Ah, I see 'tis time to dust off the cliche credit crunch photos.

At least you didn't go for the 'squeezed' Euro font.

ah yes, another crappy new fear.

Bring back the Chicken Flu!

Is there no end to this misery? European economies and banks keep returning to a market that is only too willing to bet against them. When will governments realise that this shafting is ruining any chance of recovery?

Then governments should set up their own bank and lend the money directly to the people.

Forego the Banks and remove them from the system completely.

They only want to gamble with our money not their own.

Bloody windy out again today. As well. Forecast: gloomy.

Well personally I am not in the least troubled by the prospect of impending Financial Armageddon.....

''I started out with nothing and still have most of that left'
Steve

Let me guess another bailout on the cards by the end of the month.

This year will be about the under-reported currency wars. Inflation here we come.

Officials from the so-called troika are due in Athens on 15 January and Papademos said "the coming few weeks will be extremely crucial".

We know who's giving out the money and we know who is taking it!

Time to nationalise the banks before it really is too late!

After months and months of phoney war and fear mongering by "Financial Experts and Market Analysts", I have succumbed to total apathy on this issue. Capitalism is all about financial brinksmanship and manipulation, it is impossible to make a multi-billion dollar profit without the constant threat of instability.
Fine for the Plutocrats, Oligarchs and their Political Cronies but rather irritating for the rest of us.
Could be worse, we could start another unimaginably expensive oil war to take people's mind off the great confidence trick.

Europes largest petrolium distiller Petroplus is apparently having problems getting new money.

Given the way some governments have behaved over recent years, one or two in the eurozone coming to mind, would you trust them to run a bank any better?

It looks more like an self-adjusting spanner of some kind to me. i.e. more appropriate for turning the euro rather than squeezing it.

Fort analogous purposes I would have adopted a vice or maybe some nutcrackers. Bolt crops might have been edgy. But this just fails.

Dull ? No less so than yet another article full of billions, fractions of percentages and analysts.

Someone today described Greece's comment that unless they got more money they would leave the Euro, as holding a gun to the head of the other countries of the EZ. This reminded me of the scene in "Blazing Saddles" where the black sheriff holds a gun to his own head to take himself hostage and eludes the white lynch party. He got away with it because the rest were all stupid. Greece won't get away with because.... oh wait.
Actually, the rest of the EZ really do wish that Greece really would just get lost and are rapidly taking steps to protect their banks when they do default. Greece will sink back into 3rd world status where they can contemplate their corrupt governance in peace and quiet (or maybe not if there is a putsch).

There is no Euro crisis, there is a dollar and pound crisis: look at the 10 year charts.
Even with this 'crisis' the Euro is still floating around the same level since 2008.
Short term a pseudo Euro 'crisis' - but long term GBD and USD have been tanking for decades.

EUR/USD
http://finance.yahoo.com/echarts?s=EURUSD%3DX+Interactive#chart2:symbol=eurusd=x;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

EUR/GBP
http://finance.yahoo.com/echarts?s=EURGBP%3DX+Interactive#chart2:symbol=eurgbp=x;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Economists are so dumb. Their understanding of economics is about as complete as Plato's "perfect forms" and imperfect Earthly copies. Our grasp of the economy is about as consistent as the 4 elements theory: Earth, Air, Fire and Water.

Academic economists should be ashamed of themselves for not being able to do any better. I have a very low opinion of the lot of them.

I agree 4danglia (great car by the way) but economics (the dismal science) has it own category for the Nobel prize (hard to believe, isn't it?)

Hey Joe, get with the program, this a Guardian comment string, flavour of the week/month/year is hate the Euro!

Around 85 million barrels of oil went up in smoke -effectively gone forever- since the crisis was discussed yesterday.

The fundamental assumptions of economics are false, and the whole 'house-of-cards' system, constructed around infinitely available cheap resources, will collapse over the next few years.

That poses a major problem for bankers, since they need perpetual growth to keep their Ponzi scheme (creating money out of thin air and charging interest on loans) going.

It all amounts to an interesting collision between delusion and reality.

'shafting is ruining any chance of recovery?'

There is zero chance of the past economic arrangements ever being restored.

Peak Oil is a 'game changer'.

People have a simple choice: prepare for reality or get wiped out by it.

There is zero chance of the past economic arrangements ever being restored.

Peak Oil is a 'game changer'.

People have a simple choice: prepare for reality or get wiped out by it.

