EU needs to kick start their worst economies by recapitalising banks

EU needs to kick start their worst economies by recapitalising banks

Austerity measures bites but there is no shortcut to solve EU’s problems. Timing is the issue, after the economy is on the road to recovery, there is a need to recapitalise banks to provide much needed funds for SMEs to create jobs via micro-finance. The funds provided can be recovered by diluting the shares of state banks to private investors, and EU/IMF must continue to monitor and make sure there is an orderly exit to provide confidence to the markets. Once the ball is rolling, the creation of wealth will ensure there is ROI to make sure private investors stay vested. Every single one of those economies need a different solution, and the greatest headache is Greece, which is more difficult to fix once it gets out of the Euro, but politicians do not intend to solve the problems, they want an easy way out, which is dangerous when voters get light headed and do not think of the consequences, they just want money to drop down from heaven. An orderly exit might reduce Greece’s chances of repaying it’s debts, it might also cause a longer period of hardship as everything gets devalued in Greece, but it does not mean that Greece will not be able to pay it’s debts in future once the global economy recovers. So political will is needed, or you will see chaos once more than half the population of Greece lose their jobs and will have to depend on welfare, where there is none. It is the choice of the people, who has already casted their votes, but who in the right mind will chose such hardship?
That is the reason why the independence of the UN is very important to solve the global crisis as and when it surfaces, thru my innovations and technologies, UN can be internally funded by the World Bank and IMF, the contributions from members is important, but it will really give UN the resources to fight any crisis it needs, without complications from its own members, UN could therefore technically ‘print it’s own money’ far greater than the FEDs, without a worry of inflation or a drop in value in it’s money, or rely on it’s member states to supply it denominated currencies like US$, Euro$ or RMB$. But it doesn’t mean every member states will be given a blank check to do as it pleases, prudent financial management needs to give transparency and accountability to all.
– Contributed by Oogle. 
Sunday, May 13, 2012

BRUSSELS – The European Commission on Sunday welcomed a Spanish move that forces strapped banks to establish a new 30 billion euro (S$60 billion) loan cushion and rid their accounts of risky property assets.
“I welcome the measures announced on Friday by the Spanish authorities to further reform the banking sector,” said EU economy commissioner Olli Rehn.
“A prompt and profound reform of the banking sector is a cornerstone of Spain’s crisis response and its overall reform strategy.”
Rehn said the banking reform measure was a crucial addition to Madrid’s efforts at consolidating its budget and implementing structural reforms aimed at laying a foundation for sustainable growth and job creation.
Rehn also voiced hope that the move would help Spanish banks regain the confidence of financial markets and institutional investors.
Prime Minister Mariano Rajoy’s government took the dramatic step Friday, two days after it nationalised the fourth-biggest Spanish bank, Bankia, to salvage a balance sheet drenched in red ink.
Madrid will charge two independent auditing firms with valuing banks’ exposure to the collapsed property sector, which is still reeling from a housing bubble that popped in 2008, ministers said.
Banks have already been told to set aside 53.8 billion euros as a buffer against expected losses from real-estate loans on which borrowers are likely to default.
While the banks have been tasked with finding the money, a Spanish public aid fund might lend them some of it in exchange for stakes in institutions that have to ask for help, Spanish authorities have indicated.
That prospect drove Spanish stock market prices lower on Friday because investors expect Madrid to have to intervene again in favour of the banks. The Bankia operation was the eighth such move since 2008.
Bank of Spain figures show that commercial banks held problematic real estate assets, including loans and seized property, worth 184 billion euros, equal to 60 percent of their property portfolio at the end of 2011.
Spain’s greatest headache is the collapse of it’s real estate, making banks very vulnerable to exposure of risks but now that reforms has been in place, Spain will follow the recovery like in the US of Freddie Mae where investors will return back to buy real estate, as that is a very good hedge against inflation, once the global economic recovery is stable, Spain will be the first to get out of the red out of the worst four from EU. EU can afford to bail out it’s worst with some help from World Bank and IMF, but if the governments cannot afford reforms and austerity measures, who will take the risks when everything falters again?
– Contributed by Oogle. 

Author: Gilbert Tan TS

IT expert with more than 20 years experience in Multiple OS, Security, Data & Internet , Interests include AI and Big Data, Internet and multimedia. An experienced Real Estate agent, Insurance agent, and a Futures trader. I am capable of finding any answers in the world you want as long as there are reports available online for me to do my own research to bring you closest to all the unsolved mysteries in this world, because I can find all the paths to the Truth, and what the Future holds. All I need is to observe, test and probe to research on anything I want, what you need to do will take months to achieve, all I need is a few hours.​

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