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Bernanke Fails to Answer Concerns about a Cyprus-Style Seizure of American Bank Deposits

George Washington's picture




 

The government of Cyprus wants to grab bank deposits, and the chief economist of the German Commerzbank has called for private savings accounts in Italy to be similarly plundered, and other nations may be moving in that direction as well.

The American government has seized private assets before, and President Obama authorized seizure of property again last year. (The Argentinian government grabbed 401k assets; and some in the American government have mulled the same thing. And the  U.S. government’s take-down of Megaupload was also an exercise of the power to seize all of the legal property held in a storage facility because a handful of crooks have illegal property in theirs.  )

Zero Hedge has been warning for years that Western governments – including the U.S. – would eventually seize bank assets.

Bernanke was asked yesterday whether a Cyprus-style grab of bank deposits is possible in the U.S. :

Question: I was wondering if you can tell me how if a run on the banks happens in Cyprus, how that might affect U.S. markets. And also is it possible for the U.S. to levy a tax on regular deposits here? Or why not?

 

Bernanke: As someone mentioned Cyprus is a tiny economy. I don’t think these issues as worrisome as they are and as concerned as we would be for the Cyprus people, I don’t think that they have a direct implications for the U.S. economy.

 

The only way that they would create a problem would be if the runs became contagious in some sense, if depositors in other countries lost confidence. But to this point I’m not aware of any evidence that that is in fact the case.

 

The argument the Europeans are making is that Cyprus is a unique situation, very different situation, and indeed, it is quite unusual to have a banking sector as large as they have relative to their economy.

 

In terms of the United States, the FDIC was founded in 1934, and we have insured deposits and they are very proud of the fact that no one has ever lost a dime in insured deposits.

 

And during the crisis the response of the government was in fact to increase the level of deposit or account sizes that were insured. So I consider that to be extremely unlikely in the United States.

Bernanke’s response is unsatisfactory for 2 reasons.

Initially, the FDIC only insures deposits up to $250,000. So deposits over that amount are unprotected.

Indeed, the FDIC has, in fact, come very close to being insolvent at various times.  See the following articles from the New York Times, American Banker, Bloomberg, Zero Hedge and Mish.

True, the Treasury Department would likely just bail out the FDIC if the FDIC really went belly up. But that would take a political act of will.  And so Bernanke should have said, “we will always make sure the FDIC has enough money”.

Second – and more important -  Bernanke failed to answer the question altogether.   The question was not about whether the government would save bank depositors from economic conditions caused by others.  The question was whether the government itself would grab deposits.

People didn’t think any European country would seize bank deposit assets.  But the EU demanded that the government of Cyprus seize private bank deposits.  The attempt of a government to seize  private property is undermining confidence in Europe … and many people worry that that contagion will spread.  That is what the question was about.

Bernanke entirely failed to answer the question which was actually asked … and has thereby caused a tsunami of distrust on the Internet.

In the same way that the Department of Justice’s wishy-washy assurances that it probably wouldn’t assassinate Americans on U.S. soil hasn’t reassured anyone, Bernanke shouldn’t have given a half-hearted reply.  He should have said:

The U.S. will never, ever seize any American’s bank deposits under any scenario whatsoever … without exception. We respect the rule of law as the basis for our economy, and we will never do anything which interferes with private property rights.

Bernanke’s failure to reassure couldn’t have come at a worse time.

British MP Nigel Farage just gave the following advice in response to the Cyprus bank deposit grab:

Get your money out while you still can.

The failure of American economic “leaders” to provide real reassurance regarding our bank deposits will just increase mistrust.

Indeed, more and more Americans realize that the government has bailed out the super-elite of the big banks,  and enabled their fraud … while  hosing the little guy again and again (and again). People see that we have socialism for the rich, but cut-throat, sink-or-swim capitalism for everyone else.   They see that we have a malignant synergism between D.C. politicians and giant companies. Look here, here, here.

Indeed, after Wall Street giants such as MF Global and JP Morgan got caught seizing segregated client funds – but were never prosecuted by the government – both amateur and sophisticated investors have lost trust in the American financial system and financial regulators.   (It has become obvious to all that the government is trying to cover up for the stunning crimes of the big banks.)

