Desperate Acts Of Government Continued - Europe Edition

Tyler Durden's picture

It appears that while some will argue that all is well and all we need are some animal spirits to bring us out of the doldrums, it would appear that governments and central banks disagree. Having recently discussed Argentina's forced bank-lending (and of course the BoE's wink at Barclays), we now hear a German think-tank (DIW) is strawman-ing an idea to force the wealthy to buy government debt (or lend "transfer" up to 10 per cent of their net worth). As the Germans come under more and more pressure to save their friendly neighbors the compulsory loans from anyone with a net worth above EUR250k would provide around 9% of annual GDP (or EUR230 billion) that could be mobilized to support the Euro-rescue efforts. As FAZ, Handelsblatt, and Die Welt note, this is not being well-received as the ZEW (Center For European Economic Research) reacted critically that this "would be a huge intrusion into property rights, and probably not possible under German law" running the major risk that "with enforcement action it will probably not be able to regain market confidence," and while a similar system had been installed after the Great Depression in the 1920s (as well as after WW2), these previous loans encumbered real estate properties and not directly to cash.

We discussed this three months ago (not as policy recommendations but as expectations that all wealth will be extracted to prevent what 'they' think is pending social collapse), and while it will not be popular, it seems either directly through this route or indirectly through banking repression, the forced financial tax that we wrote of back in September is exactly what is occurring - as there are only painful ways out of this miasma.


(h/t Thomas Weber)

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Dr. Richard Head's picture

In Europe, debt buys you. 

Doña K's picture

That eliminates real estate as wealth preservation. I had posted before that real estate can be taxed to extinction. Now it's perfectly clear.

the only wealth preservation asset is PM's in any form, silver bangs, gold wire, gold and silver coins and in any other form. We little people should avoid bars as they need assay before selling.

Do the right thing mates


Praetorian Guard's picture

PM's are just as big a fallacy as real estate. PM's hold no value other than what people currently ascribe to them. So on one hand you say that the powers that be can tax you to infinity for real estate, but fail to see how those same powers can ban the transactions of all PM's, or tax the shit out of them when you buy or sell? Your kidding yourself if you think PM's are going to save the day in the end. What you should actually be looking at is the big movers of PM's and what they are doing with it. HINT: they are not keeping it, they are selling it at higher premiums to people like you and buying "real wealth", as in the kind of wealth that everyday people will saw off their arms to acquire, sell their first born, etc. If you can't see the forest from the trees, you're screwed...

...and in the end PM are not really that precious now are they? Especially with the work being done over at CERN - the Large hadron Supercollider has now made previously unknown elements, so don't think for one moment that could not take Mercury 196 and insert a neutron which would convert Merc-196 to Merc-197, and after its small radioactive half life stable gold-197.

Praetorian Guard's picture

Wow 2 negatives but no explanation as to why? Figures... reply without substance

Western's picture

the 'thought police' prowl these boards.. i've a list of several posters that post as if they are hired marketers by JPM/ECB/the Queen.

GernB's picture

Under that logic, the value of everything is a fallacy, because nothing has any value except what people ascribe to it.

I'm curious as to what you think is real wealth, given than nothing has any value except what people ascribe to it.

BigJim's picture

 PM's are just as big a fallacy as real estate... blah, blah.. but fail to see how those same powers can ban the transactions of all PM's, or tax the shit out of them when you buy or sell?

A government can enforce land taxes because it is the undisputed coercive force within that polity.

Banning PM sales outside its borders? Not so much.

WiretapWilly's picture

It will be called a refundable tax.... with the details of the refundable part to be worked out later.  In unadjusted Zimbabwe dollars ofc.

crazyjsmith's picture

Great, let's just call it a Freedom tax.
That way we can all be guilted into paying it.
You are a patriot aren't you?

Freedom isn't free folks.

agent default's picture

Why bother making money or doing anything productive if the government is free to just walk in and confiscate it?

