money, not have it STOLEN.
Why put money in a bank - or a stock -if it will be STOLEN?
That simple thought evades them.
Is it possible to recognize one's own insanity?
"Suspicion towards a currency, once awakened, develops insomnia"...James Dines
Dijsselblom here is stating explicity the hard/harder line. Its a breath of fresh air, versusthe ad hoc duct-taping of the problems the past few years.
Seems like there are 2 distinct sets of commenters at ZH:
1. Those who think that Germany should continue to bail out the broke socialist banks, elites and economies (PIGS + Cyprus and France), and that somehow its refusal to do so is unfair.
2. Those who think this is a step in the right direction; let the failures be exposed, let creative destruction and rebirth happen.
1 and 2 are pretty opposite viewpoints.
Just exactly how are the banks getting punished here, they're not. These are just cheap words yet again.
Just exactly how are the banks getting punished here, they're not. These are just cheap words yet again.