After Eurovision Comes The Euroscramble: Europe’s Latest “Silver Bullet”, “Secret” Bail Out Plan
by Tyler Durden
Mere hours after the annual European Eurovision song contest ended at a cost to the host country in the hundreds of millions, money which should have been spent productively elsewhere but wasn’t while providing utterly unnecessary distraction to hundreds of millions from what is truly important, we get another stark reminder that the continent is not only broke, but that it no longer even pretends to have credible ideas about how to go about fixing itself. The latest speculation: “Secret plans are being drawn up in Brussels for a European rescue fund that could seize control of struggling banks across the Continent. The scheme, which would be funded by a levy on banks, will be presented by supporters as a “silver bullet” that could halt the steady escalation of the eurozone debt crisis. It is being worked on in tandem with a proposal from Mario Monti, the Italian prime minister, for a Europe-wide guarantee on bank deposits. The proposal would throw the financial muscle of Europe’s stronger nations, and healthy financial institutions, behind weaker countries and lenders. Proponents, including top advisers to the European Commission, say the removal of the threat of bank collapses would restore market confidence in Italy and Spain.” In other words, last week’s rumor that was supposed to be presented at the latest flop of a FinMin summit is once again being reincarnated as apparently nothing else in the European arsenal has any remaining credibility – and as a reminder, none other than unelected Monti’s one-time employer Goldman Sachs said a eurowide deposit guarantee would not work.
“The bank scheme would see all eurozone lenders forced to pay an annual levy to a deposit guarantee scheme set up as a separate company. The company would be back-stopped with cash from the European Union, the European Central Bank or the new European Stability Mechanism.”
Bottom line: the “silver bullet” plan is “secret? because it is a total farce, and nobody could possibly present it with a straight face for one simple reason – there is no source of money. No hold on, there is – Germany. And as Merkel made it very clear, Germany will not fund it. Why? Because once it starts, it won’t end.
Why won’t it end?