The politicians of the western world are coming after your bank accounts. In fact, Cyprus-style “bail-ins” are actually proposed in the new Canadian government budget. When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013″ which the Harper government has already submitted to the House of Commons. This new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks” in Canada. “Economic Action Plan 2013″ was submitted on March 21st, which means that this “bail-in regime” was likely being planned long before the crisis in Cyprus ever erupted. So exactly what in the world is going on here? In addition, as you will see below, it is being reported that the European Parliament will soon be voting on a law which would require that large banks be “bailed in” when they fail. In other words, that new law would make Cyprus-style bank account confiscation the law of the land for the entire EU. I can’t even begin to describe how serious all of this is. From now on, when major banks fail they are going to bail them out by grabbing the money that is in your bank accounts. This is going to absolutely shatter faith in the banking system and it is actually going to make it far more likely that we will see major bank failures all over the western world.
What you are about to see absolutely amazed me when I first saw it. The Canadian government is actually proposing that what just happened in Cyprus should be used as a blueprint for future bank failures up in Canada.
The following comes from pages 144 and 145 of “Economic Action Plan 2013″ which you can find right here. Apparently the goal is to find a way to rescue “systemically important banks” without the use of taxpayer funds…
Canada’s large banks are a source of strength for the Canadian economy. Our large banks have become increasingly successful in international markets, creating jobs at home.
The Government also recognizes the need to manage the risks associated with systemically important banks — those banks whose distress or failure could cause a disruption to the financial system and, in turn, negative impacts on the economy. This requires strong prudential oversight and a robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.
So if taxpayer funds will not be used to bail out the banks, how will it be done? Well, the Canadian government is actually proposing that a “bail-in” regime be implemented…
The Government proposes to implement a “bail-in” regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.
So if the banks take extreme risks with their money and lose, “certain bank liabilities” (i.e. deposits) will rapidly be converted into “regulatory capital” and the banks will be saved.
In other words, the banks will just be allowed to grab money directly out of your bank accounts to recapitalize themselves.
That may sound completely and utterly insane to us, but this is how things will now be done all over the western world.
Sometimes a “bail-in” can be done by just converting unsecured debt into equity, but as we just saw in Cyprus, often when there is a major bank failure a lot more money is required to “fix the banks” than can possibly be raised by converting unsecured debt into equity. That is when it becomes very tempting to dip into uninsured back accounts.
In fact, some European politicians are openly admitting as much. According to RT, the European Parliament will soon be voting on a new law which will make Cyprus-style bank account confiscation a permanent part of the solution when major banks fail throughout the EU…
A senior lawmaker told Reuters the Cyprus model may not be an isolated case, and is perhaps a future template in dealing with troubled European banks.
The new template is now likely to turn into a full-scale EU law, letting taxpayers off the hook in case a bail-out is needed, but imposing major losses on bigger savers on a permanent basis.
“You need to be able to do the bail-in as well with deposits,” said Gunnar Hokmark, member of European Parliament, who is leading negotiations with EU countries to finalize a law for winding up problem banks, Reuters reported.
“Deposits below 100,000 euros are protected … deposits above 100,000 euros are not protected and shall be treated as part of the capital that can be bailed in,” Hokmark told Reuters, adding that he was confident a majority of his peers in the parliament backed the idea.
The European Commission has written the draft of the law, which now awaits approval from eurozone member states and the parliament on whether and when it can be implemented. It’s been reported, the law is planned to take effect in the beginning of 2015.
Are you starting to understand?
The other day when I said that “The Global Elite Are Very Clearly Telling Us That They Plan To Raid Our Bank Accounts“, I was not exaggerating.
And for those in Cyprus with deposits of over 100,000 euros, the news just keeps getting worse and worse.
When the crisis first erupted, they were told that 10 percent of all deposits over 100,000 euros would be confiscated.
Then a few days later they were told that it would be 40 percent.
