CIBOR and LIBOR
A couple of years ago, the Danish Central Bank (B) pointedly refused to collect CIBOR – the official reason was that there was no trade in it – and thus did not
reflect a market evaluation of short term credit.
The central bank will know all about that: They can see a lot of
things from their deposits – by whom and how much. That is one reason
for demanding clearance sums paid in fully once a month – there are
other.
Now this “huge” scandal involving Libor and the fine is no more than a mild frown.
The real object is to gut the board of Barclay PLC (NYSE:BCS)’s. Other banks involved in the scandal such as, Lloyds Banking Group PLC (LON:LLOY) (NYSE:LYG) and HSBC Holdings plc (NYSE:HBC) (LON:HSBA) and Royal Bank of Scotland Group plc (NYSE:RBS) should be on alert.
Danske Bank
When I suggested that Danske Bank was “fixing” their stock value – people thought it was crazy. Two things
happened:
a) A couple of other banks were slapped with minor fines for failure
to report their trades to the Bank Inspection. A couple of thousand
USD – nothing really.,
b) The CEO announced early retirement.
A connection? Maybe – maybe not: But threats to sue are dangerous – it
will lead to investigation of whether it really was libel! And Danske
Banks CEO hung on by the thinnest possible thread – my minor
intervention could well have been the pretext to swing the already
ground axe.
Though I think the recurrent recalcitrance in respect of the CB might
be infinitely more significant. Anyhow there is no doubt that APM as
major shareholder was told to clean up its act in banking.
Enter David Cameron
The significance is much deeper in my estimate.
One thing is that Prime Minister David Cameron has been made to look like a complete fool for the entire world – which no PM likes.
Quite another is that the separation of detail banking from the rest
should proceed without to many problems – all the bank CEO’s will
start wondering what Cameron has on them that he isn’t using. The
banks have been given fair warning – a couple of heads on a stake
should remind the CEO’s that this town has law – if not order.
If the banks don’t take the hint, the next move will probably be
personal criminal persecution. They should consider any statement as
being under caution. “- that You may later rely on in court….”
Germany is Furious with Britain
But that is not the serious business: The move towards an EU
referendum clearly shows that Cameron has been told in no uncertain
terms that unless he plays cricket – the ECB and Bundesbank are highly
displeased with the British.
This latest interest hike on the Spanish sovereign bonds is clearly
the banks trying to mess with the EUR.
Now it is generally a bad idea antagonising the world’s strongest
economy (not the largest by far, but the strongest): There are 2
TRILLION EUR in German sovereign bonds – and scraping together the
other nice boys in the class – probably a further trillion. If Draghi
and Weidmann go to war – it might cost the odd dozen billion EUR; but
taking out the British banks one by one would cost the British
financial sector its life – will they do it? Well, Schäuble isn’t in
the habit of making jokes.
Just think what would happen if Germany started to sell sovereign
bonds – in earnest: The interest rates would skyrocket – we are
talking evictions by the millions!
Denmark and Danske Bank
Now there is little doubt that Denmark around November last year was
told to keep Danske Bank A/S (PINK:DNSKY) and other mortgage banks out of ECB’s
thinning hair. Did we comply? Certainly!
The Danish CB slammed about 3 bio. EUR on ECB’s table to guarantee the
loan to Danske Bank. Secondly Danske Bank is getting out of Ireland –
taking losses.
Denmark has joined the fight to defend the EUR at least since March to
absorb the 100 bio. EUR that have fled Spain – even taking sovereign
bonds into negative interests. Not only that, but Uncle Nils has
officially announced he is tooling up for the next assault by issuing
between 75 and 100 bio. DKK in sovereign bonds – strangely enough that
is 10 bio. EUR +.
Now this has not been to our disadvantage: Nice boys gets kisses by
Merkel – and nice girls get them from Schäuble – believe me – that is
a whole lot nicer than a solid caning. In Q1 2012 the Danish CB made a
2 bio. EUR profit (1½ of them covered some overspending), but it gave
a handy ½ bio. EUR for some tax-cuts.
Change of EU Chairmanship
Now the just ended Danish chairmanship has received general acclaim. A
lot of things – besides crisis management – has been decided: A thirty
year old project of a European common patent – has despite being
bogged down for a generation – passed.
One thing is that the chairmanship has been well prepared by the
Danish civil servants – such a task takes years to prepare – but there
are indications that PM Helle Thorning-Schmidt really performed above
average as a mediator.
