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The Catastrophic Threat Of Bail-Ins
Submitted by Jeff Nielson via SprottMoney.com,
It has now been more than two and a half years since the Cyprus Steal, the first “bail-in” perpetrated in the Western world, occurred. Before reviewing the history of this newest financial atrocity, it is necessary to define the terms.
The term “bail-in” describes a scenario in which a bank confiscates private property to indemnify itself for losses it has suffered. A bail-in is a totally lawless theft of assets, as there is no principle of law (of any kind) that could authorize such a seizure of private property. And in fact, there are many principles of law that demonstrate the lawlessness at work here. As with much of the financial crime jargon, “bail-in” is simply another gibberish euphemism like “quantitative easing” or “derivatives.”
As custodians of the financial assets of their clients, banks represent a form of trustee. The purpose of any trust relationship is to provide absolute security to the beneficiary of the trust (i.e., the legal owner of the property). Thus, one of the most fundamental principles of our legal system is non-encroachment regarding the property held in the custody of a trustee.
From a legal standpoint, it is like there is an invisible and impenetrable wall that surrounds the trust property. The only exceptions to this wall (ever) occur when the trust beneficiary makes a legal request for some disbursement or related transaction, when the trust itself directs some form of action (in the interests of the trust beneficiary), or when the trust allows the trustee to manage the trust assets on behalf of the beneficiary.
The idea of trustees using assets for their own benefit or (worse) claiming ownership of any trust assets represents one of the most serious forms of financial crime in Western civilization. Given this context, how did the government of Cyprus respond when its own Big Banks whined and claimed that they “needed” to confiscate deposits in order to pay off their own gambling debts? It meekly rubber-stamped the lawless theft.
How did other Western governments react to the violation of one of the most sacred legal principles in our entire financial system? They simply nodded their heads in unison, and, as a single chorus, called the Cyprus Steal “a precedent” – a template for future systemic financial crime in their own regimes.
Beyond the perfect choreography demonstrated by Western governments immediately after this act of theft, how do we know that the Cyprus Steal was a scripted event orchestrated by the Big Banks? To begin with, all of the Big Money deposit holders in Cyprus had already moved their money out of Cyprus banks before the Big Banks began their pillaging and plundering. The “fix” was in.
Not a single Western government raised the slightest qualm about violating one of the most sacred principles of law in our legal system. Rather, these puppet regimes went about creating their own “rules” as to how/when the Big Banks would be allowed to steal property from the accounts of their own account holders. The Harper regime entrenched “the bail-in” in Canada’s official budget, while other puppet regimes were sneakier and more circumspect when “legalizing” this crime.
Here it is necessary to back up and address the “reason” (excuse) behind this newest form of systemic bank crime. The “bail-in” is the ultra-insane culmination of the “too big to fail” doctrine. By this doctrine, any and all assets, public or private, in our financial system can and will be sacrificed (stolen by the Big Banks) to prevent any of the Big Banks from “failing” – that is, going bankrupt as a consequence of their own reckless gambling .
The legal and economic principles violated by the concept of “too big to fail” are too numerous to list. However, they begin with the following objections:
1) The concept of “too big to fail” is contrary to numerous tenets of capitalism. In any capitalist/free market system, insolvent entities are supposed to fail in order to correct the misallocation of assets. Any entity that grows to become an existential threat to the system is simply too big to exist.
2) Banks should never be allowed to gamble. Period. There would have been no need for the $10’s of trillions in “bail-outs” given to this crime syndicate following the Crash of ’08 if our puppet governments had not previously erased our laws that prevented such gambling.
3) “Too big to fail” is based on an overtly criminal premise called systemic blackmail: “Give us everything we demand, or we’ll blow up the financial system.” It is extortion in perpetuity: financial slavery.
Note how (2) and (3) relate directly back to (1). Why shouldn’t banks gamble with their clients’ assets? Because by doing so they not only jeopardize the property they are holding in trust but also become a threat to the financial system. Why shouldn’t financial entities be allowed to grow so big they become an existential threat to the system? Because size (as we now see) gives these Big Banks the leverage necessary to blackmail our corrupt, limp-wristed governments, perpetually.
So what is the only possible way to put an end to this Big Bank blackmail? Well, should our corrupt governments ever decide to once again enforce our anti-trust laws , we can end the cycle by smashing these Big Banks “down to size,” or down to the largest size allowed by law . Indeed, “too big to fail” is the ultimate example of why we need anti-trust laws and why they need to be vigorously enforced.
Anti-trust laws are anti-corruption laws. For decades, there has been almost no enforcement of our anti-corruption laws. The result is a global economy now almost totally dominated by just one of the major (and illegal) oligopolies that has emerged: the crime syndicate readers know as the One Bank .
