When the vampires start to donate blood, you know the whole system is dead. In a last minute maneuver announced this evening, an emergency rescue for Monte dei Paschi di Siena Bank (MPS) has been arranged, involving a consortium of banks and pension funds buying some $10 bil euro of non- performing debt off the bank’s books, at 30 cents on the dollar; and a capital infusion into MPS of some $5 billion. “Atlante” [sic] is the name for the new, rescuing entity, whose participants include Deutsche Bank—itself in need of rescue, Credit Suisse, Goldman Sachs and others. The Italian Treasury Department issued a statement that it was ‘satisfied’ with the plan. The inference is that this maneuver from private sources avoids the imposition of the EU bail-in procedure.
This MPS so-called rescue was announced minutes before the results were issued from the ludicrous “stress tests” of 51 Euro banks, conducted by the European Banking Authority. In fact, no contrived stress exercises and scenarios of risk are needed to prove that the system itself is kaput in the Trans-Atlantic banking sector, with banks holding multi-hundreds of billions of non-performing debts, and trillions of worthless derivatives and other toxic claims. The stress test results came out only after 10 pm in Europe, after markets closed, so that financial players could have the weekend to figure out their next move!
All this highlights, that the only sane solution is that proposed earlier this month by Lyndon LaRouche, as the “Herrhausen” intervention, to deal with the crisis of Deutsche Bank, by providing an injection of liquidity, accompanied by transforming the bank’s mandate and activity, to supplying credit for productive use. This is spelled out in Helga Zepp LaRouche’s July 12 call, “Deutsche Bank Must Be Saved, for the Sake of World Peace!”
LaRouche stressed this earlier today, saying that this is the job we have to accomplish. Not “testing”—which is guaranteeing, not preventing the crash.
In the ongoing Deutsche Bank saga, its stock value had fallen 8 percent as of Friday morning, just since Wednesday. The price was hovering around 12 euros per share. Then by the evening, it blipped up a bit, after the MPS scheme was made known. This week Merrill-Lynch downgraded Deutsche Bank to “underforming” status.