The banking mess

I could lose every cent I have in a bank and it wouldn’t hurt me too much. Frequently, cents are all I have. I keep the bank account for shuffling money, but I don’t leave much in it for long.

I deposit only what I need to cover the two things I have to pay via electronic transfer… And a tad left over to hold the account. That’s it.

I read someone, lost the link, that said since Americans are putting money into savings at a historically low pace, the American version of confiscation would be up to a 30% haircut on all stock holdings. Oh to have so much money that I had these worries.

But I’ve been minimally banked for a while now. Every month, everything extra gets converted to physical assets or gold, silver and lead.

I noticed the many euphemisms (“the substitution of an agreeable or inoffensive expression for one that may offend or suggest something unpleasant” – MW) used to describe the situation, too.

I read a paragraph of Obama’s words, which were used to describe the Syrian conflict while he was over that way, so many euphemisms were used I almost couldn’t count them all there so many at one time.

Strange stuff, propaganda and such. It seems like it’s been speeded up, doubled-down or something? Desperation?

I noticed the weather map showed the latest Spring snow storm with a name attached to it, Virgil, I think it was.
When did they start naming storms over the middle of the country?
Or did the ‘experts’ always do that and the weather presenters are just now doing it too?

A Pyrrhic Victory at best. Once the “banks” do reopen, why would any sane investor (large, small, corporate) place their funds in them? It would be like playing Russian Roulette – with all chambers loaded.

Those banks will fail again. There’s no way it cannot happen. Then instead of haircuts, it will be entire heads that are taken.

(It always warms my heart when I see the police – as in Cyprus – beat down angry citizens in response to the justifiable rage. Then at least their true colours are shown – gang-busting thugs doing their master’s bidding.)

I don’t claim to be intimately familiar with all the details of the Cyprus bailout, but from what I know it seems that (after several false starts) they more or less got it right. Only the two big insolvent* banks were affected (the other banks and their depositors were unharmed); their stockholders and bondholders were wiped out; insured deposits were protected to the limit of the insurance (100,000 euros); deposits in excess of that limit took a partial loss; and to the extent depositors took losses they received equity in the bank, which gives them some hope of eventually recouping some of the loss. That’s generally how a bankruptcy works: equity holders get wiped out, secured creditors get paid to the extent of the security; unsecured creditors get pennies on the dollar and often receive some equity in the surviving institution.

The only thing unusual (here in comparison to the ordinary insolvency) is the existence of deposit insurance. That is issued by the government, and here the government honored its commitment but nothing more than that (i.e., it did not protect deposits over the insurance limit). That’s as it should be. Remember, depositors in a bank are creditors of that bank, nothing more. You may think that the bank is holding your money in its vault, to be withdrawn at any time, but you would be wrong.

There is lots to criticize in modern banking systems, but within those systems this event appears to have been handled properly.

* Yes, I know that the other banks are probably “insolvent” too by certain measures, but only those two were insolvent as regulators define it.

And now for the new kid on the block

http://www.bloomberg.com/news/2013-03-25/brics-nations-plan-new-bank-to-bypass-world-bank-imf.html

@Laird – The settlement bypassed a vote of the Cypriot government. It was imposed by diktat from an unelected governing body made up of IMF, EU, & ECB officials, the Troika. They stole depositor’s money calling it a haircut because a tax would require a vote. The people who capitalized the two largest banks, Laiki and Bank of Cyprus, as well as all those entities that were loaned money by the two banks including the government of Greece, were given a free ride at depositor’s expense.
Greece is broke, their economy in shambles, 25% unemployment or worse, people rummaging in trash cans for food, and their government is unable to pay even interest on their bonds without fresh injections from the ECB.
So the Troika simply stole 6-8 Billion Euros from bank accounts in Cyprus to help cover the losses in a last ditch effort to paper over the bankruptcy of Greece. Why not just brake into peoples houses and steal their possessions to cover it? NO DIFFERENCE.
Cyprus was a tax haven, a place where businesses and people trying to avoid the burden of socialist Europe could set up offshore shop or retire to.
http://www.taxhavens.biz/european_tax_havens/tax_haven_cyprus/
Now their economy is ruined, banks closed, capital waiting to flee, while Madame Lagarde of the IMF plans another raid on assets of the unsuspecting, most probably in Spain.
As to the Germans who have been pumping billions into a sink hole to prop up the Euro, their true and centuries old real character is once again asserting itself. This article from Spiegle Online
Bailout Insights: What Cyprus Tells Us about Germany’s Character is worth the read. The first few sentences tell the story behind the story of Cyprus.
The Cypriot government was willing to do anything to save its banking industry. Yet Berlin, driven by a deep-seated fear of tax havens, sought the opposite. The resulting deal may have driven a stake through the heart of the euro-zone’s much ballyhooed banking union.

