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The European "Template" For Dealing With Crises: Freezing Accounts, Bank Holidays, and Capital Controls…

Phoenix Capital Research's picture




 

More and more analysts are beginning to take note of the “War on Cash.” However, they’re missing the fact that the actual template for what’s coming to the US first appeared in Europe back in 2012.

 

Back in March of 2012, when the EU Crisis first began to spin out of control, then Prime Minister of France Nicolas Sarkozy openly called for the renegotiation of the Schengen Treaty: the treaty that established the 26-nation EU as a “borderless” entity in which individuals could move from one country to another with little difficulty and which also made trade among EU members easier.

 

France was not alone either. A few months later, both France and Germany proposed imposing border controls in June of that same year.

 

            A Vote of No Confidence in Europe

 

Germany and France's joint proposal to allow Schengen-zone countries to temporarily reintroduce border controls as a means of last resort might sound harmless. But doing so would damage one of the strongest symbols of European unity and perhaps even contribute to the EU's demise.

 

Germany and France are serious this time. During next week's meeting of European Union interior ministers, the two countries plan to start a discussion about reintroducing national border controls within the Schengen zone. According to the German daily Süddeutsche Zeitung, German Interior Minister Hans-Peter Friedrich and his French counterpart, Claude Guéant, have formulated a letter to their colleagues in which they call for governments to once again be allowed to control their borders as "an ultima ratio" -- that is, measure of last resort -- "and for a limited period of time." They reportedly go on to recommend 30-days for the period.

 

http://www.spiegel.de/international/europe/german-and-french-proposal-for-border-controls-endangers-european-unity-a-828815.html

 

Why border controls? Well in truth, it was all about the money… specifically, physical cash. As we’ve noted before… with the vast majority of the global financial system based on digital money… the minute a significant number of depositors try to move their money OUT of a bank and INTO physical cash, the whole system can collapse.

 

Again, Europe was ahead of the US in terms of proposing these terms. The below article dated from 2012 outlines the plan to limit cash withdrawals, shut down ATMs, and impose border controls to stop people from fleeing with their capital.

 

            Exclusive: EU floats worst-case plans for Greek euro exit: sources

 

European finance officials have discussed as a worst-case scenario limiting the size of withdrawals from ATM machines, imposing border checks and introducing capital controls in at least Greece should Athens decide to leave the euro…

 

As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union.

 

http://money.msn.com/business-news/article.aspx?feed=OBR&date=20120611&id=15208663

 

What are the key takeaways from this?

 

1)   When the next crisis hits, the Powers That Be are only too happy to let the rule of law will go out the window.

 

2)   The biggest problem they face is STOPPING people from moving their money into physical cash.

 

3)   To stop #2, capital controls, border controls, and even a CARRY taxes (read here for more on this) will be imposed.

 

Moreover, and I want to stress this, Europe has also shown us the template for how this mess will play out. Indeed, the 2013 banking crisis in Cyprus showed us EXACTLY how it will be in terms of speed and timing.

 

The quick timeline for Cyprus is as follows:

 

·      June 25, 2012: Cyprus formally requests a bailout from the EU.

·      November 24, 2012: Cyprus announces it has reached an agreement with the EU the bailout process once Cyprus banks are examined by EU officials (ballpark estimate of capital needed is €17.5 billion).

·      February 25, 2013: Democratic Rally candidate Nicos Anastasiades wins Cypriot election defeating his opponent, an anti-austerity Communist.

·      March 16 2013: Cyprus announces the terms of its bail-in: a 6.75% confiscation of accounts under €100,000 and 9.9% for accounts larger than €100,000… a bank holiday is announced.

·      March 17 2013: emergency session of Parliament to vote on bailout/bail-in is postponed.

·      March 18 2013: Bank holiday extended until March 21 2013.

·      March 19 2013: Cyprus parliament rejects bail-in bill.

·      March 20 2013: Bank holiday extended until March 26 2013.

·      March 24 2013: Cash limits of €100 in withdrawals begin for largest banks in Cyprus.

·      March 25 2013: Bail-in deal agreed upon. Those depositors with over €100,000 either lose 40% of their money (Bank of Cyprus) or lose 60% (Laiki).

 

The most important thing I want you to focus on is the speed of these events.

 

Cypriot banks formally requested a bailout back in June 2012. The bailout talks took months to perform. And then the entire system came unhinged in one weekend.

 

One weekend. The process was not gradual. It was sudden and it was total: once it began in earnest, the banks were closed and you couldn’t get your money out. ATMs were closed, capital controls were in place, full stop.

