Liar, Liar Banking System On Fire! Watch As I Spit Fact That Burns Down The Sham Formerly Know As The EU Banking System

Reggie Middleton's picture



On Monday, 25 June 2012 I penned "No Capital Controls In The EMU? Liar Liar Pants On Fire". Let me excerpt the first paragraph so as to bring those who have not read it up to speed before we jump into current events...

I have outlined the upcoming EU bank runs up to two years in advance (see the many links below). Whenever one expects a bank run, the first things TPTB do is institute capital controls to stem said bank run - which of course makes the bank run that much more necessary to get your capital out - wash, rinse, repeat! Remember, by treaty, no country in the EMU may use capital controls without automatically being removed from the union. Well, do you believe that to be fact that will last? Yeah, I don't either. Simply watch as the money bleeds from the banks and the bumbletrons attempt to staunch the flow using mechanisms that will simply exacerbate the flow. Even more incredible is the fact that even to this date, with the existence of publications such as BoomBustBlog, entire nations as well as their financial advisors, leaders, regulators and politictians STILL DO NOT EVEN COMPREHEND the nature of the modern bank run. You cannot stem the tide with capital controls, you can only exacerbate it. 

Now, As Predicted Last Year, The French and the Greeks Are In A Race For The Biggest Bank Run!

 On Saturday, 23 July 2011 I penned "The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!" wherein I went through both the motive and the mechanism of a European bank run, focusing on Greece and France as impetus.

Okay, I'm writing this on 3/23/2013, referring to the events of yesterday. I apologize to my paying subscribers for being 9 months and a few miles/kilometers off, but as the more intellectually capacitive among you know, this stuff is not an exact science. Now, yesterday's headlines...

Cyprus passes laws for capital controls

Lawmakers in Cyprus passed legislation to impose capital controls on its banks and create a "solidarity fund" to pool state assets, according to media reports late Friday. The measures will help fulfill conditions for Cyprus to get a euro-zone bailout. With a Monday deadline, Cypriot lawmakers still need to vote on measures needed to restructure banks in Cyprus and possibly place levies on deposits.

I appeared on the Max Keiser show in London yesterday, and broke down the Cyprus issue as simply as could be done. In essence, "What is a bank???!!!"



In "The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!" I detailed for my readers and subscribers the mechanics of the modern day bank run, particular as I see (saw) it occurring in Europe.



You see, the problem with this bank holiday thing is that the real damaging bank run will not be staunced by the conventional bank holidays, et. al. because it is a counterparty run that will cause the damage, not depositors. TPTB in Europe don't have the chops to stem this one, at least not from what I've seen. As for how that institutional bank run thing works, we excerpt "The Fuel Behind Institutional “Runs on the Bank" Burns Through Europe, Lehman-Style": 

The modern central banking system has proven resilient enough to fortify banks against depositor runs, as was recently exemplified in the recent depositor runs on UK, Irish, Portuguese and Greek banks – most of which received relatively little fanfare. Where the risk truly lies in today’s fiat/fractional reserve banking system is the run on counterparties. Today’s global fractional reserve bank get’s more financing from institutional counterparties than any other source save its short term depositors. In cases of the perception of extreme risk, these counterparties are prone to pull funding are request overcollateralization for said funding. This is what precipitated the collapse of Bear Stearns and Lehman Brothers, the pulling of liquidity by skittish counterparties, and the excessive capital/collateralization calls by other counterparties. Keep in mind that as some counterparties and/or depositors pull liquidity, covenants are tripped that often demand additional capital/collateral/ liquidity be put up by the remaining counterparties, thus daisy-chaining into a modern day run on the bank!


Make no mistake - modern day bank runs are now caused by institutions!


And Yes!!! The fodder for bank rungs are ALL OVER THE EUROPEAN SPACE!!!!

Those that follow me know that I have been warning on Europe and its banking system years before the sell side and mainstream financial media (reference the Pan-European Sovereign Debt Crisis series). 



