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Europe Extends Confiscatory Non-Template 'Template' To Interbank Deposits
While every European leader, banker, street-sweeper has made a point to use the phrase "Cyprus was not a template" in the last few weeks since D-Boom dropped his tape-bomb, it appears that in reality plans continue to push ahead to indeed 'legalize' these confiscations. As Reuters reports, European Union ministers will consider a proposal this week to impose losses on short-term interbank deposits of lenders. The proposal is part of wider talks to consider when depositors should be bailed-in. Of course, it makes sense that banks should 'not' get special treatment for their overnight lending operations to one another, but the EU leaders want to ensure that these 'sacred' deposits do not escape confiscation, "while it is acknowledged that bailing in interbank liabilities may carry certain risks; on balance, it is preferable... that these liabilities are not excluded from bail-in". Of course, this will worry the ECB as they have worked so hard to unfreeze the interbank lending market post-crisis (with their direct backstops and intermediation). So while there is no template, and Cyprus is unique, it appears the new 'resolution' laws provide a clear plan (not template) for reaching all the way down the capital structure just as they did in Cyprus (and is legally correct from a pari passu basis).
European Union ministers will consider a proposal this week to impose losses on interbank deposits of lenders in dire financial trouble as they shape a draft EU law introducing powers that would also penalize those with big savings.
Such an idea, should ministers back it, could further rattle the confidence of lenders, already nervous about draft legislation to determine who alongside shareholders should suffer losses when a bank gets into trouble.
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The talks follow the recent decision to impose heavy losses on some depositors in Cyprus, in return for an international bailout. That set a precedent, which is likely to be mirrored in these EU rules, making losses for large uninsured savers a permanent feature of future banking crises.
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ECB President Mario Draghi recently cautioned that Cyprus's bailout was "no template", in a bid to ease market fears that bank deposits would in future be fair game for international lenders supporting struggling euro zone countries.
In a document prepared by government officials in Ireland, which as holder of the rotating EU presidency will chair the ministers' gathering, they write that interbank deposits of less than one month should also be penalized.
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Customer bank deposits of up to 100,000 euros would remain protected under an existing EU law and the latest proposals touch on sums above this threshold.
"While it is acknowledged that bailing in interbank liabilities may carry certain risks," officials write in the document, seen by Reuters, "on balance, it is preferable ... that these liabilities are not excluded from bail-in".
Such a suggestion will dismay many officials, who witnessed a freeze in interbank lending that the European Central Bank is still struggling to unblock despite having provided more than one trillion euros of cheap funds.
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Although some policymakers have sought to portray Cyprus and the losses suffered by depositors at two of its banks as a one-off, many experts believe it marks a dramatic change in tack in how Europe deals with troubled banks, to spare taxpayers who have been on the hook for previous bailouts.
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KreditAnsalt.
So, knowing what we know now, benefiting from a preview of what is going to happen in the U.S. a few short weeks/months/years from now, what actions should you take now to protect yourself from these shenanigans?
Buy bitcoins, obviously!
Hadn't you heard? There's a 40+% sale on!
Interbank lending, prepare to get "Han Solo-ed" in Carbonite.
I guess we'll have to wait for the sequel to the EU for it to get unfrozen....
(BTW, any chance of getting that $250k/Eu100 deposit insurance limit indexed to inflation?!)
Stupid squared? A snake eating its own tail? Or both?
In other news, does this mark the demise of the money-market?
Your correct, they are canabalizing themselves in order to stay healthy and it won't work.
i still think some are more pari passu than others....
And people thought the banking system seized up quickly in 2008!
What happens when you think your bank counterparty may be in trouble and your overnight loan might turn into a bail-in?
This will create a contraction in shadowbanking, which would be fine, except that it drains liquidity.
WHATEVER!!!!
I played it smart!!!
moved some money to my Belfius account (dexia)
Bnp, Bankia, KBC, ING, Rabobank, Santander...
I'll be fine...
"We are about to intentionally start a liquidity crisis, as a means to further consolidate power. Buckle up, bitchez!"
-Super Mario
The question is whether he would have the gall to plead ignorance when he and his family have piano wire around their necks...
No "banker" can be that stupid. (The bar is really that low on that issue...)
You can't buy them. I tried. All broken.
+1
When /sarc by itself just isn’t funny enough :D
Register all of your gold with government agencies?
