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A Year Later, Cyprus Still Has "An Emergency Situation" And Capital Controls
Submitted by Simon Black via Sovereign Man blog,
Imagine that your country and banking system are so broke that you have to receive approval from a special committee just to send your own money to your kids who are away at university…
Crazy, right?
But that’s exactly what’s going on in Cyprus. And it all happened overnight.
Just over a year ago, people across Cyprus went to bed thinking everything was just fine. They woke up the next morning to a brand new reality: their government AND their banking system were flat broke.
In collusion with other European powers, the Cypriot government FROZE bank accounts across the country. Suddenly an entire nation had no access to their savings.
The government spent weeks bickering about whose funds they were going to confiscate in order to bail out the banks… all the while maintaining the freeze.
Finally they made a decision: wealthy people would have their funds seized.
But this wasn’t a victory for everyone else… because simultaneously the government announced a flurry of severe financial restrictions.
Sure, people could log on to a bank website and see an account balance.
But it was nothing more than a number on a screen. It didn’t mean the banks actually had the money. Nor did it mean they were free to access their own funds.
Cash withdrawal limits were imposed. Funds transfers were curtailed. Cypriots were even forbidden from doing something as simple as cashing a check.
Peoples’ savings were essentially trapped inside of a highly insolvent financial system.
These destructive tactics are called capital controls. And one year later they’re still in place. Some are being relaxed. Others are being maintained.
But by its own admission, the Ministry of Finance still believes there is a “lack of substantial liquidity and risk of deposits outflow. . . that could lead to instability of the financial system and have destabilizing consequences on the economy and society of the country as a whole.”
Naturally, since this is an “emergency situation” in their view, they have to impose these “restrictive measures” in order to safeguard “public order and public security”.
In other words, capital controls are for your own good.
This is exactly the sort of thing that happens when governments and banking systems go bankrupt.
And every shred of objective evidence suggests that many of the ‘rich’ nations of the West are in a similar position.
Some of the largest banks in the US (like Citigroup) have failed their stress tests; this means they are inadequately capitalized to withstand any major financial shock.
Then there’s the FDIC, which is supposed to insure deposits in the Land of the Free. But the FDIC itself is inadequately capitalized, failing to meet the legal minimum for its insurance fund.
All of this is backed up by the US government, whose net worth is negative $17 trillion.
The Federal Reserve is supposed to be able to bail out the banks. But at this point, with $50+ billion in unrealized losses and a net equity of just 1.35% of its record $4+ trillion in assets, the Fed itself is practically insolvent.
This is the reality: inadequately capitalized banks are backed by an inadequately capitalized insurance fund backed by an insolvent government and nearly insolvent central bank.
Hardly a beacon of stability. Yet this is the system in which literally hundreds of millions of people have misplaced their trust and confidence.
It doesn’t take a financial guru to figure out that this is not a consequence-free environment.
All that’s required is the independence of mind to look at the facts rationally and understand that, like Cyprus, this could all change overnight.
It’s worth considering that at least a portion of your savings may be much safer elsewhere– in a stronger, well-capitalized foreign bank located in a stable country with minimal debt.
It may be wise to consider those options while you still have the ability to do so.
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But don't worry because Greece is issuing 5Y bonds into the "public" markets so everything must be fixed in Europe...
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At least the bankers are happy.
“Nothing is so permanent as a temporary government program.” - Milton Friedman
There is nothing more temporary than the success of a permanent government program. - Me
Dont worry... in another year they will be able to go to bond market again and price way below US treasuries... just like spain, italy, and greece.... awesome!
Bankers may have temporary relief, but the banks themselves are flat broke, insolvent, and on depositor life support. It's a joke, really.
But they have SuperMario
sounds like us
And Ukraine wants this shit ? Really ?
They still have a pulse, the banks aren't quite done with them yet.
Simon is just overreacting to the big news that there is a 23% chance there may be a 4% correction in the next 12 months.
I thought it was a 43% chance of a 1% correction. Still, obviously a catastrophe-level-event in anyone's estimation.
I'm betting on(and hoping for) a 50% chance of a 100% correction each year for the next 10 years.
Can you get money out to buy Greek bonds?
Yeah......sure you can.........just inform the teller it`s for the greater good of the 'European Project'
"It’s worth considering that at least a portion of your savings may be much safer elsewhere– "
Yeah, in gold. Purchased anonymously for cash and well hidden.
Thos whole "other banks in other countries" thing sounds like a lot more work and a lot easier for a tax and confiscation-hungry IRS to track down.
I don't see how you can properly account for the risk of holding assets in another country. To me, there isn't much reason to believe one country is safer than another. In relatively calm times, everywhere is safe, it's when things are under severe stress that they get dicey, so how does one predict a potential stress scenario in another country (and in particular, one you probably know little about)?
Travel. Get a second passport. Live in "international waters". Use shell companies for your car, health insurance, phone, bank accounts, etc. Disappear from the grid. (go John Galt, 21st century style)
Why stop there?
