BuBa - Steal your citizen's money before asking for bailout

[mr_anderson]

Germany’s Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.

The Bundesbank’s tough stance comes after years of euro zone crisis that saw five government bailouts. There have also bond market interventions by the European Central Bank in, for example, Italy where households’ average net wealth is higher than in Germany.

“(A capital levy) corresponds to the principle of national responsibility, according to which tax payers are responsible for their government’s obligations before solidarity of other states is required,” the Bundesbank said in its monthly report.
…
A successful test could also help to wean banks in the euro zone periphery countries off ECB funding, the Bundesbank said.

“It is not the purpose of European monetary policy to ensure solvency of national banking systems or governments and it cannot replace necessary economic adjustments or bank balance sheet clean ups,” the Bundesbank said.

reuters.com/article/2014/01/27/us-eurozone-crisis-bundesbank-idUSBREA0Q0HV20140127

What a bizzare statement, given that the crisis is over.

[KOR101]

@mr_anderson

What a bizzare statement, given that the crisis is over.

Not sure where you are coming from with that comment.

The debt levels are unsustainable, so it’s a question of who pays. Saying ‘stealing’ citizen’s money doesn’t get you very far…the government debt is the citizen’s debt. The problem, as I see it, is that the trick of using negative real interest rates (of 2 to 3% pa) is not working out because inflation is too low, so the debt must be dealth with directly. The warning signs have been building ever since what happened in Cyprus.

[mr_anderson]

Added a smiley just for you.

[beattie]

Surely this was a likely scenario all along…did people really expect Germans to dip their hands into their own pockets to bail out what they view as profligate states…

Good for the property market here

[Inis_Man]

Germany’s Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.

Heil, Kaiser - we who are about to go bankrupt salute you!

[KOR101]

@mr_anderson

Added a smiley just for you.

danke schoen

[TheEmigrant]

@KOR101

The debt levels are unsustainable, so it’s a question of who pays. Saying ‘stealing’ citizen’s money doesn’t get you very far…the government debt is the citizen’s debt.

The state’s debt is legally the responsibility of the state. There is no legal requirement to steal from citizens. It would be treasonous if a dying state performed a widespread theft of the citizens as its last act.

[tea_drinker]

@TheEmigrant

@KOR101

The debt levels are unsustainable, so it’s a question of who pays. Saying ‘stealing’ citizen’s money doesn’t get you very far…the government debt is the citizen’s debt.

The state’s debt is legally the responsibility of the state. There is no legal requirement to steal from citizens. It would be treasonous if a dying state performed a widespread theft of the citizens as its last act.

And the private banking debts… belong to their banks and shareholders, finally the deposit holders… except that didn’t happen either.

Mr Buiter, a respected economist and former member of the Bank of England’s monetary policy committee, was speaking in Dublin yesterday as Citigroup raised its growth forecast for the Irish economy to 2.1 per cent for 2014 and 2.2 per cent for 2015, up from 1.4 per cent and 1.6 per cent respectively.

He said that in 2010, the then Irish government had sought to “bail-in” senior bondholders in Anglo Irish Bank by making them share the bank’s losses. However, strong pressure from Germany, the US and then ECB president Jean-Claude Trichet blocked that move.

Mr Buiter said Ireland had been “cajoled, coerced, you might even say, extorted” into a deal that saw €30 billion- €60 billion of bondholder debt lumped on to the taxpayer.

irishtimes.com/business/econ … -1.1669969

[TheEmigrant]

@tea drinker

@TheEmigrant

@KOR101

The debt levels are unsustainable, so it’s a question of who pays. Saying ‘stealing’ citizen’s money doesn’t get you very far…the government debt is the citizen’s debt.

The state’s debt is legally the responsibility of the state. There is no legal requirement to steal from citizens. It would be treasonous if a dying state performed a widespread theft of the citizens as its last act.
And the private banking debts… belong to their banks and shareholders, finally the deposit holders… except that didn’t happen either.

The key difference is that the bank guarantee (spit) was done to keep the state alive, under the premise of benefiting the common good. If the state declares bankruptcy then it makes no sense whatsoever to steal from the citizens.