Far be it from bondholders or banks that caused the debt crisis to be punished for their sins, German ‘Wise Men’ push for wealth seizure to fund EMU bail-outs.
Two top advisers to German Chancellor Angela Merkel have called for a tax on private wealth and property in eurozone debtor states to force the rich to fund rescue costs, marking a radical new departure for EMU crisis strategy.
Professors Lars Feld and Peter Bofinger said states in trouble must pay more for their own salvation, said arguing that there is enough wealth in homes and private assets across the Mediterranean to cover bail-out costs. “The rich must give up part of their wealth over the next ten years,” said Prof Bofinger.
The two economist are members of the Germany’s Council of Economic Experts or “Five Wise Men”, a body that advises the Chancellor on major issues. There is no formal plan to launch a wealth tax but the council is often used to fly kites for new policies.
Prof Feld said a new survey by the European Central Bank had revealed that people in the crisis countries are richer than the Germans themselves. “This shows that Germany has been right to take a tough line of euro rescue loans,” he said.
Supposedly the mean wealth level, stripping out the super-rich is as follows:
- Spain €183,000 for Spain
- Italy €172,000 for Italy
- Portugal €102,000
- Cyprus €671,000
- Austria €265,000
- Germany €195,000
- Holland €170,000
- Finland €161,000
One look at the data is all it takes to conclude the report does not pass the “sniff test”. A closer look shows the study was also undertaken before the Spanish property bubble imploded and that it ignores pensions.
Yet, the “Wise Men” embraced the study. Why?
The answer is simple. The study gave them the incentive to propose what they wanted to propose all along: theft to bail out failing banks that made stupid loans.
As Ambrose Evans-Pritchard points out in his article “Any serious move to a wealth tax could the erode the pro-euro ardour of South Europe’s uber-rich.”
Indeed. So just how wise are the alleged “wise men”?
Mike “Mish” Shedlock