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Guest Post: Whose Insured Deposits Will Be Plundered Next?

Tyler Durden's picture





 

Submitted by John Aziz of Azizonomics blog,

283756588_ad5af0208e_o

According to Zero Hedge, it could be Spain:

 Spain, it would appear, has changed constitutional rules to enable a so-called ‘moderate’ levy on deposits.

New legislation in New Zealand suggests that depositor funds could be used to bail out banks there, too.

Far more worrying for American and British depositors though is this paragraph Golem XIV brings up from a joint Bank of England and FDIC paper from 2012 which points to the possibility of using deposit insurance funds to bail out illiquid banks:

The U.K. has also given consideration to the recapitalization process in a scenario in which a G-SIFI’s liabilities do not include much debt issuance at the holding company or parent bank level but instead comprise insured retail deposits held in the operating subsidiaries. Under such a scenario, deposit guarantee schemes may be required to contribute to the recapitalization of the firm, as they may do under the Banking Act in the use of other resolution tools. The proposed RRD also permits such an approach because it allows deposit guarantee scheme funds to be used to support the use of resolution tools, including bail-in, provided that the amount contributed does not exceed what the deposit guarantee scheme would have as a claimant in liquidation if it had made a payout to the insured depositors.

Of course, if deposit insurance money is used as a resolution tool to bail out a bank which then goes on to fail anyway (as we have already seen multiple times since 2008 — a bank receives a large liquidity injection, and goes onto fail anyway) depositors could end up moneyless.

As Golem XIV notes:

The new system makes the Deposit Guarantee fund available for use as bail out money.

The rationale is that if using your deposit guarantee fund for propping up the bank ‘saves’ the bank from collapse then you wouldn’t need that deposit guarantee would you? This overlooks the one lesson we have all learned from the bank bail outs of the last 5 years, that the bail outs are never, ever, ever, a one off. The first one fails to save the bank as does the second and third and and and.

So if I have read the above correctly – the new system raids the Deposit Protection scheme, gives it to the bank instead of you  and when that fails to save the bank…then what? The bank fails again and there is no money left in the Deposit Guarantee scheme.

Now, in the case of this kind of scenario actually happening, it seems probable that governments and central banks would try to replenish the deposit insurance fund. Whether the fund would be replenished to its full extent, or whether insured depositors would suffer an effective haircut remains to be seen.

These kinds of policy suggestions coming from governments and central banks are extremely worrying for depositors, because it implies that what is happening to Cypriot depositors and Cypriot banks could be forced onto British and American depositors. In a worst-case-scenario, criminally minded bankers (of which there seem to be many) could even use this provision to intentionally run off with deposits.

We know that the TBTF banking sector (or G-SIFI’s — global systemically important financial institutions — as they are now known) remains fragile, over-connected and dependent on insider advantages. That means that over the next few years, it remains possible that there could be another severe banking crisis in Britain or America or both.

Just what in the world do financial regulators think they are doing even implying that depositor guarantee funds could be used to bail out banks under such an eventuality? Such a recommendation — and the attendant possibility of insured depositor haircuts — could severely impact confidence in the banking sector, just as it has done in Cyprus. The possibility that insurance money may go down the toilet to bail out illiquid banks will make some uneasy to invest their money in the banks. If a severe banking crisis looms, it could lead to bank runs, just as is happening in Cyprus. The trend, if events in Cyprus and Europe continue to escalate, and if other jurisdictions do not take steps to protect depositors from banker greed, is toward depositors losing faith in the banking system, and seeking other stores of purchasing power — mattress stuffing, bitcoin, tangibles.

Essentially, if there is to be any confidence in the banking system, the possibility of depleting liquidity insurance funds to bail out banks needs to be taken off the table completely. The possibility of insured depositor haircuts needs to be taken off the table completely. If banks need bailing out, the money must not come from insured depositors, or funds designed to compensate insured depositors. If banks fail, the losers should be the uninsured creditors.

 


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Thu, 03/21/2013 - 18:19 | Link to Comment AlaricBalth
AlaricBalth's picture

My deposits are insured by 2 Mako sharks and a Moray eel.

Thu, 03/21/2013 - 18:20 | Link to Comment fonestar
fonestar's picture

Who's next?

Probably anyone except me because I am a dumb little sheep who lives in a bubble and nothing bad ever happens around here.

Thu, 03/21/2013 - 18:29 | Link to Comment Careless Whisper
Careless Whisper's picture

What's all the worry about? Sheila Bair said "We can not run out of money."   Shift P 

http://www.youtube.com/watch?v=7BxiEJcOoo0#t=2m01s

 

Thu, 03/21/2013 - 18:34 | Link to Comment Texas Ginslinger
Texas Ginslinger's picture

I didn't see the words 'wealthy tax dodgers' anywhere in Aziz's text.

He does understand that Cyprus is an offshore tax haven, right..??

To me it looks like the folks in control are sending a message to tax dodgers everwhere...

Maybe that doesn't fit into his storyline..??

Thu, 03/21/2013 - 18:40 | Link to Comment kaiserhoff
kaiserhoff's picture

This looks to me like a random walk, or the classic drunk's path home...

but a raid on Monaco would scare the shit out of a few people.

Thu, 03/21/2013 - 18:55 | Link to Comment NotApplicable
NotApplicable's picture

Insured deposits? LOL

Friday Humor came a day early this week, I see.

Thu, 03/21/2013 - 19:04 | Link to Comment kaiserhoff
kaiserhoff's picture

Next they'll do the Mafia thingy, and sell you insurance from themselves.

Layers upon layers of madness.

 

Thu, 03/21/2013 - 19:34 | Link to Comment negative rates
negative rates's picture

Has anyone been over to talk to the CEO of Atena yet? They just had a watergate moment of lost liquidy.

