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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TheRideNeverEnds's picture

Nice, I assume they will use the money they confiscate to buy more stawks?  



dexter_morgan's picture

What a great plan! Unless of course, one believes in free men and free markets and values their freedom and liberty.

the not so mighty maximiza's picture

yeah sure, europe has no history of reveloutions or anything

disabledvet's picture

Germany is a Federal theory it could "break apart."

newworldorder's picture

Please forgime my being uninformed on this suject of EU rules.

Since there is no fiscal unition, is this legal under current EU laws?

Can the EU impose its will on individuals domiciled in all EU countiries?

What does this mean for the sovereignty if individual EU nations.

logicalman's picture

Please forgive my being uninformed.

How can one human being have the right to tell another human being what to do, as long as no harm is being done?

What does this mean for individual freedom?

Joenobody12's picture

Obumpma : You want freedom, you can have your free dump. Your ancestor fucked my ancestor , now it is payback time. I fucking destroy your country.

lasvegaspersona's picture

Oby's ancestors never were forced onto the boat. They probably were sell side slavers...someone had to be.

edotabin's picture

What does this mean for the sovereignty if individual EU nations.


What sovereignty?

layman_please's picture

well EU has broke all its rules. most of the PIIGS shouldn't even be in the EZ. i'm not even talking about the last 4 years monetary policy as bailouts would be illegal according to the lisbon treaty's conditions. nobody really cares. there's no rule of law in EU, there never was. just the rule of the bankers.

"Can the EU impose its will on individuals domiciled in all EU countiries?"

problem is that sovereign governments are complicit and are acting on voluntary basis, because they all belong to the bankers, who dictate the EU monetary policy.


spanish inquisition's picture

The banks are complaining that the big problem is they are required to have money in the bank.

Kirk2NCC1701's picture

No Problem.  They simply move their savings to "The Bank of Certa, Sealy and Posturepedic".

Complete privacy (no ratting out to anyone), No Fees, No Charges.  Funds available 24/7/365, even on holidays. No Withdrawal Limits.

Note:  The Depositor plays their part in the Security of Deposits, depending on whom they let on the Premises.  ;-)

dexter_morgan's picture

That would be great if the 4th amendment were still in effect in any meaningful manner.

Sinnedi's picture

It's time to bring out the guillotines

lakecity55's picture


EU-wide communist nationalization/confiscation!

Forward, Soviet!

chemystical's picture

the daily by jews, for jews, and about jews.

the, ahem, similarity in the words "forward" and "forward" is not a coincidence.  it's a cohencidence.  

those who forget history are...probably reading kosher books.

or watching kosher tv/movies


"...and then they came for me, because I defended my misanthropic sociopath lucifierian co-religionists 24/7".


Shoot the messenger using down arrows.

lasvegaspersona's picture


my guess is you are 12 and have never met a jewish person but have watched a bunch of youtube about bankers.

Let's discuss Guy Rothschild. Born into the French family with everything. Serves in the army and goes to work in the bank. WW2 happens and the Vichy take his bank. His mother's entire family and a variety of relatives get murdered and dispossessed.

He rejoins the army and gets evacuated at Dunkirk. Comes to the US but joins up with the French in London. On the way his ship is torpedoed, 13 on his ship die. Gets captured but escapes. After the war the Socialists take his new bank.

By this point I'd be thinking 'wow, the people will grab anything that's not nailed down.' I wonder what the best way is to secure wealth. Every time I make money they take it away.'

And for the record all jews are doctors not bankers, I know I've counted them.

My point is if you just hate jews admit that you do so with out reason or personal grievence. This bullshit about them starting wars is nonsense. Bankers loose with wars. One side defaults. Peace and commerce are in their best interest. But logic probably isn't your strong suit.


lakecity55's picture

Apparently you have never met a Zionist.

Is the Red Shield of One Mind? Probably not.

Zionists, Khazars, are not "jews" as I understand the term.

lakecity55's picture

.....and the Tribe said "Forward," "harvest the sheeple and let us Rule The World."

dexter_morgan's picture

Queue Flakey and crew of apologists to explain why this is a great idea and should be done here.........

Catullus's picture

Or you know, you can just default. Not destroy all confidence and not send the continent into conflict.

Nah. The EU is the baby of the political class for the past 25 years. Why give it up now?

dark pools of soros's picture

the great scam will be after they lull the fools of their savings into the grand promises of socialism (why have savings.. we all get what we need) then politics will change, conservatives get in charge and crimp all those programs away....  so now no savings and now no social programs..


and it was all planned from the start...



Soul Glow's picture

People are greedy and will never go for "socialism", for better and worse.

chemystical's picture

the majority of the people who will be affacted by these measures are fat, lazy, addlepated, indoctrinated, and will do whatever makes them the most comfortable for the next 60 seconds.

Omegaman2211's picture

Whew, good thing that could never happen here!

Bugsquasher's picture

But, but Cyprus was just an isolated event, a special exception!  They promised it would never happen again!  What are you telling us?  These people would lie to us???  Who would beleive such a thing?

SAT 800's picture

I think Cyprus was the trial run; to see if people just rolled over for it and forgot about it again.

disabledvet's picture

actually that's exactly what the policy folks said Cyprus was...a "template."

What's next? "only titled individuals can have title to land?"

lakecity55's picture

Apparently, the Cypriots are only armed with shotguns.

CitizenPete's picture

bullish PM, bitshit, whatever

chemystical's picture

"feasibility of introducing an EU savings account, open to individuals whose funds could be pooled and invested in small companies?"

