Why A European Banking Union Is Far From Imminent

Tyler Durden's picture

The implicit risk transfer from periphery to core - and loss of sovereignty this assumes - that is inherent in any banking union (or Euro-FDIC) is not just a stumbling block for the Germans, Finns, and Brits; without fiscal integration it is a non-starter (which no matter how much chatter or 'coming soon'-phrases we see, is not occurring within weeks/months given the Treaty changes and ratification required). Stratfor's Adriano Bosoni does an excellent job of summarizing the short- and long-term hurdles and implications of what so many of the 'poor' nations are calling for (and yet seem not to comprehend). The proposals all involve a transfer of funds from the center to the periphery and all involve a loss of national control of different aspects of their economy. The ceding of authority to unelected officials in Brussels that will be required may seem like a compromise the desperate Spanish leaders (for example) are willing to take in the short-term. In the long-term, the loss of control over the budget and banking sector would leave the nations under the authority of an external force - a concept that threatens the very existence of the nation state as we know it today. This key contradiction between EU integration and national sovereignty undermines the European project from its foundations.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
dow2000's picture

FIRST...what's up

battle axe's picture

Old joke: "The only people the Europeans hate more then the Americans are other Europeans". 

GeneMarchbanks's picture

Lucky for us Europeans this is no longer true. Nor funny.

Matt's picture

Wait, Belgium is considered part of the Periphery, even though it is in the center, and Brussels is in Belgium? What?!

ArgentoFisico's picture

Nonono, we hate americans the most

ArgentoFisico's picture

Better: Americans envy Europe's power, according to the main italian mainstream financial newspaper, Il Sole 24 Ore: http://argentofisico.blogspot.it/2012/06/ecco-perche-le-cose-vanno-male-...

mrktwtch2's picture

never going to happen..buy early 2014 the euro will be used as wallpaper as everyone returns to their original currencies..

kito's picture

bullshit. the euro is going nowhere. by 2014 you will be buying euros to get out of dollars. absolutely guaranteed. the euro will come out of this much stronger.....leaner and meaner...........

Ropingdown's picture

If it's "leaner and meaner" it's the Euro in name only, a different group of countries with different underpinning rules.

falak pema's picture

hope it doesn't end up looking like those survivors of AUschwitz.

littleguy's picture

haha good one. So funny. 

Azannoth's picture

"The implicit risk transfer from periphery to core.." - Seems like a bargain for the German Taxpayer(AKA me) I get to hand over my hard earned savings to some slackers in Greece and Spain and in return German politicians will feel their politico-penises grow (or vaginas whatever)! Yeah Right FAK THIS S.H.I.T(Spanish.Hellenic.Italian.Transfer), Down with the System!

Lednbrass's picture

According to the Mediterranean slackers and US power structure, you are supposed to feel guilty forever and ever and happily put your neck in the yoke to prop up the charade because Opa was a big bad meanie.

My biggest hope for Germany is that there are still enough there whose minds havent been turned into paste and spines into noodles by years of incessant propaganda to finally say "Enough, and no more"!

my puppy for prez's picture

Nice info from Stratfor   (Mossad, I mean).....

GeneMarchbanks's picture

Yeah, it's just getting pathetic now.

Bay of Pigs's picture

No worries. Isn't futbol on today?


asteroids's picture

Banking union will never happen. Why? Trust.  When any single bank can short its own stock as is happening in Greece, Spain, and Italy. Well, you get the idea.

Dr. Engali's picture

And that is why a world currency will never work. That doesn't mean they won't try....but it won't work.

bigwavedave's picture

Spain CANNOT be Ireland because they line up opposite each other to play football in a few hours. High priced tickets. Lots of travelling fans. All the players well entrenched in the 1%. Lovely Jubly

CommunityStandard's picture

Germany wants policy control in exchange for money.  The PIIGS want money without relinquishing control.  Neither is going to budge.

Dick Darlington's picture

This key contradiction between EU integration and national sovereignty undermines the European project from its foundations.

Just look at the polls in Germany, Finland, Netherlands etc. Big majority DOES NOT want more integration. Big majority DOES NOT want eurobonds or any other form of common liability. Such changes WILL NOT have democratic legitimacy. Just today there's an online poll in major finnish paper askin "Should Finland leave the euro?" Over 19 000 votes so far with the following results: YES 89%, NO 11%.

Here's the link to the poll: http://www.iltalehti.fi/talous/2012061315703169_ta.shtml


OttoMBMP's picture

The plan:

Scare and frighten people. Then let them vote.

Then quickly set up the totalitarian EU state, Kissinger, Rockefeller, Delors and all the other sick people have in mind.

It might happen quickly.

falak pema's picture

this backlash is typical of the situation. If the Euro currency was healthy it would mean Euro integration was a success; if its unhealthy it means its a failure. The people understand that simple yardstick,  as those EUrocrats like Delors and his mentors; from Kohl/Mittterrand to US oligarchs, aka Kissinger/Rockafella et al; made it their emblematic star child. As surrogate &/or  competitor to USD hegemony. To stabilise the oligarchy monetary system on two first world pillars. Now both pillars are cracked and their hegemonial dreams jeopardised. Rightly or wrongly the people want their nation states back and Euro integration limited to parliamentary collective decisions, not to bureaucracy manipulations.  Pretty shoddy result on both sides of the pond after the financial hubristic binge of the Oligarchs went mad in irrational exuberance, crony cover up and stubborn fiat pump dilution of King greenback; now euro burning. All for nothing? 

