MONETARY POLICY “stress but “banking agitprop.”


tests” that were nothing But


these realistic evaluations won’t happen until the banking union is in place. How does Richter know? Draghi himself said so. Draghi said:


“The effectiveness of


will depend the


this exercise on


availability


of nec e ssar y arrangements for r ecapi t a liz in g banks...


including


through the provision of a public backs t op...Th e s e arrangements must be in place before we conclude our assessment.”


Richter translates that to mean:


“The truth shall not be known until after the Eurocrats decided who would have to pay for the bailouts. And the bank examinations won’t be completed


Private banks, not governments, virtually create the entire money supply by creating interest- bearing debt


until then,


because if any of it seeped out – Draghi forbid – the whole house of cards would collapse, with no taxpayers willing to pick up the tab as its magnificent size would


the crippling insolvency of the banks be revealed. Predictably, panic will then set in, credit will freeze, and the banks will collapse, leaving the unsuspecting public to foot the bill.


But that’s not the only alternative. In the 1990s, the expectation even in the United States was that failed megabanks would be national ized. That route was pursued quite successfully not only in Sweden and Finland but in the US in the case of Continental Il l inois, then the four th- largest bank in the countr y and the largest- ever


bankruptc y. According to William


Engdahl, writing in September 2008:


“[I]n almost every case of recent banking crises in which emergency action was needed to


FX TRADER MAGAZINE April - June 2014 25 finally be out in the open!”


Only after the taxpayers – and the depositors – are stuck with the tab will the curtain be lifted and


What Happened to Nationalizing Failed Banks?


Underlying all this frantic wheeling and dealing is the presumption that the “zombie banks” must be kept alive at all costs – alive and in the hands of private bankers, who can then continue to speculate and reap outsized bonuses while the people bear the losses.


FX


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