While the world is glued to Youtube live feeds in HD quality to the bonfires in Kiev where one corrupt regime is about to be replaced by another, the economic crisis erupts into fire in the heartland of the Eurozone.
30,000 protesters took to the streets in Nantes, France on Saturday, in an ongoing struggle to prevent the building of a new airport.
Due to the language barrier and a blackout in EU media this report for the BBC from 2012
shows that fronts are pretty hardened. Protesters claim that the Notre-Dame-des-Landes airport in the west of the country is unnecessary and would damage the enviroment while the local government just wants to press on with an agenda obviously abhorred in this town of 900,000.
We miss the uproar in the EU about the deployment of pepper spray and water cannons and the lack of any reporting about it. Click here to go to the The Prudent Investor homepage for more interesting posts.
Sad affairs have been heating up in the tiny Alpine republic in the center of the European Union. While Austria experiences record unemployment at record growth rates and tax revenues have fallen behind optimistic projections, the looming bankruptcy of a mid-sized regional bank, Hypo Group Alpe Adria (HGAA), may propel the country to the disdained position of being the catalyst for a new round of bank failures due to interwoven banks risks on both the domestic and the international level.
Austrian politicians are up in arms since a third-party expert opinion that recommends to wind down the bank at a cost of €18 billion has been leaked to the media, but keep on marching on the most fatal route that will not dissolve the problems: They keep flogging the dead horse HGAA with taxpayer's millions in a monthly money injection routine that has cost so far around €4.5 billion.
Current talks involving politicians appear to be more adequately suited for the Vienna opera house, but not for a rolling high finance train wreck that needs more than monthy band aids.
On Monday Austrian financial market authority FMA publicly said what the official Austria never wanted to hear as it is now confronted with a widening public discussion on a problem it had surrealstically hoped to brush under the carpet. FMA head Harald Ettl warned that any further delay would make the – in this blogger's humble opinion doomed HGAA – an incalculable risk and that Austria should consider no option as a taboo anymore.
Nothing could be more true. An unorderly liquidation of HGAA will not only push Austria from the throne of the best economy in the Eurozone, pushing its public debt to GDP ratio well over 80%, but will also have continent wide reverberations.
Bad Bank Idea Stopped In its Tracks by RBI
The governments preferred solution, a bad bank for HGAA with the other Austrian banks as shareholders was stopped in its tracks on Monday. Raiffeisenbank International (RBI) CEO Karl Sevelda ruled out his participation in such a special purpose vehicle, claiming his shareholders will vote "no" on this issue. RBI is laden down with its own problems like a 3-digit billion exposure to ailing Central Easter Europe's countries where it had applied an aggressive "growth before everything else" strategy that is now becoming a boomerang due to to mounting bad loans.
The government was desperate to push through such a bad bank scenario as this would have helped to avoid a rapid expansion in public debts. Without a bad bank HGAA's debts would trigger guarantees from the owner, the province of Carinthia. As Carinthia is technically bankrupt itself this would lead to triggering state guarantees as Austrian laws do not provide for the bankruptcy of a province.
The FMA's comments on HGAA will at least have one effect: Fingerpointing between those responsible for the whole mess has already begun. Austria's central bank, which issued a "no problem" expertise about HGAA at the beginning of the financial crisis in 2008, is more focussed on avoiding investor litigation that could hit the institution based on this old "expertise."
So where do we go from here? As a dyed in the wool Austrian it can be assumed that the Austrian grand coalition, under fire from all sides since its formation last November because it has only come up with new tax ideas but no sizable savings in its expenditures, will apply the ostrich strategy once more.
Alas, this time the government may not find the time to sip coffee and push the debt wagon further as the EU is watching developments closely. On Monday Daniele Nouy, head of the newly formed EU banking authority EBA warned in an interview with the Financial Times, that it may not be appropriate to merge very sick banks with their not so sick counterparts. While not naming HGAA directly Nouy said, "we have to accept, that some banks will disappear."
Austria's banking woes look eerily similar to the failure of Creditanstalt in 1931 that was the fuse for the last European Kondratieff winter. For those sticking with K-cycles this may not be a good outlook. 83 years later such an event is more than overdue in Europe and given Europe's overall outlook it does not take much anymore to set the Great EU Chaos into full fledged motion.Click here to go to the The Prudent Investor homepage for more interesting posts.
You are not a machine.
Your natural genetic design does not tolerate 2 to 4 hours of travel per day, 8 to 12 hours of slave labor 5 to 6 days per week.
For whatever monetary compensation.
On 5 to 6 hours of sleep.
In a system built on penalistic principle and a life under judgmental surveillance.
Like it or not your are human.
Stress, harassment, constant financial worries, fear and a sense of inadequacy destroys the health of any human being.
This is a scientific fact.
So why is it that we accept and tolerate a system that in actual reality demands that you erase your needs and in effect commit a slow joyless suicide for someone elses profit?Click here to go to the The Prudent Investor homepage for more interesting posts.