The price of oil collapsed by more than 8 percent on Wednesday, and a decision by the European Central Bank has Greece at the precipice of a complete and total financial meltdown. What a difference 24 hours can make. On Tuesday, things really seemed like they were actually starting to get better. The price of oil had rallied by more than 20 percent since last Thursday, things in Europe seemed like they were settling down, and there appeared to be a good deal of optimism about how global financial markets would perform this month. But now fear is back in a big way. Of course nobody should get too caught up in how the markets behave on any single day. The key is to take a longer term point of view. And the fact that the markets have been on such a roller coaster ride over the past few months is a really, really bad sign. When things are calm, markets tend to steadily go up. But when the waters start really getting choppy, that is usually a sign that a big move down in on the horizon. So the huge ups and the huge downs that we have witnessed in recent days are likely an indicator that rough seas are ahead.
A stunning decision that the European Central Bank has just made has set the stage for a major showdown in Europe. The ECB has decided that it will no longer accept Greek government bonds as collateral from Greek banks. This gives the European Union a tremendous amount of leverage in negotiations with the new Greek government. But in the short-term, this could mean some significant pain for the Greek financial system. The following is how a CNBC article described what just happened…
“The European Central Bank is telling the Greek banking system that it will no longer accept Greek bonds as collateral for any repurchase agreement the Greek banks want to conduct,” said Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
“This is because the ECB only accepts investment grade paper and up until today gave Greece a waiver to this clause. That waiver has now been taken away and Greek banks now have to go to the Greek Central Bank and tap their Emergency Liquidity Assistance facility for funding,” he said.
And it certainly didn’t take long for global financial markets to respond to this news…
The Greek stock market closed hours ago, but the exchange-traded fund that tracks Greek stocks, GREK, crashed during the final minutes of trading in the US markets.
The euro is also getting walloped, falling 1.3% against the US dollar.
The EUR/USD, which had recovered to almost 1.15, fell to nearly 1.13 on news of the action taken by the ECB.
But this is just the beginning.
In coming months, I fully expect the euro to head toward parity with the U.S. dollar.
And if the new Greek government will not submit to the demands of the EU, and Greece ultimately ends up leaving the common currency, it could potentially mean the end of the eurozone in the configuration that we see it today.
Meanwhile, the oil crash has taken a dangerous new turn.
Over the past week, we have seen the price of oil go from $43.58 to $54.24 to less than 48 dollars before rebounding just a bit at the end of the day on Wednesday.
This kind of erratic behavior is the exact opposite of what a healthy market would look like.
What we really need is a slow, steady climb which would take the price of oil back to at least the $80 level. In the current range in which it has been fluctuating, the price of oil is going to be absolutely catastrophic for the global economy, and the longer it stays in this current range the more damage that it is going to do.
But of course the problems that we are facing are not just limited to the oil price crash and the crisis in Greece. The truth is that there are birth pangs of the next great financial collapse all over the place. We just have to be honest with ourselves and realize what all of these signs are telling us.
And it isn’t just in the western world where people are sounding the alarm. All over the world, highly educated professionals are warning that a great storm is on the horizon. The other day, I had an economist in Germany write to me with his concerns. And in China, the head of the Dagong Rating Agency is declaring that we are going to have to face “a new world financial crisis in the next few years”…
The world economy may slip into a new global financial crisis in the next few years, China’s Dagong Rating Agency Head Guan Jianzhong said in an interview with TASS news agency on Wednesday.
“I believe we’ll have to face a new world financial crisis in the next few years. It is difficult to give the exact time but all the signs are present, such as the growing volume of debts and the unsteady development of the economies of the US, the EU, China and some other developing countries,” he said, adding the situation is even worse than ahead of 2008.
For a long time, I have been pointing at the year 2015. But this year is not going to be the end of anything. Rather, it is just going to be the beginning of the end.
During the past few years, we have experienced a temporary bubble of false stability fueled by reckless money printing and an unprecedented accumulation of debt. But instead of fixing anything, those measures have just made the eventual crash even worse.
Now a day of reckoning is fast approaching.
Life as we know it is about to change dramatically, and most people are completely and totally unprepared for it.
Are you ready to have your veins scanned every time you use your bank account? Are you ready to use a “digital tattoo” or a microchip implant to unlock your telephone? Once upon a time we read about such technologies in science fiction novels, but now they are here. The era of widespread biometric identification and microchip implants is upon us, and it is going to change the way that we live. Proponents of these new technologies say that they will make our private information and our bank accounts much more secure. But there are others that warn that these kinds of “Big Brother technologies” will set the stage for even more government intrusion into our lives. In the wrong hands, such technologies could prove to be an absolute nightmare.
