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‘The fraudster’ appoints cleared fraud suspect to run ECB

The ‘fraudster’ meaning, of course, Jacques Chirac. The new president of the European Central Bank is M. Jean-Claude Trichet and buried away at the foot of an old news report is this gem:

Mr Trichet’s nomination was made possible earlier this week when he was cleared of involvement in the Credit Lyonnais banking scandal in the 1990s. He was one of nine men on trial for their part in the affair, which culminated in a €31bn ($33.7bn) bailout by the government.

That is more than £21,000,000,000! For one bank. Nine people. I can just hear them: “Bah! Nick Leeson! “Betsygate” indeed! You English drive your minis with your Benny Hill and your Michael Caine, stealing a few gold bars in Milan and think you’re so marvellous! Hah!”

The Crédit Lyonnais bank ‘affair’ included a massive fraud including loans being made to friends of the late president François Mitterand. At least one of them got a few months in jail to my knowledge. A concerted effort was made to delay the appointment of a new ECB president until M. Trichet’s problems could be dealt with. Ironically, the French verb for to cheat is tricher which is pronounced exactly the same as our new Euro bank president’s name. A very suitable friend for M. Jacques Chirac. The president whose unofficial re-election campaign slogan was Vote for the fraudster, not the fascist! but who has avoided judicial processes by virtue of presidential immunity from prosecution. So much in common for them to talk about.

Now let us assume that M. Trichet were the innocent victim of devious bank subordinates who stole £21,000 million. Personally, I find such a degree of stupidity fantastic: the guy could scarcely have enough brain cells to know how to breathe. Is this really the calibre of executive to put in charge of an EU institution?

A couple of other things worry me. What did the other European leaders think they were doing when none of then vetoed the appointment of Trichet? Perhaps Mr Blair really is a closet hater of the euro – I hope so. And if the currency markets are not dumping euros for US dollars before M. Chirac’s friends get their pillaging underway… what do they know about what the Federal Reserve guys are up to?

35 comments to ‘The fraudster’ appoints cleared fraud suspect to run ECB

  • Simon Jester

    As Arjuna posted a few days ago:
    “kodiak attack in 3..2…1..”

  • Jonathan L

    Just as a catholic is always a preferable candidate for Pope, I would have thought that Trichet was perfect for the job.

    After all the Euro is itself one great big confidence trick. With all the fraudulent claims made about it and the EU, an experienced con-man is most definitely a plus.

    Compared to the 50 billion Euro bailout of Europes farmers that we perform each year, a one off 35 Billion Euro sounds like a bargain.

  • Verity

    Antoine is right. If he was involved, he is a crook on an unimaginable scale and must never be allowed near a bank again for as long as he lives. If he wasn’t involved and didn’t know, he is not up to tying his own shoelaces and mustn’t be allowed anywhere near the manager’s office of the smallest small town bank in Europe.

    And yes, the mystery is, what were the other eurozone heads of state thinking of endorsing this fraudster? Seriously. Does anyone have any thoughts about their thinking, or what their excuse might be for appointing the biggest crook in the Western world to be in charge of the European Central Bank? This is totally intriguing. Has Chirac finally lost his marbles? Was it catching in the rarified air of the corridors of EU power? What?

  • The latest Credit Lyonnais affair, with Chirac calling Bush to try and free his old buddy Bernard Arnault from the tangle he got himself into with the US Justice system (under the pretense of saving some CL money, of course), is another entertaining saga. I guess even the White House gets prank calls.

    Credit Lyonnais was essentially a vehicle for state intervention, cronyism and patronage for 14 years under Mitterand. “Cohabitation” governments used it too. It got so rotten anyone connected to it and its dealings should not be left within 200 miles of your grandmother’s purse, let alone the ECB.

    The responsible parties have never been held accountable though. Taxpayers footed the bill. As usual. American taxpayers, on the other hand, have not spent a dime of their taxes on Enron, Worldcom, Tyco or Adelphia. No wonder American-style capitalism is so frightening to some elites in Europe. (“You mean we could fail after squandering everybody else’s money *and* be held accountable for it ? Yuck ! How awful !!”)

    So they turn around and tell the little people they have so much contempt for that their rotten, corrupt system is actually all meant to protect them from harm. Look at the poor Enron employees. We will avoid that fate for you by picking everybody else’s pockets on your behalf. It’s for your own good. Sign here.

    Except Enron’s employees have better chances to find a new job than anyone laid off in Old Europe and their bosses will go to jail, their careers and lives in ruins (as they should be). Unlike in France, where the incompetent, fraudulent thieves rarely, if ever, pay in any way, shape or form as long as they happen to preside over state-controlled businesses, or have enough connections to make the President make a phone call on their behalf.

