This page has been archived and commenting is disabled.
Europe – Here is What the Wealthy are Doing
By: Chris Tell at: http://capitalistexploits.at/
There are essentially three main reasons for using Banks:
- Storing cash for ease of transacting;
- Keeping cash safe from theft;
- Earning interest on your capital.
As a teenager I remember opening my first bank account, diligently saving my money and watching it slowly grow. Receiving "official" mail was cool. I felt important by simply receiving my monthly bank statements with my name on the envelope.
I was confident that by banking my cash I was protecting my capital. After all, it seemed a better idea than sticking it in my sock drawer, and I soon found that I was earning interest on my money, something else my sock drawer couldn't provide.
Little did I know or understand how modern banking actually worked back then, though it's only gotten worse since I opened that first bank account many years ago. Much worse, in fact.
In Europe, Banks reserve ratios have literally collapsed, despite what the "stress tests" conducted by Eurocrats want us to believe. Passing a European Banking stress test these days is a little like farting - easy to do, mostly hot air, and yet it typically warns of something else coming down that isn't going to be pretty. And for those who see the writing on the wall, they know it stinks.
As Reuters recently reported:
European banks have a combined capital shortfall of about 84 billion euros ($115 billion), German weekly WirtschaftsWoche reported, citing a new study by the Organisation for Economic Cooperation and Development (OECD).
French bank Credit Agricole has the deepest capital shortfall at 31.5 billion euros, while Deutsche Bank and Commerzbank have gaps of 19 billion and 7.7 billion respectively, the magazine reported in a pre-release of its Monday publication.
If you'd like your eyes to bleed, you're welcome to read the entire report here.
It is no surprise that cash withdrawal limits are being implemented across Europe, and cash transactions of more than a fleeting amount are actually being banned. Yep, it is actually illegal to purchase anything over 1,000 Euro using cash.
Want to have a big party night in Berlin? No problem. Go to the ATM and withdraw a couple hundred Euro in cash. If you're a central banker out for a taxpayer-funded soiree, (un)fortunately you'll have a problem, as you'll likely need to withdraw a few thousand Euro (hookers and blow aren't cheap). I wonder how they're going to pay for services rendered now? With a Visa card?
It was only a few months back that HSBC were publicly humiliated for restricting cash withdrawals by its customers. Now this is becoming commonplace across Europe.
Why are they doing this?
Two reasons:
- Bank runs are a real risk if the populace actually wakes up;
- Controlling the flow of money allows the controlling of people. Ensuring that transactions are all digital guarantees that financial privacy is vaporised.
None of the above information is particularly enlightening for those paying attention. However, what is going on to combat this might raise a few eyebrows. I thought I'd relay a little story which came out of a conversation I had last week with a friend.
Switzerland, once known for its robust banking privacy and healthy capital ratios, despite all of Europe's troubles, is still home to large pools of wealth. My friend maintains a relationship with an old banking colleague, who is currently working with fiduciaries in Switzerland to get client money out of their own bank accounts and into physical cash. These clients are no longer allowed to withdraw large amounts of cash, THEIR cash, directly from the banks any longer. However, they are free to wire funds anywhere they please.
What is therefore happening is that the fiduciaries are wiring the money to Hong Kong, where it is picked up by a "messenger" and placed in an envelope to be couriered BACK to Switzerland, in cash. There are currently no restrictions on remitting cash into Switzerland. Right now a loophole exists, and these wealthy clients are moving many millions of dollars each week - wiring it out of the country only to have it sent back in cash. No doubt they're looking to put it in the sock drawer! What do they see that the man on the street doesn't?
Remember the 3 reasons for using a bank account mentioned at the beginning of this article?
- Storing cash for ease of transacting - This is still valid so long as you use the system.
- Keeping cash safe from theft - The words "safe" and "bank", at least with most European banks that is, should not be used in the same sentence. Aside from the theft occurring on a daily basis by our central bankers, the risk to waking up one day to a nationalization of your European bank is a real and present risk.
- Earning interest on your capital
Central bankers have single-handedly destroyed any incentive to place capital into the traditional banking system for yield. Anyone buying CDs thinking they're safe and that they provide a satisfactory return is simply delusional.
- Chris
"The Eurozone was never designed to cope with millions of Spaniards moving their money out of the country, behaving like middle-class Venezuelans with offshore accounts in Miami. And it also was never designed to cope with capital controls. But increasingly, it looks like we’re going to end up with one or the other. Or both." - Felix Salmon
- advertisements -

I am an American living in Odessa, Ukraine since 2009.