If they enact anything along these lines, there is no point in starting a business or running a business anymore, just join the bread line and demand more handouts.

surf0766's picture

You just made the argument against communism.

johnQpublic's picture

better to be a confiscator than a confiscatee


i never before thought of my money as having a 'shelf life'

use it or lose it

actually not a bad idea

if you make more than 250k a year, you must spend ALL of it

no savings allowed

any leftovers will be used to purchase govt debt, like it or not

that oughta spur some inflation, or sumthin

Things that go bump's picture

The government has always had that power, it has simply chosen not to exercise it on a grand scale recently.  Words on a piece of paper aren't going to protect you from a desperate government and the Supreme Court is an arm of that government.  Don't expect any protection from that quarter.   It is "All your bases are belong to us," time. Take a lesson from Argentina.  Anything left in a bank or other sort of account will be taken, if not by the government then by the robber barons who are really in charge and are already stealing ostensibly "segregated" accounts without any fear of reprisal. Real estate doesn't really belong to you either, since it is subject to confiscation.  The government will leave you naked in its attempts to protect itself.  I'm expecting sociatal collapse on a scale not seen since the black death.  I don't expect to be one of those left standing, but I hope and pray I live to see the elites and their minions get what they've got coming.  

agent default's picture

If you are expecting total collapse, then you are better prepared more than 95% of the population.  The mind set is just as important as the tools at hand in this type of situations.  With that said, take UBS's earlier advice, and get a gun some gold and some canned food, just in case.

GernB's picture

The US supreme court just ruled that the commerce clause of the constitution can be circumvented by calling it a tax. By logical extension any clause of the constitution, or all clauses of the constitution can be circumvented by the taxing authority of the government. You may not have had any real property rights before, but the US supreme court has just made it official, you only have those rights the majority lets you have.

What's more, I don't think there's any logically consistent basis on which to support confiscating money you just earned, and oppose confiscating money you already own. Why would anyone think governments cannot take what you own as easily as they take what you earn.

world_debt_slave's picture

yeah, I stopped being productive a few years ago, just closed my business. I won't take any gov handouts and will just survive the best I can.

Tirpitz's picture

A better way would be to question directly the legality of much of the amassed wealth. And confiscate it directly.

Anyone who can conclusively explain within five minutes that he had worked for 50 bucks an hour for fourty years and inherited another two hundred thousand will be fine. And anyone else will be heard in the morning and guided to the nearest labor camp the same afternoon. High time for a major change.

agent default's picture

Yeah, but why not just question your right to exist and just have the likes of you taken to the nearest concentration camp? After all those with the wealth are in a position to afford it. 

Tirpitz's picture

The question has to be whether the right to steal from the working class (to amass undue wealth) supersedes the right of the people to conduct a life worth living.

Behind every major fortune is an unpunished crime. Time to catch up with the perpetrators.

Bicycle Repairman's picture

The perpetrators won't be caught.  The merely frugal will.

Tirpitz's picture

That's another story we have to keep an eye on. War on Cayman Islands?

Clayton Bigsby's picture

Dude, seriously, what the fuck is wrong with you?

agent default's picture

"Behind every major fortune is an unpunished crime."  This is just beyond stupid.  And behind every leftist there is a potential NKVD henchman or a Red Brigade Terrorist.  There, you logic in action.

And what do you mean steal from the working class and what do you mean undue wealth?  And steal from the working class?  Two facts of life:  First, you need employers to have a working class.  Second, nobody and I mean nobody screwed the working class harder than the "Socialist Paradise" states where there where the only employer was the "People's Government".


Tirpitz's picture

Now, who's creating wealth, the salaried hand swinging the tools over in Detroit or a Goldman Sachs poker player sitting in front of his trading screen, shafting some widows and orphans with his secret algorithms?

