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The REAL Reason the EU is Implementing Border and Capital Controls
The following is an excerpt from my latest issue of Private Wealth Advisory. In it I outline two key developments in Europe which virtually NO ONE is talking about: the creation of border controls and capital controls. The political elite are doing this for only one reason: they know it’s GAME OVER in the EU.
The EU in its current form is finished. Done. Game Over. I’ve been saying this for months. But it’s a fact. Europe has literally run out of money. Indeed, the ECB’s interventions are now not only toxic for those participating in them (those banks taking money via the LTRO have been crushed in the credit market) but are losing their impact (LTRO bought only one month of market gains).
Again, the EU is finished. And the powers that be know this. Indeed, the following should give you an idea of how serious things are getting:
A Vote of No Confidence in Europe
Germany and France's joint proposal to allow Schengen-zone countries to temporarily reintroduce border controls as a means of last resort might sound harmless. But doing so would damage one of the strongest symbols of European unity and perhaps even contribute to the EU's demise.
Germany and France are serious this time. During next week's meeting of European Union interior ministers, the two countries plan to start a discussion about reintroducing national border controls within the Schengen zone. According to the German daily Süddeutsche Zeitung, German Interior Minister Hans-Peter Friedrich and his French counterpart, Claude Guéant, have formulated a letter to their colleagues in which they call for governments to once again be allowed to control their borders as "an ultima ratio" -- that is, measure of last resort -- "and for a limited period of time." They reportedly go on to recommend 30-days for the period.
This story has been almost completely ignored by the mainstream media. Let me ask you this… do you think Germany and others are really concerned about an influx of migrants? Of course not, the whole idea is ridiculous. Italy was supposedly upset about 25,000 migrants from North Africa… Italy has a population of 65 MILLION!
No, the move to create border controls is about one thing only: stopping people from fleeing with their money when the collapse comes. The political elite in Europe are watching the bank runs in Spain and Greece and know that when the big Crash comes similar runs will occur throughout the EU.
Consider the following story and you’ll see what I mean:
Swiss eye capital controls if Greece goes
The Swiss National Bank is considering imposing capital controls on foreign deposits if Greece leaves the euro, as the franc comes under heavy demand from investors seeking a haven in Europe.
Speaking to Swiss media, Thomas Jordan, head of the Swiss central bank, said the Swiss government and the SNB were looking at ways of dealing with an expected flood of foreign money into the country in the event of a Greek exit from the eurozone.
http://www.ft.com/cms/s/0/d7678676-a810-11e1-8fbb-00144feabdc0.html#axzz1wNKR2leW
Potential border controls in the EU and capital controls in safe haven Switzerland to stop inflows of funds? If that doesn’t tell you point blank that the political elite in the EU are scared stiff, nothing will.
Indeed, Germany has made a massive power grab to control most of Europe’s finances… but under one condition: it be given access to other members’ gold reserves as collateral.
Europe’s debtors must pawn their gold for Eurobond Redemption
Southern Europe’s debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilisation plan gaining momentum in Germany.
The German scheme -- known as the European Redemption Pact -- offers a form of "Eurobonds Lite" that can be squared with the German constitution and breaks the political logjam. It is a highly creative way out of the debt crisis, but is not a soft option for Italy, Spain, Portugal, and other states in trouble.
The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton’s Sinking Fund in the United States -- created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today…
The plan splits the public debts of EMU states. Anything up to the Maastricht limit of 60pc of GDP would remain sovereign. Anything over 60pc would be transfered gradually into the redemption fund. This would be covered by joint bonds.
Italy would switch €958bn, Germany €578bn, France €498bn, and so forth. The total was €2.326 trillion as of November but is rising fast as Europe’s slump corrupts debt dynamics. The sinking fund would slowly retire debt over twenty years, using designated tithes akin to Germany’s "Solidarity Surcharge".
In effect, Germany would share its credit card to slash debt costs for Italy, Spain and others. Yet it is the exact opposition of fiscal union. While eurobonds are a federalising catalyst, the fund would be temporary and self-extinguishing. "The fund is a return to the discipline of Maastricht with sovereign control over budgets," said Dr Benjamin Weigert, the Council of Experts’s general-secretary…
The fund implies a big sacrifice for Germany. Its interest costs on joint debt would be much higher than today’s safe-haven rate of 1.37pc on 10-year Bunds. Jefferies Fixed Income says it would cost 0.6pc of German GDP annually. The Council of Experts -- or `Five Wise Men’ -- argue that this would be modest compared to the growth adrenaline of rescusitating monetary union.