Thu, 03/21/2013 - 19:04 | Link to Comment Mr. Fix
Mr. Fix's picture

Maybe people will now notice that absolutely nothing has been fixed.

 It's amazing how many folks have no idea what's coming.

Thu, 03/21/2013 - 18:52 | Link to Comment DosZap
DosZap's picture

I didn't see the words 'wealthy tax dodgers' anywhere in Aziz's text.

Texas, problem is as usual they LIE.

If it were really about Rooskie Mob $$, then they should have left the Cypriots alone, and the Ex-Pats, as there are plenty of NON Rooskie deposits that they were going to LOOT.

Thu, 03/21/2013 - 21:30 | Link to Comment Imminent Crucible
Imminent Crucible's picture

Only about 30% of the money in Cypriot banks belongs to foreign depositors. The majority of the depositor haircut was going to be stolen from ordinary Cypriots who were told their deposits were 100% safe--a day before the Euro Central Beast ordered the banks locked down and raided.

Now they have a problem. Once you say the unspeakable, you can't un-say it. How can they ever re-open those banks? They will simply implode as depositors--ALL depositors--rush to get out every last farthing.

I can still hear President Zedillo: "The peso will not be devalued. The Banco de Mexico remains committed to a strong peso. I assure you, the peso will not be devalued."  And he didn't--until after midnight.  So, when the FDIC and the ABA say "Don't worry, your money is absolutely safe because we have around $30 billion in the insurance fund to cover your $9 trillion in savings", that's when I get worried. Especially since deposit insurance doesn't cover taxes or other depredations of government.

"All your savings are belong to us."

Thu, 03/21/2013 - 19:12 | Link to Comment SWCroaker
SWCroaker's picture

You do understand that lobbing a grenade into a crowd because you suspect an axe murder is hiding in it is morally wrong and reprehensible?  If you have issues with where some money came from, or the legality of particular account holder, then by all means enforce the laws extant in that land and pursue them through legal means.   To harm the baker and candlestick maker to get at the thief raises questions about the sanity of those in charge, as well as discussions about which the masses would be better off without: thieves, or their government dick-wads.

It is the same issue for those fools who promote the concept of "tax the rich".   To their pea brains, rich --> evil & guilty --> deserving of a good ass raping.   While that may be true of some rich, perhaps even many, to use it as a single discriminator for dishing out moral justice is ludicrous in the extreme.   Such un-evolved grunting proto-humans shouldn't be allowed to operate heavy machinery, vote, drink, or in any way participate in determining anyone's fate.

Here, let me give you a working example:

A) dick-wad journalists, talking heads, guest experts and blog posters who support the raping of all Cypriot deposit holders, because some Cypriot deposit holders might be Russian mafia, should be repeatedly ass raped, and have the punishment shown via streaming video to the world at large.

B) dick-wad journalists, talking heads, guest experts and blog posters should be repeatedly ass raped, and have the punishment shown via streaming video to the world at large.

Do you see that it is okay to vent your spleen and cry for justice with option A, because those being punished actually deserve it?    Do you see that option B is not okay, because it has absolutely nothing to do with justice, but just indicates a proclivity for ass raping?

Humans are supposed to give a shit about morality.       Step up!

Fri, 03/22/2013 - 03:19 | Link to Comment The Heart
The Heart's picture

"then by all means enforce the laws extant in that land and pursue them through legal means."

Exactomundo.

Sarkozy Faces Charges In Corruption Probe?

http://news.sky.com/story/1068144/sarkozy-faces-charges-in-corruption-probe

 

Thu, 03/21/2013 - 19:23 | Link to Comment nmewn
nmewn's picture

"To me it looks like the folks in control are sending a message to tax dodgers everwhere..."

Tell ya what..."when the folks in control" quit partying on the peoples dime like drunken socialists and get serious about WHAT THEY HAVE DONE, I'll give ear to their pleadings of a tax dodger behind every blade of grass.

So far, no go...and I'm fifty three now.

Thu, 03/21/2013 - 18:43 | Link to Comment SafelyGraze
SafelyGraze's picture

it's all about saving for retirement

http://postimg.org/image/jff4xapup/

(may be slow to load)

Thu, 03/21/2013 - 21:46 | Link to Comment prains
prains's picture

The kiwi's will sacrifice their goats on thr alter before this ever happens

Thu, 03/21/2013 - 18:38 | Link to Comment Stoploss
Stoploss's picture

 "If banks fail, the losers should be the uninsured creditors."

 

There's a word for that...  Hmmm.. Right on the tip of my tongue...

Oh, got it, it's called....

 

 

RISK

Thu, 03/21/2013 - 19:06 | Link to Comment disabledvet
disabledvet's picture

Good luck. "socialized losses" is the way for now...and maybe a long time actually. Who's next? Spain is already doing this. I'd say "good luck trying this shot in Italy" but after they sold their soul to the euro and had all their gold carted off to Frankfurt (talk about a war crime. And yes Maria B I'll be the best sex you ever had...and you to me as well) it was "euro or die." Round up the usual suspects if you want to who really is behind this shit. It's really not that hard. And no...Merkel is not one of them.

Thu, 03/21/2013 - 18:47 | Link to Comment savagegoose
savagegoose's picture

what is this guarantee they all talk about? is it ok to just add a %10 fee t savers when t comes time to claim on a bank default? isnt that what this is about, ? the bank has defaulted, and now the savers want to claim their $100k ea back. and they say no you pay %10 to get it back, even though its guaranteed, and there was no mention of a claim fee before, but here it is now. pay up or get nothing.

So i ask how much will we pay here to get our guaranteed deposits out ?

Thu, 03/21/2013 - 18:57 | Link to Comment AlaricBalth
AlaricBalth's picture

But wouldn't that be like extortion? Not to worry. There are laws against that. {sarc}

Thu, 03/21/2013 - 19:37 | Link to Comment negative rates
negative rates's picture

A dollar gets a dime, the math is working fine so far, a quick reversal, a magic hat, and poof, 10% of a rabbit.

