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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AuEagleNest's picture

.

 

" RE: Ayn Rand - There is much in her writing that is original and profound, but the bits that are original aren't profound, and the bits that are profound aren't original. - Johnny Cocknballs"

I may have to use that as my new email sig.

 

Johnny Cocknballs's picture

Basically stolen from a quip Samuel Johnson is usually credited with.

http://www.samueljohnson.com/goodorig.html

I almost went with some variation on the idea of a girl at a bar who is 'good from far but far from good' but the other one seemed easier to toss in.

monad's picture

You have to do better than answering your own question with an ad hominem logical fallacy.
1959

Johnny Cocknballs's picture

No, I don't.  Ayn Rand fanboys are very largely people who haven't read any other philosophy.  That's neither ad hominem nor untrue.  

People who studied economics or political science come across it and think they've gotten a seminar in western philosophy. Objectivists and Randbots are particularly tedious because they are in essence religious zealots - unaware of much outside the one sacred text they believe is Truth.

Many thinkers for thousands of years have addressed the topics Rand has.  One of the benefits of studying philosophy, or at least reading about different philosophers (history of and summary books are eminently more readable and forgivable shortcuts to, say, trudging through Being and Time) is having a lot of ideas regarding a topic with which to compare other ideas.  Not smarter but wiser.  A broader intellectual repertoire from which to draw.

What I'm telling you is Rand's most vocal and tedious and zealous fans tend to be people who read fuckall else.

 

 

I'm familiar with Rand's thinking already, hence I'm not sitting through half an hour of her philosophizing; but are you familiar with, as recent example, Chris Hitchens?  Who ironically turns up in the related videos to your link, but wasn't a fan of Rand's pharasaical worldview? 

Hitchens Destroys the Cult of Ayn Rand

 

Or if you think this girl is prepared to engage in a thorough discussion of Hume because she read Atlas Shrugged, you are welcome to join her channel and tell each other how the rest of us "don't get it."

 

As always, it's your choice. But I've already wasted too much time on this.

 

For fuck's sake, at least read "The Ego and Its Own" if you cherish this sort of ontological solipsism in your thought. At very least it will put another god in heaven for you and maybe remove a little of the power of the Randian cult from your psyche.

As to a more scientific debunking of the Randian theory of mind/rationality, which is largely cribbed from Descartes, not Aristotle  {have you read Aristotle?} off the top - check out "Descartes' Error" by Demasio.  Easy, fun read.  You might also check out stuff by Oliver Sacks to get a better sense of how fragile "rationality" is.

Cheers.

 

Lebensphilosoph's picture

That's all well and good, but it's just a little ironic seeing a criticism of Ayn Rand invoking Christopher Hitchens and the absurdities of the materialistic monism of neuroscientific philosophastry.

falak pema's picture

When you've wrapped your tongue around more of those aphorisms cum sophims you wil be ready to drown your emptyness in a glass of good chardonnay. 

shovelhead's picture

Herman's Hermits.

Peter Noone.

How could anyone discuss philosophy without knowledge of Herman's Hermits?

22winmag's picture

While Europe burns, the U.S. cartel will force it's citizens into UST... which is 'confiscation lite'.

 

Hundreds of millions of rifles in circulation tell anyone who is listening that the America Spring has yet to come.

Mr. I-N-The Sky's picture

AMERICAN SPRING? Yea right! How many millions of Americans are numb from pharmaceuticals? How many millions need a drink to function? Forget the coke/dope/etc.

The American spring went about as far as the occupy movement. Tailgating for white kids with dread locks.

The U.S. gov. fears an American spring about as much as it fears a military invasion from the Peruvian navy.

Apostate2's picture

How many accounts do you need to think you have credibility? Fail. Keep trying you POS.

slightlyskeptical's picture

The answer is pretty simple. Eliminate the Central banks, fractional reserve banking, and leave the money creation to the Treasuries. Back the currencies with each nation's productivity. Set exchange rates between all currencies and adjust them periodically using a formula of productivity versus currency outstanding.

To start with each country simply pays off what is owed with newly printed Treasury currency, with the exception that central bank owned debt just gets cancelled.  Pay off all consumer debt as well. Once fractional reserve banking is eliminated, the economy will need a huge infusion of cash, and these actions will provide it. It will also push investors to apply that cash into productive endeavors.

