The Cyprus Bank Battle: The Long-planned Deposit Confiscation Scheme...

 

A Safe and a Shotgun or Public Sector Banks?

“If these worries become really serious, . . . [s]mall savers will take their money out of banks and resort to household safes and a shotgun.”    — Martin Hutchinson on the attempted EU raid on private deposits in Cyprus banks
The deposit confiscation scheme has long been in the making.  US depositors could be next …
On Tuesday, March 19, the national legislature of Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout.  Reuters called it “a stunning setback for the 17-nation currency bloc,” but it was a stunning victory for democracy. As Reuters quoted one 65-year-old pensioner, “The voice of the people was heard.”
The EU had warned that it would withhold €10 billion in bailout loans, and the European Central Bank (ECB) had threatened to end emergency lending assistance for distressed Cypriot banks, unless depositors – including small savers – shared the cost of the rescue. In the deal rejected by the legislature, a one-time levy on depositors would be required in return for a bailout of the banking system. Deposits below €100,000 would be subject to a 6.75% levy or “haircut”, while those over €100,000 would have been subject to a 9.99% “fine.”
The move was bold, but the battle isn’t over yet.  The EU has now given Cyprus until Monday to raise the billions of euros it needs to clinch an international bailout or face the threatened collapse of its financial system and likely exit from the euro currency zone.

The Long-planned Confiscation Scheme

The deal pushed by the “troika” – the EU, ECB and IMF – has been characterized as a one-off event devised as an emergency measure in this one extreme case. But the confiscation plan has long been in the making, and it isn’t limited to Cyprus.
In a September 2011 article in the Bulletin of the Reserve Bank of New Zealand titled “A Primer on Open Bank Resolution,” Kevin Hoskin and Ian Woolford discussed a very similar haircut plan that had been in the works, they said, since the 1997 Asian financial crisis.  The article referenced recommendations made in 2010 and 2011 by the Basel Committee of the Bank for International Settlements, the “central bankers’ central bank” in Switzerland.
The purpose of the plan, called the Open Bank Resolution (OBR) , is to deal with bank failures when they have become so expensive that governments are no longer willing to bail out the lenders. The authors wrote that the primary objectives of OBR are to:

• ensure that, as far as possible, any losses are ultimately borne by the bank’s shareholders and creditors . . . .

The spectrum of “creditors” is defined to include depositors:
At one end of the spectrum, there are large international financial institutions that invest in debt issued by the bank (commonly referred to as wholesale funding). At the other end of the spectrum, are customers with cheque and savings accounts and term deposits.
Most people would be surprised to learn that they are legally considered “creditors” of their banks rather than customers who have trusted the bank with their money for safekeeping, but that seems to be the case. According to Wikipedia:

In most legal systems, . . . the funds deposited are no longer the property of the customer. The funds become the property of the bank, and the customer in turn receives an asset called a deposit account (a checking or savings account). That deposit account is a liability of the bank on the bank’s books and on its balance sheet.  Because the bank is authorized by law to make loans up to a multiple of its reserves, the bank’s reserves on hand to satisfy payment of deposit liabilities amounts to only a fraction of the total which the bank is obligated to pay in satisfaction of its demand deposits.

The bank gets the money. The depositor becomes only a creditor with an IOU. The bank is not required to keep the deposits available for withdrawal but can lend them out, keeping only a “fraction” on reserve, following accepted fractional reserve banking principles. When too many creditors come for their money at once, the result can be a run on the banks and bank failure.
The New Zealand OBR said the creditors had all enjoyed a return on their investments and had freely accepted the risk, but most people would be surprised to learn that too. What return do you get from a bank on a deposit account these days? And isn’t your deposit protected against risk by FDIC deposit insurance?
Not anymore, apparently. As Martin Hutchinson observed in Money Morning, “if governments can just seize deposits by means of a ‘tax’ then deposit insurance is worth absolutely zippo.”

The Real Profiteers Get Off Scot-Free

Felix Salmon wrote in Reuters of the Cyprus confiscation:

Meanwhile, people who deserve to lose money here, won’t. If you lent money to Cyprus’s banks by buying their debt rather than by depositing money, you will suffer no losses at all. And if you lent money to the insolvent Cypriot government, then you too will be paid off at 100 cents on the euro. . . .
The big winner here is the ECB, which has extended a lot of credit to dubiously-solvent Cypriot banks and which is taking no losses at all.
It is the ECB that can most afford to take the hit, because it has the power to print euros. It could simply create the money to bail out the Cyprus banks and take no loss at all. But imposing austerity on the people is apparently part of the plan.  Salmon writes:
From a drily technocratic perspective, this move can be seen as simply being part of a standard Euro-austerity program: the EU wants tax hikes and spending cuts, and this is a kind of tax . . . .
The big losers are working-class Cypriots, whose elected government has proved powerless . . . . The Eurozone has always had a democratic deficit: monetary union was imposed by the elite on unthankful and unwilling citizens. Now the citizens are revolting: just look at Beppe Grillo.

But that was before the Cyprus government stood up for the depositors and refused to go along with the plan, in what will be a stunning victory for democracy if they can hold their ground.

It CAN Happen Here

Cyprus is a small island, of little apparent significance. But one day, the bold move of its legislators may be compared to the Battle of Marathon, the pivotal moment in European history when their Greek forebears fended off the Persians, allowing classical Greek civilization to flourish.  The current battle on this tiny island has taken on global significance.  If the technocrat bankers can push through their confiscation scheme there, precedent will be established for doing it elsewhere when bank bailouts become prohibitive for governments.
That situation could be looming even now in the United States.  As Gretchen Morgenson warned in a recent article on the 307-page Senate report detailing last year’s $6.2 billion trading fiasco at JPMorganChase: “Be afraid.”  The report resoundingly disproves the premise that the Dodd-Frank legislation has made our system safe from the reckless banking activities that brought the economy to its knees in 2008. Writes Morgenson:
JPMorgan . . . Is the largest derivatives dealer in the world. Trillions of dollars in such instruments sit on its and other big banks’ balance sheets. The ease with which the bank hid losses and fiddled with valuations should be a major concern to investors.
Pam Martens observed in a March 18th article that JPMorgan was gambling in the stock market with depositor funds. She writes, “trading stocks with customers’ savings deposits – that truly has the ring of the excesses of 1929 . . . .”
The large institutional banks not only could fail; they are likely to fail.  When the derivative scheme collapses and the US government refuses a bailout, JPMorgan could be giving its depositors’ accounts sizeable “haircuts” along guidelines established by the BIS and Reserve Bank of New Zealand.