It is this crime syndicate that engages in the systemic blackmail of “too big to fail,” supposedly to indemnify its Big Bank tentacles for the losses they incur. However, in almost every case, these “losses” are nothing but an accounting sham: paper losses owed by one Big Bank tentacle to another. No entity could ever be bankrupted by a “debt” owed to its right hand by its left.
The “losses” do not even exist, but the blackmail and fraud is all too real. Having totally depleted the public treasuries of most Western nations with its “bail-out” extortion following the Crash of ’08, the One Bank needed a new mechanism of theft by which to continue its permanent, institutionalized blackmail.
The bankers demanded that they be allowed to steal private assets (already in their custody), directly, any time they claimed to suffer a “substantial loss.” Our puppet governments, as usual, caved to the crime syndicate’s demands, and the “bail-in” was born.
What is at risk with a “bail-in?” According to the (perversely named) Financial Stability Board : any and every paper asset in the custody of the Big Banks and (potentially) any paper asset in the custody/control of our governments. The Financial Stability Board is one of the propaganda mouthpieces of the Big Bank crime syndicate, and its “guidelines” have been directly cited as authority by several of these puppet regimes, including the Canadian goverment.
How do people protect themselves from the massive bail-ins that are imminent as the Next Crash approaches? There is only one way: get your assets (i.e., your wealth) out of all paper instruments. This includes the fraudulent paper currencies of our fiat-currency/ fractional-reserve Ponzi scheme system. Hold only enough wealth in paper instruments to satisfy current cash-flow requirements and short-term “emergencies.”
For the longer term financial Armageddon that is now inevitable, the only secure form of wealth-preservation is the oldest-and-surest tool for that task: precious metals . Rather than offering holders short- or medium-term protection for their wealth, gold and silver represent lifetime security, what people are supposed to have, and what most people still think they have when they entrust their wealth to a bank.
Once upon a time, we had strong, vigorously enforced laws that made a bank the safest place to store paper assets. That is no longer. Now banks are where your wealth is most likely to be stolen – and by the bank itself. Thanks to the bail-in, the term “bank robbery” now has an entirely different meaning.
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I don't want them to do a bail in. I need the money to spend enlarging my collection of ammonites. My use is far more productive than anything the feds will do with the money.
Why those blanketty bank- blank- banks-!!!
I never get tired of posting this link, from 2007, BEFORE the GFC:
http://gata.org/node/5606
The wife insists on keeping $20-30K in a bank account "just in case". I was alright with it at first, but it's pissing me off more and more. We're fighting about it for a month or so.
It's not like it'll break us if they take it, 99% of our assets are outside of the banksters grasp, but I still don't like the idea of them getting a penny of it.
Perhaps you can compromise by placing $4-5000 in each of six accounts at different institutions. Even if ATM withdrawals were to be limited to a few hundred per week, you'd still have a decent chance of getting out with only a modest beating compared to your current situation.
It is all too late, the 1999 repeal of the 1933 Glass-Steagall Act emboldened Wall Street crooks create trillions of dollars of derivatives. Those derivatives, CDOs, MBSs, CDSs and so on, now total in excess of two quadrillion dollars. Taking one example, Bank of America's 22 trillion dollars of derivatives now have FDIC insurance. On top of $53 trillion more already in the FDIC insured retail deposit division, as of 2011. No amount of "bail-ins" can cover what happens when even a small percentage of these derivatives turn out to be fraudulent.
It constantly amazes me the number of people who do not understand modern banksterism.
There is no 'money' in any deposit account of any type anywhere in all of westernized banking, they are all Credited Accounts, they are all book keeping entries denoting the amount of money the banks owes to (stole from) their depositors, they are all Bank Debt. That's why 'deposits' are listed as 'bank liabilities'.
Here's a puzzle for you: How can a accounting entry, denoting a bank's debt to a depositor, be used to bail that bank out of debt, as implied by the term "Bail-In" ?
http://carl-random-thoughts.blogspot.com/
the Frog
It's survival of the Wall Street banksters and their jet-setting lifestyle at all costs.
Even if it means impoverishing the 99%.
#banklivesmatter - doj's motto under holder!
Where will they practice their jet-setting lifestyle safely? Will they cordon off large sections of the most desirable places to keep the assassins out?
Good luck with that. They are truly mad if they think the sheep are going to stand still for capital controls in established economies (Cyprus is not one)
When you are dying, the fear of death diminishes.
The 99% are the 99% because they don't understand that they're not actually 'banking' money, but rather, are making an unsecured loan to the bank in exchange for next to no interest.
I thus have little sympathy for them if they can't even be bothered to understand the transaction they're entering into with their counterparty.