 

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Thu, 03/21/2013 - 23:02 | 3360530 Joe moneybags
Joe moneybags's picture

Excellent points, Steve.  It was the US Gov built the huge debt bomb, and even lit the fuse.  Then, they tasked Greenspan and Bernanke to head the Bomb Squad as a late counter-measure. If our government practiced reasonable tax and spending policies, we wouldn't know what the Federal Reserve is, or who runs it.

Thu, 03/21/2013 - 22:59 | 3360522 Seer
Seer's picture

Yes.  7+ billion humans + massive resource extraction = diminishing land of plenty for all

Imagine trying to impart this reality to people who have been totally programmed for mass consumption (in order to prop up TPTB).  Imagine unwinding the shareholders from the mass-production companies.  Really!  How would one propose to do this w/o causing an immediate and MASSIVE panic?

Things tend to move in fits and starts.  It's the slinky down the staircase.  Whether TPTB really have any control of this glidepath collapse I have no idea; and if they really ARE trying to manage this collapse glidepath knowing that the consequences for people in general could be far worse, then all I can say is God Speed.  Buckle up and "pray."

Thu, 03/21/2013 - 23:30 | 3360635 Toma Haja
Toma Haja's picture

"Whether TPTB really have any control of this glidepath collapse I have no idea; and if they really ARE trying to manage this collapse glidepath knowing that the consequences for people in general could be far worse, then all I can say is God Speed.  Buckle up and "pray.""

 

just took a peek at yahoo.com.  The first mention of Cyprus was after 85 articles of close to meaningless americana, starting with surprise, surprise, American Idol.  The collapse glidepath is being well managed.

 

God Speed Indeed

Fri, 03/22/2013 - 09:28 | 3361592 Bicycle Repairman
Bicycle Repairman's picture

"meaningless americana"

Thu, 03/21/2013 - 22:40 | 3360460 the grateful un...
the grateful unemployed's picture

the president is authorized to seize american bank accounts on american soil. ooops

Thu, 03/21/2013 - 22:46 | 3360484 Seer
Seer's picture

The US has been operating under a state of national emergency since 1979:

State of National Emergency in effect since November 1979

http://en.wikipedia.org/wiki/National_Emergencies_Act

Fri, 03/22/2013 - 01:45 | 3360871 Tall Tom
Tall Tom's picture

My bet is that the State of Emergency of the Iran Hostage crisis does not ever meet a resolution. Boy those poor "hostages" over in Iran.

Obama renewed it again on Sept.11, 2012. It has been renewed by every single Administration since Jimmy Carter's. Can you imagine that?

 

Once given Powers the Authorities will not ever rescind them willingly. This is evidential to that premise.

 

I was not aware of that. Thank you.

Thu, 03/21/2013 - 22:36 | 3360450 Ironmaan
Ironmaan's picture

It wouldn't have mattered if he had answered the question. Bernanke has a very long record of being wrong, starting with...

"There is no housing bubble". and "Gold is not money".

Fri, 03/22/2013 - 01:37 | 3360863 Tall Tom
Tall Tom's picture

He was only wrong because he was LYING THROUGH HIS TEETH. The Lie is what is wrong.

 

We hold Gold in reserves because of Tradtion??? That was classic.

Fri, 03/22/2013 - 11:34 | 3362269 DOT
DOT's picture

Benny tell the truth; "unlikely".

Thu, 03/21/2013 - 22:35 | 3360446 Lordflin
Lordflin's picture

Given all the covert and nefarious actions of a handful of low life psychopaths, some outright theft would be refreshing... Perhaps it will awaken some of our couch ridden countrymen from their slumber.

Fri, 03/22/2013 - 07:57 | 3361338 de3de8
de3de8's picture

My sentiments exactly.

Thu, 03/21/2013 - 22:24 | 3360408 ChanceIs
ChanceIs's picture

Hmmmmmm. Did I miss something? How could I possibly be the first one to the punchline on this? OK. I hope I am not repeating anybody else here:

"It's contained to subprime....er....ah Cyprus, bitchez."