Not a single 'socialist' country ever had been as indebted, relative to GDP, than our entire Western nations are. So, who did a better management of their system?

agent default's picture

That's true, socialist countries managed to collapse their economies without a penny of debt.  Now quite that's an achievement.  As far as Western debt is concerned, you know what?  It mostly went towards unsustainable welfare and entitlement projects and other "Social Policy" crap. And no, under a capitalist system Goldman Sachs and the rest of the bucket-shops would have gone out of business a long time ago.  Then again, under such a system you wouldn't have centrally planed, artificially low interest rates allowing for the debt bubble to build up in the first place.  You would have to deal with the economic realities on a day to day basis, as in no zero money down mortgages, no student loans to get degrees in things like Liberal Arts or other dead end "studies",  no easy credit card debt so that you can buy that 90 inch plasma TV you didn't really need and couldn't afford anyway especially if it wasn't made in China.  In other words, you would have to live within your means, and really work to provide for those means.  Allowing you to live above your means was a Westernized version of Socialism, encouraged by scumbag politicians looking for an easy reelection trip, enabled by guess who?  The likes of Goldman Sachs. 

And that's why the bucket-shops are getting bailed out.

Oh, and if you think that labor alone creates wealth in a competitive way,  good luck to you and your sledgehammer keeping up with a modern production like which requires minimal manual labor, and a lot of capital investment. 



Tirpitz's picture

Never would have thought to see the bottomless war machinery being called 'unsustainable welfare and entitlement projects and other "Social Policy"', but thanks for the enlightenment.

Just for you, comrade: Goldman Sachs managed to fine-tune the capitalist system beyond our wildest dreams. This quote from an unknown thinker explains it best:

"To paraphrase a line from AIG’s rescue plea, government backstops are the oxygen of the free-enterprise system. Without the promise of protection against life’s adversities, the fundamentals of capitalism are undermined, and we would all be on the road to serfdom."

Capitalism equals crony capitalism. We can't have water without getting wet.

agent default's picture

The war machinery is part and parcel of keeping the Ponzi going.  You know when they decided to invade Iraq?  When Saddam decided to sell oil in currencies other than the Dollar.  You know when Qaddafi was toppled?  When he decided to drop the Dollar.  You know What the Syrian situation is really about? Iran is dropping the Dollar. But they can't get to Iran without taking out Syria and the Russian bases in the region first.  The Petro-Dollar is instrumental in maintaining the US and to a large extent the Western Ponzi. 

And stop using AIG and the likes as an example of Capitalism, they are part of the mechanism that enabled the creation of the debt bubble which was designed to create fake prosperity.  You cannot possibly mix the words Capitalism and protection in the same sentence.  

You know what Capitalism is?

Telling LTCM to go to hell back in the Asian crisis.

Greenspan raising interest rates back in 2000 when the DotCom bubble burst, and flushing the bad debt and the over-levered speculators out of the system. 

That would have been Capitalism.  What you have now is the final stages of a failed Socialist experiment, where everybody no matter how dumbfuck he is, should not go broke.  

But you see the problem:  Everything I mentioned above, would have caused an immediate adjustment for the standards of living for the average Joe out there.  He would just have to live within his means,  and any excess would have pretty fast come to an end right there.  But no, the average Joe was "entitled" to a better standard of living.  Hence the Ponzi.


Tirpitz's picture

"Everything I mentioned above, would have caused an immediate adjustment for the standards of living for the average Joe out there."

The good thing is the house of card coming down could never have affected the million boni collecting executive class and their kin.

"He would just have to live within his means, and any excess would have pretty fast come to an end right there. But no, the average Joe was "entitled" to a better standard of living. Hence the Ponzi."

The average person may feel to be entitled to a job which pays for a living. Nothing wrong with that, in my view. Give him a job and he'll work for his money.

That Ponzi you seem to be fixed so much upon must sure be of his doing as well. After all it was neighbor John Doe who didn't care about his pension plan getting properly funded, as part of his work contract, which apparently enjoys less legal standing than the needs of some holders of inherited wealth, who never in their entire life got a hand dirty from honest work.

Your fine capitalism works possibly in theory, but on this planet capitalism always quickly moves towards monopolization and cronyism. Take other people's income and pollute their environment. Privatize gains and socialize the losses.