Barclays has just announced that it is going to become the first major bank in the western world to use vein scanning technology to control access to bank accounts. There will even be a biometric reader that customers plug into their computers at home…
Barclays is launching a vein scanner for customers as it steps up use of biometric recognition technology to combat banking fraud.
The bank has teamed up with Japanese technology firm Hitachi to develop a biometric reader that scans a customer’s finger to access accounts, instead of using a password or PIN.
The biometric reader, which plugs into a customer’s computer at home, uses infrared lights to scan blood flow in a person’s finger. The user must then scan the same finger a second time to confirm a transaction. Each “vein profile” will be stored on a SIM card inside the device.
Vein recognition technology is used by some banks in Japan and elsewhere at ATM machines, but Barclays said it is the first bank globally to use it for significant account transactions.
But Barclays is not the only one that is making a big move into biometric identification.
Online retailing behemoth Alibaba is going to start using fingerprint scanning in an attempt to make their transactions more secure…
Alibaba, the giant Chinese online retailer, is integrating fingerprint scanning into its Alipay Wallet app. Foxconn, the Taiwanese manufacturer of the iPhone and iPad, threw nearly $5 million at Norway’s NEXT Biometrics, which develops fingerprint scanning technology, back in May. And earlier this month it took a 10% stake for $2 million in AirSig, a Taiwanese company that uses smartphones’ built-in gyroscopes to track air handwriting. The company says AirSig provides three-factor authentication: your signature, your phone, and the way you sign with a flourish in mid-air.
It is only a matter of time before more banks, online retailers and major websites start using this kind of technology. We live at a time when theft on the Internet threatens to spiral out of control, and big corporations are going to be continually looking for answers.
Cell phone security is another area of great concern these days. If someone can get a hold of your phone and unlock it, that person can potentially do all sorts of damage.
So Motorola has developed a “digital tattoo” that will be used to ensure that only the owner of a phone is able to unlock it. The following is how Motorola described these new digital tattoos…
Made of super thin, flexible materials, based on VivaLnk’s eSkinTM technology, each digital tattoo is designed to unlock your phone with just a touch of your Moto X to the tattoo, no passwords required. The nickel-sized tattoo is adhesive, lasts for five days, and is made to stay on through showering, swimming, and vigorous activities like jogging. And it’s beautiful—with a shimmering, intricate design.
It’s another step in making it easier to unlock your phone on the go and keep your personal information safe. An average user takes 2.3 seconds to unlock their phone and does this about 39 times a day—a process that some people find so inconvenient that they do not lock their phones at all. Using NFC technology, digital tattoos make it faster to safely unlock your phone anywhere without having to enter a password.
And below I have posted the video that Motorola shared on YouTube about these tattoos…
Pretty bizarre stuff, eh?
But others are taking cell phone security to even greater extremes.
For example, some people were actually implanting themselves with microchips in anticipation of the release of the iPhone 6 on September 9th…
With a wave of his left hand, Ben Slater can open his front door, turn on the lights and will soon be able to start his car. Without even a touch he can link to databases containing limitless information, including personal details such as names, addresses and health records.
The digital advertising director has joined a small number of Australians who have inserted microchips into their skin to be at the cutting edge of the next stage of the evolution of technology.
Slater was prompted to be implanted in anticipation of the iPhone 6 release on September 9.
The conjecture among pundits and fans worldwide over what chief executive Tim Cook will reveal is building.
At present the iPhone cannot read microchip implants. However, Mr Slater believes the new version will have that capability. His confidence is now lodged between his thumb and forefinger.
Of course this kind of thing is not new. People have been getting implanted with microchips for years. If you doubt this, just do an Internet search for “biohackers” and see what you find.
But it is starting to become more mainstream, and there are already some thinkers that are quite eager to use such technology for very authoritarian purposes.
For example, one prominent philosopher recently suggested that we should use implantable microchips to prevent anyone that is “deemed unworthy” from becoming a parent…
Although he admits it “sounds blatantly authoritarian” and “violates just about every core value we possess in a free society,” a noted transhumanist author has said a world government body should forcibly sterilize anyone “deemed unworthy” of parenthood by using implanted microchips.
Constitutional attorney and civil liberties expert John W. Whitehead, founder of The Rutherford Institute, warned LifeSiteNews earlier this year that political officials would long to use this seminal technology.