    Knowing where the corpses are buried also helps a lot. After all, we had our own Watergate at the Elysee Palace in the late 1980s. A President sets up a cell to listen on his political opponents, the media and even a James Bond girl (well, she’s a James Bond girl so she must be dangerous right ?). Result: the President is duly re-elected and the cell’s senior civil servant is put in charge of the national electricity provider. Clearly, the latter had better be rewarded or he was going to speak. All done in plain view. Meak protest in the media. Life goes on.

    But get one tax return wrong as the owner of a small private business, and they will drag your ass to court and you could face huge fines, prison time or both. That’s “social fairness” for you.

    (Note that when George W. Bush is rumored, or suspected to help a corporate friend, that is an unacceptable hint of corruption. But when Chirac calls Bush to try to disentangle one of his personal friends, and one of the richest men of the land, from his personal financial shenanigans, well, it’s perfectly normal. Isn’t that what Presidents do anyway ? What are friends for ? )

    Incidentally, nobody in the Credit Lyonnais affair has gone to jail, most have been given plush jobs, including office and chauffeur for the CEO that presided over its costly demise.

    As for the details of the recent Arnault/Executive Life affair, they make all the silly conspiracy theories about the Carlyle Group sound like a trip to Disneyland.

    So it is bad to have a guy out of this lovely in-bred culture be promoted to the ECB ?

    Well, it would be if you assumed Brussels was a cleaner, less corrupt, more efficient place than Paris.

    And that, as amazing as it sounds, is one big if.

  • Tuscan Tony

    A small, dull point.

    The loss was probably caused largely by blathering incompetence, rather than a £21bn fraud per se.

    In any case, theft of that magnitude would earn a grudging “Great Train Robbery” style wave of respect. Not noticing a substantial volume of booty draining from the bank over a number of years requires a very special Kinnockian attitude to OPM (other people’s money) – a far more heinous crime.

    Was the money taken and used to fund BBCi’s new ican feature on their website, I wonder?

  • Edmund Burke


    from shortly after Mitterand’s election, CL was used to fund all sorts of dubious ventures by some very strange characters, despite even the dogs in the street knowing something strange was going on. But then, Credit Lyonnais was know as “the bank that can say oui”.

    I’d say incompetence 40% and fraud 60%, and anyone who took an executive role in the bank shouldn’t be allowed fish for pennies in the gutter.

  • Sounds good to me. If they put an incompetent or crook in charge of the ECB, it will hopefully hasten its demise and that of the Euro.

  • R. C. Dean

    The loss was probably caused largely by blathering incompetence, rather than a £21bn fraud per se.

    Oh, well, that’s all right then. The man who oversaw 21 billion worth of incompetence is obviously the right man for the job!

  • Kodiak

    Trichet un tricheur? Most certainly.

    Jacquot un escroc? Absolutely right.

    But aren’t 31 billion unfortunate euros really small beer compared to the 50.996.039 votes given by US citizens to President Gore and stolen by George The Appointed via the supreme joke ?

    In passing: the USA still owes 10 billion dollars to the Organisation of the United Nations. The USA also owes the World more than 500 billion dollars (75 % of World debt !!!)… Will the near-bankrupt US households be able to repay soon as they owe 1,25 dollar for each dollar they take home ???!!!…

    And of course the USA owes Iraq billion & billion dollars for all the destructions caused by Bush. (NB: cash-fat Europe is not going to pay for you dudes).

  • ” the USA still owes 10 billion dollars to the Organisation of the United Nations. The USA also owes the World more than 500 billion dollars.”

    The USA (which is to say American taxpayers) do not ‘owe’ single sou to those tranzi parasites. Oh they have something coming to them alright. But it ain’t money.

  • I have been following this case on ‘Ironies’ since 6th August. The most recent post was on 25th October highlighting French Finance Minister Mer’s extraordinary statement that US justice could be bought, before flying off to Mexico to plead with US Treasury Secretary John Snow for help in the matter.

    After France rejected the originally agreed settlement of $575 million, court proceedings were all set to get underway. Eventually a 30 day extension was granted by then Californian courts but matters are still heading for a crunch by the end of this month.

    If the French continue to dig their heels in we could get some US Attorneys crawling all over the Drexel Burnham Lambert/ Credit Lyonnais connection which should be fascinating.

    Though not, of course, for Jean Claude Trichet whose name translated to English means ‘cheat’

  • LB

    “(NB: cash-fat Europe is not going to pay for you dudes).”

