The chief economist of Deutsche Bank has urged quick action to stop a collapse of the eurozone banks.
David Folkerts Landau said European banks need the 150 billion euro immediately to avoid collapsing.
He said Italian banks urgently need new capital.
“Europe is serioulsy ill and has to solve the existing problems extremely quickly, otherwise there will be an accident,” he said.
He said the money of private creditors should not be confiscated under the “mad” new rules of the EU.
Confiscating the deposits of European customers would depress consumption, deepen the recess, create social chaos and lead to mass desertion from banks.
Using tax payer money would destroy the finances of the European nation states, and would be politically toxic.
Angela Merkel has already burdened the German budget with a staggering extra 100 billion euros because of her open doors migrant policy.
There is only one solution and that involves simple acccounting.
Since banks create money out of “thin air” as explained by Vienna economics pfocessor Franz Hoermann, it is simple for the ECB to give 150 billion euros in capital to troubled banks or for capital creation and accounting rules to be relaxed to allow those banks to book 140 billion euros of “thin air” as capital.
Crucial is that the ECB does not cut the banks off from liquidity under some pretext or other until the financial system is reset.
Otherwise we will have an economic and financial meltdown which makes the 1920s look like paradise.
The Eurogroup politicians need to take steps immediately to make sure the ECB does not knee cap the banks and have a plan B in case they do, such as ordering national central banks to supply liquidity.