Now, according to the Washington Post, those with deposits over 100,000 euros at the second largest bank in Cyprus may lose as much as 80 percent of those deposits…
A deal was finally reached in Brussels with other euro countries and the International Monetary Fund early Monday. The country’s second-largest bank, Laiki, is to be split up, with its healthy assets being absorbed into the Bank of Cyprus. Savers with more 100,000 euros ($129,000) in either Bank of Cyprus and Laiki will face big losses. At Laiki, those could reach as much as 80 percent of amounts above the 100,000 insured limit; those at Bank of Cyprus are expected to be much lower.
Sadly, the truth is that those people will be lucky to ever see any of that money ever again.
How would you feel if someone came along and wiped out your life savings so that banks that took incredibly reckless risks could be bailed out?
Needless to say, a lot of people in Cyprus are very, very angry right now. The following reactions from outraged depositors in Cyprus are from Sky News…
“They have stolen our money,” Milton Loucas told Sky News.
“I have been working for 60 years. I am 80 years old. I cannot work again for my living – they have cut the lot.
“Our money, our social insurance – they have cut them. How are we going to live?”
Another Cypriot, Stelios, came out of the bank empty handed.
“I tried to get my February wages and they gave me a piece of paper only,” he said.
“I have two children in the army and they asked for money – I don’t have money to give them.
“The Government didn’t pay anybody. My old parents didn’t get their pension.”
A lot of people have just had their entire lives turned upside down.
But there were some people that were told ahead of the crisis and were able to get their money out in time.
According to the BBC, foreigners pulled a whopping 18 percent of their money out of Cyprus banks during the month of February alone…
Information from the Central Bank of Cyprus released on Thursday showed that foreign depositors had already withdrawn 18% of their cash from the nation’s banks during February, before the current crisis hit home.
So how did they know to pull their money out and who told them?
In addition, branches of the two largest banks in Cyprus were kept open in Moscow and London even after all of the banks in Cyprus itself were shut down. So wealthy Russians and wealthy Brits have been able to take all of their money out of those banks while the people of Cyprus have been unable to. It is hard to even find the words to describe how unfair that is. The following is from a recent article by Mark J. Grant…
So let us then turn back to Cyprus and see why the Russians are not quite so upset as they were at the beginning of the crisis. The answer to this question is Uniastrum bank which is headquartered in Moscow. Eighty percent (80%) is owned by the Bank of Cyprus. After the crisis began and right up until the capital controls were implemented the bank was open for business with no restrictions upon withdrawals. So the crisis began, was all over the Press and the Russian depositors walked into the local bank and withdrew their money from Uniastrum, the Bank of Cyprus, or had it wired in from the other local Cyprus banks and it was then withdrawn. Problem solved!
At the same time Laiki bank and the Bank of Cyprus had operating branches in London. There were no restrictions there either so people could walk into those banks and withdraw their money as well. No restrictions at all right up until the time of the Capital Controls. In the meantime, in Cyprus, people and institutions could not get at their money so the Russians and many British took out their money, closed their accounts while the people in Cyprus were left high and dry.
The wealthy always seem to come out ahead somehow, don’t they?
Meanwhile, those in Cyprus with deposits under 100,000 euros are now dealing with some very stringent capital controls. In other words, there are some very tight restrictions on what they can do with their money. For example, the maximum daily cash withdrawal has been set at 300 euros. The following are some of the other restrictions that are in force right now…
As well as the daily withdrawal limit, Cypriots may not cash cheques.
Payments and/or transfers outside Cyprus via debit and or credit cards are allowed up to 5,000 euros per person per month.
Transactions of 5,000-200,000 euros will be reviewed by a specially established committee, with applications for those over 200,000 euros needing individual approval.
Travellers leaving the country will only be allowed to take 1,000 euros with them.
When the next great wave of the economic collapse strikes, capital controls and bank account confiscation will suddenly become “normal” all over the world.
So get prepared while you still can.
One thing that you can do is make sure that you don’t have all of your eggs in one basket. The following is what Jim Rogers recently told CNBC…
“I, for one, am making sure I don’t have too much money in any one specific bank account anywhere in the world, because now there is a precedent,” he said. “The IMF has said ‘sure, loot the bank accounts’ the EU has said ‘loot the bank accounts’ so you can be sure that other countries when problems come, are going to say, ‘well, it’s condoned by the EU, it’s condoned by the IMF, so let’s do it too.’”