Yet it is not charity either. One official said a key motive is to relieve the European Central Bank of its duties as chief fire-fighter. "We have got to get the ECB out of the game of distributing money, and separate fiscal and monetary policy. Germany has only two votes on the ECB Council and has no way to control consolidation," he said.
Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. "The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal.
Folks, the EU End Game is now officially in play. Germany has played its hand: if you want us to foot the bill we want your Gold. This tells us:
- Germany is aware that most EU Sovereign bonds and paper are garbage (this is confirmed by the fact that Germany has passed legislation allowing its own banks to dump EU Sovereign bonds into a bailout fund during a Crisis).
- Germany will only put up more money if it’s granted fiscal control of the EU and Gold bullion as collateral.
- Germany is the REAL monetary power in Europe (not the ECB).
I believe this is Germany’s final push for EU control. If this fails and Germany ceases to offer additional bailout funds in some form then the EU will collapse (as noted earlier, the ECB, IMF, and US Fed cannot prop the EU up nor will the ESM mega bailout fund work). Spain’s literally on the verge of seeing a bank holiday. Germany is the only one who might have the funds to prop it up. And Germany wants gold.
In plain terms, the EU will likely not last through the summer. It’s literally GAME OVER time. Various proposals will crop up (such as Germany’s “cash for Gold” program), but no one (not even Germany) actually has the funds to support the avalanche of banking failures that is coming.
THIS is why various countries are moving to put border and capital controls in place. They know the game is up. It’s now just a matter of time before things go from ugly to truly disastrous.
On that note, if you’re not preparing for the collapse of the EU, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.
This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com
Good Investing!
Graham Summers
PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com
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Condescending garbage? How is the article condescending? Dude, you're clearly over your head here on ZH.
Talk about being over one's head. Do you see the thread? I am commenting on the comment above mine. I am not talking about Graham's article. Wake the hell up!
Still don't know the differnce between socialism and and fascism do you?
So let me get this straight, you are going to hold up your own fascist state in order to degrade his fascist state? FAIL LMFAO!!
My fascists are better than your fascists! lol.
well, our fascists were and are better dressed than yours. too bad WWII wasn't a fashion competition, eh? ;-)
Yeah, I know the difference. Right now the difference is there is still a large portion of my country that doesn't think like or agree with the government. Right now there are still plenty of us in the US not looking for the gov to take care of us but rather get the hell out of our lives. That is the big problem with the euro bunch, all they have ever known is a big daddy gov that tells them when and how to do everything. Then they get into trouble listening to the gov so they elect more gov to tell them how to get out of the mess the former gov got them into last time and on and on it goes.
What makes the US great are the laws that keep the gov out of our lives and off of our back. We are no doubt losing that distinction because we have educated our children for generations that they need big daddy gov to take care of them. But we need look no further than Europe to see how that is a dead end, loser mentality. Thanks, Europe for the current, living example. Now may God grant us leadership with the brains and backbone to turn us away from the cliff you are falling over right now. I won't be holding my breath.
The times, they are a changin'.
I was raised with the idea that we were the freest nation or earth and relished the idea. I think we still have a lot of freedoms relative to other countries, but am starting to wonder if that isn't a bit of an illusion and a remnant of freedoms won in days gone by that are slipping away from us.
Things started off with smaller things, like mandatory seat belts and motorcycle helmets etc. (I wear both whether required by law or not), and moved on to things like the maximum amount of water your washing machine and toilet could use (silly in our area as we live between the two largest rivers on the continent) , requirements on gas mileage, and even what kind of light bulbs we're allowed to use.
But things have been escalating for awhile. They've been confiscating property when drugs are found even when the owner was not involved. A cruiser rented out for fishing expeditions was confiscated because they found bits of marijuana in a mop after one excursion. Cars have been confiscated and sold when a friend sitting in the back seat of a vehicle driving by someone's child was found to have tiny amounts of marijuana on them, homes have been taken from owners because a renter was caught with drugs etc. Other homes and businesses were taken under imminent domain and given to politicians' friends who were starting other businesses.
RICO laws were passed allegedly to fight organized crime gangs that had too much money for states and municipalities to fight, but they were quickly turned on political enemies and abortion protesters. Speaking of which abortion protesters have been arrested for peacefully praying on benches on a sidewalk outside of abortion clinics.