In an article for Wired.com today, philosopher Zoltan Istvan wrote that the notion first crossed his mind when he heard a blonde nurse say, “with 10,000 kids dying everyday around the world from starvation, you’d think we’d put birth control in the water.”
After careful thought, in an effort to “give hundreds of millions of future kids a better life, I cautiously endorse the idea of licensing parents,” Istvan wrote today.
You might be tempted to think that this is crazy talk.
But the truth is that this kind of technology is already being developed.
In a previous article, I quoted a news article which discussed how billionaire Bill Gates is funding the development of a birth control microchip that “acts as a contraceptive for 16 years”…
Helped along by one of the world’s most notable billionaires, a U.S. firm is developing a tiny implant that acts as a contraceptive for 16 years — and can be turned on or off using a remote control.
The birth control microchip, funded by the Bill and Melinda Gates Foundation, would hold nearly two decades worth of a hormone commonly used in contraceptives and dispense 30 micrograms a day, according to a report from the MIT Technology Review.
The new birth control, which is set to begin preclinical testing next year with hopes of putting it on shelves in 2018, can be implanted in the buttocks, upper arm or abdomen.
Yes, I know that a lot of the things that I have talked about in this article sound really weird.
But the reality of the matter is that technology is changing at an exponential rate, and our world is going to get crazier and crazier as time goes by.
Are you ready for what comes next?
ISIS is marching through city after city in Iraq, and they are doing it with American weapons. Thanks to a series of stunning victories in recent months, ISIS has captured a vast array of U.S. military equipment including trucks, Humvees, rockets, artillery pieces and Stinger missiles. When the U.S. was pulling out of Iraq, we were extremely generous to the new Iraqi army. We basically armed them to the teeth with equipment that U.S. taxpayers paid for. But now that the new Iraqi army is folding like a 20 dollar suit in the face of ISIS jihadists, vast quantities of that military equipment are falling into the hands of some of the most radical jihadists the world has ever seen. And considering the fact that ISIS also recently seized the equivalent of nearly $500 million in cash from a bank in Mosul, the leadership of ISIS won’t be having much problem buying anything else that they might need either. ISIS is getting stronger with each passing day, and they are not going to be satisfied until the Iraqi government has been toppled. It is a geopolitical mess of epic proportions, and there don’t seem to be any easy solutions on the horizon.
To say that the new Iraqi army has been incompetent would be a massive understatement. Not only have they run away like scared kittens from these jihadists, they have also left behind staggering amounts of weaponry for them. According to the Los Angeles Times, ISIS has captured “the weapons stores of the 2nd and 3rd [Iraqi army] divisions in Mosul, the 4th division in Salah al Din, the 12th division in the areas near Kirkuk, and another division in Diyala”. And we aren’t just talking about rifles and ammunition. We are talking about some pretty impressive hardware…
Government forces retreated en masse from the onslaught, leaving behind a military hardware bonanza, including the U.S.-made armored Humvees as well as trucks, rockets, artillery pieces, rifles, ammunition, even a helicopter. Some of the seized materiel was old or otherwise non-functioning; but a lot was promptly put to use on the battlefield.
Pictures of grinning Islamist warriors cruising in U.S. Humvees bedecked with white-on-black militant flags flooded the Internet and became the signature image of the ISIS rampage.
ISIS social-media enthusiasts even mocked the global #BringBackOurGirls Twitter campaign, referring to girls kidnapped by an Al Qaeda offshoot in Nigeria. ISIS sympathizers began tweeting #BringBackOurHumvee.
One of the most popular photos mocking the Obamas and the U.S. military under the #BringBackOurHumvee hashtag is posted below…
We have become a laughingstock to ISIS. They know that we are not going to invade Iraq again. So they are laughing at us as they use our own equipment to take over the country.
It is estimated that the military equipment that ISIS has captured so far could equip an army of 200,000 soldiers. No wonder ISIS is recruiting more fighters so vigorously.
But wait, there’s more.
As WND has documented, members of ISIS were actually trained by U.S. personnel at a secret base in Jordan back in 2012…
Members of the Islamic State of Iraq and the Levant, or ISIS, were trained in 2012 by U.S. instructors working at a secret base in Jordan, according to informed Jordanian officials.
The officials said dozens of ISIS members were trained at the time as part of covert aid to the insurgents targeting the regime of Syrian President Bashar al-Assad in Syria. The officials said the training was not meant to be used for any future campaign in Iraq.
The Jordanian officials said all ISIS members who received U.S. training to fight in Syria were first vetted for any links to extremist groups like al-Qaida.
So U.S. taxpayers have not just paid for their weapons.