Time for Some Public Sector Banks?

The bold moves of the Cypriots and such firebrand political activists as Italy’s Grillo are not the only bulwarks against bankster confiscation. While the credit crisis is strangling the Western banking system, the BRIC countries – Brazil, Russia, India and China – have sailed through largely unscathed. According to a May 2010 article in The Economist, what has allowed them to escape are their strong and stable publicly-owned banks.
Professor Kurt von Mettenheim of the Sao Paulo Business School of Brazil writes, “The credit policies of BRIC government banks help explain why these countries experienced shorter and milder economic downturns during 2007-2008.” Government banks countered the effects of the financial crisis by providing counter-cyclical credit and greater client confidence.
Russia is an Eastern European country that weathered the credit crisis although being very close to the Eurozone. According to a March 2010 article in Forbes:
As in other countries, the [2008] crisis prompted the state to take on a greater role in the banking system.  State-owned systemic banks . . . have been used to carry out anticrisis measures, such as driving growth in lending (however limited) and supporting private institutions.
In the 1998 Asian crisis, many Russians who had put all their savings in private banks lost everything; and the credit crisis of 2008 has reinforced their distrust of private banks.  Russian businesses as well as individuals have turned to their government-owned banks as the more trustworthy alternative. As a result, state-owned banks are expected to continue dominating the Russian banking industry for the foreseeable future.
The entire Eurozone conundrum is unnecessary. It is the result of too little money in a system in which the money supply is fixed, and the Eurozone governments and their central banks cannot issue their own currencies. There are insufficient euros to pay principal plus interest in a pyramid scheme in which only the principal is injected by the banks that create money as “bank credit” on their books. A central bank with the power to issue money could remedy that systemic flaw, by injecting the liquidity needed to jumpstart the economy and turn back the tide of austerity choking the people.
The push to confiscate the savings of hard-working Cypriot citizens is a shot across the bow for every working person in the world, a wake-up call to the perils of a system in which tiny cadres of elites call the shots and the rest of us pay the price. When we finally pull back the veils of power to expose the men pulling the levers in an age-old game they devised, we will see that prosperity is indeed possible for all.
For more on the public bank solution and for details of the June 2013 Public Banking Institute conference in San Rafael, California, see here. 

Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com.

BRICS go over the wall...

BRICS go over the wall...
By Pepe Escobar

Reports on the premature death of the BRICS (Brazil, Russia, India, China and South Africa) have been greatly exaggerated. Western corporate media is flooded with such nonsense, perpetrated in this particular case by the head of Morgan Stanley Investment Management.

Reality spells otherwise. The BRICS meet in Durban, South Africa, this Tuesday to, among other steps, create their own credit rating agency, sidelining the dictatorship - or at least "biased agendas", in New Delhi's diplomatic take - of the Moody's/Standard & Poor's variety. They will also further advance

the idea of the BRICS Development Bank, with a seed capital of US$50 billion (only structural details need to be finalized), helping infrastructure and sustainable development projects.

Crucially, the US and the European Union won't have stakes in this Bank of the South - a concrete alternative, pushed especially by India and Brazil, to the Western-dominated World Bank and the Bretton Woods system.

As former Indian finance minister Jaswant Singh has observed, such a development bank could, for instance, channel Beijing's know-how to help finance India's massive infrastructure needs.

The huge political and economic differences among BRICS members are self-evident. But as they evolve as a group, the point is not whether they should be protecting the global economy from the now non-stop crisis of advanced casino capitalism.

The point is that, beyond measures to facilitate mutual trade, their actions are indeed becoming increasingly political - as the BRICS not only deploy their economic clout but also take concrete steps leading towards a multipolar world. Brazil is particularly active in this regard.

Inevitably, the usual Atlanticist, Washington consensus fanatics - myopically - can see nothing else besides the BRICS "demanding more recognition from Western powers".

Of course there are problems. Brazil, China and India's growth slowed down. As China, for instance, became Brazil's top trading partner - ahead of the US - whole sectors of Brazilian industry have suffered from the competition of cheap Chinese manufacturing.

But some long-term prospects are inevitable. BRICS will eventually become more forceful at the International Monetary Fund. Crucially, BRICS will be trading in their own currencies, including a globally convertible yuan, further away from the US dollar and the petrodollar.

That Chinese slowdown
It was Goldman Sachs' Jim O'Neill who coined the term BRIC (no South Africa then) in 2001. It's enlightening to check what he thinks about it now.

O'Neill points out that China, even growing by a "mere" 7.7% in 2012, "created the equivalent of another Greek economy every 11-and-a-half weeks". China's slowdown was "structural and cyclical" - a "planned downturn" to control overheating and inflation.

The BRICS push is part of an irresistible global trend. Most of it is decoded here, in a new United Nations Development Programme report. The bottom line; the North is being overtaken in the economic race by the global South at a dizzying speed.

According to the report, "for the first time in 150 years, the combined output of the developing world's three leading economies - Brazil, China and India - is about equal to the combined GDP of the long-standing industrial powers of the North".

The obvious conclusion is that, "the rise of the South is radically reshaping the world of the 21st century, with developing nations driving economic growth, lifting hundreds of millions of people from poverty, and propelling billions more into a new global middle class."

And bang in the middle of this process, we find an Eurasian epic; the development of the Russia-China strategic relationship.

It's always about Pipelineistan
Russian President Vladimir Putin is taking no prisoners; he wants to steer the BRICS towards "a full-scale strategic cooperation mechanism that will allow us to look for solutions to key issues of global politics together".

This will imply a common BRICS foreign policy - and not only selective coordination on some themes. It will take time. It will be hard. Putin is very much aware of it.

What makes it even more fascinating is that Putin advanced his ideas during last week's three-day visit to Moscow by new Chinese President Xi Jinping. He went out of his way to stress Russian-Chinese relations now are "the best in their centuries-long history".

That's not exactly what hegemonic Atlanticists want to hear - still eager to frame the relationship in Cold War terms.

Xi retributed in style; "We did not come to see you for nothing" - as is partially detailed here. And wait till China's creative drive starts yielding dividends.

Inevitably, Pipelineistan is at the heart of the ultimate BRICS complementary relationship.

China's need of Russia's oil and gas is a matter of national security. Russia wants to sell more and more of it, diversifying away from the West; moreover, Russia would more than welcome Chinese investment in its Far East - the immense Trans-Baikal region.

And by the way, the "yellow peril" is not taking over Siberia - as the West would have it. There are only 300,000 Chinese living in Russia.