Guns first , wouldn't want the sheeples armed when we gang rape them.
Its all for the children don't you know, so we will make them watch before we
do them.
Signed Jamie and Loyd.
Wow, that was a little dark.
http://pathogenomics.bham.ac.uk/blog/wp-content/uploads/You-Cant-Handle-the-Truth.jpg
Not at all. Not at all religous, but I know evil exists.
Recognise those two as its personification after having dealing
with Robert Maxwell years ago. Those are the same as him.
Where!? Where!?
(looking around)......I don't see any.
(Ok, don't ask me to look in a mirror).
If this doesn't trigger a bank run, nothing will.
Maybe nothing will but in '08 when a hint Money Markets could "break the buck" and cash equivalants would be frozen, things got pretty scary, remember? The Lehman case comes front and center but with subtle nuances that many apparently do not recognize. It will come down to TRUST!
Scary? Didn't Benron fix all that in like... 15 minutes?
Yes, in '09 but not before a foiled Congressional vote and a banking crisis. The Bernank knows even 15 mins is too much time (collapse and permanent distrust for the 'system')so he'll just leave the PUT in place. So, you're comment is about right. It just demonstartes how screwed up freakin everything is and hard it is to believe what we're seeing.
Nah, he didn't fix nothin'.
Sorry 'bout dropping my /sarc tag.
That fucker exiled us all to serfdom.
Is this a... promise I can hold you against? ;-)
People don't run anymore... they only move by car anymore...
It will totally freeze interbank lending and drive every bank into the arms of the ECB.
My advice would be to get your money (and anything in safe deposit boxes) out of the bank. Only put cash in there when it's absolutely necessary, like for paying bills or having automatic withdrawals for insurance, etc. Keep some cash on hand, but also stock up on stuff you know you need and can store and stuff you don't necessarily need but could use for barter.
Many people will tell you to buy gold or silver, but IMO that should come after you've bought "supplies." As the fiasco in the Balkans showed, canned food will be extremely valuable — moreso than precious metals — if the shit really hits the fan..
http://cluborlov.blogspot.com/2009/02/social-collapse-best-practices.html
I agree. Six months of food and water first,then lead and PM's
Mums the word.
I'm trying to get out of the matrix.Personally I am, but my
business, not so easy.Most payments out are ACH , and half in ACH/ credit cards.
Exactly. It's rather sad to buy necessary stuff like bread with your silver. Small bottles whiskey, canned bread and a ceramic water filter. To become a real prepper is unpossible. Too much uncertainties.
Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent's fate.
Sun Tzu
Supreme excellence consists in breaking the enemy's resistance without fighting.
Sun Tzu
From each according to his abilities, to each according to his needs.
Karl Marx
So if I understand correctly, I should:
1) apply for every credit card offer I can find,
2) max them all out,
3) buy gold & silver bullion
4) bury it somewhere, &
5) declare bankruptcy?
Done!
6) lay low in a (cheap) country of choice to weather the (shit) storm
ps. somewhere between 1 and 2 it helps if you go invisible ;)
That all depends on what kind of ethics you have...... If I were to do that I would think of myself a thief....
Integrity - adherence to moral and ethical principles
Fuck off man! Ohhhhh don't rob the MOTHERFUCKERS THAT CYNICALLY AND BESTIALLY ASS FUCKED EVERY MOTHER FUCKING WORKING MAN FOR A FUCKING CENTURY! You are one pathetic ****!!
For a dwindling few... 2 wrongs don't make a right. EVER.
Name them for the collaborators and enemies they are then; they've accepted their programming.
"To deal morally with an immoral enemy is in itself immoral."
7) whatever it is, plan for 7 years of the same shit - even if you don't believe it possible. This is serious advice
and make sure you buy some camping gear... a tent and stuff...
debt will follow you forecer buddy.
Get rid of it. the collapse isn't arround the corner just yet. 3 to 5 years.
On the other hand it could happen next month :)
I'm sure the Central Bankers/Govts would like depositors to immediately transfer any uninsured deposits to the "safety" of the TBTF banks. With their over-leveraged derivatives exposure and (probable) Cyprus induced withdrawals, they might need the extra $$ to juice their capital ratios...
Legislate it and you have legal theft.
Fuckers have been doing this since the start of time. Ceaser claims your wife. Now Ceaser wants to fuck your wife while you watch.