    Kodiak, you are so funny. ‘Cash-fat Europe’ Hahahahahahahahahahh

  • Well, I’ve just glanced through the Credit Lyonnais website and can see no reference in the extensive “histoire” section to any frauds or malpractice or malfeasance – they seem like good guys, who must be bemused by all the fuss – anyway, what’s Euro 30bn between friends, why, it’s scarcely Euro 100 per EU citizen!

  • Well, I’ve just glanced through the Credit Lyonnais website and can see no reference in the extensive “histoire” section to any frauds or malpractice or malfeasance. Frankly, they seem like good guys, who must be bemused by all the fuss. Anyway, what’s Euro 30bn between friends, why, it’s scarcely Euro 100 per EU citizen!

  • Verity

    Tuscan Tony. Put your drink down. You’re seeing double. Your points aren’t strong enough or witty enough for double viewing.

  • Jacob

    David Carr:
    “The USA (which is to say American taxpayers) do not ‘owe’ single sou to those tranzi parasites.”

    The US, that is to say, US citizens, i.e. taxpayers, have a national debt of xxx (I don’t know how many) trillion dollars. It is a debt that has to be paid to all Treasury Bond holders, tranzi or not. A lot of that debt is held by foreigners.

    If you meant the “debt” owed to the UN – that’s indeed no debt at all (except in the eyes of the parasites) and every sou, if paid, will be used to shoot the US in the foot. Better to add those 10bn to the funds for reconstruction in Iraq, and thank the UN for it’s generous contribution.

  • Verity

    What Jacob said.

  • “The US, that is to say, US citizens, i.e. taxpayers, have a national debt of xxx (I don’t know how many) trillion dollars. It is a debt that has to be paid to all Treasury Bond holders, tranzi or not. A lot of that debt is held by foreigners.”

    Quite right, Jacob. Debts should always be repaid in full and nationality does not even come into it.

    BUT the US taxpayer owes no ‘debt’ to the UN (and neither does anybody else)

  • Kodiak

    David + Jacob: stop ***DREAMING*** !!!
    The US failure to complete its arrogant razzia in Iraq is going to make it desperate for face-saving. Bush has already started to beg the UN & Europe for fresh money in exchange for French-advocated multilateralising. Bush is now applying French precepts everyday: power is more than quickly returned to Iraqis as more helicopters are shot down everyday. La cerise sur le gâteau is of course going to be the regularisation of US astronomic debt (theft, actually) to the UN. Bush’s fiscal agenda is really the one of a communist of the worst sort: spend like a mad for a defeated army, transfusing money for artificially surviving US steel industry, throwing greenbacks out of the windows for US peasants. Not to mention the interest rates paid to Europe, Japan & even… China !!! Those debt service costs are exploding as both the amount borrowed & the rates are unstoppably getting higher & higher.

    LB: ‘Cash-fat Europe’ Hahahahahahahahahahh
    Don’t laugh too fast. Chances are million US people MUST sell their houses to buy some potatoes for them to pass the next winter. HA HA HA HA HA HA HA HA HA !!!

  • Kodiak: whilst I am as vastly entertained by your comments as the next chap, unless you stop simply making absurd bald assertions (like explaining how the US army is ‘defeated’ when a far smaller army than the US had in Vietnam is taking far lower daily casualties) and go back to trying to actually make arguments (after a fashion)…then you are just becoming incoherent pixelated pollution. Start making coherent arguments (they can still be drivel if you like, just make it coherent drivel please) or I will ban you, which I am sure at least some commenters would think a pity for a wide variety of reasons.

  • Jacob

    “incoherent pixelated pollution…” is, in my opinion, no crime; 95% of everything is just that. As long as K is not rude or foul mouthed – he should not be banned. But of course – it’s your blog, your decision.

    Your criticism of Bush is fair. All those huge and ever growing deficits, the steel and agriculture subsidies, and above all – adoption of French policies and begging the UN – these are all grave errors.

    About the US military victory – Kodiak also has a valid point. There is military victory in a specific campaign or battle and there is overall victory in war. Taking Vietnam as an example (without making an analogy to Iraq) – the US military won many victories there, but the ovrall result of that war was a total and absolute defeat. You can claim it wasn’t a military defeat, but this really doesn’t matter. It was a *total* defeat.

    The war in Iraq isn’t over yet. The US acheived some briliant military victories so far. It remains to be seen if it will muster the political will to stay for the long haul and turn Iraq into some kind of Germany, Italy or Austria of the ME. It is a tremendously difficult task, it will take many years, and the neighboring terrorist states like Syria and Iran will have to be engaged.
    If Kodiak bets that the US will get fed up and will run away, abandoning Iraq to the same kind of regime it had before (or worse) – he is making a very plausible prediction of the future.