What about changing the economic arrangements? Just a thought.

What a ludicrous system of money supply we have.

If you use bank credit to supply an economy with money then eventually this happens.

There is a great conspiracy of silence about our broken and corrupt system of money supply. Its the biggest scandal and the biggest story of the last 500 years.

Shame on The Guardian for its extraordinary lack of curiosity - all the pieces of the puzzle are there and its a MUCH bigger story than phone hacking!!!

I'm tired of reading banal reports of this chaos. Where are the questions? Where is the journalism? Why is the simple business of supplying ourselves with a medium of exchange so vexed and broken?

People need to stop listening to the rehashed nonsense of economists and bankers - and the captured politcal class - and ask themselves this question: How is money created?

Once you know the answer to that question, all of the chaos we have in economies across the globe is as easy as ABC to understand.

Start here Guardian.

"Ok guys I've got this great business idea, you lend me fifty billion euros at one percent interest then I give it back to you and you put it on deposit for me to earn a quarter of one per cent interest.." :-o

What are banks for then, apart from swallowing taxpayers' cash?

You are correct in some ways. One way or another there is going to be a moment corresponding to 'peak oil' but the debate is when is that? Maybe not in my lifetime (I'm 66), but sometime. To maintain our civilization we need to develop non-fossil fuel energy. Wind and wave power is bullshit. Maybe solar can be developed in an economical sustainable manner, I have great faith in our physicists, but will it be enough? When you get down to it comes back to nuclear. The tragedy is that it has become the red-headed step-child. We need to invest more in research. The Chinese sure as hell are, as are the Indians. It's nuclear or Neanderthal folks.

Do you mean Public Ownership ?

Look who's driving and phrasing the argument. How about rephrasing it and saying the top 25% of earners reduce their earnings by x amount. It will raise a lot more money and faster and help the country get back on its feet. Then, the slightly less rich can start making lots of money again without having trampled on the less well off.

The old saying that a bank is like someone who lends an umbrella in the sunshine and demand it back when it rains is out of date!

banks are now multinational tax avoiding companies that take in a pound, leverage that pound 1000 fold, get paid billions in bonuses and salary and when they look like going bust, they get governments to steal from the poor so that the banks can leverage this new (paper) money to pay themselves billions so that they can go bust and again get governments to steal from the poor so that the banks can leverage this new (paper) money to pay themselves billions so that they can go bust and again get governments to steal from the poor so that the banks can leverage this new (paper) money to pay themselves billions so that they can go bust and again get governments to steal from the poor so that the banks can leverage this new (paper) money to pay themselves billions so that they can go bust and again ad infinitum...

The likes of Goldman Sachs, JP Morgan are simply massive Ponzi Schemes, they have already pulled off the biggest theft in history and unlike the thousands of thieves that stole from high street UK, who have been arrested, charged, convicted and imprisoned, the bankers have not even been investigated, yet their crimes are trillions of times worse than the London Rioters...

CaMORON protects this criminal cabal, at the cost of the british voter...

You can fool all of the people SOME OF THE TIME and some of the people ALL OF THE TIME but you Clegg/CaMoron CAN NOT FOOL ALL OF THE PEOPLE ALL OF THE TIME

John Szepietowski

'There is a great conspiracy of silence about our broken and corrupt system of money supply. Its the biggest scandal and the biggest story of the last 500 years.'

Well said.

However, the Guardian cannot present the truth about the money system, the truth about peak oil or the truth about the environment to its readers (they are all interconnected). If the truth became widely known there would be a fairly immediate panic in 'the markets' and social chaos. As far as 'the powers that be' are convcerned it's better that the truth leaks out very slowly .

Like all 'newspapers', the Guardian has to limit itself to arcane discussion of the symptoms of fundamental flaws/discrepencies/scams in the system. It's the same for politiicans. They cannot speak the truth about anything that matters (even if they know it, which many seem not to). That's why politics is such sad joke.

We must thank the Guardian for keeping up posted on how quickly the system is collapsing but cannot look to the Guardian for fundamental reasons why the system is collapsing. They are found elsewhere.

The system has no future. It will take quite a while longer for the majority to realise that.

The crime of robbing a bank is a mere trifle compared to the crime of establishing a bank.

(Sorry, I can't remember who first said that.)

EUREKA! There is a solution for the Greeks - and all countries that are being hammered by bond markets forcing them to pay interest rates hundreds of times those offered by the Federal Reserve and the ECB to commercial banks.

