Bail-In Crisis

These politicians are lawyers – not economists. Lawyers are trained NOT so much in how to comply with the law, but how to avoid it. When Bill Clinton was under deposition he asked what was the definition of “is”. People laughed at that. But this is how a legal background works. It is word-smithing. You are not concerned with complying, but how do I not violate the law to escape on technicalities.

LEGALLY, when you deposit money in a bank, it is no longer yours. It is the bank’s under the law. You become a UNSECURED creditor. Say you lent me $100. I give you a piece of paper that says I have the $100 you gave me. It might even say I agree to pay you by a particular date and with interest. But unless I give you collateral, like you lent me money on my home and you hold the mortgage or have a lien, this is purely UNSECURED.

In bankruptcy, the SECURED creditors come first with UNSECURED being last. Therefore, the politicians being lawyers see no problem in a BAIL-IN because they are justifying this in their mind as you are an UNSECURED creditor legally and that means you get the crumbs that are left.


The politicians have abandoned all the benefits of the social-contract. The purpose of the regulators was to protect depositor money. They have legally justified they no longer need to do that under the law. However, that leads to the next conclusion, then do away with all the regulators since we are paying them for nothing, they sanctify the bankers anyway and they then give them not just get-out-of-jail-free cards, they do not ever prosecute them either – the UNTOUCHABLES.


This BAIL-IN first began in New York with the M.F. Global collapse and Judge Martin Glenn ignored the law and attributed the losses to the depositors rather than the bankers.  CFTC regulations said you could not take client’s money to satisfy the losses of the firm. He got away with that and so Cyprus was the next test. There have been no revolutions yet so they will keep going with this scheme until they destroy everything.

These people think they are acting legally since they see no “legal” obligation to provide society with any benefit for their taxes. The Supreme Court has stated so much in Harris v McRae, 448 US 297 (1980). A citizen cannot sue the government to force them to provide any service whatsoever for their tax dollars. The question presented was simple: Did the Due Process Clause create an affirmative funding obligation upon government. The answer was NO! Therefore, they can tax you to death, but there is no legal obligation to provide anything in return so they do not have to “bail-out” the banks again and they can legally take your money when their regulators are in the pockets of the bankers anyway. So you still lose. The Supreme Court said.

“To translate the limitation on governmental power implicit in the Due Process Clause into an affirmative funding obligation would require Congress to subsidize the medically necessary abortion of an indigent woman even if Congress had not enacted a Medicaid program to subsidize other medically necessary services. Nothing in the Due Process Clause supports such an extraordinary result.” Pp. 317-318.

If these people were economists rather than lawyers, they would see that you may be within your legal justification, but what you are doing is taxing people for overseeing and regulating society, but you then make society pay again. They cannot see if you get all the taxes and the risk, you have to be brain-dead to leave your money in a bank when there is no security and they let the bankers repeal Glass-Steagall so they can legally trade with your money anyway. They keep all profits and you get the losses. This is a great deal but I doubt it is for you.

In the end, you have to look for a custodian bank, not a commercial bank. You are better off buying stock but you take delivery of the share certificates and do not leave them with the broker. But that will cut you off from leverage – margin trading. So you have to pick between the two and decide how much to risk on leverage for if the firm goes bust you are in the M.F. Global situation. In the US, there will be no banking crisis until after 2015.75. But I would not wait for the last day.

In that atmosphere, we may then see the metals rise sharply after 2015.75. But keep in mind governments are trying to shut down gold investing as much as possible. India just imposed a 10% tax on gold. Be careful. We may see more of the same. We no longer live in a true free society of the people for the people. It is becoming them against us.