We have also paid for their training.
Not only that, but ISIS has also captured the Al Muthanna chemical weapons facility.
According to WND, some officials are concerned that ISIS may be able to use that sarin gas production facility to start churning out poison gas…
And they also may be working with a man who’s known for his expertise in making sarin, a manmade toxin that was developed in Germany and can, according to the Centers for Disease Control, produce loss of consciousness, convulsions, paralysis and death in victims who are exposed.
The revelations comes as the State Department acknowledged that ISIS has captured a stockpile of old chemical weapons at the Al Muthanna chemical weapons production complex as its fighters sweep through Iraq’s Sunni- controlled region.
The access to a sarin poison gas production facility, and the man with the expertise to operate it, is the result of a new alliance between the brutal jihadist fighters and Izzat Ibrahim al-Douri, who was a top military commander and vice president to the deposed Saddam Hussein.
And the folks running ISIS are crazy enough to do just about anything. They are stone cold killers that will go to extreme lengths to advance their cause. If you are not very familiar with ISIS yet, the YouTube documentary posted below contains some footage from some of their recent triumphs…
Iraq is literally being torn to pieces by this conflict, and even young boys are getting swept up into the fighting.
For example, check out this excerpt from a recent Daily Beast article…
It was a surprising sight. The customers standing in Haj Hamdoun’s store in central Mosul watched as a masked child came into the shop, bought what he wanted without saying a word and then left again, carrying a bag containing candies and milk in one hand and a heavy machine gun, which was just about as big as him, in the other.
This was Abdullah, who appears to be the city’s youngest volunteer with the Sunni extremist group, the Islamic State of Iraq and al-Sham, or ISIS, that took control of Mosul over two weeks ago.
Abdullah is not yet 11 years old. But his older brother and his father, who was a senior member of ISIS, were killed in fighting between the group and Iraqi security forces in 2013. That’s why Abdullah joined ISIS, although he is far from the only child in its ranks.
And the photo of a 13-year-old ISIS fighter below comes from the ISIS Media Hub on Twitter…
So where does all of this end?
For ISIS, the conquest of Iraq and Syria would just be the beginning. Ultimately, ISIS intends to establish a caliphate that will rule the entire Middle East (and eventually the entire world).
And who is going to stop them from taking over Iraq? These radicals are more than willing to die for what they believe in, and the Iraqi army has been pretty pathetic so far.
The United States seems to have very little interest in another Iraq war, and other nations would probably be extremely hesitant to intervene as well.
So who is going to stop ISIS?
And is there a larger geopolitical agenda at work here?
Please feel free to share what you think by posting a comment below…
Do you have a bank account that you don’t actively use or a safe deposit box that you have not checked on for a while? If so, you might want to see if the government has grabbed your money. This sounds absolutely crazy, but it is true. All over the world, governments are shortening the time periods required before they can seize “dormant bank accounts” and “unclaimed property”. For example, as you will read about below, just last year the government of Australia seized a whopping 360 million dollars from dormant bank accounts. And this kind of thing is going on all over America as well. In fact, all 50 states actually pay private contractors to locate bank accounts and unclaimed property that can be seized. In some states, no effort will be made to contact you when your property is confiscated. And in most states, the seized property permanently become the property of the state government after a certain waiting period has elapsed. So please don’t put money or property into a bank somewhere and just let it sit there. If you do, the government may come along and grab it right out from under your nose.
In this day and age, broke governments all over the globe are searching for “creative ways” to raise revenues. In Australia for example, the time period required before the federal government could seize a dormant bank account was reduced from seven to three years, and this resulted in an unprecedented windfall for the Australian government over the past 12 months…
The federal government has seized a record $360 million from household bank accounts that have been dormant for just three years, prompting outrage in some quarters amid complaints that pensioners and retirees have lost deposits.
Figures from the Australian Security and Investments Commission (ASIC) show almost $360 million was collected from 80,000 inactive accounts in the year to May under new rules introduced by Labor. The new rules lowered the threshold at which the government is allowed to snatch funds from accounts that remain idle from seven years to three years.
The rule change has delivered the government a massive bonanza with the money collected in the year to May more than the total collected in the past five decades combined.
Most Americans are not going to be too concerned about this because it is happening on the other side of the planet.
But did you know that this is happening all over the U.S. as well?
For instance, the waiting period in the state of California used to be fifteen years.
Now it is just three years.
And when California grabs your money they don’t just sit around waiting for you to come and claim it. Instead, it gets dumped directly into the general fund and spent.