As pointed out by Michel Rocard and Pierre Larrouturou in a tribune in Le Monde (that I translated here), the ECB can perfectly well lend money to "publicly-owned credit institutions", as stipulated by paragraph 2 of Article 123 of the Lisbon Treaty.

This fact has been (deliberately?) ignored by Mario Draghi, ex-European Director of Goldman Sachs, and recently made head of the ECB. He has publicly refused to consider lending to governments, apparently backed by the German, preferring to lend unlimited amounts of very cheap printed money to commercial banks that they immediately stick under the mattress (they maybe don't dare pay their bonuses just yet - it would be a bit too obvious).

At the press conference on the 8th December, when the ECB announced it's plan to effectively print unlimited amounts of money for any commercial banks (489 billion euros to 523 banks on the 21st December, with a second feeding frenzy planned for the 29th February), he replied as follows:

Question: Why is it so impossible for the ECB to act like the other central banks, like the Federal Reserve System or the Bank of England? Why do you not act more directly to help European countries by buying up the debt on a massive scale?

Draghi: As I said before, we have a Treaty and the Treaty states what our primary mandate is, namely to maintain price stability. Also, the Treaty prohibits monetary financing. I am old enough to remember that, when this Treaty was written in the early 1990s, some of the countries around that table were actually doing what you suggest doing now, namely some of the central banks of these countries were financing the government expenditure of their governments through money creation, and the consequences were there for all of us to see. That is why, in a sense, this Treaty embodies the best tradition of the Deutsche Bundesbank, whereby monetary financing has always been prohibited.

That sounds clear enough. But I just asked the ECB 10 pertinent questions about their policies, and got pretty straight replies - see here.

Effectively, there is no limit to the amount of money that the ECB is prepared to print for banks:

"Indeed, according to the Treaty on the functioning of the European Union (Protocol No. 4) the ECB (or, more accurately: the Eurosystem) has the competence to "conduct credit operations with credit institutions and other market participants, with lending being based on adequate collateral." Please see Article 18 here"

And to the killer question "9) If a publicly owned credit institution was to supply the money to a government such as the Greek government in order for that government to pay off its debts to the financial markets, would the ECB object?", here's the response:
According to the Treaty - as you have just quoted - such publicly owned credit institutions "shall be given the same treatment by national central banks and the ECB as private credit institutions." It is up to the banks to decide how to use the money they have borrowed from the central bank system.

SO THE SOLUTION IS THAT THE GREEK GOVERNMENT NEEDS TO SET UP A "PUBLICLY-OWNED CREDIT INSTITUTION" THAT ASKS FOR 329 BILLION EUROS FROM THE ECB ON THE 29TH FEBRUARY, LOANS THE MONEY ON TO THE GREEK GOVERNMENT, WHO THEN IMMEDIATELY PAY OFF THE 329 BILLION THEY OWE THE MARKETS. THE GREEKS ARE NO LONGER PAYING 18% TO BOND MARKET LOAN SHARKS, THE BANKS HAVE ALL BEEN REPAID, AND THE ENTIRE FIASCO COMES TO AN END.

LETS DO IT

'What about changing the economic arrangements?'

Around 1975 would have been a good year change economic arrangements in an orderly manner (bear in mind that all current economic arrangements are based on creating money out of thin air and burning increasing quantities of fossil fuels). By 1975 it was perfectly clear that the system was self-defeating and doomed (the work of M King Hubbert, the Meadows group etc.)

Now there are twice as many people chasing rapidly depleting resources and a far greater portion of humanity is trapped in industrialism..

Economic arrangements will change very soon, but not in an orderly manner.

Nationalise them all

Let's not and no it isn't. The Greeks have to repay the 329 billion euros. Do you really think they can do it? Are you willing to sacrifice to help provide that amount if you may not get it back? Gamble with the future of your children while the Greeks jerk around?

Nope I mean set up another ministery that has regional offices (create jobs for those that don't have).

Lend money to (interest Free - its our tax money) locals who are going to set up businesses and employ others in that community.

Force legislation through that forces landlords of empty commercial property to reduce their rents and to make them rent at a more "affordable" rate. Local rates may vary

Another ministry to mentor these new start ups and to seek more business for them abroad. British made goods are still considered to be of the best quality (in Asia anyway!).

A lot more can be done than the gov wants.

