Brussels' Bogus Bank Regulations
By Staff News & Analysis - January 07, 2011

Europe unveils sweeping plans to govern reckless banks … Brussels has called for sweeping powers for regulators to seize failing EU banks, sack board members, and impose haircuts on senior bank debt, aiming to ensure that taxpayers are never again held hostage by high finance. The European Commission's "Framework for Bank Recovery and Resolution" draws on Scandinavia's hard-line approach during their banking crises in the early 1990s. The goal is to end the pattern of moral hazard and mispricing of risk that generated Europe's debt woes. "Banks will fail in the future and must be able to do so without bringing down the whole financial system," said Michel Barnier (left), the internal market commissioner Mr. Barnier's consultation paper will lead to a "legislative proposal for a harmonized EU regime" as soon as this summer, with an insolvency structure in place by 2012. The final phase will be the creation of a European Resolution Authority by 2014, adding a fourth pillar to the EU's new architecture of financial regulation. EU "authorities" typically have their own permanent staff and powers to override national bodies. – UK Telegraph

Dominant Social Theme: Regulate the banks and these cyclical depressions will occur no more.

Free-Market Analysis: Another day, another meme. This is one of the older ones and its reoccurrence shows us more clearly than ever that elite propaganda is neither innovative nor complex. Just yesterday in an article entitled "Necessity of the Plutocracy?" the Daily Bell pointed out how concerted efforts were being made to blame Wall Street for the Greater Recession that began in 2008. A steady drumbeat of anti-Wall Street and anti-banking sentiment has issued forth from the organs of the state and its enabling mainstream media – designed, in our opinion, to shift the blame away from mercantilist central banking. We also pointed out the following:

The idea is to blame the securities industry and the "plutocrats" for the West's economic woes. This is what happened in the 1930s when central banks last blew up the system. Wall Street was regulated and "populism" was encouraged as a political system. The power elite is happy to point fingers at rich securities bankers; it is central banking that is to be off limits. And even now, we observe, despite a general sense (especially in America) that central banking is a main player in the disaster of the Greater Recession, central banks remain above the regulatory conversation. The Federal Reserve in fact has received vast new powers.

Yes, hard as it is to be believed, in the United States, the Federal Reserve has been given more power. Now in Europe, banks are about to become far more highly regulated. The idea that regulators themselves are partially to blame, and central banking economies themselves are set up to create cyclical depressions is not dealt with by the people making the rules nor is it made clear by the media and certainly not the academic community.

Thus as we can see, historical narratives are created by elites and elite media, not by "the facts on the ground." The elite creates dominant social themes – fear-based promotions that are widely distributed via universities, think tanks, white papers and the mainstream media. In the 21st century, these memes have been widely checked by the truth-telling of the Internet. But what has been fascinating to see is that exposure does not stop the propagation of these memes, nor their SOLUTIONS.

It is an absolutely bizarre spectacle. Global warming is an obvious culprit. It is now rejected by the majority of people in the West and probably around the world (if they have heard of it). But the global warming meme (and the tiny network that propagated – exposed via a famous hacking) continues onward nonetheless. The UN holds meeting about it; portions of the mainstream media continue to tout it as a fact; automobile companies and power companies continue to move ahead with "solutions" to a problem that is not only seen as increasingly incidental but also actually wrongheaded, in that the world may be entering another "mini-ice-age."

Global warming is an especially important dominant social theme for the power elite because so much depends upon it, including upcoming food and water scarcity memes. But what we have observed is that when elite memes are thoroughly discredited, the elite itself – via elite promotional mechanisms – continues serenely to market its discredited propaganda as if nothing has happened.

This is not because the elite, in aggregate are genius-types; nor are they reptiles as David Icke proposes; but they are arrogant and they are, we would propose, paranoid and frightened. More importantly however, the memes of the elite are simply not reversible entities. The fear-based promotions currently in play are vast enterprises that are beyond the control of any one particular person at this point. Once they are put in play they almost, of necessity, have to run their course.

But just because a promotion is ubiquitous does not make it correct. It is incorrect to blame the Greater Recession on commercial banking, or even investment banking. The elite itself at the highest levels has created a central banking economy worldwide, and the booms/bust cycles that central banking engenders has proven inordinately destructive to Western economies especially – which have the most to lose.

How does it work? The stimulation of fiat money causes tremendous surges in temporary prosperity in a given society; but as we have seen over and over again, the "bust" cycle of central banking is tremendously destructive and when combined with the progressive income tax, tends to hollow out economies and ruin their productive capacities over time. The boom-bust cycle of central banking is also immeasurably destructive of middle classes. Throughout history it seems that elites and middle classes have been at war.

The banking reforms in the US and Europe will not do a single thing in our view to ameliorate the boom-bust cycle generated by the worldwide central banking economy. Central banks will continue to print too much money, fooling people into thinking their economies are doing well. When the distortions build up enough, a crash takes place and people lose wealth and economies lose vitality and are evermore prone to authoritarianism.

After Thoughts

The regulations in Europe are in fact fairly Draconian and give government and its regulatory bodies tremendous powers they did not have before. Eventually, such regs will be "harmonized" around the world. Thus we see that despotism advances at the expense of truth and the free-market is diminished as a result of man-made catastrophes.

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