Bundesbank's Stunner To Broke Eurozone Nations: First "Bail In" Your Rich Citizens

Tyler Durden's picture

In what is sure to be met with cries of derision across the European Union, in line with what the IMF had previously recommended (and we had previously warned as inevitable), the Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help. As Reuters reports, the Bundesbank states, "(A capital levy) corresponds to the principle of national responsibility, according to which tax payers are responsible for their government's obligations before solidarity of other states is required." However, they note that they will not support an implementation of a recurrent wealth tax in Germany, saying it would harm growth. We await the refutation (or Draghi's jawbone solution to this line in the sand.)

 

Via Reuters,

Germany's Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.

 

The Bundesbank's tough stance comes after years of euro zone crisis that saw five government bailouts. There have also bond market interventions by the European Central Bank in, for example, Italy where households' average net wealth is higher than in Germany.

 

"(A capital levy) corresponds to the principle of national responsibility, according to which tax payers are responsible for their government's obligations before solidarity of other states is required," the Bundesbank said in its monthly report.

 

It warned that such a levy carried significant risks and its implementation would not be easy, adding it should only be considered in absolute exceptional cases, for example to avert a looming sovereign insolvency.

 

...

 

The German Institute for Economic Research calculated in 2012 that in Germany a 10-percent levy on a tax base derived from a personal allowance of 250,000 euros would add up to around 230 billion euros. It did not give a figure for crisis countries due to lack of sufficient data.

 

Greece has been granted bailout funds of 240 billion euros from the euro area, its national central banks and IMF to protect it from a chaotic default and possible exit from the euro zone. Not all funds have been paid out yet.

 

In Germany, however, the Bundesbank said it would not support an implementation of a recurrent wealth tax, saying it would harm growth.

 

...

 

"It is not the purpose of European monetary policy to ensure solvency of national banking systems or governments and it cannot replace necessary economic adjustments or bank balance sheet clean ups," the Bundesbank said.

 

As BCG concluded previously:

In considering some of the potential measures likely to be required, the reader may be struck by the essential problem facing politicians: there may be only painful ways out of the crisis.

 

...

 

There is one thing we would like to bring to our readers' attention because we are confident, that one way or another, sooner or later, it will be implemented. Namely a one-time wealth tax: in other words, instead of stealth inflation, the government will be forced to proceed with over transfer of wealth. According to BCG, the amount of developed world debt between household, corporate and government that needs to be eliminated is just over $21 trillion. Which unfortunately means that there is an equity shortfall that will have to be funded with incremental cash which will have to come from somewhere. That somewhere is tax of the middle and upper classes, which are in possession of $74 trillion in financial assets, which in turn will have to be taxed at a blended rate of 28.7%.

 

 

The programs BCG (and the Bundesbank) described would be drastic. They would not be popular, and they would require broad political coordinate and leadership – something that politicians have replaced up til now with playing for time, in spite of a deteriorating outlook. Acknowledgment of the facts may be the biggest hurdle. Politicians and central bankers still do not agree on the full scale of the crisis and are therefore placing too much hope on easy solutions. We need to understand that balance sheet recessions are very different from normal recessions.  The longer the politicians and bankers wait, the more necessary will be the response outlined in this paper.  Unfortunately, reaching consensus on such tough action might requiring an environment last seen in the 1930s

 

 

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Cognitive Dissonance's picture

I can't wait until Warren Buffett gets bailed in.

<I've got dibs on his jet. I hope Becky Quick didn't stain the upholstery.>

Arius's picture

i think all should do their part ... the only way to go up again

GetZeeGold's picture

 

 

Just so you know....."rich".....means you.

GetZeeGold's picture

 

 

I can't wait until Warren Buffett gets bailed in.

 

Pretty sure Warren will have an exemption.....it will have a complicated fancy term for it....but he'll have one just the same.

Four chan's picture

Does this include the Rothschilds?

remain calm's picture

Germany to the Eurozone, "GO Fuck yourself"

BuddyEffed's picture

;-)

Hey you rich fucks, take notice,

"You best start believing in ghost stories, you're in one.     