Ben Shalom Bernanke 3/21/13

Thu, 03/21/2013 - 22:17 | 3360379 Joebloinvestor
Joebloinvestor's picture

What's better, catching him in an outright lie?

 

Fri, 03/22/2013 - 01:33 | 3360862 Tall Tom
Tall Tom's picture

It is more fun.

Thu, 03/21/2013 - 22:05 | 3360308 yabyum
yabyum's picture

The vast majority of US citizens don't have two dimes to rub together, much less the 250k limit. Unless Joe6p is affected Most American can not, and will not give a shit. Whats on the tube tonight? How's your bracket doin'.

Fri, 03/22/2013 - 01:32 | 3360861 Tall Tom
Tall Tom's picture

Isn't it nice not to be part of the vast majority of US Citizens? ;-)

Thu, 03/21/2013 - 22:24 | 3360409 The Heart
The Heart's picture

The fact is now apparent, it does effect people like this Joe.

http://www.adelaidenow.com.au/news/breaking-news/run-on-cyprus-atms/stor...

Imagine how this poor guy is feeling in is world that is fast moving into the IMF created riot-land.

Pray for these people in Cyprus who are showing the world what all should hope does not happen in a theater near you soon.

Shalom?

Thu, 03/21/2013 - 22:15 | 3360369 Seer
Seer's picture

The System has pretty much made it that joe6p is irrelevant.  The PROBLEM is that it's kind of hard to really keep a System together when it's alienated the majority of its people.  Given that non-participation in this silly game/system is the better approach I'd have to ask whether joe6p is really all that stupid: no worrying about having to protect "money" that one doesn't have; no worrying about how to "invest," especially in an environment in which there is absolutely no clear path leading to the future (except for those who understand the fundamental needs).

No, the ones that are REALLY fucked are the ones that sought to climb the ladder of this ponzi.  It is They that TPTB required to be on board.  And it is They who will make the biggest noises, eventually.

Thu, 03/21/2013 - 22:19 | 3360394 Divided States ...
Divided States of America's picture

Now I understand why they are pumping the stock markets...because in order to participate in the appreciation, you must have money in accounts which have to be placed in the hands of financial institutions...if you take the money out of the system and you dont invest it somewhere, you will be screwed from inflation. As long as there is money in the stock market, the banks wont fail...and as long as the markets dont fall much...then everything will be fine. However the issue in Cyprus may be the gamechanger that destroys this theory.

Thu, 03/21/2013 - 22:42 | 3360471 Seer
Seer's picture

Very good!

They kicked all the little people out of the markets and now they want to ensure that THEY have control over the capital because, THEY know what's right!

In some ways I can see this as being true (look around, are people really aware of how to push things in the future?).  But then I see this as really only the logical progression of a system that can no longer squeeze out growth, after it has always promoted growth, predicated ALL forecasts and planning according to growth.

I don't see joe6p as having a clue.  And, clearly, TPTB don't have one either.  That leaves it up to...

Fri, 03/22/2013 - 07:12 | 3361219 jughead
jughead's picture

That leaves it up to...

 

Ironman? 

Thu, 03/21/2013 - 22:13 | 3360355 suteibu
suteibu's picture

Yeah...well all of those small businesses hit with capital theft will certainly impact Joe whether he has two pennies in a bank or not.

Thu, 03/21/2013 - 22:03 | 3360307 zorba THE GREEK
zorba THE GREEK's picture

The 2 major events that people should be be paying attention to are MF global and Cyprus deposit

confiscations because they both have changed the basic rules. MF Global changed the rule that 

investments were safe, and Cyprus changed the rules that money in the bank was safe. The only

assets that are safe are cash and physical gold that are in your physical possession. And even then,

the value of your cash is subject to devaluation through inflation, so you know what that leaves. 

Get everything you have out of the system and start stacking.

Fri, 03/22/2013 - 07:07 | 3361209 jughead
jughead's picture

Physical gold is also subject to confiscation...so you best have a safe haven for it and your other  PMs.

Fri, 03/22/2013 - 11:18 | 3362182 12ToothAssassin
12ToothAssassin's picture

Some PMs can protect other PMs

Fri, 03/22/2013 - 03:06 | 3360948 Radical Marijuana
Radical Marijuana's picture

Yeah, zorba, I have been thinking the same thing about the comparison to MF Global and Cyprus!

