The Death of Direct Bank Re-capitalisation: Europe’s (newest) day of shame

 "When a bank needs capital injections, the first thing that happens is that the national government provides the capital needed to raise the bank’s minimum capital ratio (T1) to 4.5% of its assets. After that, a sequence of haircuts must follow. First to be haircut are the shareholders and bondholders and then come the uninsured depositors (i.e. the Cyprus model is enacted). Beyond that, the ESM and the national government pout more money in the bank, with the latter participating at a rate of 20%, which can later be reduced to 10%. (...)

Mr Olli Rehn, the EU’s economic overlord, has said it himself, in describing this scheme as an attempt not to decouple the two crises but, rather, to “dilute the link” between them. It is like telling a hanging man that you will not cut the rope choking him but that you will remove a couple of layers of string from it."

http://yanisvaroufakis.eu/2013/06/21/the-death-of-direct-bank-re-capitalisation-europes-newest-day-of-shame/

Monetising the… ECB: The latest insult to be added to Greece’s multiplying injuries

"Last week another installment of the cruel theatre of the absurd, also known as the ‘Greek Rescue’ (and more recently re-released as ‘Greece’s success story’), was delivered silently: Not for the first time, the bankrupt Greek state borrowed from one arm of the Eurozone to give to another, with massive interest to boot. To be precise, the Greek government borrowed €4.2 billion from the European Stability Mechanism (ESM) in order to repay the… European Central Bank (ECB) €5.6 billion, leaving the ECB with a profit of €2 billion plus from this hideous transaction. Re-pay what exactly?"

http://yanisvaroufakis.eu/2013/05/20/monetising-the-ecb-the-latest-insult-to-be-added-on-greeces-multiplying-injuries/