More surprising is Sarkozy’s spin on these events. He interpreted the new deal as an important step towards Europe’s economic governance. But before taking too much pride, Sarkozy should remember that a €200 billion subsidy to sovereign creditors is a gigantic wealth transfer from the taxpayer to essentially the richest 5% of the world. In the US, the 5% richest households control roughly 70% of all financial wealth, and this percentage is not much different in the rest of the world. Ultimate ownership of bank capital and sovereign debt is so concentrated among high-wealth individuals that we should characterise the bailout subsidy as an “impôt pour la fortune” (“a tax for wealth”) – a wealth tax supporting the rich.
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