A bail-in for dividing Europe

In the beginning was denial. The financial crisis sparked by the subprime crisis in the US was not supposed to extend to Europe, according to the statements of the officials which were being made a few years ago. The health of banks was not even considered, just like a sovereign default was considered a blasphemy for a long time in the Eurozone.

How quickly time flies! Now, the decisions or the statements concerning the distant time horizons last about as much as the 118th element of Mendeleev's table, which has a half-life of 0.89 milliseconds.

Bailing out banks has taken precedence, due to the symbiotic connection between them and the state. "For the first time we have agreed on a bail-in which is significant for protecting taxpayers", Jeroen Dijsselbloem, Dutch finance minister and president of the Eurogroup said at midnight, after a marathon meeting.

The same Dijsselbloem would assure us, at the time of the robbery in Cyprus, that what was happening in the Mediterranean island would not be an action framework applicable all over Europe.

And yet, how are taxpayers protected, because they are also "owners" of the deposits which will be partially or totally seized? Are the deposits in the banking system set up by aliens (the outer space kind)?

"The European Union has agreed to force investors and those with sizeable savings to bear the cost of future bank defaults", Reuters writes. The new plan stipulates that shareholders, bondholders and those with deposits over 100,000 Euros will be required to participate directly in saving banks.

Moreover, the new regulations "can affect German depositors or any other investor in the world", according to a statement by German finance minister, Wolfgang Schäuble. He also said that "We need a clear liability cascade: first the shareholders, then the various bondholders, then the depositors -- not the insured deposits, which have always been excluded by European law -- then the member states concerned, and if that member state can't do it, then the European rescue fund as well", according to an article by Bloomberg.

Isn't it extraordinary that we need "a clear liability cascade" when it comes to the banks' creditors, but no mention is made of a cascade of political responsibility? And how European have the Germans become, so that they would happily pay for the default of a French or Austrian bank?

Reuters writes that "the new regulations are destroying a tabu in Europe", referring to the concept of the inviolability of bank deposits, "even though the countries will be allowed a certain degree of flexibility when it comes to forcing creditors to take the losses". What is this flexibility referring to? Could it mean the possibility of arbitrary decisions of the authorities, depending on the nationality and the race of the depositors? No! Something like that isn't possible in a community built around the "holy" European ideals!

A reader's comment on the article by Reuters reflects the best what the situation has come to: "European democracies are now de jure Kleptocracies". Perhaps a new anthem for the EU is now needed, as well as a new slogan: "All as one, and everybody gets robbed!"

In order to avoid outraging the Europeans, who might feel insulted by such a statement, it bears reminding that the issue of the banking union is far from being dealt with. Austrian Chancellor Werner Faymann said, in an interview published by Reuters, that "It is highly unlikely Chancellor Merkel will agree to such an exhaustive banking union before the General elections in Germany".

So basically what it boils down to is cheating the electorate prior to "democratic" elections, followed by decisions which have nothing to do with the "will" of the people.

While the Germans still believe in the illusion of their resilience to the European crisis, the same can't be said about France. European finance minister Pierre Moscovici stated that "France's requests, when it comes to the use of European funds for bailing out banks, have also been accepted".

The impatience of Moscovici is understandable, given that a recent analysis by Goldman Sachs puts two French banks at the top of the list of European financial institutions with low capitalization. The assets to equity ratio is over 35 in the case Credit Agricole and Natixis, according to the review by Goldman Sachs, and the top two German banks, Deutsche Bank and Commerzbank are ranked fourth and sixth in a chart of bank fragility.

But like the European authorities have already accustomed us, the latest decision means almost nothing. Nicolas Veron, a financial expert at the Bruegel European institute for economic studies, said for Reuters that "it is premature to speak about a concert of the European efforts", because "the important talks about the manner in which the restructuring will be performed have not yet begun".

What has begun, however, is the construction of a well put-together system for robbing the Europeans blind, regardless of whether or not they are part of the Eurozone, in the name of an ideal which no longer represents them.