At first we thought Reuters had been punk’d in its article titled “EU executive sees personal savings used to plug long-term financing gap” which disclosed the latest leaked proposal by the European Commission, but after several hours without a retraction, we realized that the story is sadly true. Sadly, because everything that we warned about in “There May Be Only Painful Ways Out Of The Crisis” back in September of 2011, and everything that the depositors and citizens of Cyprus had to live through, seems on the verge of going continental. In a nutshell, and in Reuters’ own words, “the savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.” What is left unsaid is that the “usage” will be on a purely involuntary basis, at the discretion of the “union”, and can thus best be described as confiscation.
The source of this stunner is a document seen be Reuters, which describes how the EU is looking for ways to “wean” the 28-country bloc from its heavy reliance on bank financing and find other means of funding small companies, infrastructure projects and other investment. So as Europe finally admits that the ECB has failed to unclog its broken monetary pipelines for the past five years – something we highlight every month (most recently in No Waking From Draghi’s Monetary Nightmare: Eurozone Credit Creation Tumbles To New All Time Low), the commissions report finally admits that “the economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment.”
The solution? “The Commission will ask the bloc’s insurance watchdog in the second half of this year for advice on a possible draft law “to mobilize more personal pension savings for long-term financing”,the document said.”
Mobilize, once again, is a more palatable word than, say, confiscate.
I believe what they’re actually suggesting is that post-recession requirements that banks hold a higher percentage of account holders’ assets to increase the stability of the financial system be relaxed.
This, in my humble opinion, is b.s. Why should account holders’ savings be collectively put at increased risk to benefit banks and investors, when they’re paying those same account holders some of the lowest interest rates in modern history in return for the use of their money? If account holders wanted those increased risk levels, they’d be putting their money into riskier but more profitable investments themselves.
Back in March, 2013, because of a European Union and International Monetary Fund bailout deal, Cyrpus’ savers lost 15% of their savings.
So, there’s precedent.
But, in this leaked document there is only talk of a lower guaranteed deposit.
The banks want to risk more of their customers’ cash if they see a way to make a profit off it…..risky or not.
If there are runs on any of these banks and they lower their cushions of capital and liquidity they will literally run out of cash when people are at the counter demanding their own money.
Looks like our mistakes of pooling risky loans with safe ones will be repeated in Europe if they go this route.
Now, if a bank customer is in on the higher returns by being in a special pool of savers whose cash will be used for special long-term savings accounts it might save them bank runs.
We’ll see how they handle it.
This is why Obama wants the MyRA
Here it comes:
NOT a new tax.
For our future!
That will earn no interest’
That we won’t be able to withdraw until we’re 60…62…64…70…75.
That the government can
wastespend in the meantime.
And keep when we die.
Oh, wait, we already have that.
It’s called Social security!
Oh, and if anyone wants to argue about that “no interest” claim, well…
I’ve been investing 10-15% of every dollar that I’ve earned since I was eighteen.
Less than SSI has taken.
I can withdraw much more every month from my investments than SSI will pay me.
Without touching the principal.
And when I die, my descendants will inherit what’s left.
None of my money is in IRAs or 401k plans, because I know history.
I’m not a gambler, but it would be interesting to see what gamblers give for odds of whether Europe will take their people’s money before our government takes ours.
You reminded me of the man who told me the only thing thing he did that his dad told him to do was to put 30% away for retirement, and he said he retired at age 50. I was recently talking to a teenager who said that the way his is investing he could retire at age 40. I wish I would have known about this stuff when I was younger. I had never heard of working to retire.
I would like to have a mathematician figure out how much a person would have in their own retirement account if they could have put their Social Security taxes in their own retirement account.
Clark Howard said that if a 15 year old could put $2,000 away per year for only 7 years, and leave it there, at age 65, and the stock market averages what it has from it’s beginning, they would have $1,000,000 in the account. How many millions would I have in my when I turned 65, and paid into it the same amount I paid into Social Security. I would be able to take care of my own retirement AND MEDICAL CARE. I wouldn’t cost the government one penny.
The politicians know this, but don’t want you to have control of YOUR money. congress has become the biggest money vacuum cleaner ever invented, and congress is planning on putting more suction power in it.
That is exactly right. This is the reason for government-approved retirement accounts. They know exactly where the money is, and how much is there.
This is why most of my investments have been in small businesses, here and abroad. Made easier by my travels.
For example, I own half of a company that manufactures custom trailers. It started with a high school student who had a great idea, me with money to invest, and a shop teacher who introduced us.
Another is a bicycle shop in South America in partnership with a young lady who approached my Army unit while were there building roads to beg spare tools so that she could repair bicycles for her friends.
A month later, at the age of eight, she was the youngest business owner in her city, with a storefront, and a shipment of used bicycles, tools and parts being assembled in the USA by friends.
I never have been comfortable with traditional investments. Venture capital is more my style, it allows me to keep my head down and attached to my neck. There are a lot of us doing it.