Bad laws are the worst form of tyranny. Edmund Burke
Ceaser is getting a little kinky these days.....
Actually it's called... taxation
Anyway, "That set a precedent, which is likely to be mirrored in these EU rule"
1. precedents are less relevant in Civil Law legal systems
2. having said that... I'm curious, it's quite unclear, yet
Christ, are they actually trying to precipitate a bank run???
think this way : who will benefit from a massive bank run?
Bitcoin won't explode once bank accounts are threatened with seizure. Long bank stawks!
Fatigue cracks are beginning to appear in the facade.
<Only a matter of time now.>
Really? Then the .0035% correction, hey? WTF? Sorry but there's been quite a few cracked facades displayed right here on ZH (See all charts). Waiting is a tough task.
First read, I thought you were referring about the cracks on some of the guys avatars.... sometimes I am not sure if I am looking a pair of silicone boobs or the back end of someone's booty..... lol
Tom Petty informs us that the waiting is the hardest part.
Cog- I read every one of your "not a crash but a crumble" series. At what rate of speed do you start getting nervous about your thesis? You laid it up there, I agreed with it. Now Europe has put up a big neon sign that says "Don't Bank Here". I'm getting a little nervous.
It really depends upon what kind of damage people are expecting. Like a fall down a flight of stairs there are many large and small impacts on the way down, many of which could do serious damage on their own. In essence the crumble is a whole series of "crashes" large and small that occur over years.
I am talking about years of misery. Any one "event" along the way will most certainly feel like the big one, but cumulatively will just be a portion of the overall death spasms. The last Great Depression played out over at least ten years, but in many minds the focus is on "the" 1929 stock market crash or several other "events" along the way as "THE" event. In truth it was the totality of the lost decade that did the overall damage.
It's almost like they are trying to crash the banking system.
They're probably surprised at how hard they're having to work if that's really their aim.
Yeah, no kidding, it happened on its own in 2008.
The shadow banking system crashed the convential banking in 2008.
Its still the elephant in the room.
It dwarfs all other bank deposits in value.
I'm personally amazed at how docile and sullen the masses are. Poor fuckers are demoralized.
No, not demoralized, they don't understand.... yet!
i brought up the cyprus issue to a relative of mine yesterday. he said it was dirty russian money anyway. i said cypriots had $48bn in those accounts. "he said it will be sorted out in the long run, everyone will get back their money".
i was appalled and prefered to change the subject.
people have an ENORMOUS confidence in today's financial structure. that's why they don't take the warnings seriously.
Don't you mean "controlled" crash?
Novus Ordo Seclorum
More like consolidate the banking system imho. The tbtfb are always gonna be saved one way or the other the Ntbtfb might be taken down due to a chain reaction in the interbank lending networks.
Of course that wouldn't be a "credit event", right?
Naw man, is'a funding event, that ewe get no credit for.
confidence builder
So if you were stupid enough to engage a bank in a contract to supply a subordinated bond or investment note in search of a yielding asset, when all the asset contains is a liability to someone else as it's source of money, then you lose your principal.
The vague part is just what they mean by insolvent lender.
The term bail-in probably has its source from the term: buy-in, when a broker buys in to a market to settle failures to deliver:
http://www.investopedia.com/terms/b/buyin.asp
So the remaining liquidity disappears.
But I thought a loss would have been a normal course of events without this public endorsement.
The lending institution would be insolvent if failure to deliver overwhelmed the bank with losses. And while the bank might be technically bankrupt, bond holders would be made whole in a bankruptcy proceeding.
Without a banktruptcy proceeding, the bondholders are directly subject to a 100% haircut.
I think the relevant term here is "blamestorming."
The second time the ECB and the IMF do a confiscation it will be a "special case".
Right up until the last time they do it.
Call it anything you like, but never call it a "template".
How about "a series of unique resolution plans which coincidentally bear remarkable similarities to each other".
no, no, you need a catchy acronym, preferably one that sounds like a non-threatening actual word like nerf. That way it doesn't give anyone a real idea of what it is when they talk about it on the news, yet, allows tptb to say that it was talked about widely, so you had plenty of warning.
Ok so Financially Insolvent Specialist Tactics, aka FIST-ing, is not a viable acronym?
This is getting good. Now the banks are eating eachother. Where's the popcorn and cotton candy?