A direct consequence of the Putin-Xi summit is that from now on Beijing will pay in advance for Russian oil - in exchange for a share in a number of projects, for instance as in CNPC and Rosneft jointly exploring offshore blocks in the Barents Sea and other blocks onshore Russia.

Gazprom, for its part, clinched a long awaited gas deal with CNPC; 38 billion cubic meters a year delivered by the ESPO pipeline from Siberia starting in 2018. And by the end of 2013, a new Chinese contract with Gazprom will be finalized, involving gas supply for the next 30 years.

The geopolitical ramifications are immense; importing more gas from Russia helps Beijing to gradually escape its Malacca and Hormuz dilemma - not to mention industrialize the immense, highly populated and heavily dependent on agriculture interior provinces left behind in the economic boom.

That's how Russian gas fits into the Chinese Communist Party's master plan; configuring the internal provinces as a supply base for the increasingly wealthy, urban, based in the east coast, 400 million-strong Chinese middle class.

When Putin stressed that he does not see the BRICS as a "geopolitical competitor" to the West, it was the clincher; the official denial that confirms it's true. Durban may be solidifying just the beginning of such a competition. It goes without saying that Western elites - even mired in stagnation and bankruptcy - won't let any of their privileges go without a fierce fight.

The Battle of Cyprus..., or the Battle for Pipelines and utter Greed?

The Battle of Cyprus..., or the Battle for Pipelines and utter Greed?By Ellen Brown

"If these worries become really serious, … [s]mall savers will take their money out of banks and resort to household safes and a shotgun.'' Martin Hutchinson on the attempted European Union raid on private deposits in Cyprus banks. [1] The deposit confiscation scheme has long been in the making. Depositors in the United States could be next.

On Tuesday, March 19, the national legislature of Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout. Reuters called it "a stunning setback for the 17-nation currency bloc'', but it was a stunning victory for democracy. As Reuters quoted one 65-year-old pensioner, ''The voice of the people was heard.''

The European Union had warned that it would withhold 10 billion euros (US$13 billion) in bailout loans, and the European Central Bank (ECB) had threatened to end emergency lending assistance for distressed Cypriot banks, unless depositors - including small savers - shared the cost of the rescue. In the deal rejected by the legislature, a one-time levy on depositors would be required in return for a bailout of the banking system. Deposits below 100,000 euros would be subject to a 6.75% levy or ''haircut'', while those over 100,000 euros would have been subject to a 9.99% ''fine.'' [2]

The move was bold, but the battle isn't over yet. The EU has now given Cyprus until Monday to raise the billions of euros it needs to clinch an international bailout or face the threatened collapse of its financial system and likely exit from the euro currency zone.

The deal pushed by the ''troika'' - the EU, ECB and International Monetary Fund - has been characterized as a one-off event devised as an emergency measure in this one extreme case. But the confiscation plan has long been in the making, and it isn't limited to Cyprus.

In a September 2011 article in the Bulletin of the Reserve Bank of New Zealand titled ''A Primer on Open Bank Resolution'', Kevin Hoskin and Ian Woolford discussed a very similar haircut plan that had been in the works, they said, since the 1997 Asian financial crisis. [3] The article referenced recommendations made in 2010 and 2011 by the Basel Committee of the Bank for International Settlements, the ''central bankers' central bank'' in Switzerland.

The purpose of the plan, called the Open Bank Resolution (OBR), is to deal with bank failures when they have become so expensive that governments are no longer willing to bail out the lenders. [4] The authors wrote that the primary objectives of OBR are to:

ensure that, as far as possible, any losses are ultimately borne by the bank's shareholders and creditors …

The spectrum of ''creditors'' is defined to include depositors:

At one end of the spectrum, there are large international financial institutions that invest in debt issued by the bank (commonly referred to as wholesale funding). At the other end of the spectrum, are customers with cheque and savings accounts and term deposits.

. Most people would be surprised to learn that they are legally considered ''creditors'' of their banks rather than customers who have trusted the bank with their money for safekeeping, but that seems to be the case. According to Wikipedia,

In most legal systems, … the funds deposited are no longer the property of the customer. The funds become the property of the bank, and the customer in turn receives an asset called a deposit account (a checking or savings account). That deposit account is a liability of the bank on the bank's books and on its balance sheet. Because the bank is authorized by law to make loans up to a multiple of its reserves, the bank's reserves on hand to satisfy payment of deposit liabilities amounts to only a fraction of the total which the bank is obligated to pay in satisfaction of its demand deposits. [5]

The bank gets the money. The depositor becomes only a creditor with an IOU. The bank is not required to keep the deposits available for withdrawal but can lend them out, keeping only a ''fraction'' on reserve, following accepted fractional reserve banking principles. When too many creditors come for their money at once, the result can be a run on the banks and bank failure.

The New Zealand OBR said the creditors had all enjoyed a return on their investments and had freely accepted the risk, but most people would be surprised to learn that too. What return do you get from a bank on a deposit account these days? And isn't your deposit protected, in the United States, against risk by Federal Deposit Insurance Corporation deposit insurance? Not anymore, apparently. As Martin Hutchinson observed in Money Morning, ''if governments can just seize deposits by means of a 'tax' then deposit insurance is worth absolutely zippo''. [6] 

The real profiteers get off
Felix Salmon wrote in Reuters of the Cyprus confiscation:

Meanwhile, people who deserve to lose money here, won't. If you lent money to Cyprus's banks by buying their debt rather than by depositing money, you will suffer no losses at all. And if you lent money to the insolvent Cypriot government, then you too will be paid off at 100 cents on the euro. ...

The big winner here is the ECB, which has extended a lot of credit to dubiously-solvent Cypriot banks and which is taking no losses at all.

  It is the ECB that can most afford to take the hit because it has the power to print euros. It could simply create the money to bail out the Cyprus banks and take no loss at all. But imposing austerity on the people is apparently part of the plan. Salmon writes:

From a drily technocratic perspective, this move can be seen as simply being part of a standard Euro-austerity program: the EU wants tax hikes and spending cuts, and this is a kind of tax. …

The big losers are working-class Cypriots, whose elected government has proved powerless. … The Eurozone has always had a democratic deficit: monetary union was imposed by the elite on unthankful and unwilling citizens. Now the citizens are revolting: just look at Beppe Grillo. [7]

  But that was before the Cyprus government stood up for the depositors and refused to go along with the plan, in what will be a stunning victory for democracy if they can hold their ground.

