Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

EU Banking Union: even the timing, 9/11, Spells Disaster

Interest-Rates / Euro-Zone Aug 15, 2012 - 09:19 AM GMT

By: ECB_Watch

Interest-Rates

Best Financial Markets Analysis ArticleEven the timing of the Banking Union spells disaster. Proposal to be announced 9/11, says WSJ (Source). Discussed in this post, the ECB taking responsibility for banking supervision.

Cast: Sharon Bowles (EU Parl), Mario Draghi (ECB), Nicolas Véron (Bruegel)



The victim: checks and balances

It looks like it's already in the bag, the ECB will have responsibility for banking supervision. What this really is, is a re-appropriation and extension of the prudential regulation role it held prior to the creation of the EBA (answerable to the EU Commission).  That's because NCBs, as members of ESCB, were already under ECB since its inception.

The ECB empire is regaining the ground lost to the EBA, and more; EBA vestige of a stillborn institution.

Is that good? The ECB is only accountable to EU citizens through 'monetary dialogues' with the EU Parliament's ECON Committee. That's weak by statute and this blog has shown evidence EU Parl has lacked diligence in accomplishing its mission under the Chairmanship of Sharon Bowles. Refer to 'Also see'. After having turned a blind eye to irregularities in Draghi's nomination, her absence of circumspection about expansion of power of the ECB is part of the normal (but wrong) course of events (Source):
I think that one of the things it recognises is that banking supervision has to take account of what monetary policy is, so to have the ECB involved in supervision of eurozone banks and therefore taking account of eurozone monetary policy in that supervision is a good idea.

The track record of the departed president of the ECB, as Krugman puts it, was an 'impeccable disaster' (NYT). The current president, Mario Draghi, is compromised—amongst others—in the GR-Goldman affair. If you're reading this blog for the first time, it's not guilt by association with the bank—'his past at Goldman'—that is implied in occasional references to matter in the press. The ECB has repeatedly obstructed, under both Trichet and Draghi, demands by Bloomberg to release its GR-Goldman swaps file (ZH), and there's a lot more that took place in Parliamentary proceedings. Refer to 'Also see'.

The US experience teaches us that if not for CFTC separate from the Fed, there would be no record of dissension among regulators on financial derivatives—Brooksley Born vs Greenspan in the 1990's. In a merged entity, the bad guys could have simply found cover behind 'the consensus at the time' to explain the financial crisis, and gotten away with it.  One reason they won is also the reason they became complacent: concentration of power. That's three reasons to hand over the reign of supervision to the EBA rather than the ECB.
 
Bruegel reassures Congress about EU plans—worrying

What is the reality about Bruegel underneath the pompous and self serving description they present themselves to the US Congress (Source):

Bruegel is a nonpartisan policy research institution based in Brussels that aims to contribute to the quality of economic policymaking in Europe through open, fact‐based and policy‐relevant research, analysis and discussion.—Nicolas Véron ? We've begun addressing this question previously ('Also see') and let's find out more as we go along, here, and perhaps in subsequent posts. Here's an opinion by the same author as related in a recent article (WSJ):

 

The ECB can also take advantage of an existing legal authority which gives it some responsibility for bank regulation, so no treaty changes are necessary. And unlike the EBA, whose reputation took a beating over the way it conducted stress tests for European banks last year, the ECB currently basks in the glow of political favor in Berlin and other capitals.

If Paris is worth a mass, the emergence of an empire—so much more fascinating than democrary, is worth a jab at an institution that barely spread its wings. The EBA relied on NCBs to conduct the stress tests. The odds are ECB wouldn't have done a better job. In fact, the methodology was established in 2010 jointly by ECB and CEBS, of which EBA is an offshoot (ECB). EBA probably bowed to the pressure not to include sovereign default scenarios. Not a fatality. The ECB, OTOH, has one more pressure to contend with: its own balance sheet.
 
I read Véron's statement to the US Congress.  There are valid points but too many half truths to consider his analysis impartial. For example, he feels the EBA's board reflects national interests, not an EU interest. But so is the ECB's board: the South/North divide, for one, has been a constant source of infighting. Regarless, it misses the point. The dominance of big banking and finance is prevalent across national authorities—even continents, and there is no basis for thinking the ECB is independent from that power. On the contrary. The much publicized watchdog complaint taken into account by the EU ombudsman is but a facet of a larger, deep seated, problem.

In a separate piece, Véron addresses the problem of TBTF, concluding as follows (VoxEU):

The discussion on possible remedies to the too-big-to-fail problem is not a simple one, and no silver bullet is at hand.
How about break it: would that reflect poorly on the sophistication expected from a 'senior fellow'? Technocratic deadlock.

Source http://ecb-watch.blogspot.co.uk/2012/08/banking-union-fallacies-4-draghi-to-be.html

By Jareth

ECB Watch

© 2012 Copyright ECB Watch - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in