IT JUST MEANS CUTTING OUT THE OLD BOYS NETWORK - and that is where the system falls down!

People need to stop listening to the rehashed nonsense of economists and bankers - and the captured politcal class - and ask themselves this question: How is money created?

But focussing on the wrong problem won't help.

'Nationalising' the money supply just means that government quangos have to do the money creation rather than the banks. And there is precious little evidence that the corporate placemen in government and the underlying bureaucracies will get it right.

Steve Keen describes the problem in his latest post

I don’t see the banking system’s capacity to create money as the causa causans of crises, so much as the uses to which that money is put. As Schumpeter explains so well, the endogenous creation of money by the banking sector gives entrepreneurs spending power that exceeds that coming out of “the circular flow” alone. When the money created is put to Schumpeterian uses, it is an integral part of the inherent dynamic of capitalism. The problem comes when that money is created instead for Ponzi Finance reasons, and inflates asset prices rather than enabling the creation of new assets.

My caution with respect to full reserve banking systems is that this endogenous expansion of spending power would become the responsibility of the State alone. Here, though I am a proponent of government counter-cyclical spending, I am sceptical about the capacity of government agencies to get the creation of money right at all times. This is not to say that the private sector has done a better job—far from it! But the private banking system will always be there—even if changed in nature—ready to exploit any slipups in government behaviour that can be used to justify a return to the system we are currently in. Slipups will surely occur, especially if the new system still enables speculation on asset prices to occur.

...

Schumpeterian banking also inherently includes the capacity to make mistakes: to fund a venture that doesn’t succeed, and yet to be willing to take that risk again in the hope of funding one that succeeds spectacularly. I am wary of the capacity of that mindset to co-exist with the bureaucratic one that dominates government.

I'm making my "surprised" face.

Thatcher gets a movie about her, why not bankers? They're misunderstood, poor souls. They're kind to their domestic staff in govt. Why is everyone down on the Gilded Age.

Let's not and no it isn't. The Greeks have to repay the 329 billion euros. Do you really think they can do it? Are you willing to sacrifice to help provide that amount if you may not get it back? Gamble with the future of your children while the Greeks jerk around?

Yes, the Greeks have to pay back the 329 billion - and no it's not a free handout. But they would only need to pay 1% interest on the loan, instead of the 18% that they currently are being offered by the bond markets, despite the fact that the banks were just given 479 billion euros, supposedly to help them start lending again at sensible rates, but which they have decided to park with the ECB.

And yes, exactly the same mechanism can be used to help out the Portuguese government, currently having to borrow money at 11.9%, the Hungarian government, currently paying 8.53%, the Irish government, currently paying 8.51%, and the Italian government, who are having to pay 7.06%.

Note that it is perfectly possible to arrange things so that the money is not used for current expenditure, and only to pay of the debt. In that case, the billions "printed" by the ECB will just disappear into thin air. Because in fact, the banks that went too far in lending billions to Greece and others didn't have the money to start with. They also just created the money out of thin air.

When ECB printed money is only used to cancel debt, then the money supply doesn't increase and there's no inflation. Unlike the sitution when the ECB just hands the money to banks (as they just did). In that case, there are no restrictions and the money can go into housing bubbles, bonuses, you name it...

Hmmmm....massive government intervention in the markets...scares people, funny that.

Money Laundering / Currency Manipulation on a massive scale by sovereign nations and whole trading blocs (EU), what's wrong with that?

Investors have to be leery, jittery, or just plain nuts.

Pissing up a rope.

@Tinflash

At the moment, the peak of oil production (all liquids) was mid 2008. That level hasn't been reached or exceeded since. The question is, was that A peak or THE peak? The longer time goes on - and meanwhile reservoirs deplete further - the more likely it becomes that this was THE peak. The drama of the moment was largely hidden by the downturn and reduced demand, but if demands ever increase again and can't be met - then you'll see some real panic.

"The Greeks have to repay the 329 billion euros. Do you really think they can do it?"

They can do it at 0.25%. They can do it at 1.0%. But they can't do it at 8%. The problem is not the size of the debt, it's the rate at which it has to be repaid. That rate is currently based on the hysterical fears of ratings agencies who were unable to see the collapse in the US housing market coming when it was, as the saying goes, lap-dancing on the table in front of them.