Of course they are. How else does one end up with a single, global bank?
All your deposits are belong to us. Get back to work building that pyramid peon.
Hello, right hand! I'd like you to meet left hand. What have you two been doing lately?
Wanking?
*damn another trick question
http://www.diffen.com/difference/EURIBOR_vs_LIBOR
What does this mean for LIBOR?
When things get tough you have to Li-more.
groan...... lol
Gosh I wonder how much money Chinese and Indian banks have on deposit in Europe? If you were one, what would you do?
Pull it out of the weaker economies, perhaps. Italy, Spain? IS that the game, then? Crash them, bail in depositors, steal the gold?
Why I'd send my spies abroad to sabotage their operations.
Does make REPO 105 somewhat dangerous
What is mind boggling or perhaps not, is how the markets, bolstered by funny Keynesian excess liquidity, refuses to price European risk accordingly.
Someone correct me if I'm wrong please but has this not actually been the case for ~200 years?
I don't know, either. But from time to time I think, just out of the last 2000 years, maybe the last 200 have been the era, in which it has for the most time not been the case. Today it clearly is, but I imagine to remember a time, when that was not the case. Or at least seemed not to be.
What a fucked up system.
1. Bank depositors are now on their own and at risk. It is the depositor's job to assess bank risk. (see template)
2. In the U.S. banks are now allowed to cook their books and mark to model. So you have no idea what the shit on their balance sheet is really worth.
3. So, you basically are told to manage risk and then told to rely upon lies.
4. Even if the lies are not enough, the Banks can outright defraud you and they will not be prosecuted because they are considered systematically too important to fail or prosecute.
5. Banks get to borrow unlimited funds at no cost and speculate, wherein they keep the winnings and taxpayers or depositors eat losses.
How much more of this is it going to take before we see DEAD BANKERS?!
Neidermeyer, DEAD MAN!
Marmalard, DEAD MAN!
Anyone with deposits in a US bank is insane.
And pms are down because GS said to short it??
What a friggin circus and MFd shitstorm coming!!
GS short reco is a buy signal.
How much are you getting paid to take the risks you just mentioned? Is it worth it?
'
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And this is what I don't understand, this idea: How much am I getting paid to take on the risks, or in financial speak, the risk premium of my money?
What and why the hell am I keeping it in a bank that could go titzup, while getting .00FA % and now I am to stand in line at the front for the bail out/in?
I've got all the downside and no upside.
Why isn't there a run on the banks and a corresponding increase in the risk premium of the money, interest rates hiked, as Reggie Middleton spoke about a few days ago, to keep the money in the banks considering the peril associated with keeping your money in the banks?
Why is this disconnect happening?
Then again, there are inflows of money back into the Greek banks.
•J•
V-V
Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no! . . .
http://www.youtube.com/watch?v=q7vtWB4owdE"Your deposits are insured, right up to the point we decide they aren't, and they are ours."
Only banksters and their politician lackeys could come up with such equivocating Sophistry.
Every main street news media outlet uses the words "to spare taxpayers who have been on the hook for previous bailouts." Well crap now only the taxpayers that have money are screwed. They are doing this crap on purpose in an attempt to spread the capital more evenly throughout the banking system, thinking that anyone with deposits greater than 100 will move it to another institution. Which is exactly what will happen. Then they will lower the guarentee or get rid of it.
It seems to me that if the ECB does this it is going to lead to a significant impairment of Interbank lending and a lock up of credit like we saw post Lehman and Bear S.
Fits nicely with the narrative of "some big financial event coming soon" as put for by Mr. Jim Willie.
Next up? .. The corrupt that be will change the limit thats insured...to like 25000€. That'll work!
Looks like old Abe beat the Europeans to it and confiscated the MtGox servers.
I wonder if this is what's making the FTSE & DAX swing 200 points per day and the IBEX 500 points.
Not a template...
More like tracing paper.
Hey ZHers, As a former risk manager for a certain large financial entity, I am going to be writing a book about savers and takers. Please don’t be shocked if I say it will be critical of certain aspects of our current financial system.
The general outline of the book will be that an upcoming struggle is emerging in civil society. It will be between those who have money but lack the political and financial power to defend it, and those who have the political clout to take it.
The savers and the takers.
