"That's as good as money, sir. Those are I.O.U.'s. Go ahead and add it up, every cent's accounted for."
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.
"That's as good as money, sir. Those are I.O.U.'s. Go ahead and add it up, every cent's accounted for."
I have a FRiend whose children tell her “Ask nully, he knows everything!”
I don’t, but still...
As demonstrated by lottery winners everywhere.
The EU bankers and politicians know the quickest way to end up naked and dismembered swinging from a lamp post is try to end the welfare state. They absolutely can not stop spending; their lives depend on it.
Middle class Germans probably won't riot when their pension funds are "rolled into government securities." 40 year old Greek, Spanish and Italian pensioners and government employees absolutely will burn their cities to the ground if the checks stop.
That's a fiction that banks want you believe. But, the legality of the matter is that once you give money to the bank, it is literally, as a matter of law, the bank's money, not your money. It has always been that way.
Thanks for posting.
I subscribe to two non-statist financial sites/magazines that have been advising to get your money out of banks NOW and don’t look back.
Also, safety deposit boxes. Get a floor safe - one commenter said his safe is located under his pit bull’s dog house.
As Obama’s spending orgy sinks America deeper into financial turmoil, he is about to turn Uncle Sam’s acute funding crisis into YOUR problem.
In fact, Obama’s Treasury and Labor Departments just held outrageous, executive branch hearings on nationalization of retirement accounts, and they are actively looking for the opportunity to ram this asset grab through.
Your nest egg is in their cross-hairs; you know, to “protect you” from losing your own money.
Congressional heavyweights such as Rep. George Miller (D-CA) have already held hearings on “merging” 401(k)s, IRAs, and other tax-advantaged private savings programs into the failed Social Security program.
Here’s what is going on.
The cash-strapped Obama Administration’s unofficial 401(k) nationalization czar is utopian New School for Social Research academic Teresa Ghilarducci — who was dubbed by U.S. News and World Report as “the most dangerous woman in America” after she appeared before Congress to testify in favor of government seizing 401(k)s and other retirement assets.
The “Most Dangerous Woman in America”
Who Helped Obama Rip Off GM Bond Holders
Now Wants YOUR Retirement Money!
Following her Congressional testimony at a 2008 hearing to begin ending 401(k) and IRA tax advantages, Ghilarducci admitted on conservative talk show host Wilbur Kirby’s KVI 570 show in Seattle the truth about the left’s scheme for gaining control of private retirement accounts:
“I’m just rearranging the tax breaks that are available now for the 401(k)s and spreading [here she paused briefly to consider her words] spreading the wealth...”
Why? Major state pension funds, state governments, and the entire federal entitlement program structure are on the verge of collapse and in need of bailouts due to collapsing tax revenues.
In addition to the Congressional hearings referenced above — and an “automatic IRA” bill introduced in August by Senator John Kerry (D-MA) — Obama bureaucrats are working furiously on new regulations (CFR, Part 1, RIN 1545-BJ04) to “herd” unsuspecting 401(k)/IRA holders’ money into government-approved “investments,” such as federal government debt. The “mainstream media” have totally blown off this story.
Lee Bellinger, Publisher
Independent Living
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