Ha Ha Ha Ha Ha Ha Ha Ha Ha    

What are you lookin at, Back to Work"  -- Captain Barbosa

http://www.youtube.com/watch?v=1fzXmJyolfY

Herd Redirection Committee's picture

" tax payers are responsible for their government's obligations"

This is where they jumped the shark.   Really?  So a politician opens his mouth, makes some promises, and then I am on the hook?  Really?

Crash Overide's picture

I would have no problem sharing the load of my countries debt, but the catch is if you get to take my money, I get to call the shots for a minute along with my countrymen to put an end to the corruption for real, not some bullshit political scam being window dressed.

Arthor Bearing's picture

Since government debt is generally used to increase the wealth of its wealthiest private citizens anyway, requiring those same citizens to give some of the money back is only fair.

DaveyJones's picture

If "rich" means me then I'm just the government's dick

MsCreant's picture

Damn baby! You gone ta hafta fuck er'y body!

Son of Loki's picture

Bail in the upper 0.001%......GASP!.....the Horror!!!!!!!!!!!!!!

Anusocracy's picture

What the hell does government do that's worth 21 trillion dollars?

They aren't worth 21 cents, they are net wealth destroyers.

BuddyEffed's picture

Your good point is noted.  Things will appear to be unfair from many points of view.  But the reality of the situation is that some people are going to have to take it in the shorts.  And from the looks of world events, unrest, and hotspots, they have pretty much tapped out the middle and lower classes now.  So the rich will soon be joining the party.   Ha Ha Ha  Ha Ha Ha  Ha Ha Ha 

Turin Turambar's picture

A tall tree and some rope is the place to start.  Start hanging the sociopaths in government and start shutting down parasitic make-work bureaucracies.  The criminals who lord over us will change their tune pretty quickly after some of them disappear.  Don't believe me?  You don't see them messing around with muslims too much do ya?

 

Lost Word's picture

Except for Obama the Muslim,

who is promoting the war against Islam?

The one percent.

Renfield's picture

<<A tall tree and some rope is the place to start.  Start hanging the sociopaths in government and start shutting down parasitic make-work bureaucracies.  The criminals who lord over us will change their tune pretty quickly after some of them disappear.>>

Nah, it's the same tune. Different words though.

They change the words, see, and everyone thinks it's different this time. But if you listen real close you know it's the same old song.

"On the fifth day of crissmiss, my bankster gave to me...

Five...fat fingers!

Fo-oreclosure writs...

Three settlements...

Two-oo sho-ort ropes...

And a strong bra-anch in a tall treeeeee..."

Drifter's picture

Ok, so when are you gonna start hanging sociopaths in govt? 

Knowing the solution is meaningless if it's never implemented.

Overfed's picture

That's the 'beauty' of socialism, we can all share the misery equally. Unless you're in the political class, or rich enough to have clout. Those people will be exempted.

Anusocracy's picture

That's the 'beauty' of ALL forms of government.

Renfield's picture

Wait. You're saying the answer...isn't...to change the government? Like, our problem might be...too much relying on government altogether?

Because if that's what you're saying, well, dude, I just don't know. You mean, like, build our own local roads, our own hospitals, police our own towns?

That might have been good enough for our ancestors and all, but we're much more enlightened today. I mean, everyone nowadays has an ivy league degree, and most of us can't tie our own shoes without govvy permission and/or help.

You must be one of those radical hippy pot-smoking libertard white commie tea partier terrists, or something.

Anusocracy's picture

Yup, pretty soon those land of the free home of the brave folks are going to need a TSA agent to help them cross the street.

Motley Fool's picture

Well, it is obviously incorrect, but is it more correct that tax payers of other countries should be liable for such obligations?

Herd Redirection Committee's picture

What is this, a lesson in the false dillema logical fallacy?

Motley Fool's picture

At the end of the day those debts will be settled, and it is going to come primarily out of the pockets of the poor and middle class.

If nothing is done currency implosion will wipe out the savings of this subset of the population, leaving the wealthy intact as per usual.