It can happen here
Cyprus is a small island, of little apparent significance. But one day, the bold move of its legislators may be compared to the Battle of Marathon, the pivotal moment in European history when their Greek forebears fended off the Persians, allowing classical Greek civilization to flourish. The current battle on this tiny island has taken on global significance. If the technocrat bankers can push through their confiscation scheme there, precedent will be established for doing it elsewhere when bank bailouts become prohibitive for governments.

That situation could be looming even now in the United States. As Gretchen Morgenson warned in a recent article on the 307-page Senate report detailing last year's US$6.2 billion trading fiasco at JPMorganChase: ''Be afraid.'' The report resoundingly disproves the premise that the Dodd-Frank legislation has made the US system safe from the reckless banking activities that brought the economy to its knees in 2008. Morgenson writes:

JPMorgan … Is the largest derivatives dealer in the world. Trillions of dollars in such instruments sit on its and other big banks' balance sheets. The ease with which the bank hid losses and fiddled with valuations should be a major concern to investors. [8]

Pam Martens observed in a March 18 article that JPMorgan was gambling in the stock market with depositor funds. She writes, ''trading stocks with customers' savings deposits - that truly has the ring of the excesses of 1929.'' [9]

The large institutional banks not only could fail; they are likely to fail. When the derivative scheme collapses and the US government refuses a bailout, JPMorgan could be giving its depositors' accounts sizable ''haircuts'' along guidelines established by the BIS and Reserve Bank of New Zealand.

The bold moves of the Cypriots and such firebrand political activists as Italy's Grillo are not the only bulwarks against bankster confiscation. While the credit crisis is strangling the Western banking system, the BRIC countries - Brazil, Russia, India and China - have sailed through largely unscathed. According to a May 2010 article in The Economist, what has allowed them to escape are their strong and stable publicly-owned banks. [10]

Professor Kurt von Mettenheim of the Sao Paulo Business School of Brazil writes, ''The credit policies of BRIC government banks help explain why these countries experienced shorter and milder economic downturns during 2007-2008.'' [11] Government banks countered the effects of the financial crisis by providing counter-cyclical credit and greater client confidence.

Russia is an Eastern European country that weathered the credit crisis although being very close to the eurozone. According to a March 2010 article in Forbes:

As in other countries, the [2008] crisis prompted the state to take on a greater role in the banking system. State-owned systemic banks … have been used to carry out anti-crisis measures, such as driving growth in lending (however limited) and supporting private institutions. [12]

In the 1998 Asian crisis, many Russians who had put all their savings in private banks lost everything; and the credit crisis of 2008 has reinforced their distrust of private banks. Russian businesses as well as individuals have turned to their government-owned banks as the more trustworthy alternative. [13] As a result, state-owned banks are expected to continue dominating the Russian banking industry for the foreseeable future. [14]

The entire eurozone conundrum is unnecessary. It is the result of too little money in a system in which the money supply is fixed, and the eurozone governments and their central banks cannot issue their own currencies. There are insufficient euros to pay principal plus interest in a pyramid scheme in which only the principal is injected by the banks that create money as ''bank credit'' on their books.

A central bank with the power to issue money could remedy that systemic flaw, by injecting the liquidity needed to jumpstart the economy and turn back the tide of austerity choking the people.

The push to confiscate the savings of hard-working Cypriot citizens is a shot across the bow for every working person in the world, a wake-up call to the perils of a system in which tiny cadres of elites call the shots and the rest of us pay the price. When we finally pull back the veils of power to expose the men pulling the levers in an age-old game they devised, we will see that prosperity is indeed possible for all. 

ZIO-EU machine has already run amok, Crisis? What crisis? Let's hit Syria and Lebanon...

The ZIO-EU machine has already run amok, Crisis? What crisis? Let's hit Syria and Lebanon...By Pepe Escobar;

PARIS - The heads of state and government of the European Union (EU) just got together in Brussels for their Spring fashion show, sorry, politico-economic summit. No Gucci/Prada glam here; instead, a stuffy Sartrean huis clos. No pesky, noisy citizens allowed; only these Masters of the (European) Universe. And this after three horrendous crisis years affecting the eurozone.

Welcome to the way "democracy" really works in Europe; all major decisions in economic policy, budget and finance, which directly affect over 500 million mostly disgruntled (and millions of unemployed) people, are taken in a cozy heart of darkness.

Former Belgian prime minister Guy Verhofstadt, now the head of the liberal group in the European Parliament, at least had the decency to remark, "Neither the European Parliament nor national Parliaments have a word to say about what the European Council and the European Commission decide."

Yes, compared to the EU behemoth, Kafka's castle is kindergarten stuff, so a run down of the cast of characters is in order.

The Council of Ministers - also known as European Council - is composed by heads of state and government and gets together at least twice a year to debate the EU's political priorities. It's currently presided by the spectacular non-entity Herman Van Rompuy. The council is composed of ministers from member-states; they are in charge of adopting legislation.

The European Commission (EC) is composed of 27 commissars (oh yes, shades of the good, ol' USSR). They are the EU's executive power - elected by the European Parliament.

The European Parliament is elected every five years by EU citizens (most of whom simply don't bother to vote). It shares legislative power with the Council of Ministers.

Then there's the European Central Bank (ECB), which (mis)manages the euro.

Welcome to "post-democratic autocracy"
So all these Masters of the (European) Universe have had three years to contain the eurozone fire. The balance so far; seven eurozone countries are in deep recession, and nine in stagnation.

At the fashion show, sorry, summit, there was a lot of talk about "policy mix"; that's EU jargon for stimulating demand in countries that are doing slightly better than others. There was also a lot of talk of "two-pack" and "six-pack". No, that's not beer-related. Or some fitness craze. It's more like a variation of Monopoly.

It all started with Germany intervening to "save" - sort of - the PIGS (Portugal, Ireland, Greece, Spain), side-by-side with France still under King Sarko The First (former president Nicolas Sarkozy); what they decided was that a bunch of technocrats, as in the EC and the so-called Eurogroup (the finance ministers in the eurozone) would be in charge of these countries' economic and budgetary policies.

First came the "six-pack"; countries had to subscribe to a shady concoction known as the Treaty on Stability, Coordination and Governance - as in don't do anything funny without telling everyone else about it.

Then came the so-called "two-pack", adopted last week by the European Parliament; two rules, according to which states must submit their budget estimates to the EC even before their national Parliaments. The bottom line; European "democracies" now have zero deciding power over policies concocted in Brussels. The ruling powers are a shady troika; the European Council, the Eurogroup and the EC. Not to mention the cosmically opaque European Central Bank.

And these people have the gall to criticize the National People's Congress in China.