Thu, 03/21/2013 - 19:15 | Link to Comment Dr. Engali
Dr. Engali's picture

Do your fricken sharks have fricken lasers on their fricken foreheads?

Thu, 03/21/2013 - 22:41 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

Whose insured deposits will be plundered next?

Answer: Everyone"s 

Thu, 03/21/2013 - 18:18 | Link to Comment Hongcha
Hongcha's picture

Stirrings, eh?

I'll get stirrings in my cameltoe for the day I see the technokrats cattle-prodded down the street with bells around their necks.

Thu, 03/21/2013 - 18:38 | Link to Comment spankthebernank
spankthebernank's picture

That's hot...

Thu, 03/21/2013 - 21:33 | Link to Comment Imminent Crucible
Imminent Crucible's picture

CATTLE PRODS? Count me in!!

Thu, 03/21/2013 - 18:18 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

Lets hope humanity wont get fooled again with this debt money shit..........

Thu, 03/21/2013 - 18:21 | Link to Comment t_kAyk
t_kAyk's picture

Well hope in one hand and shit in the other... 

Thu, 03/21/2013 - 18:24 | Link to Comment fonestar
fonestar's picture

2 cups of high fructose corn syrup, some opiate-like trance inducing programming, boobs, cushions & credit cards...

ya, they'll get fooled again..

Thu, 03/21/2013 - 18:55 | Link to Comment kito
kito's picture

leave boobs out of this.................

Thu, 03/21/2013 - 20:59 | Link to Comment YC2
YC2's picture

Seriously, don't pretend you're above boobs

Fri, 03/22/2013 - 00:50 | Link to Comment StychoKiller
StychoKiller's picture

I'm always up for a bust in the mouth! :>D

Thu, 03/21/2013 - 18:26 | Link to Comment Dr. Engali
Dr. Engali's picture

Good luck with that idea. The bankers are always out there lurking. They may have their set backs every once in a while like Lincoln and his greenbacks, but the cockroaches always seem to squirm their way back in.

Thu, 03/21/2013 - 18:19 | Link to Comment localsavage
localsavage's picture

God forbid that an insurance company take a hit.  

Thu, 03/21/2013 - 18:41 | Link to Comment Solon the Destroyer
Solon the Destroyer's picture

Deposit insurance is nothing more than a fraud. I'm surprised at Aziz's take on this, as he's supposedly an Austrian.

Here's Mish's take on the Deposit Insurance scam:

http://globaleconomicanalysis.blogspot.ca/2013/03/fraudulent-guarantees-fictional-reserve.html

Thu, 03/21/2013 - 18:56 | Link to Comment Aziz
Aziz's picture

If you're explicitly promised something, i.e.deposit insurance, and that promise is revoked because your government are a bunch of thieving, lying bastards, then that is a problem.

In my ideal world, we wouldn't have deposit insurance, but we don't live in an ideal world, we are promised deposit insurance, and this is a way for the banks to suck money out of the taxpayer.

Thu, 03/21/2013 - 21:39 | Link to Comment Imminent Crucible
Imminent Crucible's picture

Got to agree, Mr. Aziz. However.....when "Government becomes destructive of these ends, it is the right of the people to alter or abolish it and to institute new Government....when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such government [insert photo of Homeland Security Manatee here], and to provide new Guards for their future security."

Thu, 03/21/2013 - 19:15 | Link to Comment GCT
GCT's picture

Go check your accounts all if you do have any cash in them as the FDIC only insures non interest bearing accounts!! 

Thu, 03/21/2013 - 19:53 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Eh wrong

http://www.fdic.gov/deposit/deposits/insured/basics.html

What does FDIC deposit insurance cover?
FDIC insurance covers all types of deposits received at an insured bank, including deposits in a checking account, negotiable order of withdrawal (NOW) account, savings account, money market deposit account (MMDA), time deposit such as a certificate of deposit (CD), or an official item issued by a bank (such as a cashier's check or money order).

FDIC insurance covers depositors’ accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the insured bank’s closing, up to the insurance limit.

The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if these investments are purchased at an insured bank.

The FDIC does not insure safe deposit boxes or their contents.

The FDIC does not insure U.S. Treasury bills, bonds or notes, but these investments are backed by the full faith and credit of the United States government.

What it doesn't cover for interesting bearing accounts and an interesting question in and of itself is credit union accounts those are insured seperately by the NCUA

https://en.wikipedia.org/wiki/National_Credit_Union_Administration

http://www.ncua.gov/Pages/default.aspx

The $64 question is if they pull this gambit here can they and will they also go after the credit union accounts at the same time. It is no brainer they will do it with FDIC insured accounts because those banks are the ones most likely to fail due to risky derivatives exposure.

Thu, 03/21/2013 - 19:28 | Link to Comment defencev
defencev's picture

Deposit insurance is nothing more than a fraud. I'm surprised at Aziz's take on this, as he's supposedly an Austrian.

Azizoid is not Austrian: he is an ignorant fraud. The libertarian viewpoint is clear: there should not be any government insurance scheme because it gives cover to bankers who should not be really in the business. For those who do not understand the situation in

New Zealand I want to clarify: there is no government insurance scheme in New Zealand (the same is true in Switzerland). The deposits were temporarily covered by deposit insurance scheme during 2008-2011. I keep a substantial amount of money in one of the New Zealand banks but I do not lose my sleep because my deposits are not government insured. The customers suppose to do a homework and choose a reliable bank if they do not want to keep their cash in the matress (and, yes, in NZ you still can get some interest on your deposits plus the currency is doing exceptionally well and economy is improving). The current proposal is to use, if necessary, some of the deposits to cover the possible failure of the bank. It is just one of the possible options and I actually welcome it. It has certain advantages: in case if your bank fail you can lose some of your deposits but you still will have uninterrupted control of the remaining funds. More importantly, if bank A fails, deposits from bank B will not be used to bail bank A out.