If you do not believe that California does this, just check out the following information that comes directly from the official website of the California State Controller’s Office…
The State acquires unclaimed property through California’s Unclaimed Property Law, which requires “holders” such as corporations, business associations, financial institutions, and insurance companies to annually report and deliver property to the Controller’s Office after there has been no customer contact for three years. Often the owner forgets that the account exists, or moves and does not leave a forwarding address or the forwarding order expires. In some cases, the owner dies and the heirs have no knowledge of the property.
And it is not just bank accounts and safe deposit boxes that are covered by California law. The reality is that a vast array of different kinds of “unclaimed property” are covered…
The most common types of Unclaimed Property are:
Bank accounts and safe deposit box contents
Stocks, mutual funds, bonds, and dividends
Uncashed cashier’s checks or money orders
Certificates of deposit
Matured or terminated insurance policies
Mineral interests and royalty payments, trust funds, and escrow accounts.
And when a state government grabs your property, the consequences can be absolutely devastating. The following is an excerpt from an ABC news report from a few years ago…
San Francisco resident Carla Ruff’s safe-deposit box was drilled, seized, and turned over to the state of California, marked “owner unknown.”
“I was appalled,” Ruff said. “I felt violated.”
Unknown? Carla’s name was right on documents in the box at the Noe Valley Bank of America location. So was her address — a house about six blocks from the bank. Carla had a checking account at the bank, too — still does — and receives regular statements. Plus, she has receipts showing she’s the kind of person who paid her box rental fee. And yet, she says nobody ever notified her.
“They are zealously uncovering accounts that are not unclaimed,” Ruff said.
To make matters worse, Ruff discovered the loss when she went to her box to retrieve important paperwork she needed because her husband was dying. Those papers had been shredded.
And that’s not all. Her great-grandmother’s precious natural pearls and other jewelry had been auctioned off. They were sold for just $1,800, even though they were appraised for $82,500.
And some states are even more aggressive than the state of California in going after bank accounts.
In a recent article, Simon Black noted that the state of Georgia can go after “dormant bank accounts” after just one year of inactivity…
In fact, each of the 50 states has its own regulations pertaining to the seizure of dormant accounts. And the grand prize goes to… the great state of Georgia!
Georgia’s Disposition of Unclaimed Properties Act sets the threshold as low as one year.
In other words, if you have a checking account in Georgia that you haven’t touched in twelve months, the state government is going to grab it.
So much for setting aside money for a rainy day and having the discipline to never touch it.
As economic conditions get even worse, the temptation for governments all over the planet to grab private bank accounts is going to become even greater.
We all remember what happened in Cyprus. When the global financial Ponzi scheme finally collapses, politicians all over the world are going to be looking for an easy way to raise cash. And our bank accounts may be one of the first things that they decide to confiscate.
So please don’t keep all of your eggs in one basket, and check on all of your accounts in regular intervals.
In this day and age, it pays to be diligent.
Now that “bail-ins” have become accepted practice all over the planet, no bank account and no pension fund will ever be 100% safe again. In fact, Cyprus-style wealth confiscation is already starting to happen all around the world. As you will read about below, private pension funds were just raided by the government in Poland, and a “bail-in” is being organized for one of the largest banks in Italy. Unfortunately, this is just the beginning. The precedent that was set in Cyprus is being used as a template for establishing bail-in procedures in New Zealand, Canada and all over Europe. It is only a matter of time before we see this exact same type of thing happen in the United States as well. From now on, anyone that keeps a large amount of money in any single bank account or retirement fund is being incredibly foolish.
Let’s take a look at a few of the examples of how Cyprus-style wealth confiscation is now moving forward all over the globe…
For years, there have been rumors that someday the U.S. government would raid private pension funds.
Well, in Poland it just happened.
According to Reuters, private pension funds were raided in order to reduce the size of the government debt…
Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.
The Polish government is doing the best that it can to make this sound like some sort of complicated legal maneuver, but the truth is that what they have done is stolen private assets without giving any compensation in return…
The Polish pension funds’ organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.
Announcing the long-awaited overhaul of state-guaranteed pensions, Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings.
He said that what remained in citizens’ pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.
For years, Iceland has been applauded for how they handled the last financial crisis. But now it is being proposed that the “blanket guarantee” that currently applies to all bank accounts should be reduced to 100,000 euros. Will this open the door for “haircuts” to be applied to bank account balances above that amount?…
Following the crisis in October 2008, Iceland’s government declared all deposits in domestic financial institutions were ‘blanket’ guaranteed – an Emergency Act that was reafrmed twice since. However, according to RUV, the finance minister is proposing to restrict this guarantee to only deposits less-than-EUR100,000. While some might see the removal of an ‘emergency’ measure as a positive, it is of course sadly reminiscent of the European Union “template” to haircut large depositors. This is coincidental (threatening) timing given the current stagnation of talks between Iceland bank creditors and the government over haircuts and lifting capital controls – which have restricted the outflows of around $8 billion.