For insiders though, everything is fine and dandy. Olli Rehn, the European Commissioner for Economic Affairs, said with a straight face that, "If the six-pack and the two-pack were in place when the euro was launched, we would have never reached such a crisis." So why didn't any Brussels technocrat with a fat salary for life think about it then?

On the other side of the divide, Daniel Cohn-Bendit, the formerly heroic Dany Le Rouge and current co-president of the Greens in the European Parliament, defined the racket as "technocratic austerity". Better yet; the great German philosopher and certified European federalist Jurgen Habermas dubbed it "post-democratic autocracy".

From Paris to Scandinavia, there have been howls of angst about Europe having fallen into a black hole. One just has to hit the streets - and listen to the noise - to see which way the wind is blowing; populism (as in the latest Italian elections), and fascism (in Denmark, for instance, a new poll shows that the extreme right-wing DF party, anti-immigration and anti-EU, is already more popular than the center-left coalition currently in power; horrible news for current Prime Minister Helle Thorning-Schmidt).

Facing this Armageddon, the best the technocrat-infested EC can come up with is that we must "reintroduce people" in "the machine". It won't do; the machine has already run amok.

Round up the usual Kalashnikovs
As with all matters EU, if it can get more pathetic, it will. Out of nowhere, right in the middle of the Spring fashion show, sorry, European Council summit, irrupt British Prime Minister David Cameron and French President Francois Hollande.

So what was this Napoleon/Duke of Wellington remix up to? No less than commanding an Anglo-French offensive to torpedo the agreed European arms embargo and fully weaponize Syrian "rebels".

Some member-states representatives actually fell off their chairs. It took Iron Fraulein and German chancellor Angela Merkel to come up with a forceful "Nein" - as in, "just the fact that two have changed their minds doesn't mean that the other 25 have to follow suit."

In a measure of how "democratic" is the EU, even Catherine Ashton, the astronomically mediocre EU commissioner in charge of foreign and security policy, only knew about the David and Francois of Arabia shenanigans by reading the papers.

When she finally mustered her sang froid she told the summit that the end result would be an arms race in Syria. And Iran - what else - would win. Ashton once again had the wrong intel; Qatar and Saudi Arabia are already winning this arms race.

The fact is, not even Cameron - true to character - knows what he's talking about: "I'm not saying that Britain would like to supply arms to rebel groups. We want to work with them and make sure they're doing the right thing."

So now everyone is faced with the very likely possibility that Paris and London will simply ignore yet one more EU policy - which, by the way, they are signed up to - and start "doing the right thing", as in merrily weaponizing the Syrian "rebels", al-Qaeda-style Salafi-jihadis included, by May or June. That's exactly what Paris and London did in the case of Libya in 2011. And that's exactly what Desert Storm Hollande - supported by David of Arabia - did recently in his invasion of Mali.

For David and Francois, the rest of the EU is just a bunch of wussies. Crisis? What crisis? Crisis is for suckers. Playing Liberator is much more fun. ...

The demons of Europe aren’t gone; they’re only sleeping...

 

 

The demons of Europe aren’t gone; they’re only sleeping...

 

There have been waves of threats by Eurozone politicians to bully people into accepting “whatever it takes” to keep the shaky construct of the monetary union glued together. These threats peaked last year with disorderly default, and when that wasn’t enough, with the collapse of the Eurozone. But now, the ultimate threat has been pronounced: war...

It wasn’t an idle thought by a wayward parliamentarian on the radical fringe but a well-articulated statement by Luxembourg Prime Minister Jean-Claude Juncker who was, until January, the President of the Eurogroup that manages the political aspects of the euro. And he’d picked Europe’s largest magazine, Der Spiegel...
He’d alluded to it before. Last August, as he was jabbering about Greece’s potential exit from the Eurozone, he lamented that “many Germans and the German media” talked about Greece as if it were “a people you couldn’t respect,” and that Greeks depicted Chancellor Angela Merkel as if she were “the heiress of the Nazis.” And then his big threat, albeit in veiled form: “What we thought had been buried long ago, very quickly rises again.”
His problem: the halting integration of Europe. European countries were small, but there was a solution. “We must show the world something giant, and that’s the euro,” he said. He wanted Europeans to integrate more closely. And not just within the EU, but “the total continent, with extensions”—so maybe Turkey. They’d all eventually use the euro. And if it didn’t work out....
That was last year. Now, given the Italian election, he made it explicit. “For my generation, the common currency has always been a policy of peace,” he said. He was worried that people were getting lost in national naval gazing. “Those who believe that the eternal question of war and peace in Europe would never reappear could be seriously mistaken,” he said. “The demons aren’t gone; they’re only sleeping, as the wars in Bosnia and Kosovo have shown.”
The possibility of war—unless the euro survived and became the currency of the entire EU.
He was struck by the realization how much the European conditions resembled those of 1913, on the eve of World War I. But then, after having thrown “war” on the table, he backed off; he didn’t believe that Europe was facing armed conflicts, but he saw “conspicuous parallels.” In 1913, the prevailing wisdom was that there could never be another war in Europe because the powers on the continent were economically so interwoven that they couldn’t afford it, he said. “Particularly in Western and Northern Europe, there reigned a complacency that assumed that peace had been secured forever.”
By 2050, Europe would have about 7% of the world population, he said. In order to remain relevant, it would have to be united. The heads of the governments in Germany, France, etc, knew that their voices were heard internationally only because they were speaking through the “megaphone” of the EU.
And the EU’s destiny was the euro. He listed proudly the “serious reforms” that had been carried out, like keeping Greece in the Eurozone—regardless of what that did to the Greeks whose belts had been tightened by five notches, or what it did to their  economy that would be downgraded to “developing nation” effective June 2013. He praised the bailout funds and the European banking union—regardless of how they’d use taxpayers in some countries to bail out banks and their investors in others.
But hadn’t the elections in Italy shown that Southern Europeans weren’t all that enthusiastic about his glorious plans? Hadn’t Italian voters just demolished Prime Minister Mario Monti and his pro-euro course of reforms and austerity? It didn’t matter. Abandoning the austerity policies “would be a big mistake,” he explained. Politicians shouldn’t promote the “wrong policies” just because they were afraid they’d lose the next election. “If you want to govern, you must take responsibility for your country and Europe overall. And that means: you must implement the correct policies even if many voters find them wrong.”
A curious understanding of democracy. One fraught with peril. But one that has become all too common in the Eurozone where the will of the people has consistently been trampled into the ground. To make his message more persuasive, to get politicians to toe the line, to get taxpayers in financially stable countries to give up resisting the transnational wealth transfers, and to get the people in crisis countries to swallow without demur the bitter pills of his reform programs, he’d added what has become the ultimate threat in the euro bailout and austerity racket—the possibility of war.
But there may be complications. The ECB and the national central banks of the Eurozone set out to collect information on household wealth. A massive bureaucratic undertaking. Results are now ready. No one in Europe had ever done a survey on that scale before. And no one might ever do it again. Because the results are so explosive that the Bundesbank is keeping its report secret—and word has leaked out why. A “Politically Explosive” Secret: Italians Are Over Twice As Wealthy As Germans... 