A reader has convinced me to consult with him on a specific situation, regarding overseas monies and the (lack of) safety of those funds, which prompted me to dig up the Sovereign Contagion Model that we developed in 2010. Long story short (if it's not already too late), my next extensive series of posts on this topic will likely spark bank runs throughout the periphery and the core of Europe, for much of the assets that depositors think are there are simply not, and I proffer ample proof for all to see. For the banks, it's too late to pull the evidence down from your various web sites, for I already have it safely stored and distributed. Keep in mind, once the fissures form in one section of the already weakeed EU, cracks widen in the other sections... 

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Sat, 03/23/2013 - 13:32 | 3365916 Wave-Tech
Wave-Tech's picture

The fraudulent system of Fractional Reserve Fiat is on the ropes.  Have a look here for a view of the CURRENCY-CLIFF from the perspective of the world’s reserve fiat.

Sat, 03/23/2013 - 12:33 | 3365670 Arthur
Arthur's picture

"covenants are tripped that often demand additional capital/collateral/ liquidity be put up by the remaining counterparties, thus daisy-chaining into a modern day run on the bank!"


Didn't WWI start along the same lines.  Too many interlocking treaties and what should have been a minor skirmish took all of Europe down.

It won't be pretty but there might be a nice opportunity to pick up some nice European assets post carnage.   -- Assuming there is not too much blow back in our direction.

Sat, 03/23/2013 - 12:19 | 3365622 EARLPEARL
EARLPEARL's picture

i will tell you how i lost money betting against banks...i lost my ass, one arm, both nuts and all my toes buying FAZ and i have a $24 dollar average in FAZ and its trading below 11....i am going to buy more monday..........

Sat, 03/23/2013 - 11:51 | 3365544 Careless Whisper
Careless Whisper's picture next extensive series of posts on this topic will likely spark bank runs throughout the periphery and the core of Europe, for much of the assets that depositors think are there are simply not, and I proffer ample proof for all to see. For the banks, it's too late to pull the evidence down from your various web sites, for I already have it safely stored and distributed.

May I suggest that you release the info forthwith, as the longer you wait, the likelihood of a Breitbart banana peel on a Brooklyn sidewalk increases exponentionally.

Sat, 03/23/2013 - 11:48 | 3365538 Bastiat
Bastiat's picture

Here's a little anecdote from 2008.  I had a position in a middle tier Canadian mining company.  They had a substantial cash position and had about $50M of it in some Coventree ABCP (asset backed commercial paper).  This paper had liquidity guarantees: ie. very large financial institutions were contracted to buy it if the market froze up.  When the market did freeze and Coventree went to tap the guarantees, they got three responses: 1)a promise to perform or 2) denial that a liquidity "event" had occured or 3) unanswered phone calls.   This was posted on their website at the time. Next step was a meeting at, or sponsored by the regulators or central bank which told guarantee holders to STFU and go home, basically.  I just googled Coventree and found this: no mention of the failure of the liquidity guarantors, of course. 

Now I'm not defending Coventree by any means: they packaged shit and sold it for shinola but with the ratings juiced by the "liquidity guarantees."  The guarantors, the TBTFs, skated when called. and the regulators protected them from their obligations.   Bankster motto for the end game:  slip out the back jack. 

Will you find peace on that island, Jamie?

Sat, 03/23/2013 - 12:48 | 3365735 dogbreath
dogbreath's picture



Did that ABCP ever get redeemed or was it a complete loss.  That story died without the followup as to weather the frozen assets became unfrozen.  

Sat, 03/23/2013 - 13:25 | 3365872 Bastiat
Bastiat's picture

As I recall they got something back--less than 100% for sure.

Sun, 03/24/2013 - 08:47 | 3367947 dogbreath
dogbreath's picture

are you a pgeo

Sat, 03/23/2013 - 11:06 | 3365457 Roandavid
Roandavid's picture


Sat, 03/23/2013 - 11:22 | 3365481 JOYFUL
JOYFUL's picture

staunced...(verb)USA -  to attempt to ameliorate the effects of a bleeding wound by opening another vein...thereby lessening the flow to the original wound. A theory of medicine espoused by economists with "Doctor[al]" degrees, fake resumes, and important connections.

