Sunday, June 29, 2008

Financial Telegraph predicts complete meltdown of US banking system

The Financial Telegraph had a rather alarming article yesterday. It's in Dutch, but François Cellier has provided a translation.

American 'Meltdown' is the Reason for the Money Injection by Fortis

Votron stays on after a wave of criticism

by our correspondent
June 28, 2008, 09:10 a.m.

BRUSSEL/AMSTERDAM (DFT) - Fortis expects a complete breakdown of the American financial markets within days or weeks. This explains, according to the bank insurer, the series of interventions on Thursday with the aim of strengthening themselves by € 8 billion. "We are ready at the last moment. The U.S. is doing much worse than we had thought,” said Fortis chairman Maurice Lippens, who insists that CEO Votron shall not be replaced. Fortis expects bankruptcies among the 6,000 U.S. banks that have low coverage. "But the same goes also for Citigroup and General Motors, and thereby starts a complete meltdown in the U.S.”

Fortis yesterday increased its capital by € 1.5 billion by means of emission of new shares. By the end of last year, the Belgian-Dutch group already had increased its capital by € 13 billion through issuing new stocks for the takeover of ABN Amro, for which they paid € 24 billion. Lippens based his concerns on talks with bankers. "Two months ago, we didn't know yet that the situation is so dire in the U.S. And the situation will further worsen. We need a thick cushion of funds to survive the next 18 months, when we bring in ABN Amro.”

Two weeks ago, the U.S. investment bank and adviser to Fortis Merrill Lynch reported that certainly € 6.2 billion in additional capital would be needed. The VEB yesterday demanded clarification of Fortis: CEO Jean-Paul Votron had explained by the end of April that Fortis, by acquiring ABN Amro, wouldn't need to raise its capital. Yet within one year, € 30 billion in market capitalization have been destroyed. According to Votron's latest admissions, the stock value has tumbled by 19.4%, although it recovered yesterday by 4.4% to € 10.65.

The massive unrest surrounding the bank insurer has registered particularly with our Southern neighbors in Belgium like a bomb. While in the Netherlands, the discussion is limited to the financial world, it has become the talk of the day in Belgium. Not only is the bank in Belgium omnipresent, but the tumbling of the stock has hit hard hundreds of thousands of Belgian small investors directly.

All Belgian newspapers opened yesterday with disaster headlines, giving wide coverage to the free fall of the bank insurer's stock. ’Fortis crashes,' 'Disaster day for Fortis,’ and ’Fortis loses 5.3 billion,' reported three leading newspapers on their respective front pages.

The panic surrounding the group is so great South of the border that the national oversight commission CFBA felt compelled to issue a statement of reassurance to the desperate savers. “The emergency measure by Fortis is no reason to run to the bank and withdraw your savings”, said a CFBA spokesman. “The bank complies with all legal requirements, it only has set for itself very ambitious goals.”

Maurice Lippens claimed that all major shareholders have offered their “unanimous support” yesterday evening.

Just as in the Netherlands, the accusations are directed primarily a the address of CEO Jean-Paul Votron, who seems to have badly miscalculated in the takeover of ABN Amro. However, whereas the man from Brussels is only being asked in the Netherlands to pay back his bonus of € 2.5 million, the Belgians ask for his removal.

"A person who makes such grave errors must bear the consequences and therefore resign,” so chairman Huybregts of the Flemish Federation of Investments and Investors. The tumbling of the stock is for him proof that the takeover of ABN Amro was far too expensive and poorly timed.

“The former shareholders of ABN Amro are now taking a bath in champagne”, stressed Huybrechts. "A person making such grave errors must step down." Fortis is a stock for ordinary people, and you cannot mistreat their trust so recklessly.”

Also the Belgian newspaper de Standaard (the Standard) has hard words for the CEO: "The credit crisis has affected all banks, but this is no excuse. Fortis has tumbled much worse," so the commentator. “Fortis has always denied that another capital increase was to come. These were therefore either lies or ignorance. Both are equally bad, and therefore Votron should do the honorable thing. He is the only one who has earned money in the whole operation.”

According to the Belgian media, Fortis had planned to announce on Thursday that the bonus of Votron would be removed, but at the last moment, this hasn't happened. Also, it is being strongly speculated who should be his successor, whereby primarily the name of Filip Dierckx is being suggested.

Votron himself doesn't want to hear anything about stepping down. "The shareholders stand by me, and also the board has fully supported these operations that were initiated by me," said the beleaguered CEO of Fortis.