 

There were no warnings that this was coming because everyone at the top of the financial food chain are highly incentivized to keep quiet about this. Central Banks, Bank CEOs, politicians… all of these people are focused primarily on maintaining CONFIDENCE in the system.

 

How far will they go to maintain this trust?

 

The Bank of Cyprus, the bank that imploded in 2013 and STOLE clients’ funds was voted Best Bank for Private Banking in Cyprus by EUROMONEY magazine in 2012!!!

 

No joke…

 

Bank of Cyprus has been named as the Best Bank for Private Banking in Cyprus, by the internationally acclaimed magazine EUROMONEY

 

Bank of Cyprus Private Banking ranked first among Cypriot, Greek and other international financial institutions operating in Cyprus in the Private Banking sector…

 

This recognition by EUROMONEY is ever more important in today’s macroeconomic environment as it reaffirms the Bank’s ability to safely and successfully respond to its clients’ financial needs and emphasizes its clients’ loyalty and trust.

 

http://www.bankofcyprus.com.cy/en-GB/Cyprus/News-Archive/Best-Bank-for-Private-Banking/

 

From best bank to totally broke and freezing clients’ accounts in less than one year.

 

Europe has laid the template for what’s coming to the US.

 

This is just the beginning. We've uncovered a secret document outlining how the Fed plans to incinerate savings.

 

We detail this paper and outline three investment strategies you can implement

right now to protect your capital from the Fed's sinister plan in our Special Report

Survive the Fed's War on Cash.

 

We are making 1,000 copies available for FREE the general public.

 

To pick up yours, swing by….

http://www.phoenixcapitalmarketing.com/cash.html

 

Best Regards

Phoenix Capital Research

 

 

 

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Mon, 06/08/2015 - 11:06 | 6174275 chinooky47
chinooky47's picture

Eventually people will wake up and realize that banks are too much in bed with governments and us the folks who stupidly put our money in their vaults will not do so.  Gold and silver will reign and this failed monetary system will only exist between government and their larege feifdoms companies.  We the people are starting to wake up. This electronic banking/government control system is starting to crack.

Mon, 06/08/2015 - 08:32 | 6173713 LawsofPhysics
LawsofPhysics's picture

You are making the assumption that the majority of people actually have savings...

FAIL.

Mon, 06/08/2015 - 07:29 | 6173587 new game
new game's picture

debt free with a stash of staples. end of chapter in history-fiat debt ponzi, but the beginning of the new game-survival...

brush up on your skills

things happen fast

like a sunami

chow

Mon, 06/08/2015 - 07:22 | 6173578 NoWayJose
NoWayJose's picture

It's OK to have $10,000 in the bank with a debit card - but if you have $10,000 in cash in your wallet then you are a terrorist or drug dealer and it will get seized. Even if you stash cash in your mattress it can be seized -- and the reason for the 'raid on your home' was that it is suspicious that you withdrew a large amount of cash from the bank!

So 'cash' is the 'enemy' and is not safe either. Anything in the bank is not safe. Anything in Wall Street is not safe. PMs continue to be hammered down. And there is only so much beans and bullets that you can stack up. So where do you store your wealth? A garage full of toilet paper?

Mon, 06/08/2015 - 09:16 | 6173871 Fun Facts
Fun Facts's picture

The people are the enemy.

Banning cash is part of the ZWO war on freedom.

Mon, 06/08/2015 - 07:13 | 6173519 Md4
Md4's picture

· "June 25, 2012: Cyprus formally requests a bailout from the EU."

This is the key statement.

Why did Cyprus request a bailout?

Simply put, the government couldn't pay it's bills, and as a result of its tie to the euro, it couldn't monetize it's debt either. It was stuck, and needed the EU's help, for which, the EU demanded certain conditions be met. The EU might borrow or print the money...but not Cyprus.

We might see similar conditions among our states, such as California or Illinois, especially as regards pension outlays. It all comes back to the same essential point. And it's a point that renders most "protective" strategies precariously nonsensical.

The problem originates with the destruction of the western middle class' means of wealth creation: loss of jobs and the income those jobs generated. This creates great strains on authority to make up for lost tax revenue, or to aid and bailout many system components, ultimately with red ink. That significantly magnifies the original problem, while creating what will become a major currency risk down the road: insurmountable debt. Nothing they're doing, or can do, will change that. Nothing. The old economy was damaged for 40 or so years, and that damage was fatal.

The very last vestiges of that postwar economy died in 2008, and cannot be resurrected.

To top it all off, central banks get into the act by warping the mechanism for establishing the cost of capital (money), and everything attached to that financial datum. These cretins actually raise the tempo and pitch of markets (transforming them into rackets), that then intensifies the search for yield to manic levels, wholly apart from fundamental value investing, to game-based manipulation. Corporate share buybacks-to-jack-equity-prices being one of the most noxious of the games.

