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Germany Blesses "Bail-In" Deposit Confiscation Plan For Failing EU Banks
One year earlier than required, the German government approved plans to force creditors into propping up struggling banks across Europe. As WSJ reports, Germany "leads the way" in Europe by implementing European rules quickly and "creates instruments that allow the winding-down of big systemically relevant institutions without putting the financial stability at risk." What this means is that taxpayers (theoretically) will not be on the hook (though in reality we are sure the mutually assured destruction defense will be played - especially if Deutsche runs into problems) but as German authorities explain, "This ensures that in times of crisis mainly owners and creditors will contribute to solving the crisis, and not taxpayers." As a gentle reminder - creditors includes depositors... remember Cyprus?
As WSJ reports, Germany's cabinet Wednesday approved plans to force creditors into propping up struggling banks beginning in 2015, one year earlier than required under European-wide plans that set rules for failing financial institutions.
The new bail-in rules are part of a package of German legislation on the European banking union--an ambitious project to centralize bank supervision in the euro zone and, when banks fail, to organize their rescue or winding-up at a European level.
Germany "leads the way" in Europe by implementing European rules quickly and "creates instruments that allow the winding-down of big systemically relevant institutions without putting the financial stability at risk," the country's finance ministry said in its draft bill seen by The Wall Street Journal.
"This ensures that in times of crisis mainly owners and creditors will contribute to solving the crisis, and not taxpayers."
...
Germany will apply these rules already from next year, according to the bill. Struggling bank creditors, in addition to shareholders, will have to help financial institutions, covering up to 8% of liabilities, before the banks can tap Germany's financial markets stabilization fund SoFFin.
Not everyone's buying the no-taxpayer-impact concept...
In an expertise report presented Wednesday, Germany's independent Monopoly Commission, which advises the government on competition and regulation issues, said its "skeptical whether market participants can muster sufficient capital buffer to effectively prevent the general public from being held liable."
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So Djisselblom's 'levy on wealth' appears to be getting closer and closer...
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Cue zee bank run
If it's not in your hot little hands...
You don't own it!
Bail-ins are already part of the Dodd-Frank Act.
Title II - Orderly Liquidation Authority
http://www.law.cornell.edu/wex/dodd-frank_title_II
" One final provision of importance is the ban of use of taxpayer funds to preserve a company that has been put into receivership under Title II. See 12 U.S.C. § 5394 (Dodd-Frank Act § 214). In essence, this provision prevents any future government bailouts for struggling financial institutions, no matter how big, or how impactful their failure might be. This provision makes it even more critical that a liquidation under Title II work quickly and effectively; without the safety net of federal bailout money, a failing financial institution will have no choice but to liquidate. "
" Claims are paid in the following order: (1) administrative costs; (2) the government; (3) wages, salaries, or commissions of employees; (4) contributions to employee benefit plans; (5) any other general or senior liability of the company; (6) any junior obligation; (7) salaries of executives and directors of the company; and (8) obligations to shareholders, members, general partners, and other equity holders. "
spain just imposed a *retroactive* tax on bank accounts effective 1/1/2014:
http://globaleconomicanalysis.blogspot.com/2014/07/spain-issues-retroact...
only .03%, maybe a "test case" to see how people react to wealth confiscation?
All of this will happen in America eventually. It may be a couple years, but it's coming. And you will here everyone cry "who could have seen this coming?"
the banks in the eurozone countries have around ~1 trillion euros in unsecured bonds... about a fifth of that is held by German banks... hmmm...
the PIIGS look like they're going to get swine flu again... hold on, it's gonna be a bumpy ride...
stacking12321
Oh that's *really great* re a retroactive tax on bank accounts. That makes it more likely that people like me will pull more money out faster and sooner than otherwise. And that Dodd-Frank (FrankenDodd?) language in the law, even faster.
Gold, Bitcoin, hard assets and assets far away. Looks like the the time is coming soon that assets out of the system will be the only safe assets left. Haircuts or losses (eg stocks & bonds) on the rest.
Prepare...
EDIT:
ALL remarks above got my + 1
Long Smith and Wesson 44 Magnums...and Clint Eastwood. "With Chinese subtitles."
Sir Do Chen?