I like this idea:

“… here is a possible opportunity for entrepreneurs: set up 100% reserve institutions that have no connection to the central bank. Don’t call them banks; call them trust companies.” …

http://www.lewrockwell.com/blog/lewrw/archives/134483.html

The Backwoods Home Trust?

The Living Freedom Trust?

The Freedomista Trust! ?

“As for the deposits under E-100,000… you’re welcome to them, the catch being that the banks aren’t open for business..” in the James Kunstler linked article is the closest I’ve seen to how this is affecting the common people.

Otherwise I have been wondering: If the banks are shut down, does this include the ATMs? If so, how are people getting by without cash? Does the gas station reject your debit card? If someone writes a check for their rent but the banks are shut down, does the check bounce or will it be honored “at some future point in time to be determined by the proper authorities” {the same authorities who will charge interest if the check for income/property taxes does not clear by the due date}?

Anyone know for certain?

oops, hit the Submit Comment button too soon. Not that it matters though.

Thank goodness I spent some of my youth reading Backwoods Home Magazine cover to cover. That which sunk in just might come in handy. I’ve applied a lot of that info already in my life, I thought at the time; the rest of it was never going to be needed. So much for that thought.

Old Printer, when a US bank fails (and there have been several hundred in the last 5 years) the government doesn’t “vote” on the liquidation mechanism; the regulators just do it, and sometimes there are losses for uninsured depositors. In Cyprus, Laiki Bank failed and its worthwhile assets were folded into Bank of Cyprus (which basically “failed”, too; this was essentially the combination of two failing banks into a single, somewhat better capitalized one). Shareholders and bondholders of both were wiped out; insured deposits were fully protected, and uninsured depositors took a significant loss. That’s precisely as it should be. The “haircut” taken by uninsured depositors wasn’t a “tax”, it was simply a loss on a loan that went bad (remember, deposits to banks are actually loans to that bank, not assets held in trust).

Whatever the politics behind this (and I certainly won’t dispute the Germans’ antipathy toward tax havens), the end result was correct. (Admittedly, the Cyprus government tried at first to do everything wrong but couldn’t get away with it, so they were essentially forced into doing the right thing). The only flaw in the whole thing was that somehow they apparently “forgot” to close foreign branches of those two banks and the Russian oligarchs managed to sneak some of their money out anyway. (Someone will undoubtedly pay the price for that.) Which only means that BofC is still undercapitalized and will probably require a future bailout (if not outright failure). I’d be taking my money out of that one as quickly as I could.

I don’t think we will see anything from the street view in the MSM. They really don’t want to many people to understand how this really affects the people, it could cause a run on banks you know. It is very much the same way that the problems in Greece hav disappeared of the MSM.

If I had bank holdings in any of the eurozone countries and especially Spain or Italy, I’d pull it out. Might have to send it to some other country not under their sway, or keep it buried in a chest in the back yard.

I find humor in the generic acceptance that “Russian oligarchs” who seem to have a lot of deposits exceeding the guarnteed amount are getting what they deserve. It is as if they are somehow villians while the European, English and American Oligarchs that are driving the banking debacles are somehow superior.

I have to take issue with this quote from a MSM source offered by Old Printer;
” Berlin, driven by a deep-seated fear of tax havens, sought the opposite. The resulting deal may have driven a stake through the heart of the euro-zone’s much ballyhooed banking union.” If I understand your position correctly, you are making a case that Germany is somehow evil for wanting to stop being bled dry by lesser nations of Southern Europe.

