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

A Quarter-Century’s Conclusion on Our Cancer Woes

Ray Blanco

Breakthrough technologies can hold the most undiscovered money-making potential. What we’ve accomplished in a quarter century with cancer research could make you serious money and save countless lives. Ray Blanco has more on this ground breaking story...


Give Your Book Away For Free, Make More Money

Chris Campbell

The publishing industry is on its head. These days, it makes more sense to make money before you write your book and give it away for free once you do. In today’s Laissez Faire Today, Chris Campbell shows you how to create a hit with those two counterintuitive steps. Read on…


How to Poke the Russian Bear in 3 Easy Steps

Greg Guenthner

Interested in buying the dip in Russian stocks this morning? Before you do, let’s try to knock some sense into that skull of yours. Late last week, I reminded you why we bid farewell to the big Russian bear back over the summer. At the time, Russia was one of the cheapest markets in the world. But cheap can always get even cheaper—and Russia is certainly no exception. With comic book supervillain Vlad Putin manning the controls from his secret Siberian lair, the Market Vectors Russia ETF (NYSE:RSX) has dropped a cold 20% since registering its late June highs. Does it have a shot at rebounding? Greg Guenthner explains…


Why Malpractice from the Fed Will Undermine Growth

Steve Forbes

The latest friend of ours to weigh in on the topic of the value of your money is Steve Forbes. As you’ve been reading this week, we paid a visit to Mr. Forbes recently, to discuss his latest book, Money. In this essay, you’ll find his thoughts on currency devaluation… it’s impact of economic growth and your investments…