Thu, 03/21/2013 - 18:19 | Link to Comment Hongcha
Hongcha's picture

Stirrings, eh?

I'll get stirrings in my cameltoe the day I see banksters cattle-prodded naked down main street with bells around their necks.

Thu, 03/21/2013 - 20:40 | Link to Comment peter4805
peter4805's picture

Please, tell me more about this cameltoe of which you speak.

Thu, 03/21/2013 - 18:20 | Link to Comment lolmao500
lolmao500's picture

Silly conspiracy theorists!

Don't worry, the banks have CDS as insurance! If they go bankrupt or there's a run on the bank, they can always fund themselves with CDS!

Thu, 03/21/2013 - 18:23 | Link to Comment AlaricBalth
AlaricBalth's picture

Counterparty protection! What could possibly go wrong?

Thu, 03/21/2013 - 18:42 | Link to Comment kaiserhoff
kaiserhoff's picture

Wunderbar.  Zo, all I half to do ist zehn times over, insurance makin, und den go bauch floppin?

katzenjammer kraut.  can only be translated by the very drunk and/or degererate.

Thu, 03/21/2013 - 18:26 | Link to Comment nonclaim
nonclaim's picture

"... they can always fund themselves with CDS!"

And don't forget all defaulted bonds (canceled debt) can be booked as profit!

Thu, 03/21/2013 - 18:21 | Link to Comment Ourrulersknowbest
Ourrulersknowbest's picture

Why thank you banker fuckster,I would like to give you my money....
How much do I pay you to mind it for me?.....
Do I have lube,?you ask.......
Moooon river..............

Thu, 03/21/2013 - 18:24 | Link to Comment surf0766
surf0766's picture

All your money are belong to us !

Thu, 03/21/2013 - 18:39 | Link to Comment willwork4food
willwork4food's picture

That used to be funny about 3000 posts ago.

Thu, 03/21/2013 - 18:43 | Link to Comment SheepDog-One
SheepDog-One's picture

Come on! Jeez lighten up Francis!

Thu, 03/21/2013 - 18:25 | Link to Comment King Dong
King Dong's picture

There is a palpable fear now that I've not seen before. The unthinkable is now thinkable and the thinkable almost reality. At the very least this will fuck confidence in every facet of the economic society

Thu, 03/21/2013 - 18:26 | Link to Comment ziggy59
ziggy59's picture

They aint tapping a country whose savings are backed by Pb

Thu, 03/21/2013 - 18:28 | Link to Comment tony bonn
tony bonn's picture

insolvent or unviable banks should be plowed under.....insuring incompetence and criminality breeds more incompetence and criminality to the point where we are a nazi state....

for every dollar of bailout i would demand - a death sentence - not hyperbole - a banker's head.

Thu, 03/21/2013 - 19:08 | Link to Comment toady
toady's picture

I demand ... A SHRUBBERY!

Thu, 03/21/2013 - 22:09 | Link to Comment Cathartes Aura
Thu, 03/21/2013 - 18:30 | Link to Comment Quinvarius
Quinvarius's picture

They are just going to find a way to steal everything.  It is pretty obvious the system is in full on crisis mode again.  Don't wait for the news on CNBC.  The whole place reeks of panic.

Thu, 03/21/2013 - 18:55 | Link to Comment ziggy59
ziggy59's picture

Correct... It will be history as will be your money will be, when reported on crap, nothing but crap...

Get your news from ZH!

Thu, 03/21/2013 - 18:34 | Link to Comment SheepDog-One
SheepDog-One's picture

AH now I see....the key is the Maniacal Monetizing banksters have to promise us they won't rob us anymore, in effect they need a new 'Pirates Pact of Honesty' with the public, then the free moneez flows like manna from heaven and all is well once again for the elites.

 

Thu, 03/21/2013 - 19:15 | Link to Comment Strider52
Strider52's picture

Butch Cassidy criticizes E. H. Harriman's expensive efforts to eliminate their menace once and for all:

A set-up like that costs more than we ever took...That crazy Harriman. That's bad business. How long do you think I'd stay in operation if every time I pulled a job, it cost me money? If he'd just pay me what he's spending to make me stop robbin' him, I'd stop robbin' him. (Screaming out the door at E. H. Harriman.) Probably inherited every penny you got!

Thu, 03/21/2013 - 18:30 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Let me make my shocked face. Notice my facial expression didn't change after reading this article.

Thu, 03/21/2013 - 18:31 | Link to Comment frenchie
frenchie's picture

Golem... sounds scary... imaginary creature supposed to protect jews in Prague during the middle ages...

Thu, 03/21/2013 - 18:43 | Link to Comment defender
defender's picture

I thought of that too.  What makes it more disturbing is that the golem was supposed to crush the life out of the enemies of the jews.  From the material being discussed, that could be the proposition here.

Fri, 03/22/2013 - 06:38 | Link to Comment Henry Hub
Henry Hub's picture

Is that like Golem Sachs?

Thu, 03/21/2013 - 22:37 | Link to Comment Cathartes Aura
Cathartes Aura's picture

.

Thu, 03/21/2013 - 18:32 | Link to Comment toady
toady's picture

Just a bit too obvious. They need to manipulate shit behind closed doors, not out in the open where everyone can see.

It's like masterbaiting in public.

Thu, 03/21/2013 - 18:32 | Link to Comment gwar5
gwar5's picture

Everything denominated in fiat currency is on the table. All the Cyprus depositor theft did was take the mask off how how the banking system really works. It's their monopoly and their money.

Thu, 03/21/2013 - 18:40 | Link to Comment SheepDog-One
SheepDog-One's picture

That's why I make sure to take as much 'moneez' I can and turn it into metal coins which are not their moneez and stash it out of their grasping little pirate fingers.