Asked this yesterday. So bank accounts and anyting traceable are being targeted. Seems like the only place anywhere on this planet is your mattress or hole in the ground. So when gov, scrutiny aims to capture every transaction and asset? Who wiill buy the bullion? All traceable or getting there.
Bitcoin? I really do not know about right now.
WW
1) .gov is not very effective im confiscating illegal drugs in their bogus "Drug War". There will always be someone around who will buy your gold...
2) Diversification is one way to win. Our Peruvian company is thinking of selling bonds at 2%... (smile)
3) Only do Bitcoin if/when you are comfortable with it. I am getting more inclined to think it is a nice solution for, say, 1% of one's wealth (I am NOT there at 1% in BTC).
4) It id debatable that .gov would get that strong ("1984") without a serious fight, so lead bullion (and delivery devices) are good too...
5) Similarly, productive farmland on a small scale would be relatively safe (can be taxed though, or seized, "emergency"...). I do not own farmland.
6) Mattress ("Bank of Sealy") and a hole ion the ground are part of diversification. Holding CA$H is OK as well, same reasoning.
Do Chen.
Gov. can't track drugs? Come on Gov. is drug trade. They track the big guys and take their cut.
Diversification? Any investment in anything anywhere is being targeted. They are now going down the list. Bank accounts? Check. NEXT is every brokerage account anywhere. And next is any "below surface" investment that was enabled years ago....read bullionbank or other offshore storage. So what does Peruvian bond mean when all financial transactions are being met-data'ed?
Bitcoin is infant and prime for abuse.
Gov. is not that strong? Well looks to me like people are rolling over everywhere with very little test case.
Farmland. Yes of course but ultimately people need to transact. Cash under the mattress will work. But who will buy $100K of bullion without a trace? I bought bullion from reputable dealers who are confined in their business with reporting rules. Local economy? Can that absorb my stash and give fair value?
Our Peruvian bonds would not be listed on any exchange, no meta-data either as long as email encryption is strong enough or you send BTC... Think for a moment, WHY would we offer only 2% or less...? Smile,,,
We are not big guys (me anyway, for the moment I am presuming you are not a big guy), it will be hard for .gov to track all the Little Fishez ("The Firehose Problem") and what they are doing. Sure, anything in an environment that is computerised is at risk (in Peru they have to send EVERY Invoice by email to their taxation authorities).
I am confident that almost ANYWHERE there would be someone who would quietly take your gold or sell you some.
Your comment on the people rolling over is a valid concern. But, there are some 300 million guns in America (80 million owners). "There are more of us than there are of them." And, if necessary, we would fight dirty if they try to drone us...
Wth all due respect DoChen:
http://beyondjimwillie.blog.com/
Will do, anyone who is further out than Jim Willie is worth a read.
Yeah, this is quite a read!
Zeros, take note,
Wonder whether Dr. Jim himself will address these posts.
Author goes unnamed?
I've lost track of the amount of unsecured bonds Spanish banks have issued over the last couple of years... the backdraft on that is going to be breathtaking...
"O weeeeee phuck!"
That's gonna leave a mark.
The last time it was Russian billionaires jumping in front of trains.
.03% I think is only a tiny test of the waters...the IMPORTANT point is that it was retroactive so nobody (unless real insider) could be warned. So according to this the gov. gets your Jan. 1 bank statement and takes from there.
Pretty good reason to keep away from banks altogether. This is more than a bail-in for failing banks. This would get balances in every Credit Union, trust co, chartered bank. Any money anywhere.
.03% Just the friggin start.
Good thing I have a waterbed. Way heavier than ordinary mattress.
So who is to say this retroactive tax of .03% does not climb to 10% or 15% or 50%?
"Long shreading machines." Might have to go long Staples tomorrow.
instead of following bankruptcy rules, frank dodd allows for lawful theft of creditors money normally called 'deposits'.
THE LIABILITIES OF THE BANK (IT'S DEPOSITS) NOW BECOME THE BANKS ASSETS!.
SO FOR THE REST OF YOU AMERICANS WHO HAVE TO PAY OFF YOUR CREDIT CARDS, JUST REMEMBER THE BANKS CREDIT CARD (YOUR DEPOSITS) NOW BELONG TO THE BANK!
