British citizens seeking yet another reason to vote Brexit, have one in spades.
The roots of this reason go back to last year when European Commission president Jean Claude Juncker hatched a 3-year plan to leverage €20 billion in seed capital to produce a €300 billion gain in Eurozone investment.
As one might expected, the results are nonexistent even though Juncker has already used up the €20 billion in seed capital.
Juncker now wants to up the seed capital, make the plan permanent, and extend the plan outside the EU to immigration zones such as Syria and Africa!
Here’s the kicker. The UK ponied up the biggest share of this monstrous boondoggle so far.
UK Makes the Biggest Contribution to the Juncker Plan
Flashback July 17, 2015: EurActiv reports UK Makes the Biggest Contribution to the Juncker Plan.
The UK may be a Eurosceptic country, but it has made the biggest contribution to the flagship project of the Commission led by Jean-Claude Juncker – the €315 billion Investment Plan for Europe designed to stimulate the EU’s post-crisis economy.
The UK announced yesterday (16 July) it will contribute £6 billion (about €8.5 billion) to projects benefiting from finance by the European Fund for Strategic Investments (EFSI),better known as the Juncker Plan. This is in fact the biggest contribution so far.
The plan is based on a 15-fold leverage of a limited €21 billion of initial public money. As Juncker explained, the fund will be called European Fund for Strategic Investments (EFSI), guaranteed with public money from the EU budget and the European Investment Bank (EIB). The Fund will be able to mobilize €315 billion over the next three years.
The Commission has put up €8 billion from the EU budget. This backs up a €16 billion guarantee given to the Fund. Topped up by another €5 billion from the EIB, the sum totals €21 billion.
In addition, the European Investment Bank (EIB) can give out loans of €63 billion. But private investors will be pitching in the remaining €252 billion.
Juncker warned about national wish-lists, and said there was no guarantee how much they would profit from the fund, if they contribute to it.
Brussels Extends the “Juncker Plan” Beyond 2018 and Outside the EU
Flash Forward May 31, 2016: Brussels Extends the “Juncker Plan” Beyond 2018 and Outside the EU.
Via translation from El Pais …
The European Commission wants to give new impetus to the Juncker Plan, which aims to mobilize investments of over €300 billion by mid-2018. Brussels announced today that the project will be extended by at least two additional years, and aims to make it permanent. The executive arm of the EU will also seek to finance investments outside Europe, in conflict areas and projects related to immigration.
Juncker does not stop there: the head of the Commission shall submit a legislative proposal in autumn to expand the plan beyond the timeframe foreseen (mid-2018). According to sources, the idea is to extend the plan at least two more years, with firepower equivalent. And look for something more ambitious, even permanent, once the next EU budgets are negotiated.
The scheme bears the name “Juncker Plan” to make it easy to point blame if the plan fails.
A leverage ratio of 1/15 is high but not unusual in some projects the EIB, and the environment of current liquidity abundance favors private funding plan. Fund management itself will be a major challenge, as it involves decisions in a short time on the economic viability of many projects with significant distributional consequences between countries and sectors.
A final positive aspect not mentioned so far is the possibility that countries make additional contributions to the fund without being included in the deficit posted by Brussels in the stability and growth pact. This can be an escape route for France to carry out its desired fiscal expansion by the back door (Italy it is more difficult, since by its high debt is also controlled by markets). However, it is not clear whether these additional contributions can be directed implicitly makes the country, so it is not known whether it will be sufficient to increase the fund’s ability incentive.
Plan Failed Already
“So far it has not failed” said Juncker.
Translation: The plan has failed and Juncker has his hands in every country’s pocket for more funding. The UK is already already the biggest contributor to this madness, having wasted €8.5 billion.
Juncker now wants more … for immigration projects!
Anyone on the Brexit fence reading this and not immediately knowing how to vote, likely has mad cow disease (or worse yet, mad Juncker disease).
For more on Brexit, please see …
For more on the propensity of Jean-Claude Juncker to tell blatant lies, please see Juncker’s own admission “When it becomes serious, you have to lie”.
Mike “Mish” Shedlock