He also rejects outright to pay back his meanwhile controversial bonus. "What I do with my money is my own business. The bonus is unrelated to ABN Amro, but was paid for the activities of 2007," so Votron. The CEO is however willing to receive some of his salary in Fortis stock options.

Votron can still fully count on the support by chairman Lippens, who denied that the bank made a mistake with the takeover of ABN Amro. “Votron remains our CEO. To intervene at this moment would be difficult, [not] to do so shows true leadership.”

I'm really not sure what to make of this. The Financial Telegraph is supposedly a reputable paper, equivalent to the Financial Times. But there's been little to no coverage of this story in English. Fortis has been much in the news this week, but not their predictions of a US banking collapse. The closest is this Reuters article, which is very mild in comparison.

I gotta say, the Bank of Serta is looking better and better all the time.

UPDATE: The original Dutch article is now 404, but you can still see it in Google's cache.


Anonymous said...


Anonymous said...

Paper money is the cause. Unbacked fiat currency, yet another infringement on our rights by the gov't. Add it to the ever-growing list of violations:
They violate the 1st Amendment by opening mail, caging demonstrators and banning books like "America Deceived" from Amazon.
They violate the 2nd Amendment by confiscating guns during Katrina.
They violate the 4th Amendment by conducting warrant-less wiretaps.
They violate the 5th and 6th Amendment by suspending habeas corpus.
They violate the 8th Amendment by torturing.
They violate the entire Constitution by starting 2 illegal wars based on lies and on behalf of a foriegn gov't.
Support Dr. Ron Paul and save this great country.
Last link (unless Google Books caves to the gov't and drops the title):
America Deceived (book)

Anonymous said...

The Jewish century is over, thank God.

Anonymous said...

It's so easy to get out of this mess.
Bring back Silver and Gold coins, and the almighty Greenback that was backed by these coins.
Simple really! Remove the main influence of money which never changes....Rothschild!!
Remove the Federal Reserve as well as banks who create credit and money on a screen.

Anonymous said...

I am no supporter of ersatz Israel, and have been trying to do whatever I could to help stop all these illegal and unjustified wars.

However, to the Palestinian who said that the economic collapse of the USA is music to your ears, let me point out the following:

The people of the USA are good hearted, and care.

The people of the USA have been attacked on 9/11 by an inside job, combined with Mossad, and then used by LIKUD, and others esp here in PNAC, JINSA, AIPAC, ADL, JTL, OPEC, and the like.

There are corporations who are running our energy policy, who directly profit on our tax dollars, lives and give us nothing but highway robbery at the pumps.

The people of this country are victims of this, as are the Palestinians.

Now, we are being stripped of our living, and our savings, and our homes.

If the banks fail, what will happen to the people, so abused?

Don't blame the victims, my friend.
We all suffer.

The same people who are holding you in the largest concentration camp in the world, are holding an entire nation hostage, and

We are all in the same boat, together.

Anonymous said..., no, no....the PEOPLE of the so called "united states" ultimately bear ALL's ridiculous to try to escape that...
Americans are not at all "good hearted" - how on earth could anyone at this point in time make such an absurd assertion...?!!
European in LA

Anonymous said...

^ Wow... what a bunch of loons flooded comments section...

Anonymous said...

Yeah, America is SO bad, yet people are still doing everything to get here...

Dougal said...

I wouldn't live in America if you paid me. It's one screwed up country.

Anonymous said...

what I am worry the most, is possible use of a US military might to subordinate oil-rich nations. It is clear that US is going down, yet I don't belive it will make no use of its WMD inventory to prevent it. And if it happens, we are all fucked. Either jewish, either muslims. Earth-wide contamination by nuclear fallout... think abouts our kids. Because THEY surely don't give a shit.

JenG said...

There are still some Americans that want to live in denial. But, many ARE good-hearted people. This administration has hijacked our democracy! They have made it so that good, family-centered people have to work 2 and 3 jobs just to make ends meet. Many people don't have the time to find out the truth. We, obviously, don't get any real news from the MSM. There are wicked people at the helm. The population just want to live and raise their family. AMERICANS NEED TO RISE UP! Hold these men accountable for their war crimes! Those of us that love our CONSTITUTION are the real patriots. I want my family to be free to live, just as I want Muslim families and Jewish families to have the SAME freedom to raise their families as they see fit. Can't we all just get along?? Where is the America of my youth???






Anonymous said...

Don't stop posting such articles. I like to read articles like that. By the way add more pics :)