Thu, 03/21/2013 - 18:35 | Link to Comment chubbar
chubbar's picture

The cartel has to move quickly now. That is why within 48 hrs we've seen no less than 4 countries make noise about confiscation. This will continue until it is either accepted or forcibly put down. IMO.

Thu, 03/21/2013 - 18:37 | Link to Comment SheepDog-One
SheepDog-One's picture

And just right when everything was declared so fixed.

Thu, 03/21/2013 - 18:38 | Link to Comment chubbar
chubbar's picture

Btw, one of the great albums! Who's next!

Thu, 03/21/2013 - 18:36 | Link to Comment GrinandBearit
GrinandBearit's picture

Cyprus was the test experiment to gauge the reaction of the sheeple. 

Who's next?  Probably one of the larger EU countries... Spain, Italy, Greece or France.  After that, the USA won't be that far behind.

  

Thu, 03/21/2013 - 18:37 | Link to Comment Truther
Truther's picture

Fuck you Berney....

Thu, 03/21/2013 - 18:39 | Link to Comment ebworthen
ebworthen's picture

And this is why Bernanke dodged two direct questions yesterday about the fairness of confiscating depositor savings.

He condoned the ECB actions in Cyprus, and only said that it was "highly unlikely" such actions would be needed in the U.S.

And we all know how "highly unlikely" bank, insurer, and corporation bailouts were in 2007.

We also know how "hilghly unlikely" subjugation of bondholders was in 2007 as well.

Are you paying attention people?  The FED WILL STEAL YOUR SAVINGS.

Thu, 03/21/2013 - 18:42 | Link to Comment SheepDog-One
SheepDog-One's picture

They've already been 'Cyprusing' americans for a long time thru currency debasement and 0% savings rate, same deal, just different pirate ship.

Thu, 03/21/2013 - 19:06 | Link to Comment ebworthen
ebworthen's picture

Very true, though most sheeple don't understand how that is working against them.

99% of sheeple will understand when every $100 in their bank account = $90.

Similar to the "WTF!?!?" moment first paycheck this January after it was said taxes would only go up on the rich.

Imagine millions looking at their bank balances after a FED levy:

Checking Balance $2,500
U.S.  Financial Stability Levy -$250
________________________________
Remaining Balance $2,250

"Thank you for your contribution to ensuring the security of your remaining deposits and the U.S. Financial System.  Banks will remain closed this week and will re-open next Monday with $250 per day withdrawal limits."

An entirely new kind of awakening will occur, albeit too late.

Thu, 03/21/2013 - 20:59 | Link to Comment new game
new game's picture

not to belabor the point, but after 5000 plus posts on this obvious needless risk subject, comeon, I ask one silly question: who the fuck would let 100,000 or more sit in a bank acct any f'g where?

Gold bought in 9,990 dollar increments stored properly and no risk(unless your a dumb fuck) to loosing it.

how the fuck hard can that be?

a bank is like a rubber, use it to pay bills and keep a minumum, and throw it away when it is done.

endless discussion about these fucking banks is down right getting stupid...

time to go...

Thu, 03/21/2013 - 23:04 | Link to Comment ebworthen
ebworthen's picture

You are correct.

Answer being the millions upon millions of baby-boomers who still believe that moral adults are in charge of the nation.

They still believe what the nightly news tells them, they still believe what their "investment adviser" tells them, they still believe that the U.S.A. is the land of the free. 

Their blinders are on, it is too painful to suffer the cognitive dissonance of seeing reality. 

It is easier to live off of what they have left believing in the past, rather than realize that they have let the country die on the vine.

Five or ten years of believing and dying seeing an illusory future or 5-10 years of fighting the death of the nation?

Easier to go softly into that good night.

Thu, 03/21/2013 - 18:44 | Link to Comment q99x2
q99x2's picture

In God we trust. Well I do. I participated in the mass prayer back in January. One thing about God I've noticed is that God works in mysterious ways. He gives meaning to the phrase: patience is a virtue. Doesn't seem to care for giving it all away at once. But I've noticed things shuffling about in such and such a way that it looks like it may be easier this time to implement the Constitution of the United States of America than it was the first time. I've had hair brained ideas myself in the past but gave them up when I knew they would interfere with my way of living. One being going to work to make a living for example. The oligarchs have been sitting pretty for many a year now I imagine nearly since the big WWII. Seems to me the ones on the top will turn on the ones below them faster than it would take Obama to say, "trust me." Therefore with the right foundation which I believe is being provided by God (things being positioned just right) such that when the dominoes start to topple we're going to see a ton of banksters and crooked politicians locked up and a new energy source unveiled. Along with that there'll be an opening up of democratizing technologies that will allow the world to develop into a harmonious, synthetic synchronicity of future possibilities. I may be wrong and yes it may take a wake-up call but the cretin elite I mean the real ones haven't had to get a shirt dirty in nearly 3/4 of a century and I don't think they are any to fond of the idea. Patience and you'll see what God has in store.

Thu, 03/21/2013 - 19:04 | Link to Comment Black Markets
Black Markets's picture

What a load of old shit.

The world doesn't change until someone leads a revolution and occupies the executive office until the government collapses under popular pressure.

See Egypt. You need to win popular support and then you need the military to seize the country and transfer power to the rebellion.

This will never happen in the US as everyone is too chicken shit.

The US population hasn't seen a riot in 25 years. What a bunch of pussys.

Thu, 03/21/2013 - 18:44 | Link to Comment UncleFurker
UncleFurker's picture

 

Pretty sure NZ banks don't have any depositor insurance, so a Cartman "and it's gone" episode could happen at any moment.

