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Giedrius Steponkus, Lithuanian Investors Association

The manipulation of the financial system for a wealth extraction. BSG@EBA 04.07.18 London. Giedrius Steponkus, Lithuanian Investors Association. TH RE E VIEWS ON The WORLD of FINANCE. Cash Outflow. Discipline. Present. Future. Past. Elasticity. Cash Inflow.

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Giedrius Steponkus, Lithuanian Investors Association

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  1. The manipulation of the financial system for a wealth extraction BSG@EBA 04.07.18 London Giedrius Steponkus, Lithuanian Investors Association

  2. THREE VIEWS ON The WORLD of FINANCE Cash Outflow Discipline Present Future Past Elasticity Cash Inflow

  3. Money view: dynamics of financial HIERARchy Gold Discipline versus elasticity: scarcity of (ultimate) money versus Elasticity of(derivative) credit – IOU Quality Expansion Deleveraging Quantity Assets o Liabilities

  4. recession IN THE BALTICS CAUSED BY LIQUIDITY manipulation initiated By banking cartel • Manipulation elasticity and discipline in financial system are the main reasons behind the credit crunch and stagnation in the Baltic countries. • “Liquidity constrain” and grab of assets. • Why these guys behind the scandic cartel are not so smart?

  5. ARTIFICIAL MANAGement of THE HIERARCHY Money gold Central Bank: exchange rate currency Banking system: par deposits Securities dealers: price of securities Credit securities Monetary policy is all about creating artificial hierarchy in order to maintain financial stability. Counter cyclical policy: then too much discipline then Central Bank to injects more elasticity. How: - manipulating overnight interest rates to regulate market interest rate helping banking system to maintain deposits; - currency exchange "at par”; • deposit facility rates ( up to negative); • open market operations - direct investments into financial instruments.

  6. Two Facts • Lithuania originally set 01.01. 2007 as their target date for joining the euro, and in March 2006 requested that the EC and the ECB conduct an assessment on their readiness to adopt the currency. The Commission's report found that while Lithuania met four of the five criteria, their average annual inflation was 2.7%, exceeding the limit of 2.6%. As a result, the Commission concluded that "there should be no change at present to Lithuania's status as a Member State with a derogation."[ Lithuania is the only country initially to have been denied approval to adopt the euro after requesting a convergence check.[4] • SEB Group, in 2007 has sold its real estate portfolio to "Homburg Invest" ( 63 Buildings) • for almost 200 mln. EUR and has made 76 mln. EUR in profit (263 mln. Lt).

  7. THE MAJOR Swedish BANKS’ COUNTERPARTY EXPOSURES THROUGH SECURITIES HOLDINGS

  8. 2007-10 VILIBOR -”Volcker shock”

  9. VILIBOR MARKET 2008-2009: NOT FUNCTIONING

  10. A REPLICA OF “VOLCKER SHOCK” IN THE BALTICS Journalist Naomi Klein in her book The Shock Doctrine, "In developing countries carrying heavy debt loads, the Volcker Shock was like a giant Taser gun fired from Washington, sending the developing world into convulsions. Soaring interest rates meant higher interest payments on foreign debts, and often the higher payments could only be met by taking on more loans… It was after the Volcker Shock that Brazil’s debt exploded, doubling from $50 billion to $100 billion in six years. Many African countries, having borrowed heavily in the seventies, found themselves in similar straits: Nigeria’s debt in the same short time period went from $9 billion to $29 billion."

  11. An expert’s view on DEVALUATION "It's like peeing in your pants. It feels good, but only for a very short time,” Annika Falkengren SEB president

  12. LAW CODE OF HAMMURABI PARAGRAPH 48 (1792-1750 B.C.) “If any one owe a debt for a loan, and a storm prostrates the grain, or the harvest fail, or the grain does not grow for a lack of water, in that  year he need not give his creditor any grain, he washes his debt-table in water and pays no rent for this year“ Law code of Hammurabi paragraph 48(1792-1750 B.C.)

  13. TO BE CONTINUED… Thank you!

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