Sat, 03/23/2013 - 11:02 | 3365454 Lordflin
Lordflin's picture

There was an age in which these parasites fed slowly, knowing there were limits to their feeding before they weakened and killed the host. But their offspring know no such limits and have bled the host nearly dry. They are now competing with each other for host blood causing one last massive feeding frenzy.

Sat, 03/23/2013 - 11:27 | 3365494 11b40
11b40's picture

Yep...a high frequency feeding frenzy.  It ends with blood in the streets.

Sat, 03/23/2013 - 10:59 | 3365449 Bingfa
Bingfa's picture

Reggie, you totally nailed this one.....Awesome.


Sat, 03/23/2013 - 10:39 | 3365415 Wakanda
Wakanda's picture

Rock on Reggie!

Sat, 03/23/2013 - 10:25 | 3365396 Downtoolong
Downtoolong's picture

The TBTF banks have known it all along. Now that the cat's out of the bag, they're starting to write reports about capital controls like they were the first to just discover it will happen, and front running accusations against them for hiding it. Soon we'll be hearing from them about how necessary and important capital controls are to stabilize economies and guarantee job growth. Their bullshit moral high ground tactics will never end until they have taken everything from everyone. 

Sat, 03/23/2013 - 12:16 | 3365614 hardcleareye
hardcleareye's picture

Reports justifing capital controls to stablize economies and the use of the Bank insurance funds (bail-in) to prop up a failing bank have already been written by the FDIC and BoE Dec 2012....

Sat, 03/23/2013 - 10:23 | 3365390 Seasmoke
Seasmoke's picture

I agree . Counterparty runs is the problem.

Sat, 03/23/2013 - 10:23 | 3365388 shovelhead
shovelhead's picture

I think you're wrong and future events will prove me to be correct in saying that Central Banks are ecumenical and without prejudice.

Eventually they will steal from any and everybody, including cannibalization of each other.

The fox only makes a distinction between the chicken he eats now and the chicken he eats later.

Sat, 03/23/2013 - 10:10 | 3365358 falak pema
falak pema's picture

RM could be wrong to extrapolate Cyrpus as "the catalyst". Cyprus is a one off Russian conduite to Eu gone sour big time.

Cyprus banks are bankrupt overtly. And Merkel is making an example of it for her own agenda in elections.

We are not there in Europe with ECB backstops provided to core banks...not yet, so bank runs in EUro zone  as spin off from Cyprus...

we'll soon find out as of Tuesday next! 

Sat, 03/23/2013 - 11:13 | 3365462 JOYFUL
JOYFUL's picture

Did you read the guy's piece before penning that particular brainstorm squire?

Catalyst? Cyprus?

The man's been all over this story two years before "Cyprus" ... the topic being...Bank runs in Euroland...he's set up his thesis of a bank run based on...

oh, never mind.

...the continentals here don't bother to actually read anything when their precious Eurozone experiment is examined. I'ts just gawk n squawk.

btw...luved your (previous) reference to the Russians losing out big time to an "EU portal"...kind of like stumbling over your feet and somehow missing the gaping cavern to hell!

Sat, 03/23/2013 - 11:42 | 3365484 falak pema
falak pema's picture

I followed his rationale on the Keiser interview and Cyprus is called the catalyst in his own words.

What he says about Euro banking is true. But that is dependent on ENSEMBLE of QE play dynamics. The Merkel Draghi put has an ominous ripple effect on all markets. Its not an isolated situation and the HFs drill holes in the hull of the Titanic at their own risk in US shadow banking, when they short the EU; as Ben makes clear very clearly as he opens those SWAP/POMO lines to ECB/Euro PDs wide.

Don't underestimate the matrix. If your read my other post you would note that unlike your conclusion I don't think that Russia is a stand alone nation with a stable model; its very fragile in its capitalist structure. As its opaque it cannot be examined like the western economies. 

To me the real contagion down the road is political and it will be in Italy and Spain. Its not the financial play in Cyprus which could be the trigger its the North South divide n the social suicide of southern labour.

Merkel has NO answer for that and that is where the tinder box lies.

Its the POLITICAL risk of Merkel austerity in Club Med.

Watch Italy...the wealth tax will be top subject for these two nations, along with Greece.