 With the elimination of the debt and the associated interest, the governments would be running surpluses at the current levels of taxation. A choice could be made to eliminate much of that taxation and just have them print as is needed. If we eliminated taxation we would need strict limits on currency growth instituted. Force any spending above a certian point to be appoved by national referendum and a tax to keep balances under control and talso o keep us from making bad spending decisions.

Also open a national bank to perform lending functions but also let private bankers lend half their deposits as well. Social security and the pension programs could also take over some of the future lending burden and earn a return not dependent on taxation.

Bottom line is that we cannot let banks be money creators or control exchange rates between currencies. We can not force our countries into debt in order to provide the constantly needed ongoing currency expansion. We need to end it swiftly and start getting on with a saner system.

 

tahoe996's picture

What a great idea. A grand reset. Must do it quickly before the "elite" can game the new system can be implemented.

Ckierst1's picture

No, you haven't backed the currencies with convertibility to gold and silver.  No backing, no dice!

falak pema's picture

Sounds like cooperative capitalism to me. 

Have craft guilds who print their own money and specialise their own entrepreneurs amongst themselves via internal cooperation (or competition) based on guild rules.

That was the Dutch method of the middle ages but the money came from Italian banks/merchants and the wool from England.

Now we have the Internet and worldwide entrepreneurial angels of innovation (via venture funds) and maybe, maybe, encrypted money based on products promoted by the guilds gone international.

This scheme will hit the asymptote when the International or national guild goes protectionist or -- Oligarchy controlled by a few big boys. Thats history. We keep going to oligarchy plays as greed dominates "general good" principles. 

Its a bitch to walk away from a centralised form of government. Patch works never work for long. 

 

aleph0's picture

 

 

Great post ... it really is pretty simple.

OTOH , the IMF+WB+UN have other plans it seems  ... http://www.youtube.com/watch?v=G4p0UeduHMw#t=60...

.... shows Lagard making a 45 minute presentation "in a Church" of all places ... to a large audience of Prominent Guests like Mark Carney and others.

Just amazing.

 

 

DeliciousSteak's picture

The great thing about western Europe is that they go absolutely batshit crazy at least once every century. Can't wait to see how they kick off the 21st century.

Manic by Proxy's picture

In a tangential news item, German manufacturer Bosch announces a new premier gas oven. Company spokesman Terd Nurdlinger gave details regarding the high end appliance. "We are pleased to say that this oven exemplifies our dedication to providing products to enhance customers' cooking experience. These new ovens have state-of-art electronic controls and tunable gas jetting. The Reich model comfortably sleeps a family of 4".

lakecity55's picture

Long poison gas stocks.

But, will we be here to coup the profits?

Ckierst1's picture

We're certain that your heirs and assigns will be delighted with your contribution to their contribution to the banksters'/politics slush fund!

devo's picture

Bearish for everything.

Remnant_Army's picture

Much of what humanity takes for granted will be turned upside down and inside out, but this is necessary. 

 

 

http://www.thewarningsecondcoming.com/much-of-what-humanity-takes-for-gr...

 

Relax, it is under control.

redwater's picture

Hanging: too good for them.

Guillotine: too quick.

Crucifiction: very ironic. Considering that long-haired dudes beef with the money changers, and all.

Fíréan's picture

Did the author of this article see the original "document" or only responding to the short (edited) interpretation by a Reuters correspondent  ? Certainly there is reason for concern within that which is rreported, but I would like to read the original "document" before i made a conclusion from secondhand information and concluded with the word "confiscate" .

http://www.reuters.com/article/2014/02/12/us-eu-banks-savings-idUSBREA1B...

smacker's picture

Reading the orignal EU document may not be of much use. It's like reading The Daily Slime.

The EU is well known to use language that means very little to anybody, except themselves and lawyers.

I've tried reading some of the official garbage from the EU about Single Bank Resolution, it just gave me a headache. The Lisbon Treaty (aka EU Constitution by another name) is another.

forwardho's picture

It would depend on definition of "mobilize"

If volentary, you have a point.

Legolas's picture

Crap like this always starts out as "voluntary". 

gann1212's picture

this sounds like a great opportunity !! where do i sign up. i mean really what could possibly go wrong this will be run by the government and the banks right. that makes me feel all warm and fuzzy

Accounting101's picture

No, not run by the government. Perhaps legislated by the government to make the theft legal, but not run by the government. By now, we should all know who is charge.

