(05e) ECB and markets

The European Central Bank (ECB) made a decision and the financial sector is not happy. The ECB agrees to come up with ways to assist struggling Eurozone countries but without injecting already money in the countries. The markets hoped the ECB would already help failing countries and thus, as one can expect, the banks immediately increased the bonds for Spain and Italy because they want to punish the ECB for not doing what the financial sector think the ECB should do.

The ECB told the markets it will help countries that ask for help. As the ECB didn't help those countries immediately, the markets decided to "help" those countries by increasing the bonds of those countries and thus making it more likely these countries need to ask for help as a higher bond (e.g. above 7% for Spain) means countries have to pay back more and thus their debts increase. As a result, it is more likely these countries need help from the EU and ECB and thus the European money paid to those countries will be used to pay the banks and their senior people. As a consequence, those countries and the Eurozone as a whole become poorer while certain individuals become richer as they pay themselves huge bonuses and wages. Of course, these are not the people we see in banks as they are not bankers, they are desk clerks and don't get huge wages and bonuses although the public may also get angry with them because they are seen as part of the system. And thus the flow from countries into banks and the pockets of a few continues unless countries cap the wages of these powerful people. It is like a black hole: we know black holes suck all material towards them and we see the material disappears but we still don't know what happens to the material. But of course, after blocking wages some countries may say they allow free wages to attract the bankers and others in the hope these countries will benefit. Until countries collapse and then each country will feel the troubles. But maybe I am too cynical: maybe certain banks are not after our money after we gave them so much cash to save them. (By the way, I heard Spain is thinking of taxing good banks to pay for the bad ones, again taking money from those who behaved well to give without almost any conditions (because otherwise the bankers may stop working) to those who are incompetent except for filling their own pockets. But I may have misheard it).

Therefore, again, we need to introduce Eurotaxes so even the rich have to pay. But of course, one main country in Europe will probably block the introduction of these taxes. Then the Eurozone countries should introduce the reform in the Eurozone so countries that do not belong to the Eurozone can't block it (although they may join later to save us and then force their will upon the countries they save); indeed a two-speed EU of willing and those who don't. That country may invite the wealthy to its capital so the rich can avoid their responsibilities (paying taxes) in the hope to increase the capitals own wealth. Then we could replace the euro with another currency and change according to the taxes paid (thus not according to the euros they have in accounts). Thus, those who paid too little taxes because they avoided paying them would loose while those who were honourably would get their total value back.

(As I wrote this article quite fast thus without much rewriting, I publish it small as a quick thought)


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