Posted Apr 14, 2013 by Martin Armstrong
A new EU Directive provides that compulsory levies in Cyprus will be charged over the weekend. At a meeting of EU finance ministers in Dublin, Commissioner Michel Barnier confirmed that the the people are responsible for the bank they deal with. Depositors will risk their money after the Bank’s shareholders and creditors of banks.
It’s amazing and truly astonishing how the media portrays such a profound admission that decades ago would have sent a culture shock rippling around the world. The media is bought and paid for. This is becoming painfully obvious.
Politicians and banks are now saying such as Wolfgang Schäuble in Dublin that customers must inform themselves and should check the credit of a bank regularly!
The burden of banks trading with your money and being compelled to keep reserves in foreign government paper that is worthless at the end of the day, belongs to the average person. The politicians have convinced themselves it is YOUR fault, not theirs if a bank goes belly-up. They seem to think this is logical and the right thing to do as a “elected” representative of the people?
It is true that Whoever lends money to someone has the risk that they will go bankrupt. However, what is the purpose of huge government regulators? To just collect pensions? The politicians have bullshitted themselves to justify this position that it is YOUR responsibility to exercise the necessary caution! This applies to every credit in their mind. Cyprus, it should be pointed out, did not get in trouble from derivatives, wild speculation, but were DEFAULTED on by government bonds of Greece that were ONCE reserves! How is this the “risk” of the people? Politicians know NOTHING about the economy. The European Commission even came to us and we warned them they could not create a single currency without a single debt. They wanted the currency, but felt the PEOPLE would not vote for a debt consolidation. Thus, they sold a half-ass monetary system to the people KNOWING it was fatally designed all because they wanted POWER.
Anyone who has money in a bank at this point must seriously question the risk. Europe is a disaster. We are talking about SOVEREIGN DEBT DEFAULTS and that will wipe out more banks that MUST hold reserves in this crap. Japan is no better off with the JGBs looking like a zombie.
Massive runs on the banks in Europe will be inevitable. Smart investors will have no choice but to flee to the private assets and out of the troubled Eurozone area. How is the average person to judge the credit of a bank when they are out of control, routinely engage in manipulation and concealment as demonstrated by the LIBOR interest rate scandal? The ECB has been manipulating the government bonds. The whole derivatives bomb is completely opaque, because it can not be understood by the average person. There are also those derivatives that are OTC products which have no balance of funding but represents a billion-risk for the whole banking sector. Regulators are bought and paid for. The entire system is corrupt and rotten to the core. How is this the average person’s responsibility when politicians have lined their pockets and government was infiltrated by head of banks to deliberately open the flood gates so they can trade with other people’s money?
On top of that, the financial sector is so intertwined that even the misalignment of a single bank somewhere in the world is enough to bring the whole house of cards. The Great Depression started with the failure of Credit Anstalt created by the government in a failure that they tried to cover-up.
The 1931 Currency and Sovereign Debt Crisis was the kick in the stomach after being knocked down by an upper-cut from the Stock Market crash. On May 8th, 1931, the Austrian bank Credit Anstalt, which was a respected bank founded by the famed Rothschilds in 1855, had to report a $20 million loss on its 1930 accounts. The total asset base was about $250 million that was nearly half the entire national deposits in Austria. Its board of directors included Baron Louis de Rothschild, representatives from Germany’s M.M. Warburg & Co along with America’s Guaranty Trust Co as well as those from the Bank of England. Thus, the board reflected a well-respected group and illustrated how there was a growing internationalism at that time within the capital markets. This was also the age of the birth of transatlantic telephone calls and ocean liners that crossed the Atlantic that were connected by radio so one could trade their stocks from a ship. Thus, within these seeds of international capital markets, also lurked the global contagion. On May 11th, 1931, the Austrian government came up with a rescue plan borrowing funds and cutting a deal with the BIS (Bank of International Settlements). Thus, the same strategies employed today were in full motion back then as well.
The markets possess a collective instinct that may defy individual logic and reason. But this is the distinction between collective behavior and individual behavior. This instinctive knowledge appears to exist beyond the comprehension of government or the general press. Perhaps this is best expressed that sometimes the market goes down even on so called good news and the press will explain it as the market was disappointed for it was expecting even better results or some twist on that theme. Where simplistic cause and effect analysis simply lacks substance, is when we enter this world of international capital flows.
