F Dominicus Blog

A politically incorrect blog about matters of money, government, bureaucracy, freedom and sometimes something else.

A new and a secret round of expropriation

One just can say the break-down runs in direct confirmation of Mises predictions but also "Atlas shrugged".

People start to sell off bonds from nearly any EU country. Believe it or not Germany is not among them. Quite the opposite, the spreads from every other EU country to Germany are raising and Germany gets the money for free. Indeed they had to offer 0.8 % !!! for 6 months running bonds (AFAIK) and we have an inflation rate near 3%. Well so much to money and interest. Just remember also the ECB has lowered the Discount rate to 1.25 %. So in fact this is artificially low. And it fits the last moves of a Fiat-Money system. So Germany does not have a problem refinancing itself with bonds. But it gets more expensive for the other on a daily base. Monti or not Italy is "finished". But now the EU bureaucrats are again entering the scene. Baroso warns of a systemic crisis (he is right on that) and he wants no actions and now the madness shines. A new round of credit and leverage of EFSF should do the work. JFYI the EFSF has to offer much more interest then Germany alone, but the credibility of Italy, France, Belgium etc is (not free but) falling. So there are two options I think the deledefs will take. At first the will put more pressure on the ECB to buy even more bonds (this would be another new round of expropriation). The other thing will be that they introduce a tax names something like "stabilization of the euro fond" or the like. Taxes are not a gift they are robbery and so you can see in both paths a new round of expropriation starts.

But there is another "secret" round, with no democratic control and even worse. The ECB has bought bonds from Greece, is now buying bonds from Greece and Italy. (it's not known to me yet if France bonds are bought also) but the ECB has to be financed from every Euro country. And well Germany bears 27% or so of the "financial needs" and well the bonds will get worthless sooner or later. I guess sooner is not a bad guess these days. Why is this even worse than EFSF, well the ECB works without any control. An extension to the EFSF is not very likely any more. But the obligations from the ECB must be beard. This means whatever the ECB does everyone has to pay for it (dearly) . So the way seems very clear to me. The pressure on the ECB will raise they will claims kind of emergency laws. And down we go.

I just invite you to check this blog for the past years and you'll see how I warned about it over and over again. Just see http://mises.org/Community/blogs/fdominicus/archive/2011/02/03/my-predictions.aspx on my outside Mises blog I wrote (more than 2 years ago http://fdominicus.blogspot.com/2009/10/done-i-sold-last-asset-from-country.html You can check the Mises blog and see they warned and warned and warned. But the delebets do not give in the name expresses what they are.