European finance ministers have agreed to a plan that would make “bail-ins” the standard procedure for rescuing “too big to fail” banks in the future. The following is how CNN described this plan…
European Union finance ministers approved a plan Thursday for dealing with future bank bailouts, forcing bondholders and shareholders to take the hit for bank rescues ahead of taxpayers.
The new framework requires bondholders, shareholders and large depositors with over 100,000 euros to be first to suffer losses when banks fail. Depositors with less than 100,000 euros will be protected. Taxpayer funds would be used only as a last resort.
What this means is that if you have over 100,000 euros in a bank account in Europe, you could lose every single bit of the unprotected amount if your bank collapses.
As Zero Hedge reported on Tuesday, a “bail-in” is now being organized for the oldest bank in Italy…
Recall that three weeks ago we warned that “Monti Paschi Faces Bail-In As Capital Needs Point To Nationalization” although we left open the question of “who will get the haircut including senior bondholders and depositors…. given the small size of sub-debt in the capital structures.” Today, as many expected on the day following the German elections, the dominos are finally starting to wobble, and as we predicted, Monte Paschi, Italy’s oldest and according to many, most insolvent bank, quietly commenced a bondholder “bail in” after it said that it suspended interest payments on three hybrid notes following demands by European authorities that bondholders contribute to the restructuring of the bailed out Italian lender. Remember what Diesel-BOOM said about Cyprus – that it is a template? He wasn’t joking.
As Bloomberg reports, Monte Paschi “said in a statement that it won’t pay interest on about 481 million euros ($650 million) of outstanding hybrid notes issued through MPS Capital Trust II and Antonveneta Capital Trusts I and II.” Why these notes? Because hybrid bondholders have zero protections and zero recourse. “Under the terms of the undated notes, the Siena, Italy-based lender is allowed to suspend interest without defaulting and doesn’t have to make up the missed coupons when payments resume.” Then again hybrids, to quote the Dutchman, are just the template for the balance of the bank’s balance sheet.
Why is this happening now? Simple: the Merkel reelection is in the bag, and the EURUSD is too high (recall Adidas’ laments from last week). Furthermore, if the ECB proceeds with another LTRO as many believe it will, it will force the EURUSD even higher, surging from even more unwanted liquidity. So what to do? Why stage a small, contained crisis of course. Such as a bail in by a major Italian bank. The good news for now is that depositors are untouched. Unfortunately, with depositor cash on the wrong end of the (un)secured liability continuum it is only a matter of time before those with uninsured deposits share some of the Cypriot pain. After all, in the brave New Normal insolvent world, “it is only fair.”
Fortunately, it does not appear that this particular bail-in will hit private bank accounts (at least for now), but it does show that European officials are very serious about applying bail-in procedures when a major bank fails.
The New Zealand government has been discussing implementing a “bail-in” system to deal with any future major bank failures. The following comes from a New Zealand news source…
The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.
Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.
“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.
“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.”
Incredibly, even Canada is moving toward adopting these “bank bail-ins”. In a previous article, I explained that “bail-ins” were even part of the new Canadian government budget…
Cyprus-style “bail-ins” are actually proposed in the new Canadian government budget. When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013″ which the Harper government has already submitted to the House of Commons. This new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks” in Canada. “Economic Action Plan 2013″ was submitted on March 21st, which means that this “bail-in regime” was likely being planned long before the crisis in Cyprus ever erupted.
So what does all of this mean for us?
It means that the governments of the world are eyeing our money as part of the solution to any future failures of major banks.
As a result, there is no longer any truly “safe” place to put your money.
One of the best ways to protect yourself is to spread your money around. In other words, don’t put all of your eggs in one basket.
If you have your money a bunch of different places, it is going to be much harder for the government to grab it all.
But if you don’t listen to the warnings and you continue to keep all of your wealth in one giant pile somewhere, don’t be surprised when you get wiped out in a single moment someday.
