The Template for the Next Crisis: Bank Accounts Frozen, Capital Controls, and Bail-Ins

Phoenix Capital Research's picture

Behind the veneer of “all is well” being promoted by both world Governments and the Mainstream Media, the political elite have begun implementing legislation that will permit them to freeze accounts and use your savings to prop up insolvent banks.

 

This is not conspiracy theory or some kind of doom and gloom. It’s basic fact.

 

In the last 24 months, Canada, Cyprus, New Zealand, the US, the UK, and now Germany have all implemented legislation that would allow them to first FREEZE and then SEIZE bank assets during the next crisis.

 

With that in mind, I want to devote some time to what has come out concerning the Cyprus “bail-in” and its implications. The reason for this is that this tiny country has provided the world with a template of what is eventually going to be a global phenomenon.

 

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 (more on this in a moment).

 

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, NOT on fixing the system’s problems. Indeed, they cannot even openly discuss the system’s problems because it would quickly reveal that they are a primary cause of them.

 

For that reason, you will never and I repeat NEVER see a Central banker, Bank CEO, or politician admit openly what is happening in the financial system. Even middle managers and lower level employees won’t talk about it because A) they don’t know the truth concerning their institutions or B) they could be fired for warning others.

 

With that in mind, now is a good time to prepare for systemic risk. I cannot forecast precisely when things will get as ugly as they did in Cyprus for the financial system as a whole (no one can).

 

However, the clear signals are clear that the Feds are preparing for something big. The Treasury Department has ordered survival kits for the Big Banks’ employees… and the NY Fed is expanding its satellite office in Chicago in case something major happens that forces the market to collapse.

 

If you've yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis "Round Two" Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.

 

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

 

As we write this, there are less than 10 left.

 

To pick up yours…

 

Click Here Now!

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Our FREE daily e-letter: http://gainspainscapital.com/

 

 

 

 

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Phoenix901210's picture

I went to a cashpoint the other day and the top 'option' to withdraw was £100. It used to be £200 or £250. 

I could still withdraw the upper limit (£250) but there was subtle encouragement to withdraw less for people more on autopilot.

theTribster's picture

Hope they don't run out of the digital copies, only 10 left! - for fux sake! It is just insulting...

Bemused Observer's picture

If I order in the next ten minutes, will they double the offer? I'd like to have one to read, and one to put away.

scattergun's picture

How does owning gold in an IRA through something like CEF in Canada figure in to the mix. Could the U.S. Gov restrict that type of physical gold ownership?

CheapBastard's picture

Why would there be a problem? Seems like a good deal to me esp in the IRA since you won't have to worry about cap gains when gold goes to $5,000.

Son of Loki's picture

I just read China has tightened its grip on its people by increasing capital controls. I am sure they also increased the number of web sites they block there which is a pain in the balls if you are trying to do any meaningful research while you are there. My former college prof spent 6 months there but had to come back early since 50% of the sites he needed to read were blocked and there is also zero google there.

 

Why do they do that? Seems like they're holding their nation's progress back.

ToSoft4Truth's picture

Everyone, stay calm.  You’ll get your due.  We’ll use the numbering system.

Get in line. 

mianne's picture

Beware of the Citizen's Gold Confiscation Act ( April/ 5/ 1933), still valid, that Roosevelt edicted when the State was nearly bankrupt just after 1929 . Without warning and after years of massive gold buying, the Act suddenly rendered illegal the owning of physical gold . The citizens had to give their physical gold to the State and received a nice paper certificate in exchange . Thus, in financial crises, the citizens are threatened to be deprived of their physical gold and as well as of their dollar savings in the banks by a hungry State. Why not buy a few areas of good land and grow good vegetables instead with our friends and neighbours ?

Bemused Observer's picture

Back then there were still gold coins in circulation. That isn't the case today.
They COULD, in theory, attempt to trace and confiscate gold bars and coins that have a paper-trail they can follow, but there are few such folks around today compared with 1933, when gold was much more commonly held by the citizenry.
Today, most of the gold in the US is in the form of jewelry. If TPTB ever attempt to raid women's jewelry boxes, an awful lot of them will get shot, stabbed, attacked by the owner's dogs, etc.
Not to mention the PR implications of such a move. That would make for some truly ugly headlines, and keep in mind that although Americans don't own as much gold as they did back then, they DO possess MANY times the firepower.
That "good land" would be much easier for TPTB to confiscate than your neighbor's wedding rings. And if you ever had to bug out, you can take your gold with you. You can't bring your vegetable garden, you'll have to leave that behind.

