Europe Considers Wholesale Savings Confiscation, Enforced Redistribution

Tyler Durden's picture

At first we thought Reuters had been punk'd in its article titled "EU executive sees personal savings used to plug long-term financing gap" which disclosed the latest leaked 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 selling it to a whole new batch of widows and orphans.

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.

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DoChenRollingBearing's picture

@ Soul Glow

VAT or something similar would be next for us.

That of course would supplement, not substitute, for the income tax.  Likely coming!

Grande Tetons's picture

VAT is ez. I suspect you are correct. Catches a few of the going galters in the consumption net as well.  Wanna buy something? Fuck you! Pay me 15 percent for the pleasure. 


RaceToTheBottom's picture

I am sure that the public whose savings are confiscated will all get Dimon like salaries.....

wildbad's picture

the globalists on the EU Comission are already tax exempt.  They are also trying with hands and feet to get GMOs into the EU after the individual countries said NO very loudly.  Centralization makes much possible.

Raging Debate's picture

Yes Surf. They will exempt themselves and Fortune 500 type global companies. It's everybody else that gets the tax. The EU would probably consider what our politicians did here in the states and force "crappier healthcare for more money tax" at the point of a barrel of a gun but they already have socialized medicine.

The really wealthy will escape this taxation and the poor have nothing. This will be another reaming of what is left of the middle class. It isnt an intentional war, its what happens when you let bankers run your government through bribes. The politicians get so used to bribes as their day to day job and having to hire independent consultants to build good fiscal and trade policies over filet mignion is such haaaard damn work! Plus politicians are personal invested in the current casino. The fractional reserve model guarantees a mighty bust, destroying an entire generation.

Remember that article where Bernanke printed a few hundred billion for Europe? Yeah, thats on my American tax tab too.

I dont keep more than enough money in the bank to cover payroll for a few weeks and investing in real estate as tax shelter and investment. Might be low return and pain in the ass to manage at times but it's certainly better than treasuries and definately better than the mattress and real estate has bottomed, low cost of lending is an added incentive. My plan is ten years, fliiping is for big money investors that can afford larger risks and hire people to manage the process. Gold and silver is safe too, but the best hedge against currency devaluation. That appears to run its course and hyperinflation at this point means global revolution and loss of power.

I have a theory the dead bankers are a warning shot (pun intended) by some in government that know the gig is up and are reinforcing statements of power. I'll have to keep observing the trend before I offer up reasoning.

Snoopy the Economist's picture

"and real estate has bottomed" you said. You MUST have mistyped this because that's not true.

Raging Debate's picture

No I did not mistype Snoopy the Economist. If you think it has further reason to fall then let me know why.

Overfed's picture

In most places it is very over-valued due to cheap credit.

Praetorian Guard's picture

Would be happy to chime in:

1. Declining incomes

2. No jobs

3. Upward pressure on commods and energy prices

4. Increased debts

5. Upward movement in treasuries / ? tank in market...

6. Educated populace realizing they don't want to be holding the bag...


Just a few reasons WHY real estate will not hold. Close to 7X's annual income. 7 is the magic number...

Panafrican Funktron Robot's picture


Every asset has declined in value relative to the value of the USD, as measured by the Fed adjusted reserves, including real estate.

If your assets have not increased at the same rate, you lost wealth, period.  Note that the adjusted reserves increased at exactly the same rate as the GDP from at least the early 80's until the end of 2008, in order to maintain a relatively constant USD value.  

Things that go bump's picture

Would a deflationary event do it?

mumbo_jumbo's picture


i was thinking the same thing, this will apply to the 99% NOT the 1% AND certainly NOT the .01%


NoDebt's picture

And not a damned word in the article about relieving (defaulting) the debt that this confiscation would (temporarily) support funding.  

Antifaschistische's picture

"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"

Laymans Interpretation

"the savings of the European Union's 500 million citizens would be used to pay off the excessive compensation to the banking industry accrued over the past 40 years"

Lore's picture

The article seems incomplete. Where does it say that the activity that created this situation will be halted and those responsible will be made to face public justice?

Seriously, I heard somewhere this week that there is some kind of housecleaning in progress behind the scenes.  But don't basic principles of societal justice call for some kind of public gesture?  Thus far, we see nothing presented that would constitute meaningful systemic reform -- just new ways for untethered psychopaths to carry on destroying everything and everyone around them.  It's hardly subversive to make the practical observation that they need to be stopped.

"Not only must Justice be done; it must also be seen to be done."

Raging Debate's picture

Lore - Yes I sense an emergence of house cleaning behind the scenes also. I think the reason this is not explicit is because our politicians are complicit. But a public (largely symbolic) statement of forcing the execs (jail is better but wont happen complicit thing) out of banking still at the top would inspire some confidence to the investment community at large while the people would gobble it up.

Some forced out would no doubt consult because for many its an itch they need to scratch to be around the business but they should not be at the helm.

What happened up to and maybe through 2008 is partially forgiveable to lesson the pain of the inevitable bust but the looting and lack of fiscal planning/policy to restructure after is certainly not.

StandardDeviant's picture

Well, we're in this mess partly because of the bailed-out banks, of course.  But they're a mere sideshow compared to the vast amount of debt racked up by wasteful, unsustainable, utterly immoral government spending on absolutely anything and everything -- to say nothing of an even larger impending debt pile of unfunded liabilities.

There's an interesting line in the IMF report referenced above:

"The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair)."  [Emphasis mine.]

But as long as governments proceed to spend hand over fist, driven by electorates who expect them to continue doing so, how can it not be repeated?  Especially if it does sort of work the first time, as in Cyprus.

