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Decade of the Living Dead

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Posted on Mar 15, 2012

By Nomi Prins

“Zombie Banks: How Broken Banks and Debtor Nations Are Crippling the Global Economy”

A book by Yalman Onaran

Yalman Onaran’s new book, “Zombie Banks: How Broken Banks and Debtor Nations Are Crippling the Global Economy,” makes it clear. The practice of subsidizing zombie banks (those that without support would be dead, but with support are the “walking dead”—sucking at our economic flesh through endless government life support), which began in the U.S. and was adopted in Europe, has dire ongoing economic implications for the global population. Onaran’s highly engaging prose is sometimes amusing, always scary in its content and imminently accessible to an economic layperson. He combines his considerable journalistic skills and powers of insight so concisely that the book can be read and digested in one or two sittings—depending on how much your stomach can take.

Onaran, a senior writer at Bloomberg News, admits right away that “although as a reporter I shy away from reflecting my own viewpoint in the articles I write, in this book, I did not pull any punches.” The result is a hard-hitting, exhaustively researched, passionately argued book. 

Former FDIC Chairwoman Sheila Bair states in the book’s foreword, “[B]y propping up failing firms, we penalized the well-managed institutions and interfered with the basic function of the market.” She warns, “Governments around the globe continue to nurture and support a bloated financial sector built around an unsustainable model. …” And that is the problem—the model is unsustainable, yet politicians and central bankers continue to attempt to sustain it.

Onaran takes us on a global and historical journey of zombie banks, dotted with colorful anecdotes and searing analysis. He contextualizes zombie banks and Japan’s lost decade. Reading these chapters, I was reminded that we are already five years into our own lost decade, with no end in sight.

He moves on to the banking systems of Iceland (whose government chose not to sacrifice its population’s well-being to support zombie banks), Germany (whose Chancellor Angela Merkel has a love-hate relationship with zombie banks and the subsidies they are devouring out of Europe) and Ireland (which is a mess, held hostage by zombie banks).

book cover

 

Zombie Banks: How Broken Banks and Debtor Nations Are Crippling the Global Economy

 

By Yalman Onaran

 

Bloomberg Press, 184 pages

 

Buy the book

Onaran then turns to the United States. He exposes the U.S. zombies as capital deficient entities on “IV drip” and uncovers the political infighting, missed opportunities, the “extend and pretend” (extend money and pretend everything’s fine) mentality that prevents meaningful reform or policy change, and the path from zombie banks to the housing market crisis, laying blame where it’s due. 

Finally, he focuses on the enduring risk of these zombie banks and their global implications. He makes it clear that regardless of whether U.S. banks lend to Greece, Ireland or Portugal, the fact that they are engaged in a complex $700 trillion derivatives market is more than enough to suffer tremendous reverberating losses.

In the last chapter, Onaran presents a set of well-reasoned, eminently accomplishable remedies for the problem of zombie banks. These include breaking up the big banks, a rigorous restructuring of debt that would involve U.S. zombies realistically evaluating and writing down the mortgage losses they carry, and European banks doing the same with sovereign debt. The weakest would have to be allowed to fall and the strongest to survive, rather than perpetuating an illusion of health while sucking in subsidies. Will this cause banks to take losses? Absolutely. But the alternative is our current slow burn through an economic hell.

To see long excerpts from “Zombie Banks” at Google Books, click here.

After reading “Zombie Banks,” I interviewed Onaran. His responses underscore the importance of his book and the ongoing fallout of the widespread governmental subsidizing of zombie banks.

Nomi Prins: How would you rank the top U.S. banks from worst to least in terms of “zombieness”?

Yalman Onaran: No. 1 Bank of America, 2 Citigroup, 3 Morgan Stanley, 4 Goldman Sachs, 5 JPMorgan.

Prins: How does their zombie status hurt ordinary Americans?

Onaran: The zombieness of some of the largest banks hurts our economy because the zombies cannot fulfill their most important role of lending to consumers and companies. They try to use the money they get from the government to patch up their consistently bleeding wounds. They also make riskier bets with their money—such as writing complicated derivatives connected to the debt of troubled countries in Europe—which increases the likelihood that their final blowup will be even costlier to society than if they were stopped right now. That’s what happened in the past when zombie banks weren’t stopped in time. Taxpayers end up paying for the final mess every time and they will this time too.


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blogdog's avatar

By blogdog, March 19, 2012 at 5:07 pm Link to this comment

ZOMBIE BANKS - 4 years into the meltdown and the term finally makes it to the
MSM - deep analysts are so far ahead of Prins, Onaran,Tahibi, et al left-lib-prog
celebrity writers on economics, that it is literally a joke

dial up WGT http://tarpley.net/ - in the 2nd half of this week’s webcast, he does
an in-depth with a Greek activist, very savvy on the Greek position in the
Neoliberal EU financial minefield - none in the MSM, nor its deflective source
counterparts (National Propaganda Radio, Hypocrisy Now, TruthDearth, et al) ever
get close to such a knowing voice from the street - one only hears establishment-
approved voices or disinfo. plants

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prisnersdilema's avatar

By prisnersdilema, March 17, 2012 at 8:34 pm Link to this comment

Yes Big B thats exactly what happened…It was no accident it was by design..now they
plan to crush the people….