Bendromeda Strain's picture

You do know that the gold had to be confiscated in order to expand the money supply to the Government, correct? That is why it was repriced after the gold was "purchased". To seize it now would be to admit it was money all along, which makes them liars. Who in their right mind would comply with an admitted liar? Why does holding one (gold) preclude a person from doing the other (cooperative gardening)? They are not in any way mutually exclusive. Why did you post it three times? Did you get three payments for doing so?

mianne's picture

Beware of the Citizen's Gold Confiscation Act ( April/ 5/ 1933), still valid, that Roosevelt edicted when the State was nearly bankrupt just after 1929 . Without warning and after years of massive gold buying, the Act suddenly rendered illegal the owning of physical gold . The citizens had to give their physical gold to the State and received a nice paper certificate in exchange . Thus, in financial crises, the citizens are threatened to be deprived of their physical gold and as well as of their dollar savings in the banks by a hungry State. Why not buy a few areas of good land and grow good vegetables instead with our friends and neighbours ?

mianne's picture

As in  post- 1929 economic crisis, Roosevelt's solution is still possible in economic crises when the state is nearly bankrupt .Thus the owners of physical gold can be legally robbed as well as the owners of dollar savings in the banks .  Beware of the CITIZENS'GOLD CONFISCATION ACT ( 5 April 1933) , still valid, that suddenly made  illegal for the American citizens the owning of physical gold . They had to give their gold to the State in exchange of a nice paper certificate.

Jameson18's picture

Come get it bitches. At some point in your lives you will have to make a choice fight for principle or DIE A SLAVE.

Its like the first time you punch someone in face you had to make a mental choice to physically hurt a person. I promise you this in the near future all Americans will have to look in the mirror and choose.

mcq's picture

Groups that say dollars are "bad" and gold is "good", but then are willing to sell you their gold for your dollars makes me say... "hmmm".

Bendromeda Strain's picture

I am sure lots of things make you say "hmmm", like zippers and light switches. "Groups" (?) that sell gold absolutely do tell potential buyers the main reason for making the purchase. Most of them need to sell for a small profit as that is their business model. Again, they sell because that is their business. Sellers still live in the dollar world with mortgage payments and kids in college, etc. Consider this - it is better for all precious metal holders for gold and silver to be as widely held and distributed as possible. Only a Rothschild or Hunt mentality would want to hold it all.

Redart's picture

Buy gold, lose 50% on devalueation, get robbed the other 50% VS buy stocks, capital controls. Help me choose wisely pleez.

lucky and good's picture

I'm afraid we haven't seen anything yet. A key assumption of the current "escape velocity" mantra is that we have all the time in the world to deal with our problems, it discounts the notion that forward progress may at any time be fouled by events often beyond our control. This feeling all is well is strengthened by the government's optimistic projections and numbers that fail to recognize how another recession could skew future tax revenue and cause spending to soar.

The more and more I study derivatives it now appears the main goal of QE may have been to hold up the underlying value of assets that feed into and support the massive derivative market more than help the economy. The easy money policies and artificially low interest rates of the last seven years has simply moved demand forward and created a slew of economic activity that is unsustainable in what would be considered a normal economic environment. The article below looks at how this will result in a hard landing.

http://brucewilds.blogspot.com/2015/07/hard-landing-scenario-is-not-out-of.html

Lost in translation's picture

I'm starting to think "Phoenix Capital" is a psuedonym for a 6th year Economics major undergrad at UCLA.

gonetogalt's picture

Doom Porn 'lite' articles like PC's above can be helpful if and when 'Raging Debate's' father in law ever takes a look at anything besides FT placebos. If you can entice even one to peer down the rabbit hole he may eventually stick his whole head in, maybe even take the Red Pill.

(God bless ZH!)

Grandad Grumps's picture

Heaven forbid that people would get to keep what they earned and banks would have to disgorge their fraudulent profits... or create more money to be fair to the people who earned it.

All of the stuff you are talking about is simple theft and in a moral and ethical world that had a rule of law would be prosecuted.

Crocodile's picture

I love the paycheck "gross pay" verses the "take-home"; a 50% hair-cut and then add all the other taxes outside of the work place and that is another 15% haircut.  Not that people can't make enough; it is they steal so much.

Hongcha's picture

Such inflammatory headlines.  Almost spilled my Masala Chai!

Crocodile's picture

When does Phoenix Capital go bankrupt?  Not soon enough for ZH'ers.

Goldy Locks's picture

"In the last 24 months, Canada, Cyprus, New Zealand, the US, the UK, and now Germany have all implemented legislation..."