The transnational banksters are collectively a group of trillionaire mass murderers, that already control most of the world's governments, and certainly at least NATO.

Asking whether the governments that those banksters effectively control would continue to rob people blind is barely a serious question. They were already doing that, at an exponentially growing rate for quite a while.

The only serious questions are to what degree are they going to change gears to start more genocidal wars, along with imposing martial law?

George Washington's series of articles tend to deliberately stay within what most mainstream people would have to admit were true social facts, IF they ever bothered to investigate those assertions.

However, anybody who rigorously takes the time to connect a lot more of the dots is forced to come to some other conclusions, namely, the events on 9/11/2001 were an inside job, false flag attack, and that those 9/11 events prepared the way not only for more genocidal wars, but also prepared the way for the paths that led to the financial crises in 2008, which were also inside jobs.

Recent events, such as MF Global in 2011, and now the potential events (as yet not yet confirmed), in Cyprus in 2013, were surely significant benchmarks.

HOWEVER, WHAT IS THAT BENCH?

What is happening is the attempt by the transnational banksters to consolidate a complete global hegemony over the ability to continue to make the world's fiat money out of nothing, while having an effective world government force everyone else to accept that runway triumphant financial fraud.

The transnational banksters got to be who they are, and where they are, today, by being the biggest gangsters for quite a while, surely, at least, as long ago as the creation of the Bank of England, and then, the Federal Reserve Board. The transnational banksters ARE who they ARE because of them being willing and able to apply the methods of organized crime to take over governments, and thereby direct those governments to do what those banksters wanted to be done.

The banksters have been on all sides of every significant war and revolution for quite a while. They apparently do not hesitate, when they deem it necessary, to mass murder people. After all, they almost always have gotten away with that, and ended up more wealthy and powerful afterwards.

Therefore, asking whether the banksters will continue to rob Americans blind is barely a worthwhile question to ask. The established systems are already doing that, and indeed, those frauds have become practically automated!

The only question that appears to be still an open issue is to what degree are the banksters going to go to mass murder Americans, by starting more genocidal wars, and/or imposing martial law.

The Anglo-American (Zionist) empire appears willing and able to go for broke to achieve their goals, such as were clearly laid out by Georgetown Professor and historian, Carroll Quigley, who commented on the creation of the central banks in his 1975 book, Tragedy And Hope, as follows:

"The powers of financial capitalism had (a) far reaching (plan), nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the system was to be the Bank For International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank ... sought to dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the Country, and to influence cooperative politicians by subsequent economic rewards in the business world."

THAT IS AN IMPORTANT STATEMENT!

It means that there is only very probable Tragedy, and no reasonable Hope. Since the overwhelming vast majority of North Americans act like Zombie Sheeple, there is no doubt that they will continue being fleeced, ... the only doubts are with respect to when they will start being mass murdered more, and then, how extreme those mass murders will become. Since technologies have become amplified trillions of times, there are no ways predict that!

Fri, 03/22/2013 - 05:46 | 3361136 StychoKiller
StychoKiller's picture

When I first started reading ZeroHedge, I came to the conclusion that I should be a little more paranoid; but when I read your comments, I realize that I'm not paranoid enough!

Fri, 03/22/2013 - 14:21 | 3363010 Radical Marijuana
Radical Marijuana's picture

http://carolynbaker.net/2013/03/18/maintaining-mental-health-in-the-age-of-madness-by-carolyn-baker

Maintaining Mental Health In The Age Of Madness

By Carolyn Baker, March 18th, 2013.

... Paul Levy, writes in his 2013 Dispelling Wetiko:

"A civilization usually doesn’t die from being invaded from the outside, but unless it creates culture which nourishes the evolution of the creative spirit, a civilization invariably commits suicide. As if possessed, our civilization is, trancelike, sleepwalking in a death march toward its own demise."

Being afraid of the Federal government of the USA is totally justified. Indeed, there is no other worse monster that I am aware of. After the international banksters were able to take back control over the USA, the enemies were within the gates, and actually at the top of the pyramid system.