See: "Solyndra" du jour.  What could possibly go wrong?  Current gov't policy already does a stellar job of picking winners and losers (and handing your wealth to them): banks, MIC, campaign contributors, deadbeats, etc.  Each of those has contributed mightily to the good of mankind, right?  (Apologies to the deadbeats - it's not always your fault, and getting rid of the other parasites might remove you from your plights).

P.S. If you think that pulling your investments from the market will relieve you of this "bail-in" burden, then think again.  If instituted this will be a tax liability on all of us.  It will not be dischargeable through bankruptcy, and I'd expect that an unpaid debt will be inherited by your progeny.  We've all seen the playbook.  Gov't will sell your soul - to themselves.  And it will be done slowly and marketed as anything but additional enslavement.  In the USA expect to see the colors red, white, and blue in the promotion/propaganda.  Prepare to see eventually a lot of red and white because not everyone will go quietly into bondage.


Dasa Slooofoot's picture

Europeans have savings? 

disabledvet's picture

this is a VERY good point actually...and two thimbs up for the six people who up-arrowed you.

in point of fact one could argue "all they have is a benefit check."

the irony that what has led up to this point (austerity) could lead a hyperinflation should be lost on no one.

Meat Hammer's picture

Read the article again, it says pension savings. They're going to confiscate money that they were eventually going to have to print anyway, but they know this bitch is collapsing quickly so they have to do it now. Now instead of printing it and letting the people have it, which would cause hyperinflation and public hangings, they're going to "mobilize" it, meaning print it now with the stroke of computer keys without the sheeple getting wise to it, then securitize it and sell it back to the same people from whom they stole it. The people are going to buy the present with the money of their future and be left with nothing, while the elites make off with all of the hard assets courtesy of the citizens.

Guillotines are too good for these people.

XXL66's picture

Actually household savings rate in europe are 13.9 % on average, in the US not even 3%...



Overflow-admin's picture

LOL, from whom's ass do you pull that number?

XXL66's picture

shows how little Mericans know about europe

TaperProof's picture

All your currency are belong to the government

dexter_morgan's picture

This will be tough to do here in Dumbfuckistan won't it? I mean at least until we are disarmed.

JimS's picture

There now, you said something that makes sense, unless you ARE advocating disarming the population. You are than a troll/tool, or a fool.

AdvancingTime's picture

A bad haircut, in this case means you have been robbed. That may be the case if the government reaches in over a long weekend and steals money from your bank account. This is a horrible precedent to set, and the worst part may be how some people are letting it slip out that it would be fair, or in some way justifiable if it is only on the larger accounts. It is fine if it only impacts the savings of someone else, the savings of what they see as "the wealthy", the problem is someday they may come for you. More on the bail-in concept in the post below,

WhyWait's picture

Putting aside the moral outrage and the damage to people's trust, the economic effects of massive wealth confiscation depend greatly on who it is taken from and what is done with it.

The very wealthy are apparently unable to invest their wealth profitably in the real economy, and so are simply sitting on or speculating with massive quantities of it.  If this wealth were confiscated and invested in the real economy, in for example infrastructure renewal and green energy projects, it would have a hugely stimulative effect.

Even if the bulk of it were taken from poor and working people who would have spent it right away it would at least generate as much economic activity being spent by a (hypothetical) non-corrupt government as it would in the hands of the consumers.

If however it is confiscated and used simply to heal banks and retire public debt, it will have a massive deflationary effect no matter who it's taken from. 

Has anyone seriously modeled the effects of this?  My prediction is that the model will show the bail-in setting off a death spiral of collapsing demand, collapsing output, business failures and collapsing wages and collapsing revenue. It's hard to see what countervaling pressure in the Euro economy could set a floor on this collapse.

I doubt somehow this scenario is what the banks intend.  But maybe they see it and are just out of options. 

The collapse of the Euro economy might be expected to set off an explosion of the black economy, such as we are seeing now in Southern Europe, which would progressively displace the Euro economy.  Governments could react, perhaps preemptinvely, by reintroducing national currencies to capture this black economy, but that would only work if the national currencies were non-convertable and shielded from the international banks' claims.

That would in turn involve a major shift in political power.


Johnny Cocknballs's picture

It is very rare that a comment so relatively brief could be so wrong, in so many ways, about so many things.


Paul Krugman, is that you?  You silly goose!

WhyWait's picture

There is a boundary which, once you cross it you forever leave behind all hope of distinguished professorships, "Nobel Prizes" and space in the Gray Lady. You can only go so far before the Powers that Be consider you a threat.  If you test that threshold and turn back, they may still find a use for you as a kind of unofficial "Establishment Left", as kind of a boundary marker for the limits to acceptable discourse.

Kind of like Rachael Maddow, that seemingly free and fearless spirit.  What stories and facts does she leave out?  What issues does she ignore?  Whose anger will she channel and whose won't she touch? Where does the logic of her arguments lead that she won't follow?  Ask, and you will soon understand the reality of her invisible leash, and of the invisible hook that could yank her from the stage for one wrong move.

If you let them goad you to anger and contempt, that's a sign they're doing their jobs well. 

Things that go bump's picture

Uh, so why is he wrong, Mr. Cocknballs? Please consult your own crystal ball and give us your predictions. That way we can judge for ourselves. We're just supposed to take this global "wrong" on faith?

buzzsaw99's picture

all to save the very wealthiest .000001% elitist scum stock and bond holders who will not lose even a penny

dexter_morgan's picture

Kinda interesting to look at the number of reads and comments on various articles posted here around same time every once in a while. Class envy is alive and well on ZH, while this article which could potentially affect more people if implemented here than any comments by some fucked up CEO, but that's what people read and comment on.

Dumbfuckistan, as shown below.