Neutral Stupidity

The EU lawmakers are about to finalize rules for a single supervisory mechanism (SSM) coordinated by the ECB. The European Commission is expected to table legislation for a resolution mechanism to wind up ailing banks within the coming months. European Central Bank (ECB) chief Mario Draghi said on Monday in the European Parliament that a euro zone banking union will need a common resolution fund, and that it has to be “fiscally neutral over the medium term.” How can another European bank bailout fund be fiscally neutral?

 “The European Resolution Fund should be backed by a public backstop mechanism to ensure that it would be fiscally neutral over the medium term.”

Mario Draghi

Yup..neutral, but only over the medium term. Sooner or later the taxpayers will have to pay for this bailout, too…

Speaking with MEPs on the monetary affairs committee, Draghi said that the resolution fund should be financed via levies to safeguard against having to “recourse to taxpayer money,” the EUobserver.com reports.

Levies, hu?

Here are some related words:

• direct tax
• personal tax
  
• capitation
• custom(s)
  
•  excise
• hidden tax
• income tax
  
• poll tax
•  property tax
• sales tax
• single tax
•  sin tax
  
•  tariff
• toll
• tribute
• value-added tax
• withholding tax
• super tax
• surcharge 
• surtax
• death tax
• estate tax
• inheritance tax
• flat tax
• proportional tax

Also, the European Resolution Fund “should be backed by a public backstop mechanism,”  Mr. Draghi added, to ensure that it would be “fiscally neutral over the medium term.”

I’m sorry, but this sounds like pure nonsense to me.

There’s nothing new here – just another way to ensure that the bailout mechanisms already set up by the EU  leaders – the European Stability Mechanism (ESM) and the European Financial Stabilisation Mechanism (EFSM) – will still be in place when the European banking union becomes a reality.

But the need for a pan-European resolution fund is widely accepted among most EU lawmakers. However, some countries fear it could lead to their taxpayers financing bank rescues in other countries.

Well, I think they’re on to something….

Meanwhile, Draghi continues to kick the can, downplaying the recent diplomatic row over the exchange rate policy of the euro, dismissing it as “excessive” talks of a currency war involving the euro zone, Japan and the US.

He also said that the ECB did not regard the euro zone exchange rate as “a policy target, but it is important for growth and price stability.”

Important, but not a target….

And, according to the bank’s economic forecasts, the euro zone economy will fall by 0.3 percent in 2013, although Draghi indicated that he expected “a gradual recovery later this year.”

Heard that one, too…..quite a few times over the last five years.

Related by econoTwist’s:

• The Big Bailout Scam (EU Version)
• Former Goldman Sachs Banker Become New ECB President
• ECB: “What We Are Doing Is Actually Illegal”
• EU: No Bail In, Just Eternal Bailouts
• The Sociopathic Banking System of Europe
• The Big Cannoli (Europe’s Catch 22)
• The Brilliance Of A Bailout
• Spain: Mobile-Phone Jammers Installed To Prevent Info Leaks At ECB-Meeting

Other related articles:

• ECB’s Mario Draghi pushes for European bank bailout fund (denverpost.com)
• Eurozone Recovery Still at Risk, ECB’s Draghi Warns (hispanicbusiness.com)
• Draghi Says EU Needs Common Fund To Handle Failing Banks – Bloomberg (bloomberg.com)
• Draghi dismisses talk of currency war, but watching euro (Reuters) (newsdaily.com)
• Mario Draghi Gets It Absolutely Right On ‘Currency Wars’ (businessinsider.com)
• Germany’s Bundesbank says Anglo promissory note debt deal ‘problematic’ (independent.ie)
• Euro exchange rate important for growth, prices: Draghi (news.yahoo.com)
• Draghi: eurozone needs bank resolution fund (euobserver.com)
• Draghi sees inflationary bubbles (europeansting.com)

The Best of Nigel Farage

A great collection of the most memorable moments in the European Parliament over the last years – starring British MEP Nigel Farage.

Enjoy!

Vodpod videos no longer available.

1st collector for The Best of Nigel Farage
Follow my videos on vodpod

LATEST:

UKIP leader Nigel Farage meets the press following a mock funeral cortege held in honour of the euro-corpse.

“European banks are going to take a hit at some point anyway, if you are a bank owed a great deal of money it’s better to get 50% of it than none of it. Down the path we are going now is heading for a total bust.”

Vodpod videos no longer available.

Nigel Farage Holds Funeral For the Euro, posted with vodpod

Nigel Farage MEP, UKIP, Co-President of the EFD Group in the European Parliament (Europe of Freedom and Democracy)

The conclusions of the EU Summit 23-24 June 2011 here:

Related by the EconoTwist’s:

• British MEP To Parliament: “Just Who The Hell Do You Think You Are? You Are Very Dangerous People!”

