Europe Considers Wholesale Savings Confiscation, Enforced Redistribution

Europe Considers Wholesale Savings Confiscation, Enforced Redistribution

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.

Spain Considers Taxing the Sun

Spain Considers Taxing the Sun

How solar panels became “toxic assets”

Adan Salazar Infowars.com Oct. 8, 2013

You know the Spanish economy is in dire straits when politicians propose a tax on the sun.

Far from rewarding enterprising citizens by offering net metering rebates, Spain is considering a more ass-backwards approach by instead taxing those who would dare take it upon themselves to produce their own energy.

 

In alleged efforts to tackle a debt mountain of $35 billion, Spain’s energy sector wants solar panel users to pay a “backup toll,” essentially forcing people who use solar panels to pay for “self-consumption.”

“We will be the only country in the world charging for the use of the sun,” the director of a Spanish sustainable energy firm named SEBA, Jaume Serrasolses, told the BBC. “Strange things are happening in Spain. This is one of them.”

Those who produce their own energy through solar panels typically accrue enough savings to pay them off within eight years. The new solar tax would ensure that timeline extends to 25 years.

The logic behind the proposal is that with increased “’self-consumption,’ the income for conventional energy systems will decrease, but grid maintenance will cost the same,” according to the BBC.

“If I produce my own energy, but am connected to the grid, having the backup in case my production fails, I have to contribute to the cost of the entire system,” Energy Secretary Alberto Nadal explained.

In other words, even though the Spanish government was responsible for a massive campaign six years ago promoting solar energy, the people that actually jumped on the initiative are now burning holes in the pockets of Spain’s five biggest energy companies – and the taxpayers must once again come to the rescue.

Dutch lawyer Piet Holtrop has assumed the task of defending over 1,000 people who, due to the proposed tax, are now in danger of holding “toxic assets” and even losing their homes.

“The majority are people like your or my parents who at one time had savings and wanted to make an investment with a better return,” Holtrop says.