ZIO-Britain hasn't been sovereign since the Second World War since when we've been a satellite of the United States. The right wing media and the Tory Eurosceptics rage against the threat to British sovereignty from the European Union and certainly the EU has many faults but they are incapable of recognizing that the foreign power that actually controls Britain is the ZIOCONNED USA and its most infamous White House Murder INC,...
The potential war aims of any of Britain’s early 20th century rivals are easy enough to imagine or, for that matter, to look up. First, the British Empire would have been dismantled, such portions of it as the conquering nation wanted would have been seized, other parts would have been allowed self-government under the overall control of the new imperial power, and a few token colonies would be left under British control where that suited the conqueror’s interests. Second, the British government would become a permanent and subordinate ally of the new imperial power. Third, Britain’s military would have been reduced to a fraction of its previous size, and the British government would be obligated to provide troops and ships to support the new imperial power when the latter decided on a military adventure. Fourth, Britain would be expected to pay a large sum of money as reparations for the costs of the war. Finally, to guarantee all these things, the British government would have been forced to accept an occupying force in Britain, and permanent military bases would be signed over to the new imperial power in Britain and its remaining colonies. That, by and large, is what happened to defeated nations in the wars of the 19th and 20th centuries...
Now compare that list to the relations between Great Britain and the United States from 1945 to the present. That’s the thing that can’t be mentioned to this day in polite company: the British empire ended in the early 1940s when the United States conquered and occupied Britain. It was a bloodless conquest, like the German conquest of Denmark, and since the alternative was submitting to Nazi Germany, the British by and large made the best of it. Still, none of Queen Victoria’s prime ministers would have tolerated for a moment the thought of foreign troops being garrisoned on British soil, which is where thousands of US military personnel are garrisoned now...

That is a very interesting point of view which would explain a lot of things, such as the gradual "Americanization" of the labor relationships in Britain.
Still, you are probably aware that a lot of people see it the other way around. You will find a lot of people in Russia who believe that the USA is still controlled from London, in particular the City and the entire international banking network.
And then, there are those who see what they could call the transnational Anglosphere, basically the ECHELON countries, the signatories of the UKUSA/AUSCANNZUKUS Security Agreement: Australia, Canada, New Zealand, the United Kingdom, and the United States.
Add to that the quasi-colonial status of the USA as a vassal of Israel via the Zionist Lobby and the picture gets really complex.
My personal feeling is that all of the above theories are true and that what is truly ruling the planet is a combination of all of the above...

A combination of all three... Yes. The world is a complex place...

As far as London is concerned the old City was a very different place from the cowboy casino capitalism that operates there now. Until the mid Eighties the City of London was ruled by the old British establishment families and to make a successful career in London finance you either had to know the right people or bring money to the bank with you when you joined. The culture was arrive late, leave early and have long lunches. It was a club based on trust and despite its faults it was more or less functional...
In the mid Eighties the Thatcher government deregulated the City and ended what they saw as restrictive practices. These reforms were labeled Big Bang. Once the City opened up the Wall Street boys basically bought up the place and took it over. The culture changed completely and a hyper aggressive market fundamentalism took over. The deregulation made it possible to take insane risks with other people's money and the level of fraud and scandals shot up...
There is plenty of evidence that the City is worse regulated and more corrupt than Wall Street. The maverick financier Max Keiser recently interviewed a former Scotland Yard detective on his show

http://www.youtube.com/watch?v=-iswT3PfMec&feature=player_embedded

He confirms that London is the fraud capital of the world and that the government has been knowingly conniving at it for years. The British establishment has been quite cynically protecting the City fathers and weakening the regulator in order to attract criminal money as a business decision. UK plc home of innovative financial entrepreneurs and light touch regulation.
Wall Street used London as a means of circumventing US regulation. One of the reasons Clinton repealed Glass Steagal was because the Wall Street boys were dodging regulation via their London offices.
As for Israel I believe before 1967 the US Israel lobby was nothing like as powerful as it is now and the US was not Israel's prime ally. After 1967 the US saw Israel as a Cold War asset in the Middle East which could be used to intimidate the Arabs but after the Cold War Israel ceased to be an asset in my opinion and has become a strategic liability for the US. It would be easier for Uncle Sam to manage the princes and dictators of the Middle East if US support for Israel didn't lead to massive anti American feeling among the Arab public. The Lobby has grown in power to the point where the tail is wagging the dog. Walt and Mearsheimer demonstrate this quite powerfully.
The prime concern of the plutocracy that control the Anglosphere is making money not ethnicity or religion or Eretz Israel. However I do believe that certain Mafiosi and oligarchs who happen to be Jewish such as those who nearly destroyed Russia in the 1990s support Israel because it offers a refuge to which they can emigrate should they get in trouble. The ideology of Israel as a Jewish state means any Jew anywhere in the world can migrate to Israel and make aliyah as of right. This is rationalized as offering Jews protection from the threat of another Holocaust but it also potentially serves to protect criminals from retribution as well as protecting those facing unjust persecution.
The scales fell from my eyes about Israel when they buried the British crook Robert Maxwell on the Mount of Olives despite the fact that he'd stolen from the pension fund of his employees. Apparently he had put his financial and intelligence resources in Israel's service throughout his career and they stood by him as one of their own...

 

Iran, Pakistan Break Ground on Gas Pipeline...

 

"... But US pain and embarrassment spread further out into the region immediately surrounding Afghanistan today, as Pakistan’s President Asif Ali Zardari and Iranian President Mahmoud Ahmadinejad made a joint appearance to commemorate the official ground-breaking for construction of Pakistan’s side of the Iran-Pakistan gas pipeline. From the PressTV account of the event, we get some background:

The 1,600-kilometer pipeline, projected to cost USD 1.2-1.5 billion, would enable the export of 21.5 million cubic meters of Iranian natural gas to Pakistan on a daily basis.