Sat, 03/23/2013 - 12:13 | 3365606 JOYFUL
JOYFUL's picture

...I don't think that Russia is a stand alone nation with a stable model; its very fragile in its capitalist structure. As its opaque it cannot be examined like the western economies...*

at last, we are in agreement!

Russia is not opaque to the western is not 'of the west'...

it suffered it's destruction at the hands of bolshevik khazarians directed and financed by Wall St weirdos, and has come back alive, wary but resilient...drawing upon the strength of it's traditons of orthodox faith and rejuvenatory renewal like the endless steppes' reborn grasses of each spring.

There is no understanding in the "west" ... neither of the pain, humiliation, and suffering of Ukrania, Moscovia, Belarus, and the rest, under the domination of the tax farmers\slavers of the foreign frankist\sabbatean freaks who put the torch to the Eastern Empire...and actualised the only true "holocaust(s)...

nor of the forthcoming chapter of their present descendants' fulfillment of the far-seeing plan of revenge and destruction...of the Europoid peoples and their civilization...Europa and Merika...always at pains to avoid learning from the \other brothers\ wisdom...

so it shall be.

*Apologies...mon frere...I can't watch the videos with my slender bandwidth...I did not realise his quote was as you said. Your round.

Sat, 03/23/2013 - 12:47 | 3365720 falak pema
falak pema's picture

your colourful fantasy of russian history and its commonality with the west, is as factual as the rest, including the recurrent and extravagent K chapter. Some people have obsessions with illusory blood lines that have never existed. Ideology lines yes, as expressed in orthodox religiosity. 

As of 1242 at Lake Peipus the Slavic kings of Novgorod defied and defeated the Teutonic horde in that seminal birth of Slavic nation. Since then the Slavs suffered Mongol humiliation, not of K variety. The K invasions of Hungary earlier on had very little influence on Slav culture amongst its elites, where feudal values were born, for God and country. No more so than past nomadic Hunnic culture on post Roman danube nations converted subsequently by Charlemagne to christian faith.

So the slav members of the euro family, having subsequently become the new home of orhtodoxy in Byzantine demise, always carried different colours to their Teutonic rivals; where Poland became the buffer nation for their recurrent cousin bashing over the centuries. 

Sorry for this rappel, but you keep blurbing on like Don Quixote looking for his Dulcine, in some forgotten corner of Mittel Europa; a latter day Blondel looking for emprisoned Richard. Villains who destroyed a western camelot; lol. 

Back to reality and what Cyprus does is not what counts, but what Eu does to undo the north south divide is relevant question on continent; if anything, in this 12 th hour, before the house of cards implodes here, there or anywhere. 

Sat, 03/23/2013 - 13:36 | 3365940 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Love your work. Anyone who reads history knows we've been here so many times before it's just tiresome. Doesn't change until armies hit the dirt. Nowadays instead of troops nations send their currencies out to attach to transactions in the real economy. Can't blame the Europeans for overstretching to include some dodgy islands and other southerly lands.

Sat, 03/23/2013 - 13:32 | 3365919 disabledvet
disabledvet's picture

his name was MARSHAL Zhukov. and it's called "the euro group." this stuff all got it's start with this guy: the Iraq war stands out because of how openly unilateral it was...and stated to be so interestingly. only Vietnam...and the Revolutionary War of course....stands out in this regard. this will not be the case "this time around." the 'nam Vets are in da house.

Sat, 03/23/2013 - 13:13 | 3365828 JOYFUL
JOYFUL's picture

"illusory blood lines" huh?

Ok, that's it...I'm through playing around wit ya.

I put this lil jewel up in a previous posting sent your direction...which you conveniently chose not to consider...

the merits of..,

that's a big NONNON in 'scholarship' squire...

so as of now, every gonna see big Khazarian letters in front of your eyes...flashing neon sign Ks...til you take off the blinkers and welcome the light of truth!

Sat, 03/23/2013 - 13:13 | 3365826 JOYFUL
JOYFUL's picture

"illusory blood lines" huh?

Ok, that's it...I'm through playing around wit ya.

