World View: Eurozone Eyes Uninsured Bank Accounts for Further Bailout Grab
- Syria's al-Nusra Front pledges allegiance to al-Qaeda
- EU warns Spain, Slovenia, France of economic risks
- Is Germany the poorest country in Europe?
- Europeans debate how much to tax bank deposits in bailouts
Syria's al-Nusra Front pledges allegiance to al-Qaeda
A new development has confirmed that Islamists jihadists are
infiltrating the opposition to the Bashar al-Assad regime in Syria.
The leaders of Jabhat al-Nusra (al-Nusra Front) in Syria have openly
announced their allegiance to al-Qaeda chief Ayman al-Zawahiri.
Al-Qaeda links have been denied in the past, so this counts as a major
admission, confirming accusations by the U.S. and others. However,
the al-Nusra leaders were apparently forced into this admission
because of a tactical error by the leaders of al-Qaeda in Iraq, who
claimed that al-Nusra was part of al-Qaeda in Iraq, and that the two
organizations were going to merge.
The al-Nusra leaders say that they
were caught by surprise by this announcement, and that they had no
intention of merging with al-Qaeda in Iraq but then felt it necessary
to pledge allegiance to al-Zawahiri.
The pledge is thought to be a tactical blunder, because it will reduce
support for al-Nusra among Syrians. Al-Qaeda in Iraq is unpopular in
Syria because of its targeting of innocent civilians during the Iraq
war. Al-Nusra has been fairly popular with opposition Syrians, but
the admitted association with al-Qaeda will lead Syrians to fear that
al-Nusra will target civilians as well. Middle East Online and AFP
EU warns Spain, Slovenia, France of economic risks
Economic chaos continued in the eurozone on Wednesday on multiple
The European Commission warned Wednesday that Spain and Slovenia pose
the biggest economic risks and must quickly tackle excessive
imbalances; at the same time, France's growing debt was turning into the eurozone's
We already know that Slovenia is spiraling out of control, since the
prime minister said that no bailout will be needed. As we reported
yesterday, that's a sure sign that a bailout is needed, and soon.
Spain's banking system has already been bailed out but still has
"very high domestic and external debt levels." Prime Minister
Mariano Rajoy is promising to announce reforms on April 26 that will
solve the problem.
Among the remaining eurozone countries, France stands out:
[France's public debt] represents a vulnerability,
not only for the country itself but also for the euro area as a
France is a core country -- in terms of its size and its
geo-economic position. Its health has a very direct impact on the
overall health of the eurozone.
There may be some additional news this weekend, when eurozone
and EU finance ministers will meet in Dublin.
From the point of view of Generational Dynamics, there does not exist
a solution to Europe's financial crisis since the credit and real
estate bubbles of the mid-2000s decade are still collapsing, and will
continue to collapse into the 2020s. Economic Times (India)
Is Germany the poorest country in Europe?
The European Central Bank (ECB) has published a new report
entitled "The Eurosystem Household Finance and Consumption Survey."
This report compares the different eurozone country on a wide
variety of financial and economic measures. Buried in the
middle of the report is the following data:
Median net household wealth in thousands of euros
This is causing a new controversy for the obvious reasons.
Why is Germany, the poorest country in the eurozone, bailing
out Cyprus, the second wealthiest? According to German news service MNI:
Cypriot citizens were on average more than three times wealthier
than their German counterparts before the crisis, according to a
European Central Bank study on household finance and consumption
The data may help to explain the Eurozone's reluctance to offer
more generous aid to Cyprus and political obstacles any further
bailout loans may face in the parliaments of northern Europe.
The study showed that citizens in AAA-rated countries that bear
the largest share of the Eurozone's bailout burdens enjoy
significantly less wealth than those in the
Analysts have been scrambling to explain the controversial result. It
turns out that Germany has a low property ownership rate, while Cyprus
has a high rate; property ownership is a big part of household
wealth. Furthermore, the figures are from 2010, when Cyprus's
property values were still at bubble levels. European Central Bank (ECB) and Market News International (Frankfurt)
Europeans debate how much to tax bank deposits in bailouts
The Cyprus bailout originally was going to tax small bank deposits
(under 100,000 euros) by 7%, and larger bank deposits by just under
10%. That was quickly changed, with the result that small bank
deposits were untaxed, but large bank deposits would be taxed by 60%.
Now the European Parliament is debating who's going to get hit in the
According to the current debate, insured deposits
(under 100,000 euros) would be protected, but all uninsured deposits,
including interbank deposits, would be subject to tax (confiscation),
once debts owed to unsecured bondholders had been canceled.
There is a brand-new word floating around the European media: the
"bail-in". It refers to anyone whose money can be taxed (confiscated)
to pay for a bailout. Thus, uninsured bank deposits would be
bailed-in by the new rules, but insured bank deposits would not.
Reuters and Bloomberg
KEYS: Generational Dynamics, Eurozone, Spain, Slovenia, France,
Mariano Rajoy, Germany, European Central Bank, ECB,
Cyprus, bail-in, Jabhat al-Nusra, al-Nusra Front,
al-Qaeda in Iraq, Ayman al-Zawahiri
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