Yogi, just a heads up - the 1% (that's one person out of a hundred) are NOT jet-setters. The 1% are the backbone of America - the small business owners who work 80-hr weeks, risk capital, take risks, innovate stuff, and have a few employees. The guy next door with a construction company or landscaping business or small factory.
You're talking about the .001% and possibly even fewer. The 1% are your comrades in arms. The powers that be are trying to destroy the 1% because then everyone else goes down the toilet too.
bravo!
Hopefully when we're all getting schlonged, they will atleast have the decency to pull our hair.
I'm long KY jelly.
precious metals & at least two less precious ones: copper & a certain distant cousin of carbon...
Brass and lead are the most precious...
Powder and Primers man.. you can get Brass and Lead, anywhere....
Yea..."bail ins" when US banks have over $3 trillion in reserves, and the Fed can print more at will.
Once upon a time, depositors were insured against banking failure with taxpayer money. Now taxpayers are insured with depositor money. I feel so much safer now. <sarc>
There's nothing wrong with bail-ins. Banks borrow 'private property' from customers, just like any other borrower borrows. They are not custodians. They are not trustees. They are borrowers. Anyone who lends to a bank should understand this, and act accordingly as an unsecured creditor.
Bingo! Most people, including the author of this article, seem to think that bank deposits are owned by the depositor. Wrong! This is not the case, and it hasn't been the case for a very very long time. In fact, I think the accepted law regarding this dates back to pre-US English law. Whatever the case, when you deposit money into a bank, you agree to become an unsecured creditor in exchange for whatever interest the bank is offering. There's no gray area about this. When interest rates get to zero (or negative!!!), the coffee can under the dog house in the back yard seems like a better place to put your money.
The global monetary system was designed by bankers for bankers and they get a cut at every step in the process.
https://www.hiddensecretsofmoney.com/videos/episode-4
They are given the privilege of creating money out of thin air (fractional reserve banking), which they can then lend out and charge interest on.
There is only one task they have to carry out and that is to lend the money prudently to people that can pay them back plus the interest.
Could it be any easier, with no manufacturing, supply and distribution chains to worry about?
What are bankers like at prudent lending?
“What is wrong with lending more money into the Chinese stock market?” Chinese banker recently
“What is wrong with lending more money into real estate?” Chinese banker last year
“What is wrong with lending more money to Greece?” European banker pre-2010
“What is wrong with a NINA (no income no asset) mortgage?” US banker pre-2008
“What is wrong with lending more money into real estate?” US banker pre-2008
“What is wrong with lending more money into real estate?” Irish banker pre-2008
“What is wrong with lending more money into real estate?” Spanish banker pre-2008
“What is wrong with lending more money into real estate?” Japanese banker pre-1989
“What is wrong with lending more money into real estate?” UK banker pre-1989
“What is wrong with lending more money into the US stock market?” US banker pre-1929
Globally incompetent at the only job they have to do.
Shouldn’t we be asking why bankers are so useless rather than bailing them out?
Its not a threat in Europe bail ins a L-A-W as of January 1...next week could be interesting
Banker’s have a look at the Shanghai Composite stock market over the last five years, you see that big spike that topped out in June, that is called a “bubble”.
If you lend money into bubbles you can inflate the asset prices for a while, but sooner or later reality is going to catch up with you and those loans will go sour, the imaginary wealth you have created will evaporate just as quickly.
I know you are suckers for “the new paradigm” and don’t seem to have learnt a thing since Tulip Mania in 1600s Holland.
“The new paradigm” is just nonsense for gullible fools like you, keep an eye on the fundamentals, this is reality.
Please pass this to the FED who just can’t spot bubbles.
P.S. The fundamental in housing markets is size of mortgage to income (please retain for future reference).
Arrogance always goes too far it's what it does.
And yet, We the People are largely unaware and distracted by the bread and circuses given out by our leaders.... I'd guess that less than 5% of the people even have a clue, and the others fully expect the government to "fix" the problem when it happens. I've been saying for some time now, invest in precious metals: gold, silver, and lead.
Not to be too much of a contrarian here but Sprott is in the business of selling PMs. Adds some question to his motivation.
According to ZH, repo men are doing big business in Alberta. Doesn't mean they're lyin'.
No trust -- NO business. The banksters killed their own golden goose. Of course, they'll never admit it until their last client says "Up Yours!" Bankster owns $30 million house in North Scottsdale, for sale over a year. No takers. Talk about liquidity.
"The Government proposes to implement a ?bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants."
ECONOMIC ACTION PLAN 2013 - page 155
Canadian gooberment puts this in the federal buget and .........birds chirping! Gotta loathe those presstitutes.
