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ECB "Technically Ready" To Ask Depositors To Pay Banks For Holding Their Money
The first relatively big bombshell has been dropped:
- *DRAGHI SAYS ECB HAS OPEN MIND ON NEGATIVE DEPOSIT RATE
- *DRAGHI SAYS WILL COPE WITH NEGATIVE CONSEQUENCES IF WE ACT
This has crashed EURUSD and smashed German 2Y rates into negative territory.
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negative bank deposit rates.....probably means the free toaster is out too....and they Spiderman towel....you have to buy them now....it amazes me the greed of these elites....your money is my money now...its that easy in their heads
I'll bring that toaster and raise you two spidy-towels ... ;-)
Let them keep their money. Mine went to PM's (before the boating accident).
And the US Dollar rockets upward again this morning.
http://bullandbearmash.com/chart/spot-dollar-falls-corrective-move-nears...
If this move continues, there will be huge downward pressure on US stocks and commodities priced in US Dollars.
orange, a strong dollar should do wonders for US exports, also.
That used to be a big deal.
It comes as no surprise to me that Draghi refers to the probability of banks charging savers/depositors for the privilege. It has only been a matter of time. There are no depths to which these fraudsters and criminals will not stoop. You can bet your life that the legal basis under which deposits are accepted will not be enhanced by governments and banks to provide better legal security and legal clarification of customers' money.
Quite apart from several obvious consequences of this, eg: people will pull their money out of banks and do [whatever] with it, leaving banks with a serious deposit shortage, but there are other implications which I'm sure will not be considered. EG: in the UK (and I suspect elsewhere), since the money laundering laws were introduced it has been necessary for any person wishing to deposit large sums of cash in a bank to provide evidence of where it came from. I think the trigger amount is £5,000 but it may be slightly flexible if the customer is already known to the bank. Without such evidence (or at least a darned good story) the bank may refuse to accept it to cover its own ass if/when the financial crimes police decide to investigate. And in any case, without the customer being informed, the bank always completes a form for all cash deposits of greater than £5,000 which goes off to the financial crimes police.
Thus, anybody who pulls their savings/deposits out of any bank to avoid paying the bank to store it for them had better make sure they get a docket from the bank at the time of withdrawal and keep it safely to avoid being interrogated by the police if/when they decide to re-deposit cash at a future date to pay a large bill or make a large payment for any purchase.
Next coming to a bank near you will be a "transaction charge" for each and every transaction you perform with a bank.
Want to pay your energy bill online or over the counter? That'll cost you £1.
Want to pay your income tax bill online or over the counter? That'll cost you £1.
Want to pay your credit card bills online or over the counter? £1.
etc etc etc.
Well within a bank your deposit is specifically an investment. It is at risk. Has been that way for centuries.
So to remove the risk might as well take it out as cash since they're not paying you anything for it.
I believe you're right.
But you know, I have accounts with about seven major UK banks and every one of them makes great play about the "Deposit Protection Scheme" that exists in the UK whereby up to £85,000 is supposedly guaranteed by government in case of bank failure. In most if not all, they have reference to this Scheme plastered on the front page of their online banking websites and even on the walls of their branches.
But trying to find accurate information in their branches or on websites about the exact legal status of your savings and deposits is near to impossible. Banks are extremely anxious for customers to think that their money is safe in a bank. But as you say, it's actually an "at risk" investment and Cyprus is the template of what will happen if/when a bank falls over.
In view of this, when I deposit money in a bank, my new position is that I not only want a proper rate of interest paid to me, but I also want a risk premium. Since banks are not prepared to pay either, my relationship with banks is slowly coming to an end.
My first reaction to this comment was "I hope some major calamity strikes that goddamn part of the world" (obviously the EU wasn't enough).
"Your money is safe with us....trust me."
Sincerely,
His Honorable J. Corzine
LOL
So do I make the check out to your personally? Do you spell it John or Jon?
here's a novel concept, a cash bank. they don't do anything with your money, except keep it safe. rather counterintuitive, american banks prohibit safety deposit box users from storing cash. yes a cash bank with a small fee each year, that would be feasible, or perhaps a cash bank which backed your cash with gold. converted your FRNs into a gold standard currency. well lets get busy.
oh and about that fractional reserve thing, we won't be needing that anymore
Some mornings I am encouraged by a ZH article to go to my safe and look at my PMs the same way I stare lovingly at my sleeping children. This is one of those mornings.
When you combine negative rates with the mandatory hair-cuts you end up REALLY NEGATIVE...!!
http://www.youtube.com/watch?v=NmFo-LKHGY0