As the perceived risk is increased by e.g. Standard and Poor, the bond auction rate goes up. As the rate goes up, S&P increase the risk. Until that vicious cycle is broken, every country suffers - not just the Eurozone. The US is on the road to losing its AAA rating, the UK is inflating in all directions, even Germany is heading for problems as its main trading partners lapse into bank-induced recession.

The essence of the problem is the inability of the ECB to break the cycle by guaranteeing a static repayment rate.

Then governments should set up their own bank and lend the money directly to the people.

We can do better than that - once people understand the nature of debt money creation by banks, their abject failure to regulate themselves and the risk and bubble/inflation that this loaded into the system, it should then be apparent we have most of the tools to remove banks' risk and create a functioning credit system of and for the people - no government needed.

First, we'd need a currency over which we had control - examples already exist and thrive, e.g. Bitcoin. I'd suggest something that were tied locally to the price of some mass produced non-investment grade commodity- e.g. A can of cola. This provides a measure of inflation adjustment (cola companies price to maintain profitable supply volume), allows general world-wide pricing transparency and irons out local currency convertibility and inflation. The currency could be completely electronic.

Then, you'll need a system which allows people to create a reputation for fiscal responsibility that they'd be motivated to maintain- after all, if we're going to be lending each other money, we need a means to measure the risk, and we'd have to be better at it than banks were (not difficult). Similar systems exist, e.g. eBay trader feedback, we'd just need to extend it to things like identity certification.

Finally, and most importantly, would be the innovation that recognises that trade credit is the same as bank debt money creation - the only difference is that in our present, broken system, bank-originated credit (the digits in a bank account magically added as debt largely unbacked by any settled money) can be treated as cash-equivalent whereas trade credit always has to wait until it is settled- ie is vulnerable to liquidity squeeze, this gives banks undue power and creates a bias in the fiat issue currency system. The innovation would be that, subject to the aforementioned reputation systems, traders' credit would be treated immediately as cash-equivalent - this means that, for example, Rod doesn't need immediate disposeable cash to pay Jane to clean his house, she creates credit (his debt) which the currency system allows her to spend immediately. After all, that's just what banks do, expensively and inefficiently. Debtors would still have to settle debts within a certain time period, pay interest, and the community or syndicate of traders would of course also have to absorb unpaid debts as losses, again, nothing banks don't in theory have to suffer (in practice they get a taxpayer bailout if they lose, privatised profit if their bet works - another reason why government should keep out of it.)

Another Important system benefit is that the system is made up of traders not financiers, it doesn't suffer to the same extent from liquidity crises- e.g the fear of contraction by banks creates a self-fulfilling prophecy by their credit contraction. A system of monetized trade credit always focuses on traders looking to trade, trade is the motor of credit creation, never the reverse. A final point- this virtual currency and monetised trade credit system doesn't require initial capital, ie, it isn't dependent on an investor class Nor answerable to their biases.

Is such a system so difficult to conceive or implement?

This is a superb example of entrenchment in any business. The banks and Hedge-funds are now entrenched not as allies but as foes? The hedge funds as predators waiting to see where they can make their money, see who blinks first?

This is now the time to see the Financial Institutions for what they are! Now is the time to understand that the Banks have to be tamed and the Hedge-funds eliminated. They do nothing for anyone except themselves and their clients. The Banks are being made impotent, unable to help those they were intended to since they jumped ship for the casinos and now they find swimming with sharks is not as palatable as they thought!

With a bit of luck we will get some brave politicians come forward and break up the pariahs, lets make it soon, legislate so it can't happen again give the banks rules they can't break and we are back to start again.

give the banks tax money to keep don't give it back to the people- huum only greece leaving the eurozone in the next few months? these economists and bankers are smart only saving their own arses with our cash a clear case of phucc u n me, time to OCCUPYBIKESEAT pedalution peeps

Many confused people here as ususal. The reason banks won't lend out money is that they have been required to build up their capital reserves by the new banking regulation that you all wanted. You can't have it both ways.

The banking system has not failed - it has succeeded wildly in it's primary aim - diverting wealth to banksters.
The only mistake was made by everyone else - thinking it was a fair even responsible system of exchange.

Hello someofus...

This is the original quotation: "Was ist ein Einbruch in eine Bank gegen die Gründung einer Bank?"

It is from Bert Brecht, author (among many other things) of the "Dreigroschenoper", and Mackie Messer says this.

My rough translation: "What is breaking into a bank compared to founding a bank?"

Occupy the banks, not the streets.