Geez, I wonder, which bank "liabilities" they are referring to?
Bank-issued bonds, for example. In a bail-in situation, obviously the preferred and common shares are worthless. So basically they go up the capital structure, converting debt to equity, until they have the institution appropriately capitalized.
"until they have the institution appropriately capitalized."
should read:
until they have the institution appropriately cannibalized."
IMHO.
and I'll bet those fools in Cyprus still have most/all their money in the banks, like most fools the world over.
Used to be when a bank did that, people got as much of their money out as they could. Then for a generation or so they would be leery of putting money in any bank. Not in today's advanced civilization, so well trained we are against doing anything to protect ourselves be it, physical, financial or any other way.
Bankers, whether central bankers, financial, or petty local bankers, are birds of a feather. They become especially criminal when they have permission to print and dabble in the worlds financial markets as do most banks in the world today. I still hear the old "they lend money from monies deposited", even from the educated among us. These blockheads deserve to have their earnings stolen.
In closing I wonder where Sprott keeps their funds and for that matter their PM's. And I'll bet they push the precious metal IRA's where your metal is held by a custodian and controlled by some financial institution and you have to pay both.
If you don't / can't hold it you don't own it regardless of what "it" is. When we bend over at airports, let them rob our bank accounts and our property under their rules, it's no wonder they mock us, rob us, and kill us.
Rule of law? There's no rule of law anymore, who is kidding who?
TPTB will simply re-interpret any troublesome 'rules' that prevent them from doing what they want to do. The 'rule of law' will be whatever they want it to be. Which means it doesn't exist.
Here's the thing though...rules only work if everyone follows them, and they only follow them if they respect them, either because they believe in their 'rightness', or because they fear running afoul of them. TPTB do NOT believe in the rightness of these rules, nor do they fear violating them.
So, there IS no rule of law in effect. Ordinary folks should NOT keep any significant funds in a bank, period. Cover your monthly expenses, and keep everything else far away from their grasping hands.
Now what if they do a 'bail-in', but most people have pulled their money out? How would they get their hands on it then? Once they try that, the cat is out of the bag...if they don't get it the first time they try, they might not get a second chance, because everyone will be on to them. They could end up killing consumer banking for a generation or so. Banks could end up being for the wealthy, or businesses only, with most people either not having enough to bank, or not trusting banks with what little they DO have.
That would be great. Then no one would give a shit if they went under or not, and if they did they would only take their own kind down with them.
Banks are becoming increasingly irrelevant to more people, as many live paycheck to paycheck, and people simply can't accumulate enough to worry about. They don't want loans, and aren't interested or able to invest in the more exotic financial instruments of today's market. By getting too big to fail, they are getting so big that most people have no real use for them in their daily lives.
"In his brilliant classic, A Disquisition on Government, John C. Calhoun warned that a written constitution would never be sufficient to restrain the governmental leviathan. The net tax consumers (those who received more in government benefits than they paid in taxes), especially government employees, would relentlessly argue away the effectiveness of constitutional restrictions on government, he predicted. The net tax payers would inevitably be overwhelmed and defeated. There was never a truer political prediction. https://www.lewrockwell.com/2015/12/thomas-dilorenzo/sorta-good-bad-extremely-ugly/
Also this: https://www.congress.gov/bill/114th-congress/house-bill/4269/text
H.R.4269 - Assault Weapons Ban of 2015114th Congress (2015-2016)
#BankstersAreTerrorists
#AusterityIsCode4Looting
F hayek, neo-liberal economic scam, and a 4 plank plan to monopolize the world:
1) deregulate global financial markets (complete)
2) deregulate global trade (complete)
3) decimate and enslave nation states into bankruptcy with fiat bs ( making impotent to fight fraud, corruption, monopolization) (complete)
4) privatize everything. ( water, food, infrastructure - almost complete)
teach the plebes to blame gubmint, when truthfully, government is merely a proxy, like isis, etc.. for the Oligarchy.
welcome to the unveiling of the only real threat to mankind: Monopolization. west virginia coal mine lifestyles of the enslaved and impoverished! debt slavery, an open air prison, much like gaza for all!
inevitable, for P < P + I
The only problem with going 'all in' with gold is that these same corrupt government entities will make it illegal to own gold and will confiscate and arrest you for having it. They will be forced go after owners of the metal in vengeance in order for their future cashless system to work, you will be shot for owning gold.
"How do people protect themselves from the massive bail-ins that are imminent as the Next Crash approaches? There is only one way: get your assets (i.e., your wealth) out of all paper instruments. "
What a perfect segue to the "Abolition of Cash". What did you think it was for?
Cash abolition exists SOLELY to prevent escape from A SMALL PART of the banks' confiscation schemes.