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Analyzing the EU Interest Charges - The Legal Extortion of Europe’s taxpayer

Analyzing the EU Interest Charges - The Legal Extortion of Europe’s taxpayer

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Analyzing the EU Interest Charges - The Legal Extortion of Europe’s taxpayer
Analyzing the EU Interest Charges - The Legal Extortion of Europe’s taxpayer

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05/13/2014

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 Analyzing the EU Interest Charges - The Legal Extortion of 
Europe’s taxpayer 
 
I've been writing about the tremendous amounts of money that European taxpayershave been paying out every year in interest payments to the banking sector -
 €5.6
trillion since 1995 for most of the past year. I truly believe that this has to be one of thelongest running extortion rackets in history. Remember that the banks lend money togovernments that they don't actually have - they use the magic conjuring trick offractional reserve banking to create the "money" out of thin air. They then chargetaxpayers interest despite the fact that lending to governments must surely be one ofthe safest bets around.The figures for long-term interest rates in the European Union can all be found on theECB's web site and if you click there the proper link, you can see the figures for the lastyear or so. To be more specific, here is the official ECB graph showing interest ratevariations for the 17 Euro zone countries.
 
Intriguingly, there was a moment back in 2007-2008 when all the countries were payingthe same rate of roughly 4% - it was a good time to be in the Euro zone. But since then,the rates have gone all over the place with Greece, Portugal and Ireland being forced topay extortionate rates - so high that they might as well pay using a credit card. Somecountries, such as Germany have done very well since their rates are now down below2%. This gives them a fantastic competitive advantage. They can't really explainhowever why they are so keen on maintaining the status quo?The second graph shows the curves for the Non-Euro zone countries and again, thecurves go all over the place, with Hungary and Romania currently being very hard hit.Sweden, Denmark and the UK are doing very nicely though, but note that even these"top performers" pay over three times the interest charges that the Bank of England ischarging for money lent under quantitative easing (QE).To sum it all up, the overall impression one gets from both graphs is that we have allbeen ripped off for decades. Remember that we are paying interest on loans that weremade by banks using money that they essentially created, the money out of thin air,another words, fiat money.Central banks also have the right to create money - but currently, the bankers haveconvinced people that any money created by central banks can only go through thecommercial banking system. Surely, this is total lunacy. We should be campaigning toend this insane monopoly.
 
What would happen if Greece left the Euro-Zone 
It would have to be carried out almost overnight
 –
most likely over a weekend. Thebanks would have to shut their doors, bank accounts would be frozen and capitalcontrols imposed to stop any more money leaving the country. The new currency wouldbe likely to lose at least 50% of its value relative to the Euro so any saver in Greecewho has left their money in a bank will instantly find it is worth considerably less.Opinion polls show that while Greeks do not want austerity, most of them want to stay inthe euro
 –
which explains why savings are still sitting in Greek banks. Greeks go to thepolls again on 17 June after the vote on 6 May proved inconclusive. The new election isseen as a referendum on the euro. If the anti-austerity Syriza party wins control andcannot force Germany to relax its opposition to lower and slower cuts, there may be nooption but for Greece to leave the euro zone
 –
or be kicked out.
Nothing is clear 
-
Greece "may or may not" leave, and there’s a huge
range ofpotential policy responses from experts and government leaders.
Therefore, making allowances for some guesswork, here’s a rundown of some of the
"expert views" at the present time:
 
JP MORGAN: 
 
There’s now a 50% chance of Greece leaving, up from 20%before the country’s politicians failed to produce a coalition government. It says aGreek exit would depress the country’s gross domestic product by five to 10
percentage points more than if it were
to stay in. ―That would put the peak
-to-trough decline in Greek GDP at 25-30%, broadly matching the U.S. experience in
the early 1930s.‖ In turn, that would take away around two percentage points of growth from the region. ―This would put the current down
turn in line with previousdeep recessions, such as the mid-1970s and the early 1990s, but milder than theexceptionally deep recession of 2008/09, when area-wide GDP fell 5.5% from
peak to trough,‖ the bank adds, warning that regional unemployment could b
e
higher than ―anything seen in the past half 
-
century.‖
 
 
CITIGROUP: 
 
―There are many scenarios for a Greek exit; almost all of them arelikely to be euro negative for an extended period,‖ says the bank that coined the
now-
ubiquitous term ―Grexit‖. If the pro
cess is managed, which the U.S. bankdeems unlikely, expect a short, sharp sell off in the euro, with a subsequent rallyup to $1.45 or higher. If Greece just dumps the austerity program and walks, the
risk of contagion rises, and ―the euro could begin to
rally, but so much damagewill have been done by then that it would begin its rally from a much lower level
and probably not be anywhere close to the current level at the end of the year.‖ If 
the stronger countries were to break away, some see euro gains ahead, but
Citi
 
reckons that ―this can take a very long time and is probably well beyond aninvestible horizon.‖ All in all, the outlook for the common currency is ―not verypromising…unless policy makers surprise with decisiveness.‖
 

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