And don't forget Switzerland :

https://www.finma.ch/en/news/2013/08/mm-pos-sanierung-abwicklung-20130807/

Quote

As set out in its position paper on the recovery and resolution of systemically important banks published today, FINMA proposes an approach in which the home supervisory authority takes the lead in coordinating group-wide recovery and resolution plans. Where necessary, the home supervisory authority can order a bail-in in which the bank's creditors bear losses. This means in particular that the holders of senior bonds contribute towards recapitalising the institution affected. The bail-in process also creates time to reorganise the viable parts of a bank and transfer them to a sustainable business model.

UnQuote

Aaaand ...it's gone.

 

Raging Debate's picture

Yep. Debt haircuts for bondholders and continued correction in equities. Believe commodities have nearly bottomed. You have nearly every major bank including BIS shouting the warning to get out but like getting high at the casino most wont listen like my father in law.

His other son in law is a fund manager that told him I was a broken clock right once a day, except this is the second time I called it and emailed him evidence. He told father in law stocks are undervalued cause chinese capital will come roaring in. I told father in law that already happenened and it went into US real estate.

Sent him BIS and other links and explained the model and historic charting as once you understand it (and so few investors do) then it becomes far more predictable within a range. 

The guy hasnt even rotated into oil from bonds. He is a pig ready to be slaughtered. Oh well, he is family and as such I give three warnings with a solid business case. He already has lost money and wont hold his other son in law accountable for loss already (the technicals alone were screaming get out since June) so I will not feel bad as he eats more shit sandwiches. 

Same as hedging physically for at least three months with food, water and means to defend against hungry people if war breaks out (likely). Watch the show Naked and Afraid for a fucking clue hedgeless peeps. I and others say this out of love not because we are paranoid dickwads. But I am out of time now and the American people are awake, I must finish my own preps for the next 5-6 years of difficulty. 

we built this city's picture

The market has recovered more than 7 percent ...

most people are now very pessimistic - this means probably that we are going to witness a strong rally.....

bulls are still alive...bears will be hammered again....

Yes the market will collapse- but this will happen when you are going to turn to a bull....

till then ....bears are underground

 

 

dumdum's picture

 

 

These markets no longer have any bulls or bears.

Only CEOs buying back their corporations shares like there's no tomorrow.

And of course, we can't forget about the plunge protection team.

Raging Debate's picture

We built this city - This isnt 2006. i dont believe you have a clue.

OldPhart's picture

Not having a clue is probably the key to everything the FEDmarket does.

Unfortunately, I'm in the manually processed safe world, and most everybody else is in the electronic lock world.  I have no means of comparison other than my bias for mattress savings.

I'll sit this one out and hold cash until it sorts out.

Raging Debate's picture

We built this city - This isnt 2006. i dont believe you have a clue.

josh08's picture

However, the clear signals are clear that the Feds are preparing for something big. The Treasury Department has ordered survival kits http://www.pulsionerotica.com/video/1850_The-perfect-body-to-fuck for the Big Banks’ employees… and the NY Fed is expanding its satellite office in Chicago in case something major happens that forces the market to collapse.

Crocodile's picture

Or do you not know that the unrighteous will not inherit the kingdom of God?  Do not be deceived; neither fornicators , nor idolaters, nor adulterers, nor effeminate, nor homosexuals, nor thieves, nor the covetous, nor drunkards, nor revilers, nor swindlers, will inherit the kingdom of God

Dick Buttkiss's picture

That's a crock, Croc; they already own it.

restelle's picture

God's Kingdom is not Earth.

Md4's picture

Respectfully, I think it is:

"...on earth as it is in heaven..."

It would seem our willingness is required to make the difference between what is, and that presumed objective.

m

Crocodile's picture

The poster I was commenting to keeps linking to porn sites out of context; just giving a friendly warning.  However, note how many fit that list; like ALL people.

RaceToTheBottom's picture

If the money has multipliers, it can fail.  If it can fail, it will fail.

Get it out.

KnuckleDragger-X's picture

What a great way to start a civil war...if things last that long.......

Crocodile's picture

They love civil war; the more they can get "us" to kill each other, the less they will need to.  By war, famine & pestilence more than 50% of the world population will be destroyed at some point in the future (and it will be within a seven year period - (just imagine the carnage); we are forewarned.  That is quite a significant level of success.

Muddy1's picture

"And then the entire system came unhinged in one weekend."

 

More sensationalism from PC.  It took more than a weekend to become unhinged, more like 10 days from the first bank holiday to the final agreement.  More to the point there were plenty of warning signs in the "months of buildup",  There is no mention of other countries and their bank failures only where it fits the template for what PC is promoting.

restelle's picture

You nailed it right on Croc!