EFSF needs to be 4 trillion euros, says Daniel Gros

The new eurozone bailout fund, the EFSF, may need to be as big as 4 trillion euros to assist banks, Daniel Gros, director of the Centre for European Policy Studies, has admitted – and senior officials are afraid to tell lawmakers, reports the FT.


The eurozone’s largest 91 banks need 4 trillion euros next year alone to roll over debt but money markets are increasingly refusing to give European banks credit, leaving eurozone tax payer’s to plug the gap unless the banks are nationalised.

“Morgan Stanley, for example, calculates that of the €8,000bn funding that is currently in place for the largest 91 eurozone banks, some 58 per cent needs to be rolled over in the next two years. More startling still, some 47 per cent of this funding is less than a year in duration,” writes Gillian Tett.


The FT reports that senior officials – EU, ECB, IMF? – are withholding from lawmakers vital the information about the size of the mega banks debt to pass this monstrous EFSF legislation, which will give banks virtually an unlimited pool of tax payer money.

“Because increasing the size of the fund has proved controversial in many creditor countries – particularly Germany, Finland and the Netherlands – senior officials have tried not to discuss options publicly for fear of spooking parliamentarians who must approve the new powers in a matter of weeks,” writes Peter Spiegel.

The amounts will ruin public finances and drag down states in the eurozone, admits the FT.

 “For some countries, bigger contributions to the EFSF will add huge pressure to their already strained public finances,” writes Peter Spiegel.

France could be the first over the edge.

“Such an increase would mean France, whose triple A rating is essential to the market credibility of the EFSF, would see its debt levels rocket, at a time when its bond rating is already under scrutiny. “It’s just not conceivable to have a much larger EFSF and still have France as triple A,” said Mr Gros.”

The sum of €440bn for the EFSF is clearly far too small, concedes the FT.

But the 4 trillion euros required to keep the insolvent banks over water for just one year amounts to a third of the eurozone’s entire GDP of about 12 trillion euros.

The whole of the eurozone will soon look like Greece if parliaments agree to the EFSF.

All the Greek government tax revenues are now not enough to pay even the interest on the souvereign debt.

Under brutal new measures, Greek pensioners on an income of a little more 4000 euros who own a flat will have to pay tax.

Here we have looting on a scale not seen since world war two  – and it is fitting to ask if the Greeks are not the new Jews. The EU, IMF and ECB are a monstrous machine designed to pick the last cent out of Greek pockets for a financial elite who pay no taxes themselves.

Germany will also end up in the hands of this monstrous EU. IMF and ECB looting machine unless radical action is taken soon.

Germany may have a triple A rating but it has a national debt of about 2 trillion euros. In 2011, Germany will have to pay 38,1 billion euros in interest payments. Interest payments are, in the meantime, the second largest item in the country’s budget.


The debt of Germany along with that of all the other eurozone countries is set to soar.

The total volume of money that eurozone banks need to raise in the wholesale and interbank markets, which is currently around €8,000bn is also set to increase.

Aware that the people of Europe are not going to tolerate the brazen looting by banks much longer through bailout funds, the Financial Times reports that there are plans to turn the EFSF into a bank, „allowing it access to unlimited ECB funds in case of emergency.”

The plan is, in fact, for EFSF to operate like the Federal Reserve and simply print trillions of euros and hand them to the banks. The result will be inflation and hyperinflation of the kind now occurring in the USA due to the Fed’s QE programmes.

“Opposition has come primarily from Germany, where hostility to the ECB’s own bond-buying programme is strongest. Jens Weidmann, head of the Bundesbank, told the German parliament this week that the scheme for turning the EFSF into a bank was “very dangerous”, since it would give politicians access to the ECB’s currency printing press – a power normally allowed only to central bankers,” writes Peter Spiegel

“A March ECB legal opinion also called into question the legality of the arrangement, but Mr Gros argued that other EU institutions, such as the European Investment Bank, already rely on the ECB for backstopping and such legal hurdles could be cleared if national leaders agreed to change regulations”.

The real cause of the eurozone and US debt crisis is our privatised money system. Privatised money and interest is a mathematical system with an exponentional function.  Interest and debt grow exponentially.


The solution is to reform the money system and nationalise the banks.

Some responsible politicians in Germany have to act now and present a viable plan to the electorate of how to escape financial armaggedon without further delay.

Anyone who thinks that a secret budget committee in the German parliament is going to stop the banks siphoning off all the money in the EFSF is naive.

As soon as Greece defaults, the first trillions will be needed and the German parliament will hand it over just as it has handed over all the money the banks have ever asked for so far.

The result will be the economic ruin of not just of Germany, but all the countries in the euorzone, a depression worse than the 1930s, soaring unemployment, conflict, war and revolution.

Economist Kenneth Rogoff said in an interview with the FAZ that it was “a mistake” that the banks did not use all the bailout money they have received so far to recapitalise but for bonus pools and for their clients.

It is certainly a mistake to give these same bankers yet more money in the form of any EFSF fund.

The time has come to take the trough of EFSF bailout funds, eurobonds and ECB money away from the bankers.

The only solution to this crisis is a radical reform of our money system and the nationalisation of the banks.


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