Since the Kiev coup, banks here have established "capital controls", limiting the amount per day of withdrawals in U.S. dollars (varying from $1000 to $1200).They have also set limits on currency conversions: specifically, UAH (Ukraine currency) to U.S. dollars, but most banks set up a daily limit per bank in U.S. dollars. So, once a bank has converted, let's say, XXXXX UAH into YYYY dollars that day, they will make no more conversions into U.S. dollars for the remainder of that day. (In Ukraine you can set up a bank account that deals SOLELY with U.S. dollars; if you want a bank account in the Ukraine currency (UAH), you need to set up a separate account.)
Ukraine is still primarily a cash-based economy, and it is primarily businesses catering to TOURISTS that take credit/debit cards. Even in some of the newest shopping malls, most people still pay in CASH even when the stores accept credit/debit cards. And oddly enough, if you walk into any large shopping mall, the first thing you see are many bank ATMs lined up for getting cash for shopping. In fact, on just about any block in Odessa, you will find at least 2 or 3 ATMs (called "Bank-O-Mats" here).
If you have a few mil in paper money stuffed in your cellar good luck when they change the banknote design ( like recently with 5 Eur, to be continued with the higher denominations)
Horse-fuckery such as this is why I only trade in Quatloos, backed by the First Gamesters' Bank of Triskelion.
Remember: It's not a bank if it's not backed by Gamesters.
Currently there is only one reason to use a bank
1. To keep a minimum amount of cash on hand to effect neccessary transactions until a better form of real money becomes mainstream (PM's, bitcoin) to replace it. After that there will be zero reasons to use a bank.
Very true!
I keep a minimal amount in banks for use in paying "emergency bills" (by debit card) such as airline tickets or purchases of gold. When incoming deposits into my accounts exeed that amount, I withdraw it as cash. I keep my assets primarily in stocks (mostly foreign companies), real estate (rental housing) and gold spread through several countries in Europe.
"It is no surprise that cash withdrawal limits are being implemented across Europe, and cash transactions of more than a fleeting amount are actually being banned. Yep, it is actually illegal to purchase anything over 1,000 Euro using cash."
Americans really need to get their facts straight about Europe. ONLY in Italy there's a 1000 euro limit on items purchased with cash.
Initial ATM withdrawal limits are set by the bank, but you can change them, up to many 1000's a day. If you need more cash just go into the branch.
So, to answer the question of the "author": you can spend many many thousands a night in cash without any problem.
Maybe actually visiting Europe might be a good idea before writing about it....
Correct. The esteemed author should also ask why the 100, 200 and 500 euro banknotes were invented - all"worth" more in face value than 100 Scheiss dollars - and are in intensive use.
We are already in a G Zero Political World trying to hold a Global Banking system breaking at its seams. Unfortunately, the first tear begins with the EC.
The first shot of protection against contagion has been fired against BNP and ready for Deutsche Bank. They have just become fringe members of the US TBTF Club.
In self defense, they are already erecting gates to potential runs in the name of prevention of systemic risk. Systemic risk to national or global systems ?
Privatization or bailout of the likes of DB with loads of craps that they can no longer export and China and others have lots of junk foods, polluted waters and own junk debts that they do not need another load.
Still not noticing how each CB is covering their own a**es
We are already in a G Zero Political World trying to hold a Global Banking system breaking at its seams. Unfortunately, the first tear begins with the EC.
The first shot of protection against contagion has been fired against BNP and ready for Deutsche Bank. They have just become fringe members of the US TBTF Club.
In self defense, they are already erecting gates to potential runs in the name of prevention of systemic risk. Systemic risk to national or global systems ?
Privatization or bailout of the likes of DB with loads of craps that they can no longer export and China and others have lots of junk foods, polluted waters and own junk debts that they do not need another load.
Still not noticing how each CB is covering their own a**es
My eyes... My eyes...
Seriously, it'll be just like Black Friday. We'll be watching the usual suspects killing each other for fiat scrip on TV...
Thanks again for another off angle reflection into the crystal.
The more rules and regulations that governments/"soverign" banks pass to control money the more loopholes are created that specialists who are wealthy or who work for the wealthy can exploit.
Wire transfers are needed for purchases from big commodity suppliers and you mess with that at peril. A whole lot of wire transfers go into Soddy for example.
