Things just keep getting rougher for average citizens in Europe. Some have faced government seizure of accounts to help fund government operations and requirements that they explain withdrawals to their banks. Now, the European Central Bank (ECB) is imposing a negative interest rate on banks for their deposits. So, you can keep your money under your mattress or put it in a bank where the bank will use it to earn money while charging you for the pleasure. This is of course the central bank which directly relates to individual banks as opposed to individual depositors. Those banks will now pay to park their money and those costs will be passed along to depositors. Banks are likely going to try to hide the fact that the interest rate is now negative through fees and other measures.
The ECB cut the rate on its deposit facility for banks from 0 percent to minus 0.10 percent. It also cut its main interest rate to from 0.25 percent to 0.15 percent as well as cutting the rate on its marginal lending facility by 35 basis points to 0.4 percent from 0.75 percent.
It is an interesting situation where banks will now be treated as solely a safe place for holding your money but you will pay for the service as a fee. Much like the airlines where aspects of what was once viewed as the basic service are being converted into fees, banks will now be treated as akin to a safety deposit box. However, unlike airlines or safety deposit boxes, the banks are making money off the deposits. It is a fundamental change in function of banks.
I have long been critical of the tax increases and measures in Europe that will likely have displacement impacts on investments and movement of citizens and businesses. In this case, I would expect people to look for alternatives from Internet banks to foreign banks.
paulette wrote to Karen S: “Your compassion for your fellow man stuns me.”
Compassion is when one individual sees his neighbor in need, and from an emotional heart of empathy freely GIVES what he has to help that person.
Compassion is NOT when an individual votes for government to create and fund a bureaucracy designed to take from one individual in order to give a portion of what is taken (some might say stolen) to another individual.
Karen S wrote: “I do not ascribe to the belief that if you see a pile of money burning, you should put more money on it to fix the problem.”
But Karen, if you don’t put more money on it, the fire will go out! Where is your compassion?
Paul C. Schulte
angryman – I know this is not going to help much but if you stop overdrafting at your bank you can save $35 each time you do it.
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Do you know angryman that well, or is $35 a national overdraft fee amount?
Dredd – I know you do not read all the posts but she mentioned that was the cost at her particular bank. So the answer is yes, I do know angryman that well. 🙂
Sorry; the question is: “If we keep taxing the POOR etc.”
Professor Turley,
“Banks are likely going to try to hide the fact that the interest rate is now negative through fees and other measures.”
The ability of banks and other corporations to hide interest as “fees” and oppression of the poor under the guise of “Overdraft Fees” is just one of the reasons and one of the ways I believe we need to control this unrestrained Capitalism that is killing our people and our nation.
Karen–“If we keep taxing the rich into oblivion, what will happen? If we make it too expensive to own a business by increasing wages $6/hour and doubling health insurance premiums, what will happen? If we keep implementing programs with absolutely no way to pay for them but keep squeezing the public, what will happen?
Scuse’ me Mum but have you flipped your F-F-F-F-F-Funny Lookin’ Wig?
????????”If we keep taxing the rich into oblivion, what will happen??????????
That isn’t even the question as we are so far from being even within radar range of that virtual non-possibility.
The question is “If we keep taxing the rich into oblivion, what will happen?” because that is the situation we are indeed faced with; Right Now.
The poor are subject to a veritable cornucopia of taxes many hidden and fees such as overdraft fees ($35 at my bank every time I overdraw) that the wealthy are largely not susceptible to. They come from the Banks and from every other corporate entity looking for a way to up your cost without seeming like they are just grubbing for more profit.
The wealthy avoid many of these taxes and fees by the way they move and use their considerable wealth. Financial institutions that require me to “Apply” just to open an account; lay out the red carpet and begin puckering before the wealthy can get inside.
Taxing the rich into oblivion indeed!
AND
“To keep from defaulting on its debt, Greece implemented high taxes amid income losses, and other austerity measures.”
Greece implemented high taxes? Yes but Greece has no enforcement capabilities for their tax schedule.
John,
“Congress, apparently, has been derelict and negligent, if not complicit, and allowed those who profit from banking operations to assure their profits…the fox is guarding the hen house.”
Hey John! Sup’ Dude? You though it would never happen but for once I actually agree with you. The way the Banking/Financ ial/Wa;ll Street crisi was handled is beyond scandalous.