    The difference is that it seems Kodiak hopes that US will fail, while I (and you) hope she won’t. But I would say at this stage that it is more than even money that the US fails.

  • Verity

    Ah yes … those fabled US peasants of Kodiak’s fevered imagination … the potato farmers of Arizona, the coolies patiently planting rice in the paddies of New Hampshire, the burly coalminers of the Everglades …

    Can you imagine being stuck on a longhaul flight sitting next to this fatuous bore? Excuse me, flight attendant … would it be OK if I changed seats to be next to that couple with the screaming twin babies and the bratty six-year old?

  • Jacob, exactly right. I have been wondering recently why the US Army can be so good in conventional warfare, yet seems to have to go through the same steep learning curve as soon as low-scale guerilla starts. Lex over on our blog recently sent me a link to this excellent paper : http://www-cgsc.army.mil/milrev/english/SepOct02/cassidy.asp. There are gems related to the current situation in there. The conflict has switched gears. The media and public opinion have not though. Which is OK for now, as long as the Pentagon has. Sure, some will argue America can fight guerilla warfare too, and combine it with its air superiority, as it did in Afghanistan. But the important point this paper makes is that in this case, America was running the insurgent guerilla against the big local army.

    It’s a very different ballgame when you are the elephant in the china shop.

    And yes, totally agree. What is despicable about Kodiak is not his making predictions about a US failure. The fact that they are either never substantiated, or totally incoherent, doesn’t help. But most of all, it is that he seems to hope for a failure and rejoices at the casualties. Which makes him an irresponsible fool at best, or simply a sad, sickening little shitworm.

    Not that he’s the only one where he lives. France has become pretty much militarily impotent beyond running the odd police operation in Africa against teenagers high on drugs, and even that stretches our resources. So we enjoy the substitute pleasure of the armchair generals instead, celebrating the failures of those who can still do something; after all, not only do they have the nerve to do it without our blessing, but they can clearly do it without us too.

    It reminds me a soccer game back there years ago. The locals had decided they couldn’t stand the coach. So they actually rooted for the team’s failure at the next game. Never mind it would take it down one division. They hated the one guy who was not on the field, so being proven right had become more important than winning. Every score by the old archrival team was a celebration. Totally irrational.

    It’s the same with Iraq. It’s about proving Bush wrong. Who cares what the consequences of an American withdrawal would be for Iraq and the region. Proving Bush wrong is what really matters.

    And besides, everybody knows America is the biggest threat to the world.

  • Verity

    Any chance we could get back on topic? This was a fascinating thread before y’all allowed Kodiak and his endless drivel to hijack it once again. Why do you dance to his tune?

  • Verity, weren’t you the one wondering aloud about what it would be like to sit next to the guy on a plane ? 🙂 But you’re quite right. Kodiak matters around here not because anything he says actually does, but because we allow him to matter and to derail every single conversation towards the same boring litany of imaginary crimes and punishments. After all, given the way they are delivered, his lies and conspiracy theories should not bother nor concern anyone, even among people who care about reason and the truth. They’re obviously par for the course in a confused, disturbed, ignorant mind.

    As for Trichet, I might have been a bit long above. I’m not sure whether his degree of incompetence or corruption is such an issue. It would be if Brussels was a clean, efficient, competent place to begin with. I guess I’m saying Trichet and the ECB deserve each other.

    As for the reaction of the currency markets, or lack thereof, maybe they are also saying it doesn’t really matter who heads the ECB. In other words, to the extent they do not yet believe in its independence, his appointment is not relevant. And given the way he got the job, and given his own record, it is difficult to believe in the ECB’s independence.

    To the extent this helps convince the Brits they’re better off staying out of the whole darn mess, I say good for them.

  • Verity

    Sylvain – Thank you! My comment on the awfulness of being seated next to Kodiak on a plane was a shriek of frustration. Not only is he a crashing bore, but he is disrespectful to the people who wrote the original topic and put some thought into coming up with the headline, and the people who have posted thoughtful or entertaining comments on topic because they were enjoying it.

    What I want to know is, why is the Fed letting the dollar, the currency of the strongest economy in the world, slip against the euro, which is fairy money and is backed by absolutely nothing? I was wondering whether Alan Greenspan had figured that Trichet was going to appointed and the money markets would lose confidence in the euro and uh … well, I’m getting bogged down here because I don’t know how the money markets work, but maybe someone who does know would comment? But it makes no sense for the dollar to be allowed to slide against the euro. Does it?

    Otherwise, I’m in accord with you. Maybe the Fed doesn’t give a tinker’s damn about the ECB because they know it is utterly corrupt.