It is important to keep in mind that this entire Euro concept was a machination of the global elite whose aim is to centralize power. The people of the many European countries have had little say in how that central power does business. What these crooks have been doing is redistributing the wealth from powerful producer nations of Northern Europe and giving it to crappy little non-producers like the PIIGS. It is folly to put a powerhouse economy like Germany on a par with Greece or Spain. Germans throughout history have been disciplined and produce economies of tremendous value; automobiles, precision equipment, science and technology. By contrast, the low countries produce, grapes, olives and shoes. They are not equals!

The entire Euro scheme is a flawed premise that posits a goal of equality among such disparate nations and their economies. These lesser economies have been living far beyond their means and begging for the producer nations to carry them. It is bullshit. Furthermore, the notion that a central power in Brussels or the Hague should have the power to dictate every aspect of life, like regulate how the French will make cheese, is ludicrous nanny-statism.

There are a lot of globalists who have invested 30+ years in the Euro concept and it is a failure. What is happening now is evidence of it being in its death throws.

I have much sympathy for anyone who has had money stolen from a private bank account, but there are risks when dealing with an international banking cartel who will perpetually change the rules of play to suit their own profit motivations. Let the buyer beware, if you will. Don’t get in bed with criminals ie; banksters and provide for your own is the lesson. The Euro is going to die just like the crooked system throughout the rest of the developed world. Don’t try and blame it on people who work for a living. Blame it on the international elites who, in the insatiable greed, will destroy everything and everyone who opposes them.

This is all about power. Power that is being acquired by bunch of money changers and paper shufflers. They produce nothing of value and exist parasitically off the back of producers. Here in the U.S. we would do well to start cleaning our own house by booting out every single member of the congress and executive unless they vote to audit the Federal Reserve Banking Cartel! Until then, we deserve whatever happens to us…and make no mistake it is coming our way soon.

A, ‘from the ground view’ of the big bank heist:

So, What’s It Like To Have a Business in Cyprus Right Now?

… “I’m not Russian oligarch, but just European medium size IT business. Thousands of other companies around Cyprus have the same situation.

The business is definitely ruined, all Cypriot workers to be fired.” …

http://www.lewrockwell.com/blog/lewrw/archives/134665.html

There’s a screen shot of a bank account.
I could soo see that happening here someday not too far away from now.

A couple of things: First, Berlin is worried about hyper-inflation, something they had to deal with after the treaty of Versailles. Second, hyper-inflation seems to be the goal of every “Central Bank” on the planet. Our Beloved Leader and his team seem to think it’s a clever idea to pay off trillions in debt with inflated money (a trillion dollar coin? Really?). Inflation is also an invisible tax on the population that has to function under the dictates of a central bank.

But on to Cyprus, which until a few weeks ago, had two major industries. One being tourism, and the other, banking (there is a slight presence in shipping). Well, I think we can assume that they’re down to one, now. If Cyprus had problems before, what will happen with one of their major industries destroyed? Sure, some banks will survive, but who will keep their money there? In order to attract the big accounts Cyprus had some very liberal banking, and tax laws. After the crisis you could use your ATM but were limited to the amount of withdrawl. And your money, the bits and bytes that are floating around in digital purgatory have no tangible value; there’s no “actual” money, no “worth” other than what people like George Sorros assign to it. And you bet your bottom dollar (lol) that Mr. Sorros has his fingers on the pulse of the national banks in Spain, Italy, Ireland, Portugal… Oh, did I say, “finger on the pulse”? I meant to say, “Boot on the neck”. Pay attention to what’s happening in the EU! What we see happening in the Euro Zone is a preview for us. The National Socialists like OBL, Ms. Pelosi and Harry Reed are paving the way for our own horror show.

Although it doesn’t make much sense to have a large bank account anymore, few Americans are keeping much in the bank these days anyways. Why have a savings account when you get no interest and inflation shrinks what you have?

401k accounts, now there’s where the money is, at least in the US. Argentina nationalized all of their pension accounts, the government piously claiming that it was for the good of the people. Why not here as well?