I put this lil jewel up in a previous posting sent your direction...which you conveniently chose not to consider...

the merits of..,

that's a big NONNON in 'scholarship' squire...

so as of now, every gonna see big Khazarian letters in front of your eyes...flashing neon sign Ks...til you take off the blinkers and welcome the light of truth!

Sat, 03/23/2013 - 10:07 | 3365353 illyia
illyia's picture

Damn great stuff Reggie. One criticism. Spell check before posting please.  ;o)

Sat, 03/23/2013 - 10:25 | 3365395 Doña K
Doña K's picture

Raw  data are fine. Things change so fast, Reggie needs a break. No time for checking.

Sat, 03/23/2013 - 10:03 | 3365342 machineh
machineh's picture

'My next extensive series of posts on this topic will likely spark bank runs throughout the periphery and the core of Europe.'

ONE MAN holds all of Europe hostage.

Don't do it, Reggie! Think of the children ...

Sat, 03/23/2013 - 10:23 | 3365387 Doña K
Doña K's picture

Rumors of bank runs is a crime at least in the US. Even if Reggie claims making an analysis, or a guess, .gov may go after him real bad.

Nonetheless bring it on. I am getting out early on both sides of the Atlantic, half way there. 

Sat, 03/23/2013 - 09:53 | 3365315 post turtle saver
post turtle saver's picture

Increase employment by hiring people to start your car in the morning - CLASSIC!

Sat, 03/23/2013 - 09:30 | 3365272 psyops
psyops's picture

The NationalSocialist German EU just did a summary execution of a small Eurozone country, on a brutal show of force to the rest of the South.They delivered an ultimatum to Cyprus, only choice being the means to kill itself and its economy.  From now on Southerner Untermenschen are to sumbit or be subjected to immediate famine and misery of their entire population. This is so 1941...
Cyprus was an EU major banking hub of the eastern Med. In a "normal" EU, its banking sector would have been safeguarded as an EU asset. In the racist, NationalSocialist 4rth Reich that is the "EU" now, it was seen as an opportunity for another final solution against one more repulsive, dark-skinned, usurious mediterranean tribe, that needed to be scapegoated and then killed off, the banking spoils being siphoned to Germany, Luxemburg, Switzerland and other german speaking safe heavens. Good God, Luxemburg has a banking sector of 26 times GDP, its a good thing they speak german! The morality arguement (moneylaundring , Russians) was just Goebbelist propaganda to instigate the racist ensticts of the German electorate and win Führer Merkel her elections.  This thing is economically irrational. It was politically and racially motivated. It is the beginning of the use of political terrorism and collective punishment against entire countries of Southern European Untermenschen, that would break them into submission to debt serfdom to their German Übermenschen overlords. The sooner the Southern Europeans get what Cyprus is about, the sooner this neocollonialist, postdemocratic, neofascist EU farce could end.

Sat, 03/23/2013 - 12:14 | 3365603 taraxias
taraxias's picture

Great post.

Sat, 03/23/2013 - 09:19 | 3365255 Scro
Scro's picture

Bringing down the house. Way to expose those fiat flinging mofo's.

Sat, 03/23/2013 - 09:24 | 3365242 JOYFUL
JOYFUL's picture


Of all the people on earth who need apologize for anything in regards to the forthcomin apocalyptic collision between 'the peeple' vs 'usury banking,' Mr Reggie Middleton is the least likely party.

I am now fully convinced of two things:

a) my remaining bank-stored assets(purposely kept outside the Euro-merikan gulag zone and in non-fiat form)are currently being help hostage by the subsidiary of a certain Italian banking conglomeration. Like the tios in Cyprus...I cannot cash out...but at least I've had my final illusions dispelled. I'm ready for Freddie (Kruger)

b) At the precise moment Sir Reginald announces here who the lucky winner is of his "failing bank domino" sweepstake is, we will see the end of the whole farce...the END> the man has not, indeed never has, overstated his case.

One guy holding the match. It's like having a ringside seat to the end of days.  Reg...hold that apology. But light that match. Just do it.!

p.s. I'm going with Credit Agricole...if I win, I want: one last chance to see Jamiraquoi live at Montreux before the whole thing blows! (what a concert-what a way to got out!)