Don’t be surprised when the global elite confiscate money from your bank account one day. They are already very clearly telling you that they are going to do it. Dutch Finance Minister Jeroen Dijsselbloem is the president of the Eurogroup – an organization of eurozone finance ministers that was instrumental in putting together the Cyprus “deal” – and he has said publicly that what has just happened in Cyprus will serve as a blueprint for future bank bailouts. What that means is that when the chips are down, they are going to come after YOUR money. So why should anyone put a large amount of money in the bank at this point? Perhaps you can make one or two percent on your money if you shop around for a really good deal, but there is also a chance that 40 percent (or more) of your money will be confiscated if the bank fails. And considering the fact that there are vast numbers of banks all over the United States and Europe that are teetering on the verge of insolvency, why would anyone want to take such a risk? What the global elite have done is that they have messed around with the fundamental trust that people have in the banking system. In order for any financial system to work, people must have faith in the safety and security of that financial system. People put their money in the bank because they think that it will be safe there. If you take away that feeling of safety, you jeopardize the entire system.
So exactly how did the big banks in Cyprus get into so much trouble? Well, they have been doing exactly what hundreds of other large banks all over the U.S. and Europe have been doing. They have been gambling with our money. In particular, the big banks in Cyprus made huge bets on Greek sovereign debt which ended up failing.
But what happened in Cyprus is just the tip of the iceberg. All over the planet major financial institutions are being incredibly reckless with client money. They are leveraged to the hilt and they have transformed the global financial system into a gigantic casino.
If they win on their bets, they become fabulously wealthy.
If they lose on their bets, they know that the politicians won’t let the banks fail. They know that they will get bailed out one way or another.
And who pays?
Either our tax dollars are used to fund a government-sponsored bailout, or as we have just witnessed in Cyprus, money is directly confiscated from our bank accounts.
And then the game begins again.
People need to understand that the precedent that has just been set in Cyprus is a game changer.
The next time that a major bank fails in Greece or Italy or Spain (or in the United States for that matter), the precedent that has been set in Cyprus will be looked to as a “template” for how to handle the situation.
Eurogroup president Jeroen Dijsselbloem has even publicly admitted that what just happened in Cyprus will serve as a model for future bank bailouts. Just check out what he said a few days ago…
“If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’. If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders”
Dijsselbloem insists that this will cause people “to think about the risks” before they put their money somewhere…
“It will force all financial institutions, as well as investors, to think about the risks they are taking on because they will now have to realise that it may also hurt them. The risks might come towards them.”
Well, as depositors in Cyprus just found out, there is a risk that you could lose 40 percent (and that is the best case scenario) of your money if you put it in the bank.
Why would anyone want to take that risk – especially in a nation that is already experiencing very serious financial troubles such as Greece, Italy or Spain?
As if that was not enough, Dijsselbloem later went in front of the Dutch parliament and publicly defended a wealth tax like the one that was just imposed in Cyprus.
Dijsselbloem is being widely criticized, and rightfully so. But at least he is being more honest that many other politicians. His predecessor as the head of the Eurogroup, Jean-Claude Juncker, once said that “you have to lie” to the people in order to keep the financial markets calm…
Mr. Dijsselbloem’s style contrasts with that of his predecessor, Jean-Claude Juncker, Luxembourg’s prime minister, who spoke in a low mumble at news conferences and was expert at sidestepping questions. Mr. Juncker once even advocated lying as a way to prevent financial markets from panicking—as they did Monday after Mr. Dijsselbloem’s comments.
“When it becomes serious, you have to lie,” Mr. Juncker said in April 2011. “If you have pre-indicated possible decisions, you are feeding speculation in the financial markets.”
But Dijsselbloem is certainly not the only one among the global elite that is admitting what is coming next. Just check out what Joerg Kraemer, the chief economist at Commerzbank, recently told Handelsblatt about what he believes should be done in Italy…
“A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product”
And as I wrote about the other day, the Finance Minister of New Zealand is proposing that bank account holders in his nation should be required to “take a haircut” if any banks in his nation fail.
They are telling us what they plan to do.
They are telling us that they plan to raid all of our bank accounts when the global financial system fails.
And calling it a “haircut” does not change the fact of what it really is. The truth is that when they confiscate money from our bank accounts it is outright theft. Just check out what the Daily Mail had to say about the situation in Cyprus…
People who rob old ladies in the street, or hold up security vans, are branded as thieves. Yet when Germany presides over a heist of billions of pounds from private savers’ Cyprus bank accounts, to ‘save the euro’ for the hundredth time, this is claimed as high statesmanship.
It is nothing of the sort. The deal to secure a €10 billion German bailout of the bankrupt Mediterranean island is one of the nastiest and most immoral political acts of modern times.
It has struck fear into the hearts of hundreds of millions of European citizens, because it establishes a dire precedent.