Iran has already constructed more than 900 kilometers of the pipeline on its soil.Tehran-based Tadbir Energy Development Group will reportedly undertake all engineering procurement and construction work for the first segment of the project, which starts from the Iran-Pakistan border and costs around USD 250 million.The Iranian firm will also carry out the second segment of the project, and extend the financing later to USD 500 million.

The Express Tribune relates the history of the US trying to prevent the pipeline being built:

The two sides hope the pipeline will be complete in time to start delivery of 21.5 million cubic metres of gas per day to Pakistan by December 2014.

The US has issued warnings to invoke economic sanctions already in place against Iran if Pakistan went ahead with its plans to import natural gas from the Islamic republic.The United States has steadfastly opposed Pakistani and Indian involvement, saying the project could violate sanctions imposed on Iran over nuclear activities that Washington suspects are aimed at developing a weapons capability. Iran denies this.India quit the project in 2009, citing costs and security issues, a year after it signed a nuclear deal with Washington.

Isn’t that interesting? The pipeline could come online the same month that NATO troops are scheduled to end their involvement in Afghanistan. That could well be why we see this paragraph in the Fars News story on the pipeline:

During the meeting at the international airport of the Southeastern Iranian port of Chabahar today, Ahmadinejad and Zardari said that the gas pipeline will further strengthen the economic, political and security relations between Tehran and Islamabad and other regional states.

US presence in the region clearly has been a destabilizing force. Iran and Pakistan appear to be taking steps toward what they hope will be improved stability once we are gone..."

 

ZIO-Britain hasn't been sovereign since the Second World War...

 

 

 

ZIO-Britain hasn't been sovereign since the Second World War since when we've been a satellite of the United States. The right wing media and the Tory Eurosceptics rage against the threat to British sovereignty from the European Union and certainly the EU has many faults but they are incapable of recognizing that the foreign power that actually controls Britain is the ZIOCONNED USA and its most infamous White House Murder INC,...
The potential war aims of any of Britain’s early 20th century rivals are easy enough to imagine or, for that matter, to look up. First, the British Empire would have been dismantled, such portions of it as the conquering nation wanted would have been seized, other parts would have been allowed self-government under the overall control of the new imperial power, and a few token colonies would be left under British control where that suited the conqueror’s interests. Second, the British government would become a permanent and subordinate ally of the new imperial power. Third, Britain’s military would have been reduced to a fraction of its previous size, and the British government would be obligated to provide troops and ships to support the new imperial power when the latter decided on a military adventure. Fourth, Britain would be expected to pay a large sum of money as reparations for the costs of the war. Finally, to guarantee all these things, the British government would have been forced to accept an occupying force in Britain, and permanent military bases would be signed over to the new imperial power in Britain and its remaining colonies. That, by and large, is what happened to defeated nations in the wars of the 19th and 20th centuries...
Now compare that list to the relations between Great Britain and the United States from 1945 to the present. That’s the thing that can’t be mentioned to this day in polite company: the British empire ended in the early 1940s when the United States conquered and occupied Britain. It was a bloodless conquest, like the German conquest of Denmark, and since the alternative was submitting to Nazi Germany, the British by and large made the best of it. Still, none of Queen Victoria’s prime ministers would have tolerated for a moment the thought of foreign troops being garrisoned on British soil, which is where thousands of US military personnel are garrisoned now...

That is a very interesting point of view which would explain a lot of things, such as the gradual "Americanization" of the labor relationships in Britain.
Still, you are probably aware that a lot of people see it the other way around. You will find a lot of people in Russia who believe that the USA is still controlled from London, in particular the City and the entire international banking network.
And then, there are those who see what they could call the transnational Anglosphere, basically the ECHELON countries, the signatories of the UKUSA/AUSCANNZUKUS Security Agreement: Australia, Canada, New Zealand, the United Kingdom, and the United States.
Add to that the quasi-colonial status of the USA as a vassal of Israel via the Zionist Lobby and the picture gets really complex.
My personal feeling is that all of the above theories are true and that what is truly ruling the planet is a combination of all of the above...

A combination of all three... Yes. The world is a complex place...

As far as London is concerned the old City was a very different place from the cowboy casino capitalism that operates there now. Until the mid Eighties the City of London was ruled by the old British establishment families and to make a successful career in London finance you either had to know the right people or bring money to the bank with you when you joined. The culture was arrive late, leave early and have long lunches. It was a club based on trust and despite its faults it was more or less functional...
In the mid Eighties the Thatcher government deregulated the City and ended what they saw as restrictive practices. These reforms were labeled Big Bang. Once the City opened up the Wall Street boys basically bought up the place and took it over. The culture changed completely and a hyper aggressive market fundamentalism took over. The deregulation made it possible to take insane risks with other people's money and the level of fraud and scandals shot up...
There is plenty of evidence that the City is worse regulated and more corrupt than Wall Street. The maverick financier Max Keiser recently interviewed a former Scotland Yard detective on his show

http://www.youtube.com/watch?v=-iswT3PfMec&feature=player_embedded

He confirms that London is the fraud capital of the world and that the government has been knowingly conniving at it for years. The British establishment has been quite cynically protecting the City fathers and weakening the regulator in order to attract criminal money as a business decision. UK plc home of innovative financial entrepreneurs and light touch regulation.
Wall Street used London as a means of circumventing US regulation. One of the reasons Clinton repealed Glass Steagal was because the Wall Street boys were dodging regulation via their London offices.
As for Israel I believe before 1967 the US Israel lobby was nothing like as powerful as it is now and the US was not Israel's prime ally. After 1967 the US saw Israel as a Cold War asset in the Middle East which could be used to intimidate the Arabs but after the Cold War Israel ceased to be an asset in my opinion and has become a strategic liability for the US. It would be easier for Uncle Sam to manage the princes and dictators of the Middle East if US support for Israel didn't lead to massive anti American feeling among the Arab public. The Lobby has grown in power to the point where the tail is wagging the dog. Walt and Mearsheimer demonstrate this quite powerfully.
The prime concern of the plutocracy that control the Anglosphere is making money not ethnicity or religion or Eretz Israel. However I do believe that certain Mafiosi and oligarchs who happen to be Jewish such as those who nearly destroyed Russia in the 1990s support Israel because it offers a refuge to which they can emigrate should they get in trouble. The ideology of Israel as a Jewish state means any Jew anywhere in the world can migrate to Israel and make aliyah as of right. This is rationalized as offering Jews protection from the threat of another Holocaust but it also potentially serves to protect criminals from retribution as well as protecting those facing unjust persecution.
The scales fell from my eyes about Israel when they buried the British crook Robert Maxwell on the Mount of Olives despite the fact that he'd stolen from the pension fund of his employees. Apparently he had put his financial and intelligence resources in Israel's service throughout his career and they stood by him as one of their own...