(As for the line about "distorting behavior", how cynical is that?  The truly distorted behaviour we see all around us is that of investors trying desperately to cope with the tide of financial repression which has rendered almost every asset class unfit for purpose.)

Things that go bump's picture

So, when will they stop beating their wives?

scrappy's picture

This is the proper venue Lore, as per your wishes.

If we build a Common Law Grand Jury, the people will come. 

Join us.






James_Cole's picture

This is what drives me crazy. Almost literally: these assholes have gone and robbed folks' houses and now that there's nothing left to rob there they've insisted on having the bank accounts too.

Does no one else see this?? Sums up my state of mind:

What 'holes' are they plugging in the (man-made) financial system?? Where are all these holes originating from?? Gawddamn..

NemoDeNovo's picture

+1000 one of the best South Park eps ever!

Zymurguy's picture

No, the term "investments" they use means they will NOT use it to close the gap in debt.  They will use it as leverage for more debt, moar spending... just more borrowing from the future to buy votes and remain in power.  Much easier to pull off in a disarmed society such is most of the EU.

Billy Sol Estes's picture

Don't worry, it is "Exceptional"!

tradewithdave's picture

Colloquially referred to as "the Britney Spears one-time tax"... oops I did it again. 


Berspankme's picture

Shitbags like Barroso and Von Rumpboy, Draghi all need to be swinging from the lampposts

chemystical's picture

Quisling frontmen, but yes they too should swing.

disabledvet's picture

this sounds more like a "finding" than a leak. in other words I order to say "how we're going to pay for it all" you have to go to the media via "creating a finding" thus "to be entered into the public domain" and there to be discussed.

it is more than a little incongruous because as with Cyprus there seems to be a determination implicit in the "finding" that national interests (in the form of the very idea of a tax base) does not exist.

no wonder so much money is flooding into London. "at least they have a currency that need not be devalued to zero to survive."

this truly is Crazy Talk (meaning no DV blabbering on and on but actual executors of policy fact.)

this is not Venezuela...this is the EU.
the "reliance on private finance" is the Faustian Bargain that was made to bring the euro into existence.

the incongruity that the EU is in fact a Customs Union was not lost on the markets when the euro first debuted...whereupon it promptly collapsed against the dollar.

It was only with the attacks on 9/11 and the American Response to them that this changed.

Apparently "even that" wasn't enough.

disabledvet's picture

a "template" to publicly destroy confidence in allot Europe's banking institutions.

I fail to see how the euro here doesn't get annihilated.

Raging Debate's picture

A monetary union without a fiscal union was doomed to fail. I remember a former Chancellor from Germany think it was Helmut Kohl in 1993 that stated this and it made a lot of sense to me. With a weak political structure such a one off bail in will have serious blowback methinks.

Welder's picture

They will hang, don't worry. Their time is up !

papaclop's picture

Will these bastard banker owned politicians stop screwing the people they supposedly represent. Jamie Dimon got a 20 million dollar bonus after JP Morgan paid over 10 billion in fines yet not one of these f*ckers had to do any jail time. They sucked up billions from the US Fed, and used a lot of this money for lavish parties and bonuses. I sure don't want any more of my money going to these crooked banksters. Sickening!

Bunga Bunga's picture

It's already there. A "high yield" savings account is just a hidden confiscation.

HardAssets's picture

If you only own digital entries - - - they will steal it.

And some wonder why they hate PMs ?

chemystical's picture

These will be implemented as a series of taxes, and you'll pay one way or the other.  You can't hide from an imposed debt.  Long on debtors' prisons btw.  That infrastructure is moving along nicely.

Au at the "bottom of your lake" offers you protection only from total confiscation of your assets and it disguises your true wealth.  Total confiscation is not gonna happen.  If the "each according to his ability" principle is in play, then, yeah, your calculated tax will be reduced, but if they go after income as well then you're as fucked as the rest.  What will you do btw if you're in the US and FICA rises to 15% (from both you and your employer) or your bracket increases 20%?  Quit your job?

I own both Au and Ag btw.

Possible Impact's picture

Pb & Cu too? They can enhance efficacious asset safety assurance methodologies.

chemystical's picture

Yes, and in various sizes: .44, .38, .223, .....

Had no problem using them in the past, and won't have a problem using them in the future.  i have no problem with enemy recognition, and neither do my neighbors.  Rather be judged by 12 than carried by 6 (or enslaved by 1 +1 + 100 + 435 + 9 + inummerable apparatchiks), and the rest of the cliches. 

GetZeeGold's picture



I have a nail gun on backorder....I'm practically giddy with excitement.

Antifaschistische's picture

Don't forget Ni.  

The US Nickel is the last vestige of a real US "money" left in circulation. for me, I can't even figure out why they haven't turned this 25% Ni coin into a ghetto plated zinc (inner) coin like the penny.    They really must be desperate to keep the money facade going as long as possible.

disabledvet's picture

zinc isn't worthless. I demand you apologize!

GetZeeGold's picture



For the love of pete.....the zincbugs are everywhere.

RaceToTheBottom's picture


Barter comes into play more.

Work via Consulting companies with low salaries and high owner draws instead come into play more. 

The game will become "be like Romney", again.....

His IRA stock option scam was Epic criminality.

tip e. canoe's picture

gotta give them credit, the Bain Broz have taken swindling to a level of high art, up to and including insuring a 2012 reelection without the uncomfortable truths spouted by Grandpa Simpson (aka RP) raising to a too dangerous level of national discourse.

ebworthen's picture

"All your monies is ours."