Congress was completely negligent and this is just one reason I see little difference between the Parties as time brings about crises.
angryman – I know this is not going to help much but if you stop overdrafting at your bank you can save $35 each time you do it.
Banks inspire with American English words that have left their ancient moorings:
(On The Origin of “Conspiracy Theory”, quoting Professor Lutz). I suppose we can now add “negative interest flow” to the mix.
This will only worsen asset bubbles in the stock markets, forcing more and more savers into speculation.
Was it Maggie Thatcher who was in control in Great Britain when they refused to join the Euro currency? I think so but don’t know so. For those nation states which joined the Euro currency I have one piece of advice: Pull out now like your father should have.
Paul, LOL! You must remember the great scene where he cut open the hanging carcass of a pig and the $’s came rolling out.
Love Justified. Great show, great cast. Superb writing.
Perhaps Professor Turley can amend this article with facts as to the constitutionality of the Fed printing money and setting interest rates.
“Congress shall have the power to coin money” as a utility or infrastructure for the people. The power to coin money was kept from banks so that it could not be abused as a tool to create profit.
In a free society, interest rates are a function of the markets and are set as a reaction to competition which benefits free people.
The Federal Reserve Board was established, within the industry, with the sole function of assuring sufficient banking reserves, to accommodate demand.
Interest rates must be established by dynamics and competition in free banking markets.
Congress, apparently, has been derelict and negligent, if not complicit, and allowed those who profit from banking operations to assure their profits…the fox is guarding the hen house.
Banking reserves are assured by level requirements, not the ability to set interest rates. The former is difficult, the latter dangerous.
They are wrong who purport the ability to know more and perform in superior fashion to unmanaged free and open markets.
Karen ~ “If we keep taxing the rich into oblivion, what will happen? If we make it too expensive to own a business by increasing wages $6/hour and doubling health insurance premiums, what will happen?”
Your compassion for your fellow man stuns me.
And this is why I am a fiscal conservative, who believes in living within our means, making sure we get value for our money in social programs or replacing them with ones that perform better. I believe in analyzing the results of our decisions and basing future decisions on that information.
I do not ascribe to the belief that if you see a pile of money burning, you should put more money on it to fix the problem.
Well, I have tried to explain the end outcome of the whole “tax and spend” philosophy fruitlessly.
People need to expand out trends into future outcomes. If we keep taxing the rich into oblivion, what will happen? If we make it too expensive to own a business by increasing wages $6/hour and doubling health insurance premiums, what will happen? If we keep implementing programs with absolutely no way to pay for them but keep squeezing the public, what will happen?
Greece, Europe in general -there are lessons there that people are just blind to. Canada and UK are running out of money for their government health care, even with far less immigration burden than we have. Greece imploded when the government could no longer pay the benefits that its people depended on.
To keep from defaulting on its debt, Greece implemented high taxes amid income losses, and other austerity measures.
And yet, there are people here in the US that claim there is no problem with spiraling debt. We do not need to live within our means. Nothing will ever happen, no matter how high our debt goes. It could go into the realm of Googolplex and it would be just fine. Keep taxing those business owners! I’m sure they will continue to employ us for pure altruism! I go to work to make money but how dare they do the same! That kind of rhetoric.
We ignore what’s going on in Europe at our peril.
http://usatoday30.usatoday.com/money/world/story/2012-02-12/greece-riots/53061252/1
JT: “So, you can keep your money under your mattress or put it in a bank where the bank will use it to earn money while charging you for the pleasure.”
And this differs from the U.S. in what way?
Which is a greater risk? 1. that the area under your mattress will burn or be robbed or 2. that bankers or government will confiscate your money or you will be the victim of a frivolous lawsuit that will take any money in a bank account? Why, again, do people put their money in banks?
There is little to no money to be made keeping your money is a bank. I have most of mine tied up in property. I am sleeping in my money. 😉
Ah…central banking…where you can fix the price of currency and set the dial to “punish”
Yes, rafflaw, the EU banks have some Turkeys within.
Stupid idea meant to harm the small depositor because the banks will trickle the costs down to the small guy. Is this a beginning of a Turkey situation for all of Europe?
Wasn’t there some problem in locating exactly where Limehouse kept the money?
Folks in Harlan County have always used Ellstin Limehouse as their bank. Maybe Limehouse needs to leave his “holler” and branch out to Europe.[Obvious Justified reference].