Wednesday, March 20, 2013

Germanys fault

Berlin, Germany, Brandenburger Tor

Once again we have a European country that have in this case decided to attract business and money not by actually producing something but by offering low taxes and high interest rates in their banks. By doing so their banks have swelled to the size of eight times the countries GDP. Today in the US there are serious discussions about breaking up the Too Big To Fail because they, according to American accounting rules, represent around 65% of the US GDP and according to international rules the big American banks represent 105% of GDP.

Here we are talking about a tiny little country where the banks are representing 800% of the GDP. I repeat 800%! Is that too  much? Yes, it is and to allow that to have happen is crazy, stupid and seriously dangerous. To make things worse they have been running a laundry business and have since they joined the EU in 2004 been pushing their "friend" Russia's interest in Brussels. A significant part of the cash deposits in the banks belongs to rich Russian people. Money was deposited in the banks since they gave a very high interest rate.

How could they do this? Well, for instance they were using the deposited money to buy junk bonds (such as Greek bonds) with high interest rate which is why they could give their depositors so high interest. They were then of course also living on the fact that 100k € was secured within EU and were using that as leverage to create a more, as they thought, profitable situation. As always happen in these situations, given time, the card house fell down and it went very flat, very flat indeed.

I´m not German but I live here and I pay my taxes here. Also I, just like the Germans, start to be a bit fed up with the continuous accusations that we the German tax payers are the bad guys and that we are only looking after our own interest.

Seriously, why should I pay, with my German tax money, to save a little country that are purely living on the fact of that they are part of EU and have been able to create a tax paradise were illegal and half dodgy people hide their money? If they would not have been inside the EU then this possibility would not even have existed for them.

Their government made a bad decision by voting no. I would have had no problem to stick to the regulation with 100k € security but since the government on this little island wanted to save their money laundry business they created the dodgy taxes of 9.9% above 100k € and 6.75% on anything below 100k €. The people did not want that and the politicians as everywhere are too weak/corrupted to actually make a wise decision for the good of the country in the long run.

I personally have no issues with the banks going insolvent, which they actually are, because then everyone will loose their money. It seems as if people don´t understand that. When your bank goes insolvent your money is gone! It isn´t and shouldn´t be the norm that the government always steps in to protect you! You must chose your own bank just as carefully as you chose an index fond or a stock for that matter.

Either way lets see just how corrupt Russia is. Will Putin save his billionaire buddies money or not? And if he doesn´t well if they can not bring up some money on the table then why should I and the rest of the Europeans bring our money to the table?

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