So? Am I following here? The bank owns the credit card same as they "own" the deposit? So we default and then they "own" the debt balance?
Plus the 100 billion they "loaned themselves" through Bear Stearns...all internally done and therefore not really subject to any rule anyone could recall actually.
At least "not at that meeting we didn't have and you don't need to know about."
Oh, and "yes, they control the media too."
Almost makes the US Government look small...war and everything.
all savers and bond holders are evil and should be punished... what Germany is saying here is basically, "don't save your money in a bank or be a bank creditor or you'll be sorry..."
it's official, EU has jumped the shark
It's yours until the banks need it, then it's theirs.
It's theirs the moment you deposit it, as you become an unsecured creditor.
That sounds like a buy recommendation actually. Sorry...not going there either. "If you want your bank debt...you can have your bank debt!"
It has always been theirs. Prior to this nonsense they at least gave you a few pennies every month for the ability of using your deposit as the basis of lending at way higher rates of interest.
Now we get nothing and risk, the real risk, we risk being fleeced retroactively on top of the taxes we paid already. Sheesh almighty when are people going to wake up to this. The plan is unfolding completely in the open. Right in plain view.
ONLY question is where on earth to hide?
Our bearing import company in Peru is thinking of issuing bonds at 2%.
/seriously?
"SO I WHIPPED OUT MY BIG TEN INCH! (record of the band that plays the blues.)" belly up to bar bro! Before we burn it to the ground!
If the bank owns it all and it is clearly stated that every credit card actually belongs to the bank? Guess what you also own my debt. So run them up folks and default. Why can I not default? Where is my bail-in?
My credit cards (faithfully paid off) could also easily become "minimum payment" debt. Here in Canada the credit card statements have to show how many years at minimum payment it would take to pay off the principal + interest. IT amazes.
Minimum payment in many cases results in a 30 year repayment. Thanks bank. I default. it is your property, your risk. your debt. I know it sucks but so does retroactive taxation.
When the middle class try to default are they going to make it easy? Doubt it because they want us eliminated so if you default, say bye to any assets they can seize and hello to leins on any and all future income.
Jim Sinclair paints a reasonable picture from the 30 min mark covering the Great Flushing (Lehmen), Great Leveling (2014-2016), followed by the Great Reset. In this clip he specifically mentions they are after the middle class (white collars) having destroyed the blue collar and lower class - as we know this group relies on social security support in most western nations today. He ends with stating gold unlikely to be confiscated but expect a windfall gains tax.
https://www.youtube.com/watch?v=8IQ_TBJHrcU&list=TLMugyaGX0AcQ5ry0pyPPnY...
As long as NASA doesn't find out about your gold stacking you will be fine.
and so, another white lie, to be out'd by tyme
Ps. feeling sorry for the proletariet that will swallow this bitter pill of latent reality
thankyou Tyler
Yes, Tyler sounded the alarm for all who will listen.
If depositors are creditors then how the hell does it not involve the public?
Deutsche Bank is fucked.
Austria Alpe Hypo Real Santander Banco Catastrophale Di Medici Terminato Vaticano Popi Dei Totalo Capputto
Lumber liquidators is liquidating a lumber (taking a dump for those who don't understand my humor) after hours.
That's a no brainer. The yards in WA and OR where they store logs are pretty empty because there's little demand. I still think that "Sandy" pushed demand for lumber which had nothing to do with ordinary building permits and construction numbers. Sandy skewed the market for lumber at a time when it fit the "recovery" theme. Of course there's no demand otherwise. Prices were at all time highs and building got too expensive.
What do you make of AA results? For real?
I think they are lucky enough to join the U.S Steel crowd where they somehow continue to operate with massive losses but their stock will continue to move up and be held up as a barometer of the recovery taking place right under our noses that is not taking place. It's possible that if anyone ever actually looks under the hood they will find Arthur Anderson helping with their earnings reports. However that may be several hundred points higher on the SPY from now.
I'm doing my part. I need to put down 600 sq ft of wood flooring and buy some nails and screws. Prices are huge but the wife is "eager" to get it done. Two legged pressure cooker. Oops, probably shouldn't have used that word. Oh well, NSA have at it. How many more CIA spies are there at the BND? 2 and counting.
