Tuesday, 28 January 2014

Government going bankrupt? No bailout but citizen bail in (Reuters)

The Bundesbank calls on countries to "bail in" from citizens before calling on Germany to help.  No reader of this blog should be surprised at this recommendation. 

Although difficult to implement it would certainly raise the required funds.  This might explain why the wealthy of those countries in risk and buying bitcoins and property in London.  The wealthy will have their escape routes planned already.

Bundesbank calls for capital levy to avert government bankruptcies [Reuters]

"(Reuters) - Germany's Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.

The Bundesbank's tough stance comes after years of euro zone crisis that saw five government bailouts. There have also bond market interventions by the European Central Bank in, for example, Italy where households' average net wealth is higher than in Germany.

"(A capital levy) corresponds to the principle of national responsibility, according to which tax payers are responsible for their government's obligations before solidarity of other states is required," the Bundesbank said in its monthly report.

It warned that such a levy carried significant risks and its implementation would not be easy, adding it should only be considered in absolute exceptional cases, for example to avert a looming sovereign insolvency."

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