The more places that you have your money, the more difficult it will be for “the powers that be” to loot it.
The global elite are fundamentally changing the game. From now on, no bank account on earth will ever be able to be considered “100% safe” again. This is going to create an atmosphere of fear and panic, and no financial system can operate normally when you destroy the confidence that people have in it.
Confidence is a funny thing – it can take decades to build, but it can be destroyed in a single moment.
None of us will ever be able to have confidence in our bank accounts again, and I fear that the next wave of the economic collapse may be closer than I had first anticipated.
View full post on The Economic Collapse
EU meat tax proposed
Angela Bowman, Staff Writer | Updated: 01/23/2013
The Swedish government is pushing for meat tax to help curb the environmental impact of meat production, but officials don’t want to stop there. They would like to see the meat tax enacted throughout all of the European Union to reduce meat consumption.
The proposal was made by Sweden’s Board of Agriculture, according to a report by EurActiv.com.
“Environmental regulations and economics incentives like environmental taxes or subsidies are possible alternatives. Preferably they should be implemented at the EU level rather than the national level," the board’s report, Sustainable meat consumption: What is it? How do we get there?, said.
Meat is popular among Swedish – and European – consumers. Last year Swedes consumed 191 pounds of meat, but Marit Paulsen, a Swedish Member of the European Parliament (MEP) and vice president of the European Parliament’s agriculture committee, said that she would like to see meat consumption in the Scandinavian country drop to 99 to 110 pounds per person annually. Read more from EurActiv here.
In the U.S., the livestock industry is also fighting rumors surrounding meat’s environmental impact despite evidence of the contrary. The Environmental Protection Agency (EPA) reported that animal agriculture accounted for just 2.8 percent of the country’s greenhouse gas (GHG) emissions, and Judith Capper, Ph.D., assistant professor of animal sciences at Washington State University, said in a recent “Meat MythCrusher” video report that the livestock industry has been proactive in reducing environmental impact. Watch the Meat MythCrusher video report here.
This isn’t the first time that vegetarianism has promoted from Sweden. In August 2012, scientists at the Stockholm International Water Institute announced that a looming water shortage would force the global population to become vegetarian by 2050. Click here to read, “We’ll all be vegetarians by 2050, scientists say.”
Statistics: Posted by yoda — Wed Jan 23, 2013 2:43 pm
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For the Sake of Intellectual Integrity, Republicans Should Not Cite the CBO When Arguing against Obama’s Proposed Fiscal-Cliff Tax Hike
By Daniel J. Mitchell
I’ve commented before how the fiscal fight in Europe is a no-win contest between advocates of Keynesian deficit spending (the so-called “growth” camp, if you can believe that) and proponents of higher taxes (the “austerity” camp, which almost never seems to mean spending restraint).
That’s a left-vs-left battle, which makes me think it would be a good idea if they fought each other to the point of exhaustion, thus enabling forward movement on a pro-growth agenda of tax reform and reductions in the burden of government spending.
That’s a nice thought, but it probably won’t happen in Europe since almost all politicians in places such as Germany and France are statists. And it might never happen in the United States if lawmakers pay attention to the ideologically biased work of the Congressional Budget Office (CBO).
CBO already has demonstrated that it’s willing to take both sides of this left-v-left fight, and the bureaucrats just doubled down on that biased view in a new report on the fiscal cliff.
For all intents and purposes, the CBO has a slavish devotion to Keynesian theory in the short run, which means more spending supposedly is good for growth. But CBO also believes that higher taxes improve growth in the long run by ostensibly leading to lower deficits. Here’s what it says will happen if automatic budget cuts are cancelled.
Eliminating the automatic enforcement procedures established by the Budget Control Act of 2011 that are scheduled to reduce both discretionary and mandatory spending starting in January and maintaining Medicare’s payment rates for physicians’ services at the current level would boost real GDP by about three-quarters of a percent by the end of 2013.