Soundsike a collateral call...and "that ain't gold. VERY fine wide. Well, actually cheap ass shit yellow pine that's as straight as a Chicago politician"...but hey, to the right buyer!
Maybe things work differently in Germany, but in this country, the people who pay taxes tend to have bank balances, and the people who don't pay taxes, don't.
German savings rates are at all time highs. Good time for a raid.
Operation Zitadelle of finance.
I wonder where Putin is hiding his stash.
"Prepare for massive counter offensive"?
Saving the taxpayer is fascist code for saving the government
When being fucked, does it really matter if you are on the top or the bottom? Those at the top of the pyramid will do what they can to force any real losses on everyone below them, call them creditors, owners or the lawn guy.
My swears by the Top. Every single time !!
No expert but isn't being raped different?
Position actually might matter if we're talking the latter.
The ECB has been all but telling folks 'do not leave your money in the banks'. Anyone who misses that hint deserves to be fleeced.
I think I heard Draghi say 'buy gold' too.
These guys are done with the current system of dollar domination. They have gold, marked to market, on their balance sheet and all it takes for them to be the world's #1 medium of exchange is a dollar collapse. If the dollar is at zero their gold goes to infinity (in dollar terms). From then on it is up to the rest of the world to decide what a Euro (and thus gold) is worth.
a whole 8% - LMAO
What a deal the banks have - hands in the treasury, endless bailouts, QE, escaping the rule-of-law, and rights to the deposits of citizens. Win-Win for .gov and the coporatocracy, Lose-Lose for citizens.
Don't ever wonder why .gov requires direct deposit of paychecks, and will soon get rid of paper/coin currency and outlaw precious metals transactions.
Just about ready to finish my book "Whitey Bulger and the Secret to Living Large."
Might be time for an in person interview.
Translation: The German pot calls the American kettle black.
The WSJ omits to mention that the UK already has its own bail-in policy which was rushed through and activated to sort out the Co-op Bank.
Presumably, this EU-wide version of it will be implemented in the UK at some time. And just like the UK version, there will be no public announcement by government or MSM.
A better idea is to confiscate the wealth of anyone who served in government or anyone who held a senior position at a bank in the last ten years.
Why didn't they just invoke the Right of Conquest over Brazil after the shellacking they just gave them? I'm sure they can despoil enough from the World Cup host country to make Deutsche solvent again. Even the hometown crowd was chanting obscenities against the president, so it would have been a good time to plan a coup.
A triumphant German Naional Team: "Ve return to zee Fatherland bringing Brazilian reals."
Angela Merkel: "Wunderbar! How many's in a brazillion?"
Well, yes, I am sure Angela Merkel would be happy to welcome home the German team with the World Cup. But, would it not make her even happier if each German player were bringing back a brazillion oz of gold?
If they win, the Krauts can melt the cup down and put it in the Bundesbank vault in place of the stuff they might/might not have at the Fed. First though, they have to beat Argentina, who's economy is in vey public t atters, and may want to flog the statue straightaway. Perhaps they could cut a deal and save a lot of running around?
Idiots force everyone into BTC, Be your own bank
Noe you know why the government secretly love Bitcoin type currencies. Because if there is no paper, there is no risk for a bank run.
If you allow for "Google deletions" that might make bitcoin untraceable.
I think the Feds have thought this through...but it is an interesting question.
Bitcoin is like "hiding in plain site." Literally "casino capitalism" in the sense of money laundering (in theory) on a truly stupendous scale.
"Just to get my five dollar coffee and bagel at Dunkin Donuts."
Hmmmm.
That would definitely put a bid in the "printing machine" and make people wonder where all the inflation is.
Its not confiscation. It is merely a debt to equity conversion, which is the standard for pretty much all situations where one lends to a corporation. Don't know why people are making a big deal out of this. Perhaps the complainers should seek only to lend to credit-worthy borrowers (and banks that lend to credit-worthy borrowers) instead of being irresponsible.
The equity, especially in a restructured institution, should be quite valuable in and of itself.
