As Old Guy says .

http://www.forexfraud.com/f... is a slightly out of date article but it describes the mechanisms well .

The ECB finances the interbank rate of lending , has a direct marginal rate for those who cannot find funding , and nowadays charges deposits , which does not seem to deter banks from holding on to their cash .

After all of that there is also Target 2 which is at its simplest a record of inter-nation balance of banking payment/transfer/liability . Due to a single currency it is all that exists to denote say money 'created' in, or lent into, say Spain , buying German manufactured goods . It shows Germany earning and the rest of Europe borrowing to buy . The money that Germany earns is Euros , it is in a sense southern debt which originally Germany (they had/have large positions in foreign debt) , now ECB , fuels and maintains . Should the Eurozone disassemble chaotically , those Euros held by Germany will be worth ... what ? Their value would be a representation of past accords , not current reality - hence the 'no exit' mentality . The actual resolution of this imbalance in that case would depend mainly on political will afterwards - would a new currency honour past debt in Euros , would governments finance their banks some way to ensure payment of foreign debt . We like to think it is all arranged (they do their best to 'persuade' on top of that ) but a country can turn round and say 'Adios amigo, and thanks for lunch ' should it wish . Up to now that idea has only been used in political fencing , but if there is a chaos and countries wish to wrestle back control of their own affairs , that would be the route , with or without the agreement of the rest of Eurozone .

Carlos the inter bank rate is set by the ECB not the Germans. It is simpler to stop loaning them fiat. The Germans have actually profited by the Euro as the DM would be king in Europe right now if they had not joined the EMU and many know this. Thus the reason for the fingers being pointed at Germany during these lean times.

Unless I am wrong, current legislation already contemplates that share holders and bond holders are responsible for the health of the bank.

If that is the case, the BRRD is merely a conduit to punch a hole in current legislation. No?
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Current legislation was never applied in the case of Cyprus and Greece nor, indeed, in the case of Bankia or the Dutch bank that failed 4 years ago. In these cases, the European Central Bank froze everyones money and some even took hair cuts if I am not mistaken? I mean depositors that had less than 100K? Bankia was a particularly odious case where some depositors had their savings forcibly converted into shares (if memory serves) and the bonds were sold at top rating only for the bank to fail in less than 2 years. My memory may fail me. Maybe someone can chime in?
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What I find is the important bit in the BRDD rules is the following:

"The directive establishes a bail-in system which will ensure that taxpayers will be last in the line to the pay the bills of a struggling bank. In a bail-in, creditors, according to a pre-defined hierarchy, forfeit some or all of their holdings to keep the bank alive.[...] A member state could lodge a request with the Commission *** to exempt certain creditors from bail-in on an exceptional and case by case basis. *** ""
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Is that passage not key to the whole boondoggle or am I imagining things?
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http://www.europarl.europa....

“Sorry boys and girls, you will have to choose. You can either have capitalism, freedom, prosperity and personal responsibility, or you can have socialism, tyranny, poverty and ‘security’.
You cannot have both.”

The problem is that the party of personal responsibility, isn't.

Cronyism is not capitalism. Bailing out JP Morgan is not capitalism. The Patriot Act is not freedom. Wealth concentrated into the hands of 1% is not prosperity. Both political parties have chosen number 2.

"the ECB will violate the Maastrict Treaty.."

You mean to say there are still articles of the Maastrict Treaty that have not yet been violated? I am shocked!

Germany always screwed since euro inception.
MUCH lower euro (ecb eating losses) or Gexit as german taxpayers on the hook for mega losses by its banks.

The real question is your money safe anywhere? Bail-ins will come to all countries. Capitalism died a long time ago, otherwise these banks would be allowed to fail. Governments have imposed so many taxes and programs most working people would like to be able to buy better material goods. The problem is they cannot buy them. Most people are in too much debt.

Yes. In gold.

Germany is not a safe haven. Although its productivity is a defense of future value, account wise it is fully overextended, both national accounting, financial leverage, and in funding the EU project. I personally do not think that it is able to manage the position it has bought. If that is where someone's loyalties are, or in looking for the better of European investment, maybe, but unless you know exactly what you are doing, I would look elsewhere.

Fabian Socialists, Marcusian Marxists and Keynesian financial engineers of the world unite!!

Obama's SOTU speech is coming.

Tom Brokaw says this will be the best ever. He's very excited.

Can he feel it in his leg or is that only Matthews

How ObamaCare impairs economic output

http://www.americanthinker....

Nothing in the EU is 'safe', not your money, not your national sovereignty, not your banks, your women or even your person.

Socialism -- such a wonderful model...

Von Firstenberg!

I originally read Pater's arty but it was quite long and had trouble boiling down the essence. Thanks for doing that Mish.