Not that we should be surprised by this silly conclusion. The CBO repeatedly claimed that Obama’s faux stimulus would boost growth. Heck, CBO even claimed Obama’s spending binge was successful after the fact, even though it was followed by record levels of unemployment.
But I think the short-run Keynesianism is not CBO’s biggest mistake. In the long-run, CBO wants us to believe that higher tax burdens translate into more growth. Check out this passage, which expresses CBO’s view the economy will be weaker 10 years from now if the tax burden is not increased.
…the agency has estimated the effect on output that would occur in 2022 under the alternative fiscal scenario, which incorporates the assumption that several of the policies are maintained indefinitely. CBO estimates that in 2022, on net, the policies included in the alternative fiscal scenario would reduce real GDP by 0.4 percent and real gross national product (GNP) by 1.7 percent. …the larger budget deficits and rapidly growing federal debt would hamper national saving and investment and thus reduce output and income.
In other words, CBO reflexively makes two bold assumption. First, it assumes higher tax rates generate more money. Second, the bureaucrats assume that politicians will use any new money for deficit reduction. Yeah, good luck with that.
To be fair, the CBO report does have occasional bits of accurate analysis. The authors acknowledge that both taxes and spending can create adverse incentives for productive behavior.
…increases in marginal tax rates on labor would tend to reduce the amount of labor supplied to the economy, whereas increases in revenues of a similar magnitude from broadening the tax base would probably have a smaller negative impact or even a positive impact on the supply of labor. Similarly, cutting government benefit payments would generally strengthen people’s incentive to work and save.
But these small concessions do not offset the deeply flawed analysis that dominates the report.
But that analysis shouldn’t be a surprise. The CBO has a track record of partisan and ideological work.
While I’m irritated about CBO’s bias (and the fact that it’s being financed with my tax dollars), that’s not what has me worked up. The reason for this post is to grouse and gripe about the fact that some people are citing this deeply flawed analysis to oppose Obama’s pursuit of class warfare tax policy.
Why would some Republican politicians and conservative commentators cite a publication that promotes higher spending in the short run and higher taxes in the long run? Well, because it also asserts – based on Keynesian analysis – that higher taxes will hurt the economy in the short run.
…extending the tax reductions originally enacted in 2001, 2003, and 2009 and extending all other expiring provisions, including those that expired at the end of 2011, except for the payroll tax cut—and indexing the alternative minimum tax (AMT) for inflation beginning in 2012 would boost real GDP by a little less than 1½ percent by the end of 2013.
At the risk of sounding like a doctrinaire purist, it is unethical to cite inaccurate analysis in support of a good policy.
Consider this example. If some academic published a study in favor of the flat tax and it later turned out that the data was deliberately or accidentally wrong, would it be right to cite that research when arguing for tax reform? I hope everyone would agree that the answer is no.
Yet that’s precisely what is happening when people cite CBO’s shoddy work to argue against tax increases.
It’s very much akin to the pro-defense Republicans who use Keynesian arguments about jobs when promoting a larger defense budget.
To make matters worse, it’s not as if opponents lack other arguments that are intellectually honest.
- They could point out that higher marginal tax rates discourage productive behavior.
- They could point out that increased double taxation of saving and investment will hurt workers by reducing capital formation.
- They could point out that a larger tax burden will encourage a bigger burden of government spending.
- They could point out that revenues almost surely be less than what is projected because of the Laffer Curve.
So why, then, would anybody sink to the depths necessary to cite the Congressional Budget Office?
View full post on Cato @ Liberty
By Simon Lester
Over the past year or so, there has been a slow and steady effort to generate support for a U.S.-EU free trade agreement. The Obama administration is now behind this, and there is no reason to think a President Romney would change gears. Thus, regardless of the outcome of the Presidential election, this trade initiative is likely to go forward.
So should free traders be excited by the prospect of a trade agreement with the EU? Maybe a little. But before getting too wound up, it’s worth taking a look at the possible details of such an agreement, as set out in an interim report by a U.S.-EU “High Level Working Group”. As indicated by the post title, there are things to like, but also some things not to like — the Good and the Bad. I’ll go through the list roughly in order of those I am most to least happy with, quoting the report and offering some comments. I will conclude with the Ugly. (See if you can guess what it is.)