  • Kodiak

    Pointless off-topic screed deleted by Samizdata Admin.

  • Abby


    Snow’s weak dollar policy boosts exports and depresses imports. This is why China pegs the yuan to the dollar: by artificially keeping the value of its currency down and moving with the dollar, it can dump mountains of cheap exports on foriegn markets (crushing competion) while foriegn goods sold in China are prohibitively expensive for its people.

    This is why China and Japan are so eager to buy our debt. This supports the value of the dollar, so Americans will continue to buy Asian imports without facing real competition from American companies. This is what finances and encourages our trade deficit, so if the dollar ever tanked, our import-export ratio would reverse itself.

    The strong euro has been a drag on the European economy, particularly in export-oriented countries. European finance ministers are trying to get China to float the yuan to counteract this, but there’s no way that will happen.

    Currency manipulation is a beggar thy neighbor sort of game.

  • Verity

    Abby, thank you so much. Obviously, there’s no way the Chinese would stop pegging the yuan (not the rimbimi any more? – boy, am I behind!) to the dollar. So goods from the eurozone get more expensive to the rest of us, and obviously, the rest of us aren’t going to buy them. Am I close?

    So the Fed is going to force people in the eurozone to trade with each other yet be desirous of importing American, or non-euro country, goods, except there’s a trade barrier that forces cheaper, more competitive American companies selling over the internet to become tax collectors for the faceless EU monolith? Oh, stop!

    I wouldn’t care about all this, except some once competitive trading countries of Europe are now part of an uncompetitive trading bloc … although through their own impulse to suicide … Next up, Five Year Plans.

  • Kodiak

    Pointless off-topic screed deleted by Samizdata Admin.

  • Kodiak

    Go away, tiresome blogroaches not welcome

  • Verity, some clarifications. I was not talking about the Fed’s opinion of the ECB here. But that of the currency markets.

    Which are different from money markets; the latter are where short-term debt – < 1 year - is traded. As far as I am concerned, the less the government is involved in forex intervention, the better. There is room for it but ideally, it should be the exception, not the rule. Also, I don't believe the Fed "owns" the dollar exchange rate, although I never looked into the gory details of these operations. The US Treasury Exchange Stabilization Fund is usually what's at work here. See http://www.ustreas.gov/offices/international-affairs/esf/ for more information. Of course, the Fed is kept in the loop and coordinates with Treasury.

    Of course, a lower dollar makes euro products less competitive. Which is probably a good thing if reform in Europe is what you are hoping for. So far, the cheap euro had made it affordable to postpone too many necessary adjustments in terms of labor market and other regulatory rigidities. No longer.

    Falling EU exports in lockstep with the euro suggest that much of Europe’s recent competitiveness was indeed dependent on a cheap euro. To the extent the euro is pricey, and with monetary policy in the hands of the ECB, there are a lot fewer places to hide for those entrenched statists who want to preserve the wasteful status quo. Of course, they are going to blame the entire world for their self-inflicted problems and who knows what they are going to come up with. Although thanks to the EU, they have bound themselves in rules that prevent most old-fashioned knee-jerk populist reactions. I guess the EU is not all bad. Assuming the big players play by the rules.

    And although France is economically right to ignore the nonsensical Stability & Growth Pact, it also suggests other rules could very well be ignored by the usual suspects when the time comes to please the gullible electorate with protectionist measures.

    As for the yuan, it’s a protectionist red herring. Given the state of the financial and banking systems in China, the yuan peg is probably a necessary evil for the time being.

    Besides, notice the huge surge in imports from China since it joined the WTO. This is not going to stop anytime soon and is a good thing, not only for those who export to China, but also in terms of anchoring China in world trade. Floating the yuan could severely disturb trade with, and from, the country. I’m not so sure I want to know how its leadership would react to such a disturbance and the kind of economic upheaval it could create at home.

  • Verity

    Sylvain and Abby – Thank you so much for shining a light into what has always been a hazy, swirling, slovenly mess in my mind! Could I ask just one more question? Yes, of course, if I’d thought about it, I would have realised that the Fed doesn’t “own” exchange rates! I don’t know why I made such a lazy assumption. So it’s organic within the money markets … they trade money, like any other commodity? A dollar is worth what a money trader will pay for it? But governments do intervene …

    I agree about the value of anchoring China in world trade, BTW. This can only be for everyone’s benefit and help the world get richer.

  • Verity, of course governments intervene. But in the US, it’s the Treasury that’s usually involved, not the Fed. At least not directly, to my knowledge.

  • Verity

    Sylvain – Looks like I have a lot to learn about the money markets! Thanks to you and Abby for trying, though.