• UK’s Farage Goes Nuts In EU Parliament Over Barroso’s Speech

• Barroso: EU Has Survived The Economic Crisis
• Is Mr. Barroso Really Competent To Be President Of The EU?

Related articles:

• Nigel Farage Holds Funeral Procession For Euro In The Middle Of Brussels (lonerangersilver.wordpress.com)
• Fears endless bailouts may prove fatal for euro (rt.com)
• New Greece Deal: Britain Will Not Have To Pay (news.sky.com)
• Nigel Farage:We’re Trapped Inside an Economic Prison. (politics.ie)
• Nigel Farage Explains the EU – in plain language (prof77.wordpress.com)
• Nigel Farage on Euro’s 10th Birthday (politics.ie)

EU Budget Talks Collapse

A last attempt to reach an agreement for the 2011 EU budget failed Monday night, due to reluctance by member states to grant MEPs extra powers in future multi-annual budget negotiations. The EU commission will now have to draft a new proposal, while the first months of next year will be funded on the basis of the 2010 budget,

“There is no drama, the world won’t go under.”

EU diplomat

No Budget - No Drama

The final collapse was mainly due to disagreements over procedures and extra powers granted to MEPs under the Lisbon Treaty, the EU’s new rulebook, European media reports.

Jerzy Buzek

“It’s not good news not to have a budget for 2011, but we will follow procedures,” EU Parliament chief, Jerzy Buzek,  told reporters in a late-night press conference after talks with member states broke down, according to the EUobserver.com.

Junior ministers from Britain and the Netherlands insisted that the only issue on the table was the budget for 2011 and declined to discuss contentious issues for the long-term budgetary perspective, such as raising more EU “own resources” through supplementary taxes or the “flexibility” of the budget when unexpected expenses arise.

Shortly after announcing €95 billion in domestic budget cuts, Britain has demanded that next year’s EU budget stay frozen at the 2010 levels, or go up by a mere 2.9 percent, less than half of the original MEPs’ request.

Perverse Mechanism

“The Brits didn’t want to hear about ‘flexibility’ as they argued it could create a perverse mechanism by which governments are forced to pay more into the EU coffers,” one EU diplomat says.

Dutch officials were motivated both by similar spending cuts at home and a diplomatic defeat for the Netherlands when Albania and Bosnia were granted EU visa-freedom.

The Dutch EU affairs minister promised last week that budget talks will only relate to the 2011 figures and “nothing else.”

The chairman of the budget committee, French MEP Alain Lamassoure, lashed out at the national envoys, who had no mandate to negotiate anything else but the figure for next year and said that if they were not willing to discuss MEPs’ powers, he would “take it to the European Council in December.”

Bad Blood

For some diplomats, the strategy of the European Parliament was bound to fail, because it wrongly assumed that member states would agree to a budget out of fear of being labelled as “anti-European.”

“There will be a budget, based on 2010 figures. There is no drama, the world won’t go under,” one EU diplomat told the EUobserver.

However, EU budget commissioner Janusz Lewandowski is not of the same opinion.

During the lengthy hours of negotiations he reportedly warned member states that failure to reach an agreement will create “bad blood,” and even lead to higher borrowing costs for the euro zone’s most embattled economies in Ireland and Greece.

A last-ditch attempt by the Belgian EU presidency to separate figures from the “political agreement” on the MEPs’ powers was dismissed by the parliament’s negotiators as “completely unserious.”

The euro-deputies had previously indicated that they would back a 2.9 percent increase in the budget, as demanded by 12 member states led by Britain.

Anyway – now it’s back at square one; the EU commission will have to come up with a new draft budget, and another round of negotiations, at government leader level, are to take place in December.

Related by The Swapper:

• Internal Wrangles Could Leave EU Without 2011 Budget
• EU Wants To Tax Bonds Of Deficit Countries (And Old People)
• EU’s Administrative Costs Set To Rise 4,4% In 2011
• Warns Against Euro Zone “Elite”
• Brussels Tells Athens To Shut Up And Take The Pain
• Barroso: EU Has Survived The Economic Crisis
• EU To Extend Greek Aid
• Bundesbank: Ireland Will Destroy The Euro Zone
• EU Member States Disagree On Debt Figures
• EU’s Bank Rescue Turning Into Political And Economic Catastrophe

Related Articles

• EU budget talks in deadlock (bbc.co.uk)
• EU 2011 Budget Negotiations Collapse (politics.ie)
• EU budget talks collapse over sovereignty concerns (seattletimes.nwsource.com)