The goal would be to eliminate all duties on bilateral trade, with the shared objective of achieving a substantial elimination of tariffs upon entry into force and a phasing out of all but the most sensitive tariffs in a short time frame. In the course of negotiations, both sides would consider options for the treatment of the most sensitive products.
This is pretty good, but not great. Note the part about “options” for “sensitive products.” How many of these would there be? This language makes me nervous.
The aim of negotiations would be to bind the existing autonomous level of liberalization of both parties at the highest level of liberalization captured in existing FTAs, while seeking to achieve new market access through efforts to address remaining long-standing market access barriers, recognizing the sensitive nature of certain sectors.
This is all sounds good (except for that reference to “sensitive” sectors again).
But then it goes off in a different direction:
the United States and the EU would include binding commitments to provide transparency, impartiality and due process with regard to licensing and qualification requirements and procedures, as well as enhancing the regulatory principles included in current U.S. and EU FTAs.
“Impartiality” and “due process” are useful concepts in domestic law. But can they be effectively used in international trade agreements? Are these concepts appropriate for binding international agreements, or do they turn trade agreements into a kind of global constitution?
The goal of the negotiations would be to enhance business opportunities through substantially improved access to government procurement opportunities at all levels of government on the basis of national treatment.
While there is a good free market objection that governments spend too much on procurement, nonetheless, if they are going to spend, it would be better to do so in a non-protectionist way. This part of the report is good. It promotes economic welfare through non-discrimination in government procurement. We buy their products and services, and they buy ours. Note, of course, that it refers to “substantially improved access,” not full free trade. But it is still an improvement over today’s situation.
The aim would be to negotiate investment liberalization and protection provisions on the basis of the highest levels of liberalization and protection that both sides have negotiated to date.
Here, there are two very different concepts included. Investment “liberalization” is great. By all means, let’s make sure foreign investors are welcome and not subject to discrimination, in both the U.S. and EU. But “protection” of foreign investors is something else entirely, as the rules on this issue in other agreements go far beyond a simple non-discrimination requirement. Furthermore, of all the groups that need “protection” in this world, I would put “foreign investors” near the bottom of the list.
(a) trade facilitation/customs; (b) trade-related aspects of competition and state-owned enterprises; (c) trade-related aspects of labor and environment; (d) horizontal provisions on small- and medium-sized enterprises; (e) strengthening supply chains; and (f) access to raw materials and energy.
In this hodge-podge of items, we have some good and some bad. It’s great to make customs procedures more efficient; but including labor and environment provisions in trade agreements makes the whole exercise seem more like global governance than free trade.
Regulatory Issues and Non-Tariff Barriers
Here, there are several issues that are difficult to understand. First, it is important to note at the outset that existing international trade rules do not allow discriminatory laws and regulations. That’s a core principle of the GATT/WTO, and has been since 1947. So, keep that in mind when you hear calls for trade agreements to address “regulatory issues and non-tariff barriers.” They are already addressed in important ways.
Getting specific, the report calls for the following related to Sanitary and Phytosanitary (SPS) issues (e.g., food safety) and Technical Barriers to Trade issues (TBT) (e.g., product regulations):
• An ambitious “SPS-plus” chapter, including establishing a bilateral forum for improved dialogue and cooperation on SPS issues.
• An ambitious “TBT-plus” chapter, including establishing a bilateral forum for addressing bilateral trade issues arising from technical regulations, conformity assessment procedures, and standards.
It is not at all clear to me why existing WTO SPS and TBT rules are insufficient.
The report also asks for:
• Horizontal disciplines on regulatory coherence and transparency for goods and services, including early consultations on significant regulations, impact assessment, upstream regulatory cooperation, and good regulatory practices.
• Provisions or annexes containing additional commitments or steps aimed at promoting regulatory compatibility over time in specific, mutually agreed sectors.
Here, I agree that there may be benefits from regulatory cooperation. But I’m not sure why they should be held hostage to free trade agreements. If the idea is to promote things like mutual recognition (say, in the auto industry), couldn’t it just be done now?