 

 

Thu, 03/21/2013 - 22:18 | Link to Comment MonsterBox
MonsterBox's picture

as Jon Conzine/MFGlobal demonstrated in the non-cartoon world

Thu, 03/21/2013 - 18:45 | Link to Comment Sun and Moon
Sun and Moon's picture

I agree that bank shareholders, government insurance pools, and uninsured depositors should be wiped out before taking any money from insured accounts. But what everyone should realize is that deposit insurance is worth very little when bank assets are several times larger than a country's GDP. Even if a government is allowed to print currency, it will never be able to make good if bank losses approach the size of the country's GDP.

Thu, 03/21/2013 - 18:51 | Link to Comment IridiumRebel
IridiumRebel's picture

So if your bank is "Mark to Eat-a-Dick" you should worry....

Thu, 03/21/2013 - 19:05 | Link to Comment Dr. Engali
Dr. Engali's picture

And you don't even want to think about it when it's marked to "Eat -A-Bag-of-Dicks" like here in the U.S.

Thu, 03/21/2013 - 21:04 | Link to Comment slightlyskeptical
slightlyskeptical's picture

ECB I believe is on the hook for these guarantees. Thus they keep trying to get someone else to pay. I would enforce ECB payment and then just stop answering the phone.

Thu, 03/21/2013 - 18:49 | Link to Comment defender
defender's picture

     The possibility of insured depositor haircuts needs to be taken off the table completely.

This is starting from the wrong end of the stick.  We don't need to take depositor insurance off of the table, we need to require insolvent banks to close before it gets to that point.  Unfortunately, that would require regulators that are interested in keeping the country in running order, rather than making a quick buck.

Thu, 03/21/2013 - 18:49 | Link to Comment Mr Nice Guy
Mr Nice Guy's picture

Well, if it'll help some government or bank get back onto a sound financial footing, then I say they're welcome to mine. After all, what good are all my millions with my poor mother halfway starving to death and living in a cardboard box under a bridge not two miles from here.

Thu, 03/21/2013 - 18:49 | Link to Comment swabeyjw
swabeyjw's picture

Banks? Spineless governments! System worked fine in global expansion. It is time for a monetary reorg.

Thu, 03/21/2013 - 18:52 | Link to Comment Meat Hammer
Meat Hammer's picture

Where is LongSoupLine when you need him?

Thu, 03/21/2013 - 18:58 | Link to Comment IridiumRebel
IridiumRebel's picture

I've been asking that all week! Maybe he is incarcerated...

Thu, 03/21/2013 - 19:05 | Link to Comment Meat Hammer
Meat Hammer's picture

LOL....I hope not.  If he is, he'll have an epic f-bomb laden tirade to unleash when he gets out.  

Thu, 03/21/2013 - 18:54 | Link to Comment little buddy bu...
little buddy buys the dips's picture

we don't need no steenking banks

Thu, 03/21/2013 - 18:57 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

You got to love the golem XIV source article title.

http://www.golemxiv.co.uk/2013/03/plunderball-the-new-euro-banking-game/

Plunderball – The new Euro banking game

Bawahahahah

Coming soon to an American bank near you.......

Thu, 03/21/2013 - 19:00 | Link to Comment JR
JR's picture

It’s time for all Europeans to act, to take the first step away from the failed European currency unit, the ECU, and bank tyranny.

As for Cyprus, the obvious steps, according to Stephen Lendman, “include exiting the Eurozone, regaining sovereignty, shutting or nationalizing insolvent banks, and forcing debt holders to take a haircut.”

Tiny Cyprus, representing only 0.2% of Europe’s economy, is “entrapped under Eurozone straight jacket rule.” Why? It and dissimilar countries in Europe have surrendered monetary and fiscal control whereby they could combat recessions. They “can’t devalue their currencies to make exports more competitive. They can't print money freely. They can't spend, spend, spend,” says Lendman.

The euro system was perpetrated upon Europeans under fraudulent measures (as was the Fed) and was predicted to fail as early as 1995 by Bernard Connolly, considered the foremost European economic, monetary, and political integration expert.

Said Connolly in his book, The Rotten Heart of Europe: The Dirty War for Europe's Money," the ERM and the EMU (European Monetary Union, the mechanism which ultimately brought the Euro into technical existence) are not only inefficient but also undemocratic: a danger not only to our wealth but to our freedom and ultimately, our peace."

Europe’s Exchange Rate Mechanism (ERM) was introduced in 1979, a part of the EMU “intended to propel the continent to one European currency unit (ECU).”

Connolly was right. Here, according to Lendman, are today’s results of the euro system that was “fraudulently reengineered to look workable”:

"Europe is banker occupied territory. So is America. Finance is a new mode of warfare. Banking giants run things.

Economies are strip-mined for profit. Communities are laid waste. Ordinary people are impoverished. They're marginalized and left out.

“Corrupt governments go along. Bankers control them. They're more powerful than standing armies. They inflict greater damage. John McMurtry describes a money sequencing cancer system.

“Banker controlled money power is hugely destructive. It assures disproportionate private enrichment. Co-existence with democracy is impossible.

“Bankers hold nations hostage. They turn crises into catastrophes. They create mass impoverishment, high unemployment, neo-serfdom, and human misery.”

As for Cyprus: “Depression conditions exist. Economic output is shrinking. Its banks are troubled. Its solution is grand theft… At issue is agreeing to troika terms (the EU, ECB and IMF). Debt peonage comes with strings. It reflects financial terrorism.”

Says Lendman, expect this IMF terrorism to “include mass layoffs, wage, benefit and social spending cuts, other tax increases on working households, and selling state assets at fire sale prices.

“Bail out bankers matters most. So does protecting large investors. Eurocrats are adamant. They want ordinary people bearing the burden… “

Regarding this force-fed terrorism: “What harms Europe hits America. Contagion spreads. Debt peonage, banker occupation, and austerity undermine every debt-entrapped country.”

http://rense.com/general95/grandw.html

Thu, 03/21/2013 - 19:16 | Link to Comment GraveyardSpiral
GraveyardSpiral's picture

Mine Are Protected By an Unusually Large, and hungry, Snapping Turtle!