People need to disabuse themselves of the false metaphor that banks actually hold your money for safe-keeping. They don't. Banks are like any other borrower or lender out there, playing the game. Anyone can act as a bank. Even someone sitting in their basement with a margin account buying stocks on credit is, effectively, acting as a bank.
All messangers will be shot.
"Arabic or Robusto?"
Might explain why coffee has been bid to the moon here as well.
People are making a big deal of it because ever since deposit insurance was introduced over 80 years ago, people were led to believe and believed that their deposits in retail banks under the insured amount are completely safe, safer than money in the mattress. Few depositors treat their deposit in the banks as loans to the bank.
It will be worthless if most new equity holders tried to sell their equity at the same time. That is not an unlikely scenario since the very reason they would have been holding that money originally in the bank as deposits instead of as some other assets is because they needed the liquidity. The only way to avoid that would be to take secured loans from the banks against these assets. However that will impose debt servicing cost.
the banks have made this crisis and their clients (big ones) will foot the bill (this includes the corporates).
The bitch is to include the tax havened money. That is the key to making this debt jubilee level handed, when it comes.
exciting times indeed :-)
Their next step will be finding out who has money hidden where, and then maybe keeping it under the finders keepers rule of law.
Good grief! Why don't they just tax the hell out of beer. I'm sure there will be no complaints.
Hmmm. "Try and corner the hops market too."
Long the Farmers Museum in Cooperstown, NY.
Roger Clemons is on the mound and the call is High Cheese.
It does seem more "fair" than lumping the problem on the taxpayer. It is just like when any other business goes belly up the creditors all have to line up and take 'pennies on the pound' for what they are owed once the dust settles ?
In an ideal world where people understood what was going on they would avoid risky banks like the plague and thus put them out of business naturally ? Once a few go down and take the depositors with them maybe people will start looking more carefully at whom they are going to trust their cash with ?
Doesn't bother me either way ... I keep my pittance in phys like a good doomsdayer should and make use of every "tax minimization" scheme I can get my head around :P
People who have money in the bank have no clue that it is not their money. Are they in for a surprise.
Indeed ... which is exactly what they (we) need. So long as the majority remain willfiully ignorant of "reality" we will never see change.
It is "their" money in the same sense that the money a 30 day creditor (supplier) is owed is theirs ... when there is no-one (aka Government / Taxpayer) to make good losses from failure then reputation and good will start to matter again.
How to incite bank runs and poison the well for future fractional reserve banking systems in 3, 2 ... 1
When enough get on the band wagon, hold on to your money or getzeegold now! Thank you Dodd and Frank!
http://larouchepac.com/dodd-frank
BIS lays out plan for how to handle bank failures - Bail-in Plan Included!!! http://forum.prisonplanet.com/index.php?topic=246677.0
You wanna play in their system you gotta pay by their rules. Honestly, it seems fair. Better bailins than bailouts.
Why stop there? I call for rehypoth-o-bailouts!
Nail every depositor of every bank to stop the failure of just one bank!
And, for a dollar figure far bigger than what's in those accounts so anyone who wants to start a new account will automatically be in the hole!
Cigars & champagne all around, the taxpayers are saved!
A bad haircut, in this case means you have been robbed. That may be the case if the government reaches in over a long weekend and steals money from your bank account. This is a horrible precedent to set, and the worst part may be how some people are letting it slip out that it would be fair, or in some way justifiable if it is only on the larger accounts.
It is fine if it only impacts the savings of someone else, the savings of what they see as "the wealthy", the problem is someday they may come for you. I shudder to think what kind of world our children will live in.More about what happened in Cyprus in the article below.
http://brucewilds.blogspot.com/2013/03/a-bad-haircut-seizing-bank-accoun...\
Shave & a haircut... 2 bits!
The system of reciprocal loans investments and holdings in European financial insitutions is mind-boggling, as is - having seen this from the inside - their utter determination not to accrue any kind of loss or reserve on their balance sheets. Corrupt to the core. Thus, be certain the true state of these piles of shite is far worse than anyone is letting on, and when one goes they very likely all go.
Me - I haven't had cash on deposit for many a moon.
Remember that Dutch Finance Minister DieselBoom warned everyone that the Cyprus robbery was a "template," so don't "act surprised".