Perhaps pre-empting is not too terrible, as they will then cover some of that cost at least.

Though defending such leaves a bad taste in my mouth.

Caught between the devil and the deep blue sea.

Overfed's picture

It's too bad that the politicians who created the situation, and have been using their positions to line their pockets, aren't going to give up 30% of their ill-gotten gains.

dizzyfingers's picture

"It's too bad that the politicians who created the situation, and have been using their positions to line their pockets, aren't going to give up 30% of their ill-gotten gains."

Why not ALL of their ill-gotten gains, with interest?!

supermaxedout's picture

BuBa to NSA:        Hey guys, we need your help.  We heard you have all data collected to answer our most urgent question: Who owns or controls what in this world.???  Is this correct?

NSA: Hey, ole partners in crime in Frankfort, Old City of Money. Long time passed since we had business together. How are the things going on in Frankfurt? ha, ha. That was a joke since we know it anyhow. Ha,Ha     Yeah, Could be we could help you out.  Till now we havent got an order from our masters to check on this matter, hmm.??     When we think about it,  yeah, should be not a big problem. Wait a moment. Yeah, that was an easy one. According to our data appx 70% of the multinational corporations are owned or controlled by lesser than 100 persons or entities.Here some data which are anyhow public so that you have something to read my dear Krauts in Frankfort. Wait a moment you will get it soon.

http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf

http://www.bullionbullscanada.com/intl-commentary/26287-the-one-bank

BuBa: Great, Thanks for your help. Thats good news.  You know we have a problem with the debt in Euiroland and we think you have this problem too.

NSA: Problem with debt ? Why should there be a problem with debt here. Berni the Fed Master prints all the money needed to pay for the debts of all. 

BuBa: We know, we know. But you know what: Things do not grow into the heaven! We think Berni did to much of a good thing. He can not print for ever but the debts keep growing and growing!!    you know the the interest, the interest!! the damn interest.

NSA: The interest ? Why should there be a problem with the interests here. Berni the Fed Master is also in charge for the interests. The interest rates are low here, very low, they were never lower than nowadays.

BuBA: But this is the problem, this is the problem! Money costs nothing and when something costs nothing its worthless, worthless, worthless!!!!!  Do you understand!!!

NSA: Worthless our money is worthless?? Are you crazy ? Ok, the Dollar is not anymore the Dollar it was some years ago, but it still buys all we need, everywhere.

BuBa: Yes now but not much longer if we do not stop Berni or Frau Yellen very soon. If they continue to print Dollars at the same rate then your Dollar buys nothing anymore , nowhere!      There is only one solution. And its easy. Just extract  the money from the super rich and pay down the debts asap, otherwise we are all bust.   Our and yours money becoming worthless, worthless, worthless!!!!            Hey,  we just checked the material you have sent to us  a few minutes ago. Great job guys, its all there. And its so simple just get the money from them and pay down the debt. The super rich will anyhow not feel it. They have so much money and assets they will not go hungry to bed if you take away 50% of their blunder from the past 100 years.

NSA: You think so ? But we can not revolt against our masters. We have all sworn to be their true servant, .............

BuBa: Sworn to them!!! sworn to them!!!    Ha, Ha,.Ha     Do you believe that your masters do waste a thought about what they have sworn to YOU! !!!!    Ha, Ha.   Our advice from Frankfurt both BuBa and ECB is: Take away a huge chunck of their blunder and pay down big on the debt. If you dont do it, then we aaaaalllllll !!!   become their debt slaves forever! 

 

Theosebes Goodfellow's picture

~"Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help."~

Coming to a bank near you. Er..., all banks near you.

Lost Word's picture

A short history of how President Franklin Roosevelt promised peace,

but privately worked with Jews and the Banksters to cause World War II,

to profit from war.

http://www.ihr.org/jhr/v04/v04p135_Weber.html

TheReplacement's picture

If he's elected, yep, you are on the hook.

You will sit down and take it.