The current malaise does not even in the most remote sense have anything to do with socialism, where the people, instead of a few hundred families, earn the means of production and its income.

johnQpublic's picture

"Behind every major fortune is an unpunished crime"


i've got to agree with tirpitz


think 'robber barons', the range wars,early opium trade

country has been a rigged game from the start

ask an american indian

agent default's picture

You cannot use someones financial situation as evidence of crime, or evidence of anything.  How would you like the following:  Poverty is evidence of incompetence, weak character, low intelligence, and an underlying criminal nature.

But it's funny how people react when you use their line of thinking from the opposite direction isn't it? 

LawsofPhysics's picture

Stop beating around the bush and state the problem plainly;  There has not been any real consequences for bad behavior at any level.  The "educated" elite should fucking know better.

Fine, you don't want to see the rule of laws and contracts restored,  fucking fine, burn it all down, at least then we can find out precisely what the real value of everyone's labor really is.  Fucking bring it.  fuck the paper-pushers and their weapons of financial destruction.

agent default's picture

Didn't I just make this point using LTCM and Greenspan's interest rate policies as an example?

Tirpitz's picture

Guess he wasn't that aware of LTCM and Greenspan having been products of socialism, owned by the people, run for the people, with no private scooping up of rich profits occurring in the background.

Tirpitz's picture

"How would you like the following: Poverty is evidence of incompetence, weak character, low intelligence, and an underlying criminal nature."

It ain't easy to run into poverty as long as you have some work and a system which allows for proper education. Unless, of course, some excessive medial bill throws you off track, just while your employer outsources your job for some extra tax-sheltered profits.

Now, how can you get wealthy, become part of the 0.01%? No chance with a honest job. But running some lovely ponzi scheme amongst a group of fellow crony capitalists a la Corzine, Madoff or Blankfine helps mightily on the bank account side. While being born into the right tribe family won't hurt either. Must be in the genes, somehow.

Again, I wonder how quite a few people here are so eager to see the splinter in the working man's eye, all the while they don't care about the beam in their own ones.

XitSam's picture

I hope you realize, after the troublemakers, the fellow travellers are the next ones to be sent to the labor camps.

Tirpitz's picture

Got to make them big enough. Have space for their entire tribe.

Doña K's picture


<<<A better way would be to question directly the legality of much of the amassed wealth. And confiscate it directly.>>>

Certain european countries make you pay income taxes based on the real estate and type of car you own.

You can not have a mansion and a top of the line luxury car (they claim) and report that you make 20,000.00 Euro per year.

The law is appropriately called "De donde eres" "pothen esches" and both mean: "Where do you come from?"


johnQpublic's picture

that doesnt catch the bigtime(read wall street) thieves

just dope dealers, who at least provide a useful fucking service

Doña K's picture

True! It catches the underground economy only. The wall streeters and big dope dealers own everything through dummy corporations. Hard to find.

GernB's picture

Well, who voted in the people who did this, and why. Did they vote for them because they promised free stuff? Did they cheer them on when they launched two wars? Did the advocate bailing out failing banks? Are they standing there now advocating massive spending in the face of a historic economic collapse? I've voted for the wrong people, stood behind the wrong policies, and I'm willing to sufffer the consequences.

People who have obtained money illegally should be penalized in proportion to the damage they've done and the lives they have ruined. But, those whose only crime is providing goods and services that people need. To penalize them for providing those goods and services, or view money freely given for value received as somehow tainted is wrong, and will only hurt the the people who currently buy those goods and services, when they are no longer available.

Caggge's picture

Keynesians got us into this mess and now we (non-Keynesians) have to sacrifice our principals so that they can get us out of this mess.


Tirpitz's picture

Not sure Reagan's misguided supply-side spending spree had that much to do with Keynes.

Bicycle Repairman's picture

We recovered from Reagan and the 1980s congress' mistakes.  If anyone owns the current situation it is Bush II and that congress.

Tirpitz's picture

Almost agree here. Reagan lifted the debt level to unprecedented levels, and even Clinton didn't manage to get off this unsustainable level.

Bush finally blew it, and Obama leveraged W's wretched way of running the government.

NotApplicable's picture

WTF do all of those puppets have to do with anything????

Could you at least engage in mature conversation, rather than focusing on the facade?

This isn't HuffPo, Slate, nor Free Republic, mister.