After 911 things started kicking into high gear. The Patriot Act was railroaded through Congress without much debate and now it's being used by Homeland Security like a bludgeon a la the old Russian Gulags in some instances. People have been arrested for taking pictures on public streets when authorities feel threatened.
Listen to Former CIA Asset, Susan Lindauer, detail how she was treated by the government she served under the new laws ushered in via the Patriot Act. You can forget about your "Constitutional Rights" which are now trumped by the Patriot Act.
Or listen to this poor guy's lament about having his French wife being required to be fingerprinted and biometrically scanned every ten years per Homeland Security or she'll be deported. A preview of things to come in America
Or listen to the thousands and thousands of complaints of people being felt up and X-rayed etc every time the leave or enter the country, or kids & disabled people being subjected to such things when they go to the airport.
The government is getting more and more blatant at taking away our most basic freedoms even without any threats of terror or Homeland Security mandates.
Take Religious Freedom, for instance, the very first right enunciated in the Bill of Rights "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;"
Obama was adamant in shutting down pharmacies who would not sell contraceptives &/or abortifacent drugs on religious grounds. Pharmaicists who wouldn't go along with the government program were fired &/or licenses for the pharmacies were revoked. Pharmacists who had invested their whole lives into their practice were put out of business.
Catholic Charities and foster homes were not allowed to place children for adoption or into foster homes when they would not cater to homosexual couples. Once again, charities that had built up networks and multi-milion dollar facilities and the people who had been trained and serving people for more than a century were shut down because they wouldn't toe the government's line and reject their religious principles which had been held for millenia.
Now everyone is being forced to purchase health insurance, and businesses that are forced to provide it to their employees must pay for benefits that their religion teaches are gravely immoral. Once again, whether you believe in their deeply held moral principles or not, keep in mind that the government is, with respect to the practice of their religion most definitely "prohibiting the free exercise thereof".
That brings to mind,
Pastor Niemoller's address to the U.S. Congress
"When Hitler attacked the Jews
I was not a Jew, therefore I was not concerned.
And when Hitler attacked the Catholics,
I was not a Catholic, and therefore, I was not concerned.
And when Hitler attacked the unions and the industrialists,
I was not a member of the unions and I was not concerned.
Then Hitler attacked me and the Protestant church --
and there was nobody left to be concerned."
Bottom line, is that I don't think we're nearly as free as so many think we are. The government taps most phone calls, monitors our internet use, and reads our emails. The totally free United States of America sometimes seems to be more mirage than reality, and the nightmare threatens to become the new reality.
May God help us.
What a confused fellow... Compassion, ZHers.
I'm not so sure you know much about differences. Zero Govt and I were discussing border controls and I slipped in the thing with the ID's and a comparison of what the police may or may not do - mainly because of another discussion we had. Somehow you slipped (as argument) this "I can carry a gun on my hip down main street, you can't even own one".
Are you serious about this or was it only a quip?
Similar to the quip "That is the big problem with the euro bunch, all they have ever known is a big daddy gov that tells them when and how to do everything"?
This is a fight club, I'm game, but boy, you know what they say about coming to a gunfight with a knife... ;-)
Yes, in other words, Europeans actually enforce their borders and immigration laws. Imagine that Amerika.
I think you forgot to insert the word badly in that sentence. At least I would have done it.
Transferring debt over the 60% limit is of little use unless nations actually start running their budgets in the black otherwise the whole exercise is useless.
The idea of backing these bonds with gold will be of little use unless gold is substantially revalued.
Germany will succeed. Bullish for gold and, believe it or not, the Euro.
Looks like gold is coming out.
Long live gold and death to the squid(s)!
I still can't imagine people are running full speed at gold and silver... they just keep sticking to the paper...
It's like running with a can of gasoline from one burning house to another burning house...
But, SD, that leaves more Au and Ag for the rest of us to load up.
Of course, mine fell off the back of the truck on the way to the forest.
They fixed everything this morning. You'll have to wait a few more years.
Alas... this "New German Plan" will go its way.
Some academics argue that the long-term effects of Hamilton’s program on the states may have proved to be detrimental. This idea is premised on the economic concept of “moral hazard”, with the argument being that states were relieved of the responsibility of debt, began to excessively rely on federal assistance and funding through assets rather than taxation and became extravagant in incurring debt in the years to come. Hence, this “bailout” for the states set a bad precedent and may have proved disadvantageous to the economic progress of the states.
History is often a bitch!