What else will YOU do?

chemystical's picture

"tax payers are responsible for their government's obligations"

 

In any putative democracy the taxpayers are responsible for their government period.  As are the non-taxpaying citizens*.  We put them into office, and if they then put themselves into orifice, then that's still our problem to work out. 

The old joke is that "every time we work it out they work it back in again".  The REAL joke, however, is that this has rarely been the case, as I don't recall many democracies that turned demon and were then exorcised.  Instead we tacitly accept the demon. 

* although if a workable "fair" solution could exclude those who have no skin in the game from voting, I'd be in favor of that.  "skin" is also up for debate.

limit_less's picture

Herd - "So a politician opens his mouth, makes some promises, and then I am on the hook?  Really?" If your country has a central bank the answer is Yes. If not, then no.

Panafrican Funktron Robot's picture

It would be a pretty brilliant ruse to be sure.  Inflate the nominal price of the "assets" by, say, 300% (probably way higher, but for illustrative purposes), and then tax it at 30%, for a net nominal gain of 210%.  Rich guys win, and they come out looking like roses.  "We did our part!"

AL_SWEARENGEN's picture

Bundesbank: ''Ve don't get das Gold back, you don't get our Euros."

Urban Redneck's picture

Someone just needs to call Buba's bluff... all an enterprising Greek needs to do is pick up Samaras' family and make it very clear what will happen to them if Greece does not overtly default on all external obligations within the EU, see if Buba would rather pay pennies on the dollar to continue to bail out the Greek Kleptocrats or big bucks to bail out DB.

People are not property of the State. And if the State does not respect the human rights of its citizens, then there is no reason for the citizenry to accord any human rights to any functionary of that State.

chemystical's picture

I'll believe that they have truly turned the corner when they tell ISR to go fuck themselves and that they will no longer give away nuclear submarines or continue paying over $529 USD per month to 18,500 "holohoax" survivors. 

Worse?

http://forward.com/articles/177486/germany-agrees-to-pay-b-for-home-care-for-holoca/

"The announcement of new funding comes amid controversy for the Claims Conference over revelations related to bungled investigations in 2001 that failed to detect that a broad fraud was underway at the Holocaust restitution organization. A document obtained last week by JTA showed that top Claims Conference officials were involved in the botched probes, including then-executive vice president Gideon Taylor and Berman, who in 2001 served as outside counsel to the Claims Conference.

Claims Conference employee Semen Domnitser, a director of two restitution funds who was at the center of the 2001 inquiries, was found guilty earlier this month in federal court of masterminding the fraud scheme, which ran up more than $57 million in fraudulent claims from 1993 until 2009. The cost of the fraud was borne entirely by Germany."

Calling them fraudulent claims is about as redundant as it gets.  

"The Reparations Agreement of 1951 between Israel and West Germany".  A one-time payment of $7.5 BN USD ($70BN in 2014 dollars?) + annual payments thereafter + monthly payments to "holahoax" survivors + + +

By the way, why would Germany have paid ISR a sheckel?  ISR did not exist until long after the war was over.  Did ISR have self-declared power of atty to represent all Jews?

During the reparations negotions "Menachem Begin ordered the asassination of (German Chancellor) Adenauer, which was carried out by Jewish terrorists by means of a bomb plot killing one person, but leaving Adenauer unscathed. Though Adenauer learned that it was a Jewish attempt on his life, he ordered investigations to be put on the back burner."

Assassination?  Now there's someone you can negotiate with in good faith.

As Ethyl Merman bellowed, "There's no business like Shoah Business" or something like that.

Anasteus's picture

"It is not the purpose of European monetary policy to ensure solvency of national banking systems or governments"

Really? And what were those former, latter and ongoing bailouts throughout Europe, most of which were directly or indirectly directed to German (and French) banks all about?

The arrogance of banksters is indeed beyond comprehension... although, on the other hand, I can understand the anger of the bank's staff when realizing its gold reserves completely wiped out.

limit_less's picture

I dont get the Bundesbank/German polticians. Always beating around they bush.

This is what they said.

 

Germany's Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.

 

 

In Germany, however, the Bundesbank said it would not support an implementation of a recurrent wealth tax, saying it would harm growth.