Thu, 03/21/2013 - 19:20 | Link to Comment Seasmoke
Seasmoke's picture

It's not a loss, until you make a withdrawal.

Thu, 03/21/2013 - 19:20 | Link to Comment Joe moneybags
Joe moneybags's picture

The good news is that the supposed safety of bank deposits is now out in the open.  It's better that we debate our way through this now, than waiting for the next financial crisis to be raging around us.  We owe Cyprus a "thanks" for the wake up call.

Thu, 03/21/2013 - 19:26 | Link to Comment bunnyswanson
Thu, 03/21/2013 - 19:25 | Link to Comment Black Markets
Black Markets's picture

Go after the fucking bond holders first.

The bank should fold before they risk 1c of deposit money.

Thu, 03/21/2013 - 19:29 | Link to Comment Mac1492
Mac1492's picture

http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

 

Are we headed towards the implementation of an updated version of the chigco plan? the plan was first developed in the 30s and last year was reexamined  by a bunch of blow hards at the imf.  the thing about global think tanks and the elites are they seem to  love to lay out their plans in plain sight like agenda 21 etc...

 

Here is an excerpt from the pdf file. The whole thing is worth a read

 

 

This paper revisits the Chicago Plan, a proposal for fundamental monetary reform that

was put forward by many leading U.S. economists at the height of the Great Depression.

Fisher (1936), in his brilliant summary of the Chicago Plan, claimed that it had four

major advantages, ranging from greater macroeconomic stability to much lower debt levels

throughout the economy. In this paper we are able to rigorously evaluate his claims, by

applying the recommendations of the Chicago Plan to a state-of-the-art monetary DSGE

model that contains a fully microfounded and carefully calibrated model of the current

U.S. ?nancial system. The critical feature of this model is that the economy’s money

supply is created by banks, through debt, rather than being created debt-free by the

government.

Our analytical and simulation results fully validate Fisher’s (1936) claims. The Chicago

Plan could signi?cantly reduce business cycle volatility caused by rapid changes in banks’

attitudes towards credit risk, it would eliminate bank runs, and it would lead to an

instantaneous and large reduction in the levels of both government and private debt. It

would accomplish the latter by making government-issued money, which represents equity

in the commonwealth rather than debt, the central liquid asset of the economy, while

banks concentrate on their strength, the extension of credit to investment projects that

require monitoring and risk management expertise

 

Thu, 03/21/2013 - 20:05 | Link to Comment JR
JR's picture

Interesting that John Maynard Keynes, before his death, seemed to repudiate his doctrine to artificially drive down interest rates, but who knows if he was really having second thoughts about The General Theory since he said so many different things to people and changed his mind so often.

John H. Williams recounted this conversation with Keynes “a few months before his death” in 1946:

"He complained that the easy money policy was being pushed too far, both in England and here, and emphasized interest as an element of income, and its basic importance in the structure and functioning of private capitalism. He was amused by my reminder that it was time to write another book because the all-out easy money policy was being preached in his name, and replied that he did think he ought to keep one jump ahead.” – John H. Williams, American Economic Review (May 1948)

Thu, 03/21/2013 - 20:42 | Link to Comment slightlyskeptical
slightlyskeptical's picture

+1 since that's the limit

Damn. I have been advocating the Chicago plan all along and this is the first i have heard of it in an official capacity.

What say Dr. Krugman on the Chicago plan? Too painful for your bankster buddies?

Thu, 03/21/2013 - 19:57 | Link to Comment Jena
Jena's picture

It could happen right now and much of the country wouldn't notice.

 

IT'S MARCH MADNESS!

Thu, 03/21/2013 - 19:58 | Link to Comment hardcleareye
hardcleareye's picture

Sorry for the cut and paste but this is relevant An OP-ED Piece by  the vice chairman of the Federal Deposit Insurance Corp.

http://www.fdic.gov/news/letters/safetynet.html

  Banking Safety Net Makes Wall Street Dangerous

By Thomas M. Hoenig
American Banker – Online, January 17, 2013

Given calls for breaking up the largest banks and placing the nonbank broker-dealer activities in separate companies to successfully compete without public support, it is fair to ask, "Will they remain too big to fail?"

The short answer is no. Structured correctly and without a government backstop, the market would demand stronger capital and safer asset growth. This in turn would enhance the ability to place them into bankruptcy instead of the arms of the taxpayer, should they run into trouble.

To achieve this result, however, we must return the safety net – deposit insurance and Federal Reserve credit – to the purpose for which it was intended and economically justified, and we must reform parts of the shadow banking system to end its reliance on the same government support.

The safety net was designed to safeguard the retail consumer and to assist solvent commercial banks in meeting the liquidity demands so essential to the functioning of our national payments and clearing system. While the safety net meets these goals, it also creates the well-recognized moral hazard problem in banking: creditors worry less about getting their money back, so they pay less attention to a financial firm's condition and capital levels and they have less to lose should it fail. This results in a subsidy for insured banks in the form of reduced capital cost and funding advantages.

This moral hazard problem intensifies not only as firms become larger but as the scope of protected activities expands. The more activities that are brought within the subsidy of the safety net of commercial banks, the more incentive and ability management has to leverage the firm and gamble for higher returns. Subsidizing noncore banking activities such as underwriting, proprietary trading, market making, and derivatives encourages firms to bring these business lines onto their balance sheets using more debt, most of which is very short term. The effect is to make the financial system increasingly fragile, and it becomes proportionately more difficult to allow these firms to fail. Thus, while these activities are crucial to the success of a market economy, there is no rationale for the public to subsidize them.

