Dead hand of Draghi seen in Article 38
“Look into my eyes look into my eyes look into my eyes”
The third piece on EU under-the-radar Bailin capability I posted this morning has tempted quite a bit of leakage from the wood work. And some of it is dynamite.
A regular Slogger source writes to tell me that ‘”Derivatives” can remain “off-balance sheet” under this “resolution” process. Thus the true nature of the problem is going to remain hidden.’
He quotes how Article 38 of the proposal uses this quite brazen but explosive phrase:
‘Exceptionally and where there is a justified necessity to ensure the critical operations of the
institution and its core business lines or financial stability (Article 38) the resolution authority
could exclude derivatives’ liabilities.’
Well damn me boys, there’s the E word again. And we all know what that means. But specifically to the point, this part of the proposal will have come down from Count Draghula at the ECB himself: nobody since the start of this four year disaster has grasped the ability of non-netted derivatives to blow the entire banking system to smithereens quite like the Italian Galleon. Il conti Mario doesn’t care if Spain splits into three parts, Italy has a revolution and the Greek population starves to death….as long as the banking system survives. But the derivatives must be faced one day. And that day is always tomorrow.
Meanwhile, a Dutch Slogger has copied me on an email he sent to Nigel Farage this morning on the subject of a Bailin procedure that can circumnavigate the EU Parliament. He clearly grasps the eurojargon better than I do, writing to Nige that ‘this legislation is being handled under the “regulatory comitology procedure with scrutiny”, which means that it is automatically adopted if your Parliament does not oppose the draft’. Let’s see what Farrago Man does with this. I’m happy to settle past differences and join forces to defeat a common enemy.
Earlier at The Slog: How an EU proposal can become law without a single MEP voting on it
In the UK, of course, the process is already real…as in the Co-Op bailin that is strengstens verboten from debate in Westminster. Make your view equally strongly known to the legislature:
www.hat4uk.wordpress.com/ link to original article
Lucas 2012 Infos 