All it takes is open eyes and ears, and regular contacts with people who may be in position to know someone with an idea… Like teachers and Law Enforcement Officers. You would be amazed at how much LEOs see that is not law enforcement related, and how much most of them want young people to succeed!
####This is the reason for government-approved retirement accounts. They know exactly where the money is, and how much is there.####
But, that would mean that the politicians would have to give up THEIR control of YOUR money, and when was the last time this happened? The only chance I see of saving this country is from non-politicians running for office. My first choice would be for the military to storm congress and run for office.
I have suggest to the Tea Party Patriots, the Tea Party Express, and others that before they agree to support any candidate, that the candidate has to sign a contract stating what they will and won’t do after being elected, and that if they don’t do as agreed, then there is a date for these things to be done, and if they are not, then that is their automatic resignation from office. I have seen too many politicians backed by Tea Party organizations get elected, then not follow the Tea Party values. Who knows how many pretend Tea Party supporters the democrats and others are getting elected this way.
YOU AND I NEED TO GET TOGETHER. I have a lot of great ideas for investments. With your money and my ideas, we can be millionaires in a short time.
You reminded me of Glenn Beck’s The Marketplace. I’m guessing it is something like you are doing. Some time ago I told my financial planner that I believe the stock market will crash sometime soon, and to invest assuming this will happen. I mentioned to him that investing in gun, ammo, and gun accessory companies would be a good idea, and I was right.
I am going to be moving my money to a different investment company. My son is using USAA’s investment branch and is content with it. Have you got any ideas what I should do with it?
I just thought of a good example of how to run the federal government. I forget the city’s name, but they have about 100,000 people, but they have only 9 city employees. They contract almost everything. They don’t have to deal with unions, and they can change things as needed. But, I just listed why the politicians wouldn’t like the idea. Look how many things could be contracted out to private companies.
“I am going to be moving my money to a different investment company. My son is using USAA’s investment branch and is content with it. Have you got any ideas what I should do with it?”
My advice would be to meet with the individual who will be managing your money in person, for long enough to get a feel for how honest and mature they are. Take them to a long lunch and a long conversation about more than investing. Hobbies, people that they know, that sort of thing. Get a feel for them. (“Mature” in my mind means possessing a sense of duty, of honor). It’s not necessary that you like them, but that you respect and trust them. Get a lawyer that you can trust to vet all documents.
My area of expertise is venture capital, so I only know enough about traditional investing to know that I need to avoid it like the plague.
Perhaps you could learn about different types of investing to find one in which you could gain sufficient expertise in your time frame to have a good chance at successfully monitoring your activities.
Two things to avoid:
Anything regulated by a government. (They’ll know how much you have and where it is)
Anything that looks like you can make a lot of money fast. (It won’t happen)
And, it’s true that you win some, you lose some, so be prepared for a setback or two. Don’t put all your eggs in one basket. I lost everything that I had in a motorcycle shop in Baghdad, for instance. It happens.
Be prepared to invest a lot of time and effort along with your money. What you don’t watch will wander off.
Keep your other expenses low and have a nest egg for emergencies.
Avoid the glitzy, popular investments. No gold, no silver. (Although I do have a stock of scarce industrial metals in a shed…I’m kind of strange.)
I plan on leaving once my medical problems are cleared up. Maybe New Zealand, but probably South America… I’ve got a lot of research to do yet.
Oh, and do consider USAA. I don’t deal with them, but they do have a great reputation, from the little that I know. Research research research.
I have a brother who was a store manage, so I figured he could help me on investing. He said to get a financial planner, and that he uses one. That surprised me. I figured that since he managed a store, he would know how to manage money.
He suggested staying away from individual financial planners. You are signing your money over to them to do what they want. He also mentioned that if they go out of business, they could take your money with them. He suggested using a corporation that you can sue if you need to.
USAA serves only present or past service members and their families. In other words, almost everybody qualifies. Consumer Reports rates them very highly in their banking, and my son is using the investment branch and likes it, so I was looking into using it also. There won’t be just one individual doing the investing. That should be a good thing. Like I mentioned earlier, I had to suggest to my financial planner to look into gun stuff for investing. I also suggested the survival type companies that are doing great right now. Who said obama can’t create job?
If I choose to use the USAA’s mutual funds, there is no fee. For many years I have heard that retirees prefer these types of funds. Since I am an official retiree, I figured I would look into them.
Well, that just shows how much I don’t know about individual financial planners. Good thing I don’t use them!
Most of my comment, looking back, was more about how I decide who to invest with as a business partner. As I said, my expertise is limited to venture capital, so that’s all I do.
I think I forgot to thank you for the information on investing. Thanks. I don’t have a head for numbers, or remembering names or dates, so I prefer to let someone else do my investing for me. Since my son is OK with USAA, and since it is highly rated, I guess I will let them do the investing.