 

The Bundesbank dont want to harm growth in Europe cause that means less money for Siemens, Bosch, Mercedes, BMW, Audi, Miele, 3M, Henkel, Porsche etc etc.

 

So what they really mean, and what they have been saying in a round about way since the crisis started is that governments in the Eurozone should take their medicince and default. Leave the money in the pockets of their citizens so they can send it to Germans in exchange for stuff.

 

I cant work out why the Bundesbank wont come out and just say "we think the Greek government should default, we do not live in a fascist system where the population is forced to bailout private companies."

 

 

zerozulu's picture

"Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help"

 

 

I'm bad in history but is it not the same what Hitler asked to chossenones?

PT's picture

At first they came for the peasants but I didn't care because I wasn't a lazy-ass peasant.  If the peasants think they're so poorly done-by then they should start their own business and work hard and work smart and innovate and take risks and properly manage those risks etc etc etc.

And then they came for the retailers but I didn't give a shit because I wasn't a retailer and any way all the retailers just sell cheap, foreign crap that breaks all the time so they deserve to go broke too and anyone who buys anything from them must be a moron who deserves what he gets.

And then they came for anyone that has anything because obviously if you had managed to carve a little niche for yourself in this world then you must have lied and cheated and "stealed" somewhere along the line 'cos there's no way an honest man could possible save any money in this environment.

So then I went to hunker down with my guns / gold / food stash and blow me down it wasn't there because the drones had followed me there the other week and someone must've broken in and taken all me stuff while I was busy ploughing the fields all last week.

So then I went to round up the townsfolk so we could form a posse and jump on a jumbo jet and track down TPTB who could be anywhere on the globe and no-one knew what they looked like, but blow me down, the dumb-ass town-folk had been brainwashed by the MSM and they all looked at me as if I were the problem.   I guess, why would they want to fly the world on a wild goose - chase to find the people who really stole their money and their time and their life when they could just take it out on the closest yob available - me.  Besides, none of them had any money and some of them don't like flying.

Maybe I shoulda hired a PR team.

In the end it was all a bit silly, because after stealing everything on the entire planet, whether it was nailed down or not, TPTB still only had enough money to pay down 1% of the interest on their debt.

Last I heard, the answer was a compulsory superannuation scheme for people on the dole that pays out when they're 160 years old, financed by ad-clicks on everyone's unemployment Facebook page - so if you post pornographic selfies of yourself then you'll generate enough money from ad-clicks to put into your superfund to give money to TPTB to pay off the interest on the current debts that will finance a future inflated utopia that will ...  and then my head started to hurt.

 

GVB's picture

Yup, everyone has been mindfucked. except ZH. ZH stands for delivery!

Things that go bump's picture

Yes, we will stand and deliver, just like everybody else, and count ourselves lucky if they let us keep our lives.

limit_less's picture

PT - Brilliant post. 

Rafferty's picture

Q: Does this include the Rothschilds?

A: No, only  the peons pay.

Cacete de Ouro's picture

Red Shields ? Taxes? Bears in woods?

chubbar's picture

Kind of like how the GenRes investigation went away shortly after he sold his 130 Million oz of silver.

cowdiddly's picture

or how the Keystone pipeline went away after good ole warren was called to the whitehouse to be convinced not to sel his Wells Fargo stock.

Well I do have this little railroad thingy and you expect me to take it in the arse their too? 

DEAL.

Ignatius's picture

The creditors must be paid.  That is the first and only 'rule' in all of this.

So, who owns the debt?

"Duh, well, I guess we all do.  I've got 10 shares."

No. No. No.  Who owns 10 million shares, 10 billion shares of the debt?  Or more?

In antiquity it was understood that periodically the debts would have to be cancelled.  This is because the normal growth of an economy is an "S" curve (innovation, mass adoption, saturation).  The normal growth of the "debt" curve is exponential via compounding interest (you owe me, you owe me more, man, you owe me way, way, way more).

Large, modern private capital holders refuse to cancel the debts and kill to protect their franchise.