Obtain eternal life by finding the Holy Grail
Become a famous Rock Star
Get those Abs you've always wanted
Change the oil in your time machine
Stock your Moon Base with Kate Upton clones
only one greenie to give
As always, capital controls stories are about bitcoin.
Nothing else can escape those controls and border inspections to flee.
Should you have all your wealth in bitcoins? No, of course not. Some (lots of) farmland within the country is a good idea too because if land ownership is respected then you can sell calories off of it.
Pretty much nothing else works, other than bonds -- until they don't.
unless you were a Ukranian in Crimea where your land is at...now its in Russia...and if you do not want to be a Russian..they will take it from you..cheaply
The more subtle way is taxes and regulation. I heard that in some places they meter even private wells.
Ownership respected????
Are you nuts?
If not you are connected.
In collusion with other European powers, the Cypriot government FROZE bank accounts across the country. Suddenly an entire nation had no access to their savings
This is not true..they kept a branch open in Europe where the rich could get their millions out for several weeks....and they did...the Russians did not donate to the bail in....
"It's a trap!"
Admiral Ackbar.
I live in Cyprus and the banking is a joke. I enquired about a foreign currency account yesterday. I asked what would happen if I wanted to transfer money out of it......was told that if it's over €5000 I'd need to provide reasons why...ie an invoice or an explanation of why it was needed......COS IT'S FUCKIN MINE!!!
Wtf, they'll take the cash but won't give you it back unless you can provide a reason they feel is good enough...and it won't be.
The island is in big trouble, businesses closing, no jobs or low paid jobs and everything is ridiculously expensive.
Thanks for the view.
Tell them you're looking to buy a .308 assault rifle, magazines, 5K rounds of ammo, body armor and a new GPS with the money.
Drop your prices for vacation activities way down below what Mexico or Cuba charges to make up for the longer airline flights and maybe I'll come to visit. Offer hotels and meals priced in bitcoins to guys like me and you have a way out of these capital controls. I might even bring a few gold and silver coins plus some consumer goods wanted in Cyprus to trade for the room and board. Everybody wins except the bankers!
I'm still not sure how a bank loses all its money. Did they lend all of it out to drug addicts?
There's no money in the banks to lose, didn't you know that?
Only paper promises on the backs of taxpayers.
Whatever monies they scrounge up, they pay themselves for doing such a good job! Ha.
Fn Crime pay's, no wonder crime is going through the roof!
"Did they lend all of it out to drug addicts?"
No, much worse. They lent it to Greeks.
And how many swaps did the US fed do with Europe?
Best not to have anything, private property is long dead. know where to get food & shelter use chits with friends work cash and gold if you must. Only put money in the bank to pay them when they are going to cut you off. This should blow over in a decade or two
The less you can be happy with, the less you can be controlled.
A man who has nothing has nothing to lose.
Darn tootin Logicalman, less to worry about too. older I get less I need.
which is why advertisers don't give a c--- about you, 18-38 or your off the grid
Unless you're dead, you do have something to lose.
Who the hell cares about Cyprus? Warm weather, nice beaches, what the hell else do you want? And, Draghi will always give you a hand.
I have an option on an empty hanger in Area 51.
Cyprus Needs Assets Seized to Tame Bad Debt: Demetriades http://www.bloomberg.com/news/print/2014-04-02/cyprus-needs-assets-seized-to-tame-bad-debt-demetriades.html
That debt became bad because the EU forced Greek bondholders (of which Cyprus was a huge one) to take drastic haircuts.
The debt was just fine until the EU bankrupted the Cyprus banks by decree.
"It’s worth considering that at least a portion of your savings may be much safer elsewhere– in a stronger, well-capitalized foreign bank located in a stable country with minimal debt."
Will I have to take a magic carpet ride to locate such a bank and qualifying country?
no. all it takes is 'shrooms.
Someone please tell me how putting money in a stable foreign country will work.
first off
My thoughts are physicall gold burried deep in the ground!
Why? Do you think that after you bury it cornstalks will sprout to feed you?
Not everyone´s funds are in a risk. In Cyprus by trusting on intuition only some politicians were lucky to transfer funds at the last moment and to get the transactions details accidentally deleted too. If you got friends your money is safe everywhere in the Universe.
Friday, July 8th, 2011 @ 15:30
"Plan your food supplies now. Grow and buy seeds that will keep you alive. Buy silver coins or gold, so that you can buy what is necessary."
http://www.thewarningsecondcoming.com/eternal-father-will-prevent-new-wo...
Sunday, April 17th, 2011 @ 09:00
"Wake up all of you – now. Look around you and see for yourselves. Stop trying to imply that the world is simply in the throes of a depression, caused by a slump in the economy, because this is not true. These people will now control each of you through a global currency and your country’s indebtedness. No country will escape their clutches. Please heed My Word. Your money will be worthless. Your access to food and other necessities will only be possible through “the mark”, the identification I spoke about."
http://www.thewarningsecondcoming.com/new-world-order-plan-to-control-yo...