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By diamond, March 17, 2012 at 3:20 pm Link to this comment

“Everybody thought he was going to be in the limo’.

Everyone always does and they also think it will never run out of gas. It’s why the human race never learns anything and is presently doing what the people on Easter Island did: cutting down the last tree to roll a gigantic idol into place facing out to sea, waiting for guidance and salvation from another galaxy far, far away instead of working with what is most useful and most inexpensive. Common sense and each other.

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moonraven's avatar

By moonraven, March 16, 2012 at 6:00 pm Link to this comment

Back to banks:

A friend on FB reminded me of the Mark Frechette story—the guy who starred in Antonioni’s Zabriskie Point in 1970 who later held up a Boston bank and was sent to prison—where he was found dead withg a 150 pound barbell on his windpipe.

Frechette said of the bank job:  “It would be like a direct attack on everything that is choking this country to death”.

Well he was right—and then he choked to death….

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By Big B, March 16, 2012 at 5:48 pm Link to this comment

Get ready for it collin (and all those bible humpers like him) this may come as a shock, but the bible is NOT A HISTORY BOOK. It’s a religious manifesto that was written by the oligarchs and plutocrats of the past as part of a system to keep the poor powerless. Oh, the writers over the centuries were smart enough to include a backgound of peoples names that actually existed and kingdoms that were real, but as the old saying goes, a lie is best hidden in between 2 truths.

Arks, seas parting, fish swollowing people, water into wine? I call bullshit.

As long as mankind uses religion as a crutch, we might as well all be real zombies.

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By El_Pinguino, March 16, 2012 at 5:44 pm Link to this comment

I wouldn’t be looking for jesus either. If jesus is ever found there would be management issues, trademarking the likeness, copyrights to discuss, ticket sales and stadiums to fill in support of the:

Jesus is Coming: And Boy is He Pissed Tour

I’d suggest everybody look busy.

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moonraven's avatar

By moonraven, March 16, 2012 at 5:02 pm Link to this comment

Penguin:

Here in Mexico I am into container gardening, for what that’s worth.

Not looking to find a godhead, though.

And especially would never mix Jesus with peaches.  I like peaches too much.

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moonraven's avatar

By moonraven, March 16, 2012 at 4:59 pm Link to this comment

tobysgirl: 

The world is really pretty simple.

When anyone tries to tell you it’s complicated, watch out:  he or she is out to rip you off.

As for the bible and other things hebrew, reminds me of that old joke about the guy who asked a jewish leader after WWII why the jews put up so little resistance to Hitler’s Final Solution, when Hitler had supposedly said in one of his speeches that when the Solution was almost over—note that qualifier, almost—there would only be enough jews in Europe to put in one limosine to ride through the streets of Berllin.

The response:  Everybody thought he was going to be in the limo.

Well, looks like that kind of thinking is rather widespread in Gringolandia….

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By El_Pinguino, March 16, 2012 at 3:46 pm Link to this comment

With all of these books and papers…internet posts and documentaries, you have to wonder why millions are not in the streets.

Until someone paints the big picture in ways common people can understand it there will be very little dissent. Some will move out of the country… some will Occupy somewhere… some will plant a little garden, eat a lot of peaches and try to find Jesus.

Globalism is more than economics. We are entering into a new phase of humanity… and it won’t be pretty in the beginning. Read the lyrics to The Future by Leonard Cohen. “won’t be nothin’ you can measure anymore”

http://www.azlyrics.com/lyrics/leonardcohen/thefuture.html

Hence, I’ve decided to move to another geographical place. Since the fighting seems to be among countries with the 3 major religions (Jewish..Christian.. Muslim) I have decided a Buddhist country isn’t a bad idea.

Plant a little garden, eat a lot of peaches… see what I can find.

Thanks John Prine

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Alan Lunn's avatar

By Alan Lunn, March 16, 2012 at 3:27 pm Link to this comment

“Zombie banks” is such a fitting metaphor.
Furthermore, the zombies are creating an invisible
contagion, only noticed by those who recognize where
the symptoms are coming from. Banks resurrected from
the dead by taxpayer guarantees and on the backs,
ultimately, of the lower classes around the world.

In the movie “Inside Job,” there was a speculation
about the mental health of those working atop the
skyscrapers, that they act like “psychopaths.” Where
is their conscience about what they are doing? Or are
they so caught up in the dopamine and adrenaline rush
of the incoming floods of money that they never stop
to think where it is coming from or the massive risks
they are loading on the nations? After all, when you
make theft legal, you forget that it was ever really
and truly a crime. And now it is a legalized crime of
unprecedented proportions.