I noticed that bank ATM cards I use (including Chase) recently dropped withdrawal limits to $300 per day.
Per Jim Willie, I'm recycling post 2008 (QE) FRNs. Anybody have any relevant rumors?
That is one of Jim Willie's nuttier comments. A difference between old toilet paper and new simply cannot matter. ...besides who uses cash? I look to Jim for entertainment not information.
I'll admit I have mixed feelings about Jim Willie. His articles are written in some strange stream-of-consciousness-style and he certainly pulls no punches. And more often than not his articles morph into impressive rants.
But IMHO he's definitely more than entertainment, unlike that economic court jester Cramer. From across the pond, I often look at Americans and wonder: they excel at producing the finest as well as the most moronic creatures on earth. And they manage to put up with both, so that even absolute assholes can rise up to fame and glory.
You guys are strange.
Willie always claims to have the massive inside scoop - but it mostly never seems to pan out.
Oh great, so now it's not just the NSA watching me...
The modern economy that has evolved over the last several decades is loaded with interwoven contracts reeking of contagion. If faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar. Never before has mankind diverted such a large percentage of wealth into intangible products or goods. I contend this is the primary reason that inflation has not raised its ugly head or become a major economic issue. Like many of those who study the economy I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply. Putting money into a svings account is investing in a promise!
The timetable on which economic events unfold is often quite uneven and this supports the possibility of an inflation scenario. A key issue being one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment or stop driving the twenty miles to work? Answer, it could be months before your car is repossessed so you buy gas. It is important to remember that debts can go unpaid and promises be left unfilled. Is this possible and if so where would that leave us? Chaos and major disruption would result from such a scenario. As we have seen from the economic crisis of 2008 and following many other unsettling developments legal actions can continue to drag on for years. More in the article below.
http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....
nice catch---paying off debt zeros out money---not paying kicks the can---
Can remember only 3 years ago transferring 750k in 10 minutes bank to bank but also walking in and requesting 20/30k in cash from my business account and having no problems; maybe the occasional could you please call a day in advance which is reasonable.
Those were the days and with the tighter measures outlined in your story i might have not left myself without a pot to piss in. Hey ho easy come easy go and when i can shake myself out of this slumbering depression due to all this warmongering and crazy financial manipulation i can look to earn 7 figures a year again.
What bank? Last time I tried to pull friggen $3k out of an account, I actually had to go to two branches to get the whole amount.
Scared the shit out of me.
As trustee of an estate I pulled over $400K out of Chase in one day as cashiers checks (5) they didn't like to lose the deposits but I HAD NO PROBLEM ! Lots of BS here
A cashier's check ain't cash. I'm talking about getting stacks of actual Benjamins.
Christ. Of course they pay for hookers with a visa card. I can't say if that's the case with the blow but I'm quite sure.
The thing is, $115 billion isn't a lot of money anymore.
The Fed could print that money out of thin air and plug that gap in an afternoon.
Fed using currency swaps like they always do, more secret infusion, lots of BS here.
The ECB and the FED are managed very differently. The Euro cannot be allowed to inflate. The dollar has no choice. Them 2 have very different structures. The ECB has physical gold on it's balance sheet.The Euro gets stronger as gold increases in price. These are not true for the dollar.
How about punching an adjacent button and producing a few million fiat votes? That is the only way Obozo could have been REELECTED..
They are ... and the gap grows wider.
Why is wiring allowed and cash withdrawals not allowed? I need some help here.
Could it be related to a fear of inflation?
Both is allowed, the author is just wrong.
Cash is more difficult to gate.
It relates to social caste.
Off the the ATM now
You know it's bad when you have to ask the bank if you can withdrawl X amount of cash! Which begs the question: Who's the customer who's the slave?
Its a beautiful world...if you keep your eyes closed.
My wife is always telling me to dump zerohedge, close my eyes and have a cup of tea. I hope she is right but somehow I get this feeling ....
At heart all women are socialists. You can withhold your darker discoveries from her, which is what I recommend, because women find men they can't figure out entirely to be more interesting longer than the rest. Looking around you will see the alternatives: divorce, alcoholism, suicide, war, miscellaneous self destructive OCDs. Its a zero sum game. Take my advice...
"At heart all women are socialists. . ."
Ah ha! You may be onto something there. I can't wait to run this by my wife (who, in spite of having taken the red pill, still clings to many socialistic tenants).