Credit Anstalt, like most banks today, made investments directly in private companies much as an investment bank does retaining shares in companies they take public. Goldman Sachs was famous for having board positions on numerous companies where they were involved in taking them public. When banks use deposit money for such investments, this naturally introduces some serious risk for they are using short-term deposits for long-term investments. This same crisis emerges when banks lend short-term deposits for long-term mortgages on real property. This creates a mismatch of maturities that can bring the entire house down. This is what we call a liquidity crisis when cash cannot be raised to meet short-term demands.
Nevertheless, the stage was set because previously during the first phase of the economic decline, the Austrian government took a stable bank such as the Credit Anstalt, and directed it to buy the second largest bank, its rival, the well-known Bodencreditanstalt. Like the shotgun weddings in 2008, this forced marriage also involved losses far greater than publicly admitted. In trying to prevent a crisis in confidence, governments always, and without exception, lie to the public. It is simply in their nature. What governmen6 will ever admit error there and then? I can find no evidence that such an event has ever taken place.
Behind the scenes, the Austrian government had been secretly injecting funds to compensate Credit Anstalt for the forced takeover. These funds were being arranged secretly in London with the approval of the Bank of England. Today, if an individual did this, he would be thrown in prison for 25 years calling it money laundering. Thus, the losses were far greater than publicly admitted and that now undermined the soundness of the largest bank in Austria whose deposits now accounted for nearly half that in the nation.
The seeds for a global contagion were there in the books of Credit Anstalt. About $75 million of its $250 million was foreign loans. This meant that if this bank failed, the ripple effect would go beyond the borders of Austria. There were urgent meetings in an attempt to put together a consortium between England, Germany and the United States. However, events were unfolding and politicians just never quite understand the economy domestically, no less internationally. They could not come to any terms in a timely manner.
I am sorry. I have tried so hard to get governments to just look at what they are doing. It is impossible. We just have to go into complete meltdown mode. This is why the need tanks and bullets. This is the destruction of all liberty.
They are moving to electronic money to transform us into a new economic state of total subjugation. They are hunting assets on a global scale and governments are calling behind the curtain for the abolition of cash, and the mandatory operation of electronic money. Cyprus is arresting people who try to leave the country with more than a €1000. These politicians have sold us out and we have no “fundamental rights” remaining.
What we have here is a Europe with an expropriation announcement. They are hunting anyone with money they label as “tax dodgers” and criminals just as Hitler did regarding people who have anything in the offshore areas around the world. The hide behind blaming the rich to create class warfare in hopes of diverting all blame from those in government.
This new found assumption that it is suddenly your personal responsibility is outrageous when we have to pay for huge governments that we were told were there to protect us. They are in bed with the bankers and the object is to enslave the people to pay for theor retirements. How should for a 75-year-old pensioner, who has for decades been a bank customer , today competently make whether this bank is at risk?
When there are great scandals involving billion dollar losses for big banks JPMorgan, Goldman Sachs, UBS and BNP Paribas, and they are always above the law, how is this the responsibility of depositors? They claim they are victims of rouge traders. That means that internal managers therefore do not know what is happening in their own institutions – but the small savers should make an expert risk assessment? How?
In the EU, there should be sheer panic when the public wakes up. Politicians are no longer hiding their solution which is M.F. Global/Cyprus. No more bailouts – it is bail-in. We are witnessing the final destruction of Western Civilization for when there is no CONFIDENCE in the system, then the system is not worth sustaining. This is a complete breakdown of socialism transformed into fascism. When will the people hold those in politics and banks with an equal share of the responsibility?
There is no escape for the Bank’s customers. How do we conduct business with no solid ground? The taxpayer is being fleeced, first by hire taxes for those to pass laws against the people, to protect the bankers. Where is the social benefit to society? The consequences will be incalculable. Not even the rich can retire to their estates in the middle of economic chaos.
This announced expropriation will proceed by the Cyprus model on a global scale. Buy shares and take delivery. Deal with small regional banks that are not engaged in proprietary trading. They still are risky for they will have exposure to the trading banks. Do not even count on deposit insurance. They are will review and pay one time per person so spreading it around to many banks will not increase the insurance. They have no intention of paying that one either.
The European expropriation will work perfectly in their mind. We are heading towards a lawless condition in Europe that will spread around the global until we throw the bastards out of office and elect people NEVER part of any political party. Jefferson – we need you now!