 

 

 

Lebanon announces pre-qualification round for offshore oil and gas exploration...

On Friday 15 February the Lebanese authorities announced the launch of a pre-qualification round for those IOCs interested in its offshore acreage. The statement came after news that up to 675 million barrels (MMB) of oil and 16 trillion cubic feet (TCF) of gas have been discovered in Lebanese waters adjacent to its northern maritime border with Cyprus and Syria. So far up to 30 IOCs have expressed their interest with contracts due to be signed in 12 months and drilling to begin at the end of 2015.

Despite the obvious potential, as witnessed by the US Geological Survey's (USGS) 2010 estimate that the Levant Basin as a whole could contain two billion barrels of oil and up to 123 TCF of gas, it has taken over two years for the government in Beirut – which has been dogged by slow-motion politics, neighbouring conflicts, and sectarian divides - to establish a Petroleum Administration to handle applications from IOCs bidding on exploration blocks. The delay has been compounded by the issue of the region's unresolved maritime border disputes.

In 2007 a bilateral agreement was signed between Lebanon and Cyprus on the delimitation of the former's Exclusive Economic Zone (EEZ) but, in protest at the 2010 bilateral agreement between Cyprus and Israel, it has never been ratified by the Lebanese government. There is a disputed area of 874 km², as Israel began its maritime border with Cyprus at Point 1 which coincided with the final point demarcated between Lebanon and Cyprus. Beirut argues, however, that this final coordinate was deliberately chosen because it was in uncontested Lebanese waters and that the de jure border should actually lie 17 kms further at Point 23. This dispute, as well as Turkish political pressure on Lebanon, has also held up the ratification of the 2007 Lebanese-Cypriot agreement, despite the existence of clauses in these agreements to accommodate for amendments.

In a move to hasten the acceptance of an agreement and strike an accord between Lebanon and Israel, which technically still remain in a state of war, Cyprus' outgoing President Demetris Christofias signed a memorandum of understanding with Lebanon's President Michel Sleiman in January 2013 to “ to increase co-operation to agree on principles and sound means that would allow us to extract this resource.” This latest discovery, plus the huge discoveries already made in both uncontested Israeli and Cypriot waters, have put fresh impetus on all sides to come to an agreement which will enable the whole of the Levantine Basin to be explored without violating each other's maritime sovereignty. 

A “Politically Explosive” Secret: Italians Are Over Twice As Wealthy As Germans...

In December 2006, the ECB established the HFSC network of survey specialists, statisticians, and economists from its own ranks, national central banks of the Eurozone, and statistical institutes. The acronym stood for Household Finance and Consumption Survey. It would collect “micro-level structural information” on household wealth. A massive bureaucratic undertaking. Surveys went out in 2010. Results are now ready. No one in Europe had ever done a survey on that scale before. And no one might ever do it again. Because, in the era of bailouts and wealth-transfers, the results are so explosive that the Bundesbank is keeping its report secret—and word has leaked out why...
The surveys were conducted on a national basis, with each central bank publishing its own report. They would then be combined and summarized by the ECB into a cohesive picture of how wealthy—or how poor—people in various parts of the Eurozone were. A number of countries already published their reports, including Italy and Austria.
What the Austrian National Bank found was not pretty (20-page PDF). The considerable wealth in Austria was very unevenly distributed. The wealthiest 5% owned nearly half of the country’s wealth. Their median wealth was €1.7 million in diversified assets. The lower 50% owned only 4% of the country’s wealth. Of them, 83% rented their homes. Their median wealth was a measly €11,000 consisting usually of a car and a savings account. That’s half of the people! And 10% had a net wealth of less than €1,000.
This unequal distribution of wealth created a huge gap between median income (half the people earned more, the other half less) of €76,000 and average income of €265,000 (pushed up by a small number of extremely wealthy households). And that’s why some countries don’t even publish average income values. Too much truth would hurt.
Germany’s data is likely to be similar—but the Bundesbank is treating its report like a secret. Because the results are, let’s say, awkward for two reasons. The highly unequal distribution of wealth is one of them. The German government already went through wild gyrations late last year, and now again, over its Poverty Report that exposed some inconvenient facts that were then edited out—something that was leaked immediately, and it caused a ruckus [read.... Censored: Poverty Report in Germany].
Italy is the other issue. But it may be too hot for the Bundesbank to touch. Italy’s report (142-page PDF) finds that median household net wealth has increased 56% since 1991. And from 2008 to 2010, it increased by about 5% annually, despite the crisis!
But the wealth of German households stagnated during much of that time while they paid taxes out of their noses. And now they might learn that Italy’s median household wealth is €163,875—while Germany’s is closer to Austria’s, around €76,000. Less than half!
“Politically explosive,” sources at the Bundesbank whispered to the FAZ.
These reports show that in some countries, like Italy, where government finances have been in crisis, median household wealth is actually greater than in some financially healthy countries where governments have kept deficits and debts down.
Germany’s federal government only had a minuscule deficit in 2012. But high taxes and the citizens’ greater willingness to pay them—though cheating is a national sport—have over the years extracted a lot of wealth from the people and transferred it to the government. In Italy, people have been more adept at hanging on to their wealth. To the detriment of government finances. Other studies have shown similar trends, but never on such a scale with such detail, and in this “harmonized” and easily comparable manner.
It could stir up a firestorm in Germany. It’s not just jealousy. Strung-out German taxpayers would have to be bamboozled into bailing out the mountain of Italian government debt that the Italians, whose median wealth is twice that of Germans, refused to pay for. It won’t sit well. Not at all. It could become a political nightmare for Chancellor Angela Merkel, who faces an election in a few months and must keep any kind of tumult out of the scenery.
If the report ever sees the light of the day in unvarnished form—not a certainty given the debacle of the Poverty Report—Bundesbank statisticians will be trying to explain away the difference between countries like Italy and Germany. Household wealth is particularly high in countries with high homeownership rates, they will argue. In countries where renting is popular, like Germany, a considerable part of the housing stock is owned by the government and rented out in a subsidized manner. Thus the wealth is public, etc. etc. Because the bailout saga must go on. The messy reality that Germans can’t afford to bail out their richer neighbors must not be allowed to interfere with the grand and glorious saga of the euro.
Every country in the Eurozone has its own collection of big fat lies that politicians and eurocrats have served up in order to make the euro and the subsequent bailouts or austerity measures less unappetizing...