Skip to comments.Europe Considers Wholesale Savings Confiscation, Enforced Redistribution
Posted on 02/12/2014 6:38:41 PM PST by DeaconBenjamin
At first we thought Reuters had been punked when we read about the latest proposal by the European Commission, but after several hours without a retraction, we realized that the story is sadly true. Sadly, because everything that we warned about in "There May Be Only Painful Ways Out Of The Crisis" back in September of 2011, and everything that the depositors and citizens of Cyprus had to live through, seems on the verge of going continental. In a nutshell, and in Reuters' own words, "the savings of the European Union's 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says." What is left unsaid is that the "usage" will be on a purely involuntary basis, at the discretion of the "union", and can thus best be described as confiscation.
The source of this stunner is a document seen be Reuters, which describes how the EU is looking for ways to "wean" the 28-country bloc from its heavy reliance on bank financing and find other means of funding small companies, infrastructure projects and other investment. So as Europe finally admits that the ECB has failed to unclog its broken monetary pipelines for the past five years - something we highlight every month (most recently in No Waking From Draghi's Monetary Nightmare: Eurozone Credit Creation Tumbles To New All Time Low), the commissions report finally admits that "the economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment."
The solution? "The Commission will ask the bloc's insurance watchdog in the second half of this year for advice on a possible draft law "to mobilize more personal pension savings for long-term financing", the document said."
Mobilize, once again, is a more palatable word than, say, confiscate.
And yet this is precisely what Europe is contemplating:
Banks have complained they are hindered from lending to the economy by post-crisis rules forcing them to hold much larger safety cushions of capital and liquidity.
The document said the "appropriateness" of the EU capital and liquidity rules for long-term financing will be reviewed over the next two years, a process likely to be scrutinized in the United States and elsewhere to head off any risk of EU banks gaining an unfair advantage.
But wait: there's more!
Inspired by the recently introduced "no risk, guaranteed return" collectivized savings instrument in the US better known as MyRA, Europe will also complete a study by the end of this year on the feasibility of introducing an EU savings account, open to individuals whose funds could be pooled and invested in small companies.
Because when corporations refuse to invest money in Capex, who will invest? Why you, dear Europeans. Whether you like it or not.
But wait, there is still more!
Additionally, Europe is seeking to restore the primary reason why Europe's banks are as insolvent as they are: securitizations, which the persuasive salesmen and sexy saleswomen of Goldman et al sold to idiot European bankers, who in turn invested the money or widows and orphans only to see all of it disappear.
It is also seeking to revive the securitization market, which pools loans like mortgages into bonds that banks can sell to raise funding for themselves or companies. The market was tarnished by the financial crisis when bonds linked to U.S. home loans began defaulting in 2007, sparking the broader global markets meltdown over the ensuing two years.
The document says the Commission will "take into account possible future increases in the liquidity of a number of securitization products" when it comes to finalizing a new rule on what assets banks can place in their new liquidity buffers. This signals a possible loosening of the definition of eligible assets from the bloc's banking watchdog.
Because there is nothing quite like securitizing feta cheese-backed securities.
And topping it all off is a proposal to address a global change in accounting principles that will make sure that an accurate representation of any bank's balance sheet becomes a distant memory:
More controversially, the Commission will consider whether the use of fair value or pricing assets at the going rate in a new globally agreed accounting rule "is appropriate, in particular regarding long-term investing business models".
To summarize: forced savings "mobilization", the introduction of a collective and involuntary CapEx funding "savings" account, the return and expansion of securitization, and finally, tying it all together, is a change to accounting rules that will make the entire inevitable catastrophe smells like roses until it all comes crashing down.
So, aside from all this, Europe is "fixed."
The only remaining question is: why leak this now? Perhaps it's simply because the reallocation of "cash on the savings account sidelines" in the aftermath of the Cyprus deposit confiscation, into risk assets was not foreceful enough? What better way to give it a much needed boost than to leak that everyone's cash savings are suddenly fair game in Europe's next great wealth redistribution strategy.
I wonder if the folks in EUrope knew they had voted into being an all-consuming gubamint that would eventually devour them so it could survive.
It’s time to hang politicians from lamp posts and burn their buildings to the ground.
However, this is only a question of method, not result. The "investment" projects will obviously be confiscatory redistribution to keep the lid from blowing off.
We're not that different here in result, but we go about it in a different (so far) and less explicit way. When the US government's debt burden becomes too high, it will most likely inflate and tax it away, which is a different way of confiscating accumulated savings than a direct debit. The spending driving the debt will be called social investment here, too. Saaaame thing, really.
Get ready for the biggest bank run in history.
The pensioned, jackbooted enforcers will be more than happy to assist in the theft.
“Europe Considers Wholesale Savings Confiscation, Enforced Redistribution”
Holy cow! The EU elites want to live through a second French revolution, complete with beheadings, buckets of blood and brains seeping out their various Nazi and commie orifices.
Okay. I don’t have a problem with that.
It takes real men to have a revolution with beheadings and the like. Unfortunately all the real men in Europe died at the Somme, Verdun and Stalingrad.
Confiscate bank & pension accounts, make cash illegal, confiscate PMs. That ought to do it.
Now if you’re a good boy or girl, you might get your state allowance.
Too bad the euros don’t have a 2A.
May you live in interesting times.
“It takes real men to have a revolution with beheadings and the like. Unfortunately all the real men in Europe died at the Somme, Verdun and Stalingrad.”
Completely understand your sentiment; however, if i were a wild-eyed barbarian, thinking that the Britons were easy pickings, I’d contact my life insurance agent first and be certain that I had burial insurance.
I’ve served with Brits, and their warriors are still first-class, kick-ass MFers who can serve a major hurt on those they perceive as the enemy.
Take care, henkster.
Time for a bank run?
Surely they will give you some type of receipt or IOU. /sarc
The Conservative government in Ottawa passed a law that allows a troubled bank to confiscate some of your cash that you have on deposit. (CONFISCATE- AN UGLY WORD).
A big change in banking has taken place.
We always thought when you deposited your money in the bank it was a case where the bank merely “held” your money on deposit.
No longer. When you deposit your money in the bank you have now lent your money to the crooks.
Your deposit is now a debt that the bank owes.
In the case of bankruptcy I guess your claim goes into the pile of debt that might bring you a few cents on the dollar.
I wonder if it is the same in the USA?