By Andrew Brady During the busy days of the festive season you may have missed one of the most important stories in Europe at the moment which is the move towards a European banking union. Discussions are ongoing between EU finance ministers, the Europ …
By Andrew Brady
During the busy days of the festive season you may have missed one of the most important stories in Europe at the moment which is the move towards a European banking union. Discussions are ongoing between EU finance ministers, the European Commission and Central Bank to agree a framework which amongst other issue will attempt to deal with Europe’s ‘failing’ banks. A frightening piece in The Economist in 2011 titled ‘Banks are safe, say banks’ discussed the infamous stress tests for banks which are premised on – yes – you’ve got it – self-reporting. The same self-reporting that all the Irish banks passed before their collapse. Hence, they should be taken with a large dose of salt like any self-reporting.
Last week, EU Finance ministers reached an agreement to raise €55bn over 10 years to assist with the winding down of failing banks, including finding buyers for them or ordering them shuttered. However, the true scale of the problem remains unknown and will do nothing to abate the vulture like credit agencies who prey on any financial institutional weakness.
The academic Costats Lapavitas in his recent blog hits the nail on the head when he says: “It did not take long for any hope of a change in approach following the collapse of Lehman Brothers to fade and for the forces of neoliberal economics, powerfully entrenched in ministries, international organisations, thinktanks and universities, to reassert themselves. By the middle of 2009 the familiar mix of favouring private capital, squeezing labour, attacking the welfare state and proclaiming the virtues of the market had prevailed.” The same ideology which create the financial crisis is back with a vengeance.
Therefore, the real question which should be asked is how can you create a ‘banking union’ designed to further insulate European economies without reform of the system? Well, the simple answer is you can’t . Until Europe’s elected representatives tackle the architecture and the environment in which neo-liberalism thrives then they will be rightly accused of being subservient to market forces and financial capital.
Another major bank collapse would drown the support fund as around €473bn of monies had to be injected into Europe’s banks since the crisis in 2008 whereas a fraction of the €55bn being raised as an insurance policy for weak bank going under could have been more effectively deployed to addressing the real European crisis: youth unemployment.
3.6 million young people are officially unemployed and the true figure is much higher when part-time work and under-employment is factored into the equation. The percentage reaches over fifty per cent in Greece and Spain. But what do the lives of millions of young people mean compared to securing the repayment of financial loans to major corporations all over Europe? The answer from over the last week is they don’t matter at all.
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