Mitzibitzi's picture

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

Those would be the same companies that have about a 1 in 10 chance of making enough profit (in order to pay for the legion of tarriffs, licences, permits, fees and regulatory compliance measures that they have to follow) to avoid going bankrupt in their first 2 years, would they?

Same ones?

Thought so!

When government gets out of the way and lets new business start-ups actually have a realistic chance of success, then maybe I'd consider investing in a fund to help them out. Once start-ups are freed of all the bullshit, there's a pretty good chance you'd get a decent return on such an investment. Lot of bright people out there, with good business ideas, given the opportunity.

But since it's obviously far more profitable (for the 'elite', anyway, especially in the short term) to mire a small business in unpayable debts, force them to go bankrupt and walk away with their assets, ideas and intellectual property pretty much for free - whilst also stealing one hundred percent of the money any sucker was stoopid enough to put in the 'EU savings fund' - THEN sell the aforementioned assets, ideas and IP to your corporate buddies for pennies on the dollar..... I won't hold my breath!

NuYawkFrankie's picture

'Savings Confiscation' Macht Frei

- über Banksters

falak pema's picture

Well lets hope they start the confiscation with the oligarchs, the financial sharks. 

Mathematics say to fill the socialised "debt" hole created on the collective balance sheets of nations there is ONLY ONE WAY TO DO IT : Go after those who have the money in their private and corporate accounts.

NO OTHER WAY as its the Math, stupid !

About time we enforced "debt jubilee" on these wankers.

This apexed financial redistribution based on "market" forces of TBTF/ US crony Oligarchy capitalism, under the Reaganista-Thatcherist gun over thirty years,  is a sinister farce of unimaginable dimensions.

Clean out those Augean stables one way or the other! 

 

Singelguy's picture

They may very well try to do that but just like in Cyprus, the oligarchs will be forewarned about a week before it is announced, giving them ample time to move their cash beyond the reach of the government thieves. The tax havens will welcome it with open arms.

forwardho's picture

Does that mean that this article is the "notice" to the peons?

Or to the oligarchs,

GetZeeGold's picture

 

 

Internet 2.0.....you WILL logon.

Mareka's picture

The suggestion above is from un-elected EU bureaucrats so they don't have to worry about the next election.

Savings confiscation???  We've been living with it for 5+ years in the USA!

ZIRP has been grabbing about 7% per year from every saver.

3 to 4% per year in lost interest via artificially supressed rates and 3 to 4% per year in lost purchasing power via inflation.

It stacks to about 50% loss in 7 years... almost there.

Bernanke, yefekya.

forwardho's picture

Yes, but the possibility of outright confiscation of  funds is slightly different.

!. What will the average EU citizen do when they realize their money could soon  be "our"money?

2. What will they turn to in order to preserve some control over their savings?

Right now they/We are getting less than nothing to keep their/Our savings in bank.

100% risk with no possibility of gain, who would take that deal? Should enough people figure out this simple fact...

GetZeeGold's picture

 

 

GOP Senator Apologizes for McCain Tantrum

 

We'd appreciate it if the GOP could control their progessive members.....thanks in advance.

jtg's picture

Why apologize for that s**t McCain that loves jihadis that are raping and killing Christians and also Muslims that say No to the seventh century?

Franktastic's picture

should they take (any) money i left, then why would i donate any more labor\or investment my time in the future?

how to kill a good working buzz.

people will move underground, the Roman tax takers have chased the people from their system in history...it is happening again. Gee i wonder how this will end?

MathWins's picture

And the bankers will find some way to line their pockets off of this.

insanelysane's picture

They will charge the government and the depositor a confiscation transaction fee of 3 1/2%.

lakecity55's picture

"Holy Mao, Batman! It's a plan for World Communism!"
"Yes, Robin. We must stop the Jewker!"

muleskinner's picture

If you have a savings account and receive one percent interest, you are just plain stupid to have your money in a bank anywhere. That is, if you can save a single dime, but that's another story.

Cash not in the bank is what you need.

154 95 percent copper pennies equals about one pound, so if you have copper pennies saved, you have doubled your fiat money.

I agree, nickels are about the best you can do if you can't save any silver or gold.

The only way to save is to own pms.