Cyprus expropriates the savings, the first European playpen. Should we have a boring financial system?
Ulrich Beck wondered, what would happen if the European Union asked for membership in the European Union? Nor would he take the trouble to examine the proposal. It does not meet all the conditions it demands of the member states. The question, after what happened in Cyprus, who should stop being part of the European Union?
What happened, in the words of Luis de Guindos, is that the Eurogroup has imposed a tax on depositors of savers. What does it mean in practical terms? “Deposits below 100,000 euros are sacred …” is a metaphor. If someone in Cyprus asked for a small loan for their business, they will discover that part of their money has evaporated. It is not preferential, nor how many term, nor structured insurance, the guarantees of sacred savings has jumped through the air.
Heiner Flassbeck , the former Secretary of State for the Economy (SPD) in Germany more than a decade ago and current director of UNCTAD, calls it expropriating citizens’ savings, a measure that he describes as brutal. It will not solve the euro crisis and has introduced arbitrariness and insecurity in the banking system. The eurogroup punishes the Cypriots for having the money in the bank and not in the mattress.
Throw the stone and hide the hands
The decision has destroyed at a stroke the confidence in the banking system in southern Europe. Was it malice or stupidity? The presidency of the Eurogroup, in a communiqué, indicates that by “unanimity” was supported the proposal of confiscation of savings in Cyprus.
Then everything is denied. Wolfgang Schäubler rejected that the proposal was German, Sigmar Gabriel, president of the SPD, reminded him that it bears the signature of Germany: “small savers are made to pay so that the banks go unpunished”. And Angela Merkel adds that it has made it possible for a country with a million inhabitants to suffer, to have plunged all of Europe into chaos. ”
Not all are calm waters in the SPD. Martin Schulz , president of the European Parliament of the SPD, which he described as a “socially acceptable solution”. In the parliamentary group opened fire those who qualify the decision of “brazen political error.” Peter Steinbrück , his uncomfortable candidates, could not think of anything else to put more constraints on Cyprus.
Towards a transfer union or domestic banks.
The nein, nein, nein of Angela Merkel is misinterpreted. It opposes rescuing creditors, even if it is the German bank itself, with taxpayers’ money. The chief economist of Deutsche Bank, David Folkert-Landau , argued in favor of involving creditors and shareholders: “we must seize the opportunity to discipline the financial market … creditors of banks must assume their responsibilities before taxpayers.” He agrees with Joerg Asmussen, member of the Executive Board of the ECB, who maintained his position as Secretary of State for the Economy with Wolfgang Schäuble and Peer Steinbrück, neither a liberal nor a Keynesian, is a mainstream economist who considers that “the ECB should only provide emergency liquidity to solvent banks … their task is not to lend money from taxpayers to banks”.
An election measure by Angela Merkel , six months before the election, would not give the sick banks more liquidity? Citizens do not like to see how private debts are socialized -4.6 billion according to the president of the commission have gone to banks. The conditions of access to the European Stability Mechanism are to set conditions for governments to finance banks with public debt. What is the alternative? creation of a European Financial Stability Fund capitalized by the banks themselves through one after the financial transactions. The tobi rate. The difficulty is that the authority will supervise the banks of the European Union. The European Central Bank after mistakes ended up adopting a political role in Cyprus. He has exercised authority without actually applying.
Who wants the banking union?
There is a European bank but a banking nationalism prevails. The deposit guarantee is national while the bank plays with European rules. Absurd. Who does not want, no longer the banking union, but a European supervisory authority? The risk systems of European banks are addressed from methodological nationalism, as risks that will not obtain the exit visa.
Cyprus’s 70% of GDP comes from the money laundering business, as evidenced by the amount of money from non-residents. And not only Russians. Nobody remembers that in the G20 of 2008 it was proposed to burn the tax havens. The government of Cyprus wanted to avoid at all costs that those non-residents paid more than 10% – here the absurd 9.9%. Preserve your business model, which incidentally, Cyprus is a sink compared to Luxembourg, a global washing machine.
The Economic Council of the German government proposed a banking union with a deposit insurance throughout Europe, with a common authority that, as noted, allows the risks to be distributed between banks that are already European and not “national” (http: // www. .voxeu.org / article / internal-market-banking-union-proposal-german-council-economic-experts – written by Peter Bofinge and others).
What happened? After a decade of financial deregulation, savers have become, without knowing it or asking for it, in speculators. The line between savings and investment banking disappeared. What allowed converting all citizen investors.
The European Central Bank, thanks to the political clumsiness of the Eurogroup, ended up betraying its own foundations and slipped into politicized decisions. Mario Draghi who opposed the eurobono, the banking union, etc., now acts as a part-time revolutionary, makes proposals, unthinkable a few months ago, since the reform of the financial system, common guarantee funds, European authority. Can Cyprus be the trigger to stop being proposed part-time?
Pending task of domestic banking.
Luis Linde , governor of the Bank of Spain, accepted the European conditions: “if a bank is not sufficiently solid to guarantee its future it must be dissolved or liquidated”. Minister Luis de Guindos denied that any bank would be liquidated. Will we get into debt by saving bankrupt banks? Neither Cyprus, nor Greece, nor Spain have asked for the ransom. Banking nationalism prevents us from coming out of the crisis, asking questions within the nation state.
It is not the taxpayers who must pay for the broken dishes of the bank but the European bank itself. Sigmar Gabriel , president of the SPD, accepted to vote the last rescue to Greece, which supposed to socialize private debt in public debt, but demanded to accelerate the banking union. Neither the timid reforms proposed by Sigmar Gabriel , summarized as “the banks are boring again” found followers. The guarantee fund must be European, the rescue to the bank must have a Financial Stability Fund from a rate on transactions. Angela Merkel has integrated these proposals; in February it proposed that the destruction of someone else’s money is a crime and, more importantly, divide the banks, including the Deutsche Bank , into a savings and investment bank -the latter if it is not solvent to liquidate their assets.
The Minister of Economy of Cyprus, Mijalis Sarris , is more willing to travel to Moscow than to Brussels. Does not Moscow demand so many guarantees? Do you prefer the Moscow doctrine of liquidating the guaranteed savings to save investment banking? It seems that Cyprus fooled with playing with its gas, that the Russians aspire to a Bolshevik Europe. While Europe was showing signs of losing the compass of its interests for a problem in Cyprus, with the size of a medium-sized city. The road to elections in September promises to be a roller coaster. A time of fright awaits us.