AldoHux_IV's picture

EU doesn't need a banking union when policy and the banks are the problems.

unununium's picture

If Europe were destined to be integrated, wouldn't we have seen a trend toward unification?

When is the last time two tiny European countries merged?  That is not the environment in which Europe exists.  The trend recently has been toward more countries.  Not less.

slackrabbit's picture

1939 someone tried by force.....that didn't work either.

nuff said...

Ned Zeppelin's picture


interesting math

doesn't work.

DOA is imminent for all of this, absent some astonishing movement towards a political unification of Europe. 


slackrabbit's picture

there are no countries...its eu national sovereingnty  peasant!

LMAOLORI's picture

Bank Network close to bankruptcy freezes the accounts of thirty thousand customers


xcehn's picture

Some still hold out hope for a sort of quiet coup to occur. The eurozone itself was spawned by an undemocratic shotgun wedding, but a fiscal union (under defacto German charge) would give rise to its own set of contradictions and inevitably lead to more instability and conflicts. We likely would be quickly staring down the collapse of the new and improved eurozone with even worse consequences.

falak pema's picture

Peter Tchir who is a frequent contributing poster at ZH has this to say according to BI : 

6 Reasons Why Spain's Bank Bailout Plan Is A Huge Step Forward - Business Insider

Sounds contrarian to the views he has published here on ZH in the past; am I missing something? 

Animal Cracker's picture

"This key contradiction between EU integration and national sovereignty was the purpose of the European project from its foundations."


Fixed it for ya.

falak pema's picture

you mean it was planned by the enemies of Eurozone integration from inception  and was not the result of a Bureaucratic machine going faster than the national political music, by creating a Euro monster, its favourite spoilt child,  that they could not tame or groom properly, without the agreement of national parliaments who were not privy to the intricacies of its conception? 'Cos if it was planned by the globalist Bilderbergers to be a star child,  they would have made sure that the national parliaments in each country adhere to its proper conception and not spoil the party like they did in club med. 

Animal Cracker's picture

I meant that the purpose of the project was to overthrow national sovereignty, but the Globalist Elites do not have the godlike powers they (and indeed their greatest detractors) believe they have.


Darth Hayek's picture

Bug, feature, whichever.

If they had any brains at all, it would be the Germans looking for the door.

W10321303's picture


YOUR enslavement!

A draft agreement leakd Wednesday shows the Obama Administration is pushing a secrective trade agreement that could vastly expand corporate power and directly contradict a 2008 campaign promise by President Obama. A U.S. proposal for the Trans-Pacific Partnership (TPP) trade pact between the United States and eight Pacific nations would allow foreign corporations operating in the U.S. to appeal key regulations to an international tribunal. The body would have the power to override U.S. law and issue penalties for failure to comply with its ruling. We speak to Lori Wallach, director of Public Citizen’s Global Trade Watch, a fair trade group that posted the leaked documents on its website. "This is not just a bad trade agreement," Wallach says. "This is a '1 percent' power tool that could rip up our basic needs and rights." 

Lori Wallach, director of Public Citizen’s Global Trade Watch. (www.democracynow.org - 6/14/2012)

W10321303's picture


Obama Plans to Put Foreign Companies Above the Law

Zach Carter has a must-read new article up at Huffington Post on leaked documents from trade negotiations that have been posted at the website Public Citizen. You should read his entire article, pronto, but here is the money quote:

The newly leaked document is one of the most controversial of the Trans-Pacific Partnership trade pact. It addresses a broad sweep of regulations governing international investment and reveals the Obama administration’s advocacy for policies that environmental activists, financial reform advocates and labor unions have long rejected for eroding key protections currently in domestic laws.

Under the agreement currently being advocated by the Obama administration, American corporations would continue to be subject to domestic laws and regulations on the environment, banking and other issues. But foreign corporations operating within the U.S. would be permitted to appeal key American legal or regulatory rulings to an international tribunal. That international tribunal would be granted the power to overrule American law and impose trade sanctions on the United States for failing to abide by its rulings.

This is an active effort to undermine US laws and make certain US laws subordinate to non-US tribunal that sits outside any democratic process. President Obama took an oath to uphold the land. I’d like to throw this out to readers. As much as trade agreements (which were approved by Congress) have sometimes run into friction with existing laws, this move by Obama looks to be a far more radical effort to increase the power of multinational companies. And US companies would argue for, and likely eventually get, similar breaks, assuring a legal/regulatory race to the bottom (if you think what we have is bad now, do not underestimate how much worse it could get). (www.nakedcapitalism.com)

EvangelosA's picture

WTF this guy says???

That’s from ECB…

European Central Bank definition of the concept of financial integration: “The market for a given set of financial instruments or services to be fully integrated when all potential market participants in such a market (i) are subject to a single set of rules when they decide to deal with those financial instruments or services, (ii) have equal access to this set of financial instruments or services, and (iii) are treated equally when they operate in the market”


That was the purpose of the Maastriht Treaty… that’s why we had allow the freedom of capital movement assuming a freedom to get lending from all over Europe… WE DIDN’T EVER WANT TO ALLOW THE ONE WAY FLIGHT OF OUR DEPOSITS WITH NO TURNING BACK MECHANISM!!!

debtor of last resort's picture

a burning bank union is what we need.

Grand Supercycle's picture

Rally warning continues...

Despite stockbears with their pre-election jitters, SPX choppy bullish daily & USDX bearish daily charts strengthen.

Significant equity / EURUSD upside & USDX retracement ahead.