For decades the principle of limited subsidy was understood and practiced. The Glass-Steagall Act kept commercial banks and the government safety net separate from investment banking and broker-dealer activities. Just as importantly, investment banks were kept separate from the payments system and from funding their activities with insured deposits. Investors and creditors understood the risk and rewards for each type of firm and demanded capital and returns commensurate with those risks. When commercial banks failed, they were taken into receivership by the FDIC and the payments system was protected. When investment firms failed, they were placed into bankruptcy. The effects of financial failures on the economy were contained.

This system served the United States from the Great Depression until 1999, a period of relative financial stability. So, what happened?

In 1999, the passage of the Gramm-Leach-Bliley Act officially ended the separation of activities. Large commercial banks expanded into a host of trading and investment bank activities that were easily funded using the public backstop. Investment banks like Lehman Brothers and other broker-dealers became bank-like firms – shadow banks – funding and leveraging themselves with overnight repos, asset-backed commercial paper and other deposit-like instruments. The two structures became one large, highly complex and leveraged system, and the perception that the safety net covered the blended structure became reality.

Thus, to realistically address the problem of too-big-to-fail, these activities must again be separated. Commercial banking companies should be confined to operating the payments system and engaging in lending and traditional activities that follow from this basic role. Such a restructuring would strengthen management teams' attention to these services, allow the market and supervisors to better assess the banks' condition, and give resolution a higher likelihood of success.

At the same time, placing broker-dealer activities outside of the safety net will reduce the direct risk to the taxpayer and lower the multibillion dollar subsidy that economists now estimate these activities currently enjoy. Broker-dealers would be free to engage in proprietary trading, market making, underwriting and all related activities. But under the statutory changes I am suggesting, they would not be allowed to issue short-term liabilities secured by longer-term assets to fund growth. Firms that run into trouble would be far more likely to be resolved through bankruptcy. Under this structure a large broker-dealer would fail without a sustained impact on the economy, as was the case when Drexel-Burnham failed in 1990.

The increased capital and limits on size that follow the removal of the subsidy would result not only in a more stable broker-dealer industry, but also a more innovative, competitive and successful one. Those are the goals we seek to achieve.

Thomas M. Hoenig is the vice chairman of the Federal Deposit Insurance Corp.

Thu, 03/21/2013 - 20:50 | Link to Comment dark pools of soros
dark pools of soros's picture

you minaswell suggest we go back to churning butter,.... the animals left the barn years ago

Thu, 03/21/2013 - 20:16 | Link to Comment Paracelsus
Paracelsus's picture

masturbate,verb. as in to masturbate

a.to engage in auto-eroticism,onanism,self-abuse,wanking,banging the bishop,spanking the monkey,pulling your tool,five finger exercise,rosy palm,etc.,the golden finger(fem.)

b. to engage in a pointless exercise,efforts expended with no clear result or objective attained,an act of self-gratification with relatively minor accomplishments to show for the work involved.

c. See Federal Reserve Banking System

Thu, 03/21/2013 - 20:40 | Link to Comment dark pools of soros
dark pools of soros's picture

G-SIFI’s — global systemically important financial institutions

 

anybody or anything that has to tell you they're important in its title will always be a momma's boy wanker

Thu, 03/21/2013 - 21:05 | Link to Comment robertocarlos
robertocarlos's picture

Why not stamp it, 'not to be taken away'.

Thu, 03/21/2013 - 21:58 | Link to Comment Hubbs
Hubbs's picture

Great picture of the Who at the monolith...before they pissed all over it. Miss the Ox and the Loon.

And  that albumn, appropriately titled "Who's Next?" meaning which country will have its savers get screwed by its banks next?

 

And finally, maybe a rallying song by the people in the future  "Won't Get Fooled Again"  which concludes/warns :"Welcome to the new boss, same as the old boss."

 

Oh, the nostalgia....and the brawl in the song.

 

 

 

Fri, 03/22/2013 - 04:09 | Link to Comment orangegeek
orangegeek's picture

Love the image from "Who's Next".  Contained is the song "Won't get fooled again".

 

We'll be fighting in the streets
With our children at our feet
And the morals that they worship will be gone
And the men who spurred us on
Sit in judgment of all wrong
They decide and the shotgun sings the song

I'll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around me
Pick up my guitar and play
Just like yesterday
And I'll get on my knees and pray
We don't get fooled again
Don't get fooled again

Change it had to come
We knew it all along
We were liberated from the fall that's all
But the world looks just the same
And history ain't changed
'Cause the banners, they all flown in the last war

I'll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around me
Pick up my guitar and play
Just like yesterday
And I'll get on my knees and pray
We don't get fooled again
No, no!

I'll move myself and my family aside
If we happen to be left half alive
I'll get all my papers and smile at the sky
For I know that the hypnotized never lie

Do ya?

There's nothing in the street
Looks any different to me
And the slogans are replaced, by-the-bye
And the parting on the left
Is now the parting on the right
And the beards have all grown longer overnight

I'll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around me
Pick up my guitar and play
Just like yesterday
Then I'll get on my knees and pray
We don't get fooled again
Don't get fooled again
No, no!

YAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAH!

Meet the new boss
Same as the old boss

Fri, 03/22/2013 - 04:24 | Link to Comment orangegeek
orangegeek's picture

Below is a link to "Tommy Can You Hear Me".

 

http://www.youtube.com/watch?v=bXTe3K7BllM

 

As the song plays, chime in and verbally repeat the lyrics each sentence is sung.

 

Tommy, can you hear me? Can you feel me near you? Tommy, can you see me? Can I help to cheer you? Ooh, Tommy, Tommy, Tommy, Tommy
Tommy, can you hear me? Can you feel me near you? Tommy, can you see me? Can I help to cheer you? Ooh, Tommy, Tommy, Tommy, Tommy
Tommy, can you hear me? Can you feel me near you? Tommy, can you see me? Can I help to cheer you? Ooh, Tommy, Tommy, Tommy

Do NOT follow this link or you will be banned from the site!