America is an extremey diverse, and so paradoxical place, with what I believe is some of both the best and the worst of every kind of human being. ... The most paradoxical American achievement is that its Federal government has become the best at being the worst!

In that context, all resistance is assistance.

Thu, 03/21/2013 - 23:47 | 3360676 ebworthen
ebworthen's picture

Well said, and true.

Live and learn.

Fri, 03/22/2013 - 01:30 | 3360858 Tall Tom
Tall Tom's picture

Unfortunately your last statement is backwards. Learn then you will live.

 

Other than that it is just a reactionary survival.

 

I will rather be proactive in my approach.

Thu, 03/21/2013 - 20:34 | 3359971 bank guy in Brussels
bank guy in Brussels's picture

In the view of Jim Sinclair, what we all just witnessed - and what Bernanke himself sees - is the collapse of the global Ponzi scheme via the attempted seizure of Cypriot insured bank deposits

Sinclair believes Bernanke just saw all his own work - 'floating' the bad bank debts on printed money for as long as possible - all that blew up in smoke, via the stupid decision of the IMF and the EU Germans-Dutch etc.

The key illusion of keeping the whole money-printing Ponzi going, was keeping up the illusion the deposits were safe

Now that deposits are no longer safe, the End has begun, according to Sinclair ... He sees Bernanke as in despair, his several years of work suddenly aborted, Bernanke knowing the dollar will die soon, and just hoping it does not die in the several months he has left as Federal Reserve chairperson

If the money-printing Ponzi is ending, yes, that does mean that governments will just steal assets. Bernanke was never very good at lying, his voice shows it too much ... staying quiet was a better choice for him

Sinclair says this is why Bernanke signalled he is leaving the Fed

Sinclair says that is also why the police raided Lagarde's apartment over the excuse of some ancient years-old 'investigation', to show her she was being put down ... the banksters themselves are angry at the stupid Lagarde and stupid EU

Sinclair says last weekend with Cyprus was really Lehman Brothers Part 2, and the IMF and EU have really in many ways blown up the Western world

According to Sinclair, Bernanke saw now that his whole QE fix will crash and burn, because the banks won't be trusted now. So he is washing his hands of it, he will just serve out his time now ... the whole QE Ponzi depended on no one breaking the mystique the deposits were ok

Sinclair is not right about everything but he is pretty good

Fri, 03/22/2013 - 11:50 | 3362333 Sandy15
Sandy15's picture

You are so RIGHT!!!!

 

However I think one more point should be addressed.  Soros, who controls the politicians in Washington, is taking down Cyprus on purpose.  Germany quit doing what the rest of the countries are doing and that is printing and spending. Why do you think Germany wanted their gold back.  Not sure why it would take 7 years to return it to them, unless it doesn't exist.  Soros is trying to bribe Merkel into conforming to his destruction to reign in his NWO.  Cyprus is the perfect place to put the heat on Germany, but once Merkel acquiesces it still will collapse with the blame being put on Russia.

Soros will soon be 83, he wants his power before he's gone.  He wants a legacy larger than Hitler or Mao.

Plan, prepare......... get your money out of banks, get gold & silver, get food, get water, get gun and ammo.

Thu, 03/21/2013 - 22:42 | 3360472 Buck Johnson
Buck Johnson's picture

Your dead on, dead on.  He had to keep the illusion of banks will keep deposits safe until he left office and the game of printing reached it's final conclusion (implosion).  But with the EU and IMF doing what they did this weekend was extremely stupid.  I still say that this was it's intended purpose.  Germany is getting tired of using their money and future to bailout the rest of the EU, so I think they sugar coated this deal and and pushed it in order to have Cyprus be the spark that sinks the EU aka the euro instead of Germany.  Because I can't believe they couldn't or wouldn't have known this would happen.  No matter what deal is struck, people will  pull all their money out of the banks and the banks will still go under.