All of this combines with the hawking of pseudo-assets, like PM's and shacks, by a variety of racketeers (and you know who you are) driven to profit as addicts are to "score"...without any regard for the consequences to Main Street or the country...as though the middle class they helped to destroy (or now feed off of) no longer mattered.

What 70% consumer spending-driven economy?

Given all this, why would anyone seek cash...simply to hold it "safely"?

Safe from what?

As long as emitters are around, you're never safe, even if they place tyrannical stipulations on the movement of their notes. They are only worth what THEY say they are...TODAY.

As with other pseudo-assets, like shacks or PM's, it's the same thing, only from a merchant or supplier's point of view: what you stashed will buy only what they first determine it COSTS. Until then, you'll have NO idea what your "asset" is really worth.

On the other hand...IF you've already converted cash to USEFUL assets to put to the real work of living (perhaps, becoming one of those merchants yourself)...that's a different matter.

You lack the means of sustaining YOURSELF when it finally blows...that's on you.

m

Sun, 06/07/2015 - 23:13 | 6173165 Dragon HAwk
Dragon HAwk's picture

and what in the world would convince all the people to take their money out of the banks..  that is the trillion dollar question

 

Sun, 06/07/2015 - 22:02 | 6173032 TheGreatRecovery
TheGreatRecovery's picture

Hey, I got a great idea!  Let's all of you give up your currencies and just use our currency.

Hey, I got another great idea!  Now that you've all given up your currencies and are using our currency, let's do away with currency altogether.  :-)

Sun, 06/07/2015 - 20:37 | 6172852 harrybrown
harrybrown's picture

one can never have to much of the facts, it just depends on how much one chooses to pay attention to it.

Sun, 06/07/2015 - 18:47 | 6172632 fedupwhiteguy
fedupwhiteguy's picture

My, My, My.... More doomer porn for us plebes. I've already sold off all large, seizeable assets. Converted most of in-bank savings to PM's. Now I just have to bite the bullet and convert all the remaining bank assests (IRA's & a 401(k)) to PM's. I'm just dreading the 28% tax hit.

Mon, 06/08/2015 - 05:55 | 6173502 NEKO
NEKO's picture

Is a mere rumour of cash becoming unavailable enough to make people rush into cash and thus boost the "value" of the dollar.

I believe the hour is late and we are dealing with desparate people and they will use any and all means to keep this thing going.

Tic Toc.

Mon, 06/08/2015 - 02:58 | 6173414 crazytechnician
crazytechnician's picture

Not even a 0.01% allocation into bitcoin ?

Mon, 06/08/2015 - 03:22 | 6173430 JustUsChickensHere
JustUsChickensHere's picture

Many people miss what I think is the key set of attributes that make Bitcoin very attractive now for a minor percentage allocation.

  1. Invisibly transportable across borders - use a brain wallet during travel
  2. With care, it can be untraceble and unseizable (useful protection against theives and ex wives)
  3. Forex volatility has stabilized.
  4. Can not be counterfieted (no tungsten bars)

Of course it requres an investment of your own time to allow you to understand and practice how to exploit these attributes, so that is a negative.

Mon, 06/08/2015 - 03:40 | 6173440 Peribanu
Peribanu's picture

For short-term transportation it seems fine, assuming the volatility really has subsided. But longer term, it is hugely risky. As soon as a Western government or two gets fed up with bitcoin putting assets out of their control, a simple legal ban on a trader accepting bitcoin would kill it. It's no store of value if it loses convertibility with goods or other currencies.

Mon, 06/08/2015 - 05:16 | 6173485 crazytechnician
crazytechnician's picture

It would be impossible to ban a Protocol. Bitcoin clearing houses would simply be based off-shore if government tried to ban it. Then the trader would be receiving fiat , not bitcoin even if somebody were spending their bitcoin on that traders product , the trader would not even be aware they were accepting bitcoin. You cannot stop an idea who's time has come. BTW why would government even want to ban it ? They too will see the massive cost saving benefits , transparency , security and market efficiency blockchain technology is now bringing to the table.

Mon, 06/08/2015 - 07:29 | 6173588 NoWayJose
NoWayJose's picture

Why would a government want to ban it? Control! The same pluses that the Bitcoiners praise (anonymity, etc) make it suspicious to governments, who want to tax any gains and keep drug money from being laundered.

Sun, 06/07/2015 - 20:30 | 6172838 Singelguy
Singelguy's picture

Better a 28% tax hit than a 90% loss through a combination of confiscation and hyperinflation.

Do NOT follow this link or you will be banned from the site!