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By Tobysgirl, March 16, 2012 at 2:06 pm Link to this comment

As always, succinct, moonraven.

Re Bible: What no one seems to get is that in the Bible, EMPIRES ALWAYS DIE. And it’s sickeningly amusing to watch the Bible thumpers think THEIR empire is going to be the first to survive forever.

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moonraven's avatar

By moonraven, March 16, 2012 at 12:45 pm Link to this comment

So long as we are talking cartel here, the only reason that those US banks were still limping along when the Big Bailout Scam arrived—to never leave, of course—it the billions upon billions of Mexican narco cartel dollars laundered by those banks.

Great caper the gringo-impoised war on drugs: 
you guys get the drugs,
the arms money
and the billions of bucks to launder,
and Mexicans provide the corpses,
many of which are mutilated,
decapitated,
tossed into black garbage bags
and dropped along the roadside—
or boiled down in big oil cans
into perverse putrescent pozole.

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By kayrun, March 16, 2012 at 12:32 pm Link to this comment

Just a couple of thoughts.  First, whether by intent or stupidity, the international banking cartel has damaged the world’s economy—probably beyond repair.  Griffith’s book, The Creature from Jekyl Island, begins by saying that “the name of the game is bailout.”  This observation way predates the 2008 collapse and the rush of the U.S. government to bailout the idiot (or evil) players.

What few of us in the United States realize, I think, is that the spectre created by this collapse is not more economic folly and manipulation.  That may well occur, but the real threat is an old, old human horror: FAMINE.

I’m not much on biblical (or any other) prophecies, but one that I believe the writers in biblical times were well acquainted with was FAMINE.  There were hundreds of devastating famines, many of them political, not natural (as in crop failures).  In a famine, whoever controls the food usually controls the people.  The warning in Revelations was (properly translated) a measure of wheat (barley) for a “day’s wages”.

For the past several years, watching food banks flood low-income people with food, I have had a horrible feeling that we were being set up for global famine.  Maybe this is just paranoia from knowing that the elite are primarily sociopaths without capacity for empathy, but maybe not.

I would appreciate hearing what others have to say about the portent of global famine and its connection to this progressive destruction of the world’s economy.  Thanks for taking the time to read this.

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By Dennis in MI, March 16, 2012 at 11:38 am Link to this comment
(Unregistered commenter)

yeah, what BigB said!

and after they wreck it they buy it up, cheap, with devalued money

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EmileZ's avatar

By EmileZ, March 16, 2012 at 8:41 am Link to this comment

Stay tuned for “Zombie Media” and “Zombie Citizens of the Free World” who like to get angry and stuff when they don’t understand what is going on.

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By collin, March 16, 2012 at 6:21 am Link to this comment
(Unregistered commenter)

I believe that some of the views expressed are correct but to be brief, the money system cannot come back it will be destroyed and a new system will emerge that will be worst than this one because it will be constructed on the premiss of “a mark”. The Bible prophecied it and it is in the process in fulfillment. The Bible is the only book that has past, present and future, not ecnomics or science or education or politics, they have all failed because this type of civilization is of the devil and not of God. God’s civilization or economy is governed by Faith not science, eductaion, politics, medicine, economics. So my friends, I know that my view may seem to be religious but think again why did God send a man called William Branham in tghis day. Explain February 28th 1963, that Mysterious Cloud over flagstaff in Arizonia USA 27 miles high where moisture don’t exist and 30 miles wide. Explain the FIB verification of the light photographed over his head taken in 1950. Eplain the prophecy in December 1962 30th speaking about meeting seven angels and it did happen. Explain the thousands of vsions that came to pass every one to the letter. Explain about the healing of Congressman Upshaw, and King George and Florence Nightengale. Explain the prophecies of the Dictators Mussolini, Hitler way back in 1933. Explain about the rise and control of the Catholic church in the USA when the founding Fathers fled from Roman Catholic persecution to the New World see how she has wormed her way into the White House under Mr Kennedy and has continued to go down and down until we have a Media made Man in there.Think friends wake up because it is already to late, run for your life hell in on the earth. I hope in did not offend or hurt in any way but my intentions were to be truthful and honest which many writers who are part of the system cannot and will not do because they are eating from Jezebel’s table.

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By Big B, March 16, 2012 at 5:01 am Link to this comment

I still think to this day that the markey collapse of 2008 was created by the oligarchs through their banks. It was all done intentionally for one purpose, The super rich and the multinational corporations that they run, saw the success of the “social democracys” of Europe, Japan and others and needed to nip their thing in the bud ASAP. It was surprisingly simple. Get them to invest their public holdings in the securities markets, and then crash those markets, leaving many of those nations in dire financial straits with crippled coffers unable to pay for the public benefits that their people voted for some 50 or so years ago. Then you send in the oligarchs and plutocrats to preach “austerity” and to privatize government services, so as to suck the last drops of blood from the public sectors of those now crippled nations.

It has worked like a charm.

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