Under the new rules which the British government backtracked on and supported, national governments will be prevented from bailing out a bank unless they have already written off large share and bond holdings, emptied corporate bank accounts and stolen anything over €100k in any bank account that hasn't yet been plundered. Only then can they step in and financially support the bank to prevent it collapsing and that support will be limited to just 5% of the bank's liabilities.
Cllr Donna Edmunds wrote in favour of this proposal the other day - something that was met with scepticism from other UKIPpers in the ensuing Twitter debate. In a nutshell, Donna says that it's better that they're open about their intention to steal your money up front and it shows people that the EU is prepared to steal from citizens to further its agenda which will surely damage the EU. To a certain extent I agree with the logic - it's unusual for the EU to be so open about an abuse of trust and natural justice - but this "bail in" concept is a dangerous one.
The banking system is built on trust. You put your money in the bank because you trust that it is safer in a bank than it is in a box under your bed but this shows that it's anything but safe in a bank. Most people won't have anything like £85k in the bank but who's to say the £85k won't be dropped to £50k or even £1k if the government, on a whim, decides to do it? There was no legal basis to steal anything over €100k from bank accounts in Cyprus so the Cypriot government simply ordered that all bank accounts were to be frozen until they could pass a law to make it legal. The British government could just as easily freeze and confiscate money - any amount of money - from bank accounts in the UK.
The idea of emptying corporate bank accounts is also a worrying one. Left wing politicians and media like to cast big business as the bogeyman but they are responsible for a big proportion of what goes into the public purse and employ millions of people. Depriving them of capital could bankrupt them or damage their creditworthiness making it harder for them to do business resulting in job losses and the destruction of entire local economies that rely on the supply chain of large employers.
Then there's the increased likelihood of institutional investors and multinationals pulling out of the UK and the EU as a whole to insulate themselves from potential losses from the kind of "solidarity" wealth confiscation system that you would normally associate with repressive regimes in third world countries and communist states.
Barclays Bank are quite happy with the "bail in" idea and the quote from their analysts gives away the reason:
good news, in our view, and paves the way for a start to discussions on the establishment of a single resolution mechanism, the second leg of the banking union
Complying with different banking rules and regulations in the 27 vassal states of the EU is an expensive business and a minefield for banks. It's only natural that they would support a banking union that would reduce the cost of doing business across the continent and of course they don't care where the money comes from that supplies the safety net for when they get things wrong and run out of money. Just because banks are experts on banking doesn't mean that what they support is in the best interests of their customers and this is certainly one example of where it isn't.
It's a damning indictment of our clueless and weak politicians when it's safer to keep your money in a box under your bed than it is to keep it in the bank.
wonkotsane is an author at Bloggers4UKIP.
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