Sat, 03/23/2013 - 10:05 | 3365347 illyia
illyia's picture

Your link is broken (video removed) but thanks for the Jamiraquoi music. Excellent.

Sat, 03/23/2013 - 10:59 | 3365448 JOYFUL
JOYFUL's picture

Sorry bout that...could be country-specific...I brought it up fresh and it was working here. Maybe the Euro-merikan gulag gnomes are also cracking down on music as well as moolah...too much rhythm and you set off the fence sensors!

btw...Reg...I know that you want to pad the subscriber list before the big me on this...

you wait till Monday and you're likely have a canoeing accident while in the 'hot tub' .... no delay bud...PULL IT now.

Sat, 03/23/2013 - 12:35 | 3365682 Bingfa
Bingfa's picture

Pretty soon everybody's gonna let it rip.....

just need some cover first...


Sat, 03/23/2013 - 12:47 | 3365728 DoChenRollingBearing
DoChenRollingBearing's picture

Respected and beloved ZH-er Mr Lennon Hendrix has a nicely crafted piece on likely bank runs coming soon:

Where the hell has that guy been?


Sat, 03/23/2013 - 09:11 | 3365236 spinone
spinone's picture

Don't fly in any small planes, Reggie.  Keep up the good work.

Sat, 03/23/2013 - 09:57 | 3365314 Popo
Popo's picture

Nah. Reggie may be absolutely correct from an accounting perspective, but he's making he same mistake many of us made in 2008/2009: he's betting against the house. (I just about lost my shirt shorting banks. Should I have made money? Yes. It looked like a safe bet. Did I? Oh hell no.)

The rule is: There are no rules when it comes to the banking system. The referees will change the rules to suit the home team every time. They will lie, cheat, steal, change laws, bribe politicians, confiscate property, fail to prosecute criminals, and generally make up crazy shit in order to see to it that the banks win and the people lose.

Reggie is applying logic where logic doesn't matter.


Sat, 03/23/2013 - 13:11 | 3365813 mind_imminst
mind_imminst's picture

Right on Popo. Reggie better watch out trying to profit from a Euro Bank run. The FED will print. The house will win (nominally-speaking of course). It doesn't matter if the notional of derivatives is $500 trillion. What do numbers matter to the FED? All they do is type another zero, or two, or three. Bingo. Bank run solved. The FED had no qualms bailing out international banks back in 2008/2009 with newly printed money (Remember Dexia - bailed out several times over). What makes anyone think - especially Reggie - that the FED will just sit back and watch a bank run take down "the system". There is no amount of "liquidity" the FED will not provide. Get used to using the term quadrillion.

Sat, 03/23/2013 - 13:35 | 3365936 disabledvet
disabledvet's picture


Sat, 03/23/2013 - 12:50 | 3365743 cocoablini
cocoablini's picture

Financial system is just an accounting scheme. There is no "money" with inherent value except for physical assets. The money is basically valued in assets. Homes, gold, cars and stuff. Real currency is a small part of the overall reserve , and the banks have been attempting to privitize all money creation and valuation. They have removed government as the issuer of money. Now banks and the Davos douchers can make fake assets and fake money using derivatives.
But if your model is a ponzi the system has no capacity to deflate. All mathematical and game rules assume inflation of money supply. The system is desperately trying a ponzi reboot but its like mad cow disease. Parts are dying and you do not even see it.
Of course the banks change the rules- the game is run by private financeers not the rule of law. The governments,cb's, are all part of the virtuous circlejerk of morale hazard and begger thy neighbor

Sat, 03/23/2013 - 13:38 | 3365950 disabledvet
disabledvet's picture

"either the euro craters or we take out another country." sound about right? spot on comment btw...

Sat, 03/23/2013 - 10:43 | 3365405 algol_dog
algol_dog's picture

What? How'd you lose money shorting the banks? When did you start shorting? april '09. Shit ... Citi went to $1.00. 

Sat, 03/23/2013 - 13:38 | 3365955 disabledvet
disabledvet's picture

put options on GE weren't bad either...

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