This will happen because the capitalist system has been turned into a financialist system. The economy is no longer served by the banks and financial institutions. We are now at a point where the banks force the economy to serve them. Those who benefit are the financial class, their servants in the political class and the large international organizations such as the EU, the IMF and the World Bank.
Those who suffer are the rest who are trapped in the system and cannot find the means to escape it – but they do have small amounts of saved money or equity. Who are the savers? In short, it is those people who look to their own future and have taken decisions to set aside “value” from today and hold it for use tomorrow. This includes those with savings deposits, pension funds (401K, RRSP, ISA etc) and those who have equity in their homes. It also includes those who hold small physical amounts of precious commodities such as silver, gold and palladium.
The takers are those governments with unsustainably high debt levels and high levels of unfunded future liabilities. In cooperation with them are the major international banks that have over leveraged themselves as well as supra-international institutions such as the EU. This meme – savers and takers – will shape much of the political and economic discourse over the next few years. The existing examples of where this has occurred have been Greece, Spain, Ireland and Portugal. How this all plays out is not clear, but there are lessons to be learned about the limits of the individual and potential social unrest.
You can see the rest of an article which describes the outline of the book at:
http://tinyurl.com/dxsqjbe
or at http://economicsfortherestofus1.blogspot.ca/2013/04/savers-and-takers-new-fault-lines-and.html
If you have any comments, ideas or whatever, feel free to leave comments and I will try and answer them. Send the URL to friends if you think this is a worthy project.
The Honest Ex-Banker
I read and I think it's an OK idea. It becomes a fantastic idea if it becomes sort of a "how-to" or nonfiction masquerading as fiction. The stuff on exarchia was very informative. We're going to be needful of information.
My only suggestion would be for you to articulate with great clarity exactly how this shambles has come about and exactly who is to blame for it.
IMVHO, although bankster criminals were (and continue to be) central in causing this mess, it is the political elites who are ultimately responsible. Simply because they cannot have it both ways: on the one hand assuming full power and control over everything that breathes and moves in their country, whilst simultaneously abdicating responsibility when it all blows up. As it has done in spades.
This implies the urgent need for nations to reign back the size and powers of their political elites.
Unless 'we' (society collectively) fully understand all that, we cannot move forward towards a solution which pays due respect for personal freedom and liberty coupled to a belief in free market enterprise.
Confiscation by the EU in order to steal FED supplied money to European Banks?
I don't know if we're thinking this one through correctly. The full scope of this particular template is not being addressed.
For example, everyone knows that credit default swaps are popular amongst the banking sector brokerages because they permit a bet on the credit quality of a defaulting corporation or credit derivative obligation. In the presence of credit default swaps, a bank could be ultimately profitable but still go insolvent or bankrupt if the risk of the company creates huge liabilities, and for nothing so much as rumours.
So technically, if you hold a credit default swap against said corporation or bank, then if the bank is meant to go bankrupt because of risk, then the original depositor(or the original leveraged amount) is forfeit rather than the bank go bankrupt.
On an interim decline in Greek treasury bonds, we noted a few bankruptcies, for instance, MF Global, PFG Best, and lastly Cypriot banks. This is having a deflationary effect. The plunder of depositor's money is now become institutionalized, where depositors in each failure were raided, meaning the holders of subordinated bonds, futures contracts, and investment notes were appropriated without apparent legal consequence, when they would normally be first in line in a bankruptcy proceeding and guaranteed re-imbursment during a banktruptcy since they presumably hold 'AAA' paper.
And larger depositors were warned before hand, allowing them to transfer their funds out at a price. Probably including converting their gold into Euros.
This IS getting crazier.
Large entities = inertia...
I noticed this about 30 years ago..
back when tptb oscillated back and forth between expansion and contraction of 'the economy'...
sort of like trying to drive (and recover) a car on black ice...
guess the overall system reaction was always a bit 'behind the curve'..
course back then, they actually put $ to work...
now they just give it to their buddies..
and keep pumping...
The banks in toto are carrying a huge black-hole of toxic debt. "The banks" comprise Bernanke's buddies - including the european wing - and sundry non-buddies i.e. the core and the periphery.
As the slow-mo collapse trundles on one way of shoring up Bernanke's buddies would be to deliberately collapse the non-buddy banks and stampede the cash into the buddy banks.
Bankruptcy. No more bailouts for deadbeat depositors.
hilarious.