Jason Farrell

If you’ve ever wondered what bureaucrats do late at night, now we have an answer: They argue with each other in smoke-filled rooms, trying to figure out how to make bad ideas even worse.

Reuters reports that after seven hours of late-night talks, finance ministers from the EU’s 27 countries emerged with a blueprint to close or save banks in hot water. Beginning in 2018, the so-called “bail-in” regime will be able to force shareholders, bondholders and some depositors to cough up money to keep banks afloat. Insured deposits under 100,000 euros are exempt.

“For the first time, we agreed on a significant bail-in to shield taxpayers,” exhalted Jeroen Dijsselbloem, chairman of the Eurogroup of finance ministers. He expects it to “break the vicious circle of sovereigns and banks, and to induce banks to behave more responsibly.” The European parliament still has to approve of the deal, which could take until the end of the year.

Dijsselbloem considers the move a “step forward toward a banking union.” Such is the European mindset: When trouble strikes, centralization will save the day… eurozone crisis be damned.

Economists didn’t believe a banking union was unlikely this year, according to a Reuters survey.

Of course, the “bail-ins” could trigger bank runs, which might be used as another excuse for intervention. This is worth keeping an eye on. Whenever politicians discover a way to divert responsibility for bad policies, expect it to catch on quickly. Canada has a similar “bail-in” plan on the table. The U.S. is likely not far behind.

Jason Farrell

For The Daily Reckoning

P.S. We’ve been keeping readers of the Daily Reckoning email edition regularly updated with tips and strategies to protect and even grow their wealth in the face of government confiscation and economic uncertainty. Sign up for free, right here, to start receiving the Daily Reckoning email and get ahead of the curve.

Jason Farrell

Jason M. Farrell is a writer based in Washington D.C. and Baltimore, MD. Before joining Agora Financial in 2012 he was a research fellow at the Center for Competitive Politics, where his work was cited by the New York Post, Albany Times Union and the New York State Senate. He has been published at United Liberty, The Federalist, The Daily Caller and LewRockwell.com among many other blogs and news sites.

Recent Articles

New Hope for Type 1 Diabetics

Stephen Petranek

Stephen Petranek explains how the blood pressure medication, Verapamil, could be used to do big things for sufferers of Type 1 diabetes. Click here to see why some are calling this a sign of hope...


It’s Time to Trade Shale Stocks

Greg Guenthner

I consider this trade a mean-reversion play. We're not hanging around if it doesn't work out--and I certainly don't think these stocks will regain the momentum they had during last year's monster run. This is a short-term trade, OK? But a little disbelief rally can hand us some quick double-digit gains.


Extra!
Record Numbers Renounce U.S. Citizenship — Here’s One Alternative

Peter Schiff

Fact: More Americans than ever before are choosing to give up their citizenship. If you’ve been finding America’s tax laws inconvenient or even oppressive, however, read on. Peter Schiff outlines options for avoiding government intrusion in your life… without giving up your citizenship...


Printing Winners and Losers

Jorg Hulsmann

Like everything in life, there are winners and losers -- money production is no exception. In fact, thanks to the opening the money spigot, Guido Hülsmann of the Mises Institute explains we're ultimately looking at worsening income inequality. Read on...