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Private banks receive half-trillion-euro gift from ECB

ECB chief Mario Draghi delivered a Euros 530 billion gift to bankers Wednesday 29 February. Added to the 470 billion euros present in December, this brings the total subsidy to the speculators who caused the biggest crash since 1929 to more than a trillion euros.

After handing over Euros 490 billion to private banks for a song in December the European Central Bank gave them another Euros 530 billion euros for practically nothing on Wednesday.

Unlike the caps and cuts on wages, benefits, public sector hiring and the crunch facing small businesses, there was no limit set on the three year cash offered by the Frankfurt-based central bank to the people who caused the biggest economic meltdown since the Great Crash of 1929.

The terms were very generous. This interest rate on this second Long Term Financing Operation (LTRO), like in the December, is 1%. People in the EU (British banks Lloyds and HSBC shared in the bonanza too) should bear that in mind when they next go to the bank for a loan.

So why has Christmas come early twice in just two months?

Banks are not lending to the real economy, as ECB chief Mario Draghi admitted the other day when he told the FT that it was “hard to say” whether the first LTRO had made a difference to lending.

Instead they have been using the dirt cheap money to buy high-interest bearing Eurozone government debt (Spanish and Italian banks’ holdings of government bonds rose almost 85 billion in December and January, according to Reuters). This is earning them an immediate profit from the difference in interest rates, currently ranging from about 3-7%.

It’s a mad money-go-round in which private bankers make a mint once again on the back of tax-payers and all the millions who are losing their jobs and homes, and face cuts to benefits and public services. And then they make heaps more, as privatisation steps up apace as national treasuries bled dry by the same bankers are forced to sell off state assets.

All so we can maintain their millionaire lifestyles, as well as pay for the yachts, ferraris and mansions of the banks’ largest shareholders.

Many on the Left are asking why the European Central Bank can’t just lend straight to Governments at the same 1% interest rate, cutting out the parasites who, sitting in the middle, are feasting on the misery of the 99%.

And others are asking whether the public debt accumulated over these years through the pursuit of aims benefitting a tiny elite, that the European people never underwrote nor were even asked about, is really legitimate; and therefore whether it shouldn’t t just be written off. They would have a point.

See also: Banks at the trough – how the banks are having a good crisis

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope


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