Courtesy of Mish.
Andy Duncan of FinLingo.com interviewed Claudio Grass, managing director of Global Gold in Switzerland. Below is a transcript excerpting the main parts of the first section of the interview on the problems in the European banking system and what measures might be taken if push were to come to shove.
What follows is a guest post by Pater Tenebrarum at the Acting Man blog.
A Looming Banking Crisis – Is a Perfect Storm About to Hit?
Andy Duncan: How do you see the current situation in banking particularly in Europe?
Claudio Grass: One interesting indicator is that today in certain countries not bankers are making the highest average salaries any longer , they have been replaced with government servants. Overall I would say it is bad, but that was predictable. The system and the assumptions the whole sector is operating under are just not sustainable, and printing money out of thin air does not create wealth; on the contrary, it is destroying capital.
All state interventions have backfired and current monetary policy with low / negative interest rates is putting insupportable pressure on the banks. Bad actors have been allowed to get away with reckless and catastrophic positions for too long. The history of bailouts has sent the message that such actions don’t really have consequences, and therefore my understanding is that moral hazard and risk linked to it have increased.
Andy Duncan: Do you think we ever actually got out of the 2008 crisis or do you think that this money printing and quantitative easing over the last eight years has just been keeping that crisis on ice? And is what we are seeing now just the crisis trying to reemerge again?