Finally, the report says:
In view of the importance of developing an ambitious and realistic approach to regulatory differences that unnecessarily impede trade, the two sides would invite stakeholders to present, before the end of the year, concrete proposals to address the impact on trade of those differences.
As noted above, the principle of non-discrimination has long been a core part of international trade rules. The principle mentioned here – “regulatory differences that unnecessarily impede trade” – is potentially much broader, as it intrudes into domestic policy-making to a greater degree.
Both the EU and the United States are committed to a high level of intellectual property protection, including enforcement, and cooperate extensively through the Transatlantic IPR Working Group. Both sides agree that it would not be feasible in negotiations to seek to reconcile across the board differences in the IPR obligations that each typically includes in its comprehensive trade agreements. Before the launch of any negotiations, both sides would further consult on possible approaches to deal with IPR matters in a mutually satisfactory manner.
It has never been clear to me why intellectual property should be included in trade agreements at all. Now the U.S. and the EU, who often push for strong protection in this area, will work together to achieve very tough international rules (except where they can’t agree, as with geographical indications, which will be left out).
So, that was the Good and the Bad, all mixed together. Now let me wrap this up with the Ugly: No coverage of agricultural subsidies, or possibly agriculture trade of any sort! That means excluding one of the biggest sources of protectionism, not to mention two other big ones, with trade remedies and aircraft subsidies also out. Those are some serious omissions.
Oh, and one other thing: Free trade with just the EU is not really free trade! It is discriminatory trade, with EU products and services favored over other countries’ products and services.
I don’t mean to rain on this free trade parade. But keep all that in mind when evaluating this proposal.
View full post on Cato @ Liberty
EPA withdraws proposed livestock reporting rule
NCBA | Updated: July 16, 2012
Late Friday afternoon, July 13, 2012, the Environmental Protection Agency (EPA) withdrew its proposed Clean Water Act (CWA) Section 308 CAFO (Concentrated Animal Feeding Operations) Reporting Rule. The rule sparked controversy within the agricultural community due to what was referred to as a serious overreach of EPA’s authority. The National Cattlemen’s Beef Association’s (NCBA) primary concern was the likelihood the proposed rule could put the nation’s food system at risk of increased terrorist attacks. NCBA President J.D. Alexander said this move by EPA is a victory for cattlemen and women and illustrates the importance of the beef cattle community working together to educate government officials.
“Early on, we called for EPA to pull this rule. It turns out they listened. This really showcases the importance of cattlemen and women becoming engaged in the regulatory process and making sure their concerns are heard,” said Alexander. “We encourage the agency to redirect its focus to working with states and other partners to attain already publicly available information that would allow them to work toward their goal of improved water quality. This can be done in a way that does not put our food system at increased risk.”
The proposed rule required all cattle operations meeting the regulatory definition of a CAFO to report a long list of information about their operations to EPA, including latitude and longitude (or street address) of the production area, acres available for land application of manure, type and number of head and contact information for the owner or authorized representative. EPA stated it would place this information on the agency’s website in an easily searchable database, where NCBA feared extremists could access the information with the intent to do harm to cattle operations or the nation’s food system. Any non-compliance with the proposed rule would have been a violation of the CWA, which would have resulted in fines of up to $37,500 per day.
Alexander said NCBA worked with EPA to convey the privacy concerns on behalf of cattlemen and women. On Feb. 3, 2012, NCBA invited EPA to attend its annual convention in Nashville, Tenn., to discuss the proposed rule face-to-face with the beef cattle community. Ellen Gilinsky represented EPA at NCBA’s convention, where she acknowledged the industry’s biosecurity and privacy concerns. Alexander said cattlemen speaking directly with EPA officials makes a lot of difference.
“EPA resides in Washington, D.C., and seldom gets the opportunity to hear directly from the providers of food for this country,” said Alexander. “It is paramount that we continue being engaged in the regulatory process. They need to hear from us. We must not take this lightly. This recent announcement by EPA proves that we can make a difference.”
Statistics: Posted by yoda — Mon Jul 16, 2012 11:20 am
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