Bernanke knows that the only way that the US can buy a little more time (only a little) when the implosion comes is to take our 401k's and pension funds and pay us in depreciating dollars while inflation is rampant.  We will have our taxed down to our bank accounts, in fact I can see where if you take out more than 100 in cash you will be taxed 25%.  But they say you can spend it via check or debit card (so they can track your purchases and the money is still in the system).   And this as I said will only delay the inevitable of complete currency debasement and economic destruction because once the dollar isn't taken as a currency for trade, we won't be a reserve currency and then we will be contained financially like other countries.

It's coming people, it's coming.

Fri, 03/22/2013 - 07:25 | 3361254 max2205
max2205's picture

Ben almost lost it when 1 trillion was seconds away from a money market run in 2009.   16 trillion bank run will be impossible to stop.  Get your cash out asap

Thu, 03/21/2013 - 21:56 | 3360266 Seer
Seer's picture

I don't think that Bernanke (or any of the other top players) ever expected this to do anything other than draw things out.  I mean, it all could never just keep going, keep growing (with or without their adding fuel to the fire, as though they thought that this MIGHT act as a fire-break).

They all have had time to ask how they could make perpetual growth work.  No answers came through (because there is none- trick question, it's IMPOSSIBLE).  And the Russian, ever the pragmatists, are here to remind the world that the entire game is changing (though they too are only buying time- as their energy exports drop -can't push on a string- their revenues will drop, thereby creating internal unrest- welcome to hell).

Anyways, I'm in total agreement that it's all done.  Sinclair's analysis (thanks for providing some of it here) is spot-on.

Fri, 03/22/2013 - 01:18 | 3360608 rocker
rocker's picture

Not to worry, the To Big to Fails will be there again to take the public's money just as they enter the Ponzi Scom called the Stock Market. Wasn't it Rubin or somebody else who said when the FED exits it will make those in the know very rich again. History repeating itself again.

Fri, 03/22/2013 - 09:16 | 3361564 Bicycle Repairman
Bicycle Repairman's picture

Every time the FED moves the well connected get rich.  They have prior information regarding the move.  The bigger the move, the more money they get.  They get rich off of the other "players".  So you leave the game.  So the game starts to pursue you.

And all you are left with is outrunning your neighbor, because you cannot outrun the bear.

Thu, 03/21/2013 - 21:51 | 3360251 andrewp111
andrewp111's picture

I don't think Cyprus is Lehman 2. Bear Sterns 2, maybe.  But Bear led to Lehman. When Italy, Spain, or Portugal seizes deposits, now that will be Lehman II.

Fri, 03/22/2013 - 01:21 | 3360840 El Oregonian
El Oregonian's picture

No, it will be GAME, SET, MATCH!

Thu, 03/21/2013 - 22:10 | 3360343 Seer
Seer's picture

Do you think that the EU will survive Cyprus?

I'm thinking that Cyprus really represents all the pushed off pressures from those other countries.

Lehman wasn't a bank was it?  And, while it was big, it was centered in ONE country.  This Cyprus fuse is connected to MANY ban ks, in MANY countries (because of the EU).  Further, Lehman was "contained" because it fell under a pretty well-controlled central bank, one that was responsible to ONLY one set of politicians.  I think that folks here would pretty much be unanimous in their agreeing that the EU (and euro) was always pretty shaky, meaning the threshold for potential failure was much lower, much easier to hit/cross.  The Cyrus event will not be significant, but neither is the match at the lead end of the fuse.

Thu, 03/21/2013 - 23:17 | 3360590 rocker
rocker's picture

Andrew seems to have ate the bait. You are much wiser Seer. Did anybody notice the Bernanke's snicker when asked about the stock market highs. Afterall, that was his goal. To garnish the too big to fail banks and the overpriced large cap industrials with FED dollars. Let's face it, almost three years of outflows from stock market funds and now with three months of the public money coming back in, we have a picture that is most likely a Ponzi Scam confirmed by the Bernanke's snicker and a taxpayer's devaluated dollar. It is too real to be anything else. The FED has once again made another bubble. The Stock Markets highs. But, as the Bernanke has said, "Not in Nominal Valuation".  Compared to what, Mr B. 

Fri, 03/22/2013 - 02:21 | 3360928 Boris Alatovkrap
Boris Alatovkrap's picture

Bernanke is lie like festering sack of pond scum. Time is to drain swamp!

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