And when you cause paralysis in the banking system, a once thriving economy can freeze up almost overnight. The following is an excerpt from a report from someone that is actually living over in Cyprus…
As it stands now, nowhere in Cyprus accepts credit or debit cards anymore for fear of not being paid, it is CASH ONLY. Businesses have stopped functioning because they cannot pay employees OR pay for the stock they receive because the banks are closed. If the banks remain closed, the economy will be destroyed and STOP COMPLETELY. Looting, robberies and theft are already on the rise. If the banks open now, there will be a massive run on the bank, and the banks will FAIL loosing all of its deposits, also causing an economic crash. TONIGHT there are demonstrations at most street corners and especially at the parliament building (just 2 miles from me).
Many are thinking that the ECB and EU are allowing Cyprus to fail as a test ground for new financial standards.
Just wanted all you guys to know the real story of whats going on here. Prayers are appreciated (although this is very interesting to watch) many of my local friends have lots of money in the banks.
Would similar things happen in the United States if there was a major banking crisis someday?
That is something to think about.
In any event, the problems in the rest of Europe continue to get even worse…
-The stock market in Greece is crashing. It is down by more than 10 percent over the past two days.
-The stock markets in Italy and Spain are experiencing huge declines as well. Banking stocks are being hit particularly hard.
-The Bank of Spain says that the Spanish economy will sink even deeper into recession this year.
-The latest numbers from the Spanish government show that Spain’s debt problem is rapidly getting worse…
“The central government’s interest bill surged 15 percent last year to 26 billion euros, while tax receipts slumped 21 percent. The cost of servicing debt represented 30 percent of the taxes collected at the end of December, up from 20 percent a year earlier.”
-The euro took quite a tumble on Thursday and the euro will likely continue to decline steadily in the weeks and months to come.
For a very long time I have been warning that the next major wave of the economic collapse is going to originate in Europe.
Hopefully people are starting to see what I am talking about.
As this point, the major banks in Europe are leveraged about 26 to 1, and that is close to the kind of leverage that Lehman Brothers had when it finally collapsed. As a whole, European banks are drowning in debt, they are taking risks that are almost incomprehensible and now faith in those banks has been greatly undermined by what has happened in Cyprus.
Anyone that cannot see a crisis coming in Europe simply does not understand the financial world. A moment of reckoning is rapidly approaching for Europe. The following is from a recent article by Graham Summers…
At the end of the day, the reason Europe hasn’t been fixed is because CAPITAL SIMPLY ISN’T THERE. Europe and its alleged backstops are out of money. This includes Germany, the ECB and the mega-bailout funds such as the ESM.
Germany has already committed to bailouts that equal 5% of its GDP. The single largest transfer payment ever made by one country to another was the Marshall Plan in which the US transferred an amount equal to 5% of its GDP. Germany WILL NOT exceed this. So don’t count on more money from Germany.
The ECB is chock full of garbage debts which have been pledged as collateral for loans. If anyone of significance defaults in Europe, the ECB is insolvent. Sure it can print more money, but once the BIG collateral call hits, money printing is useless because the amount of money the ECB would have to print would implode the system.
And then of course there are the mega bailout funds such as the ESM. The only problem here is that Spain and Italy make up 30% of the ESM’s supposed “funding.” That’s right, nearly one third of the mega-bailout fund’s capital will come from countries that are bankrupt themselves.
What could go wrong?
Right now, close to half of all money that is on deposit at banks in Europe is uninsured. As people move that uninsured money out of the banks, the amount of money that will be required to “fix the banks” will go up even higher.
It would be wise to try to avoid the big banks at this point – especially those with very large exposure to derivatives. Any financial institution that uses customer money to make reckless bets is not to be trusted.
If you can find a small local bank or credit union to do business with you will probably be better off.
And don’t think that this kind of thing can never happen in the United States.
One of the key players that was pushing the idea of a “wealth tax” in Cyprus was the IMF. And everyone knows that the IMF is heavily dominated by the United States. In fact, the headquarters of the IMF is located right in the heart of Washington D.C. not too far from the White House. When I worked in D.C. I would walk by the IMF headquarters quite a bit.
So if the United States thought that confiscating money from bank accounts was a great idea in Cyprus, why wouldn’t they implement such a thing here under similar circumstances?
The global elite are telling us what they plan to do, and the game has dramatically changed.
Move your money while you still can.
Unfortunately, it is already too late for the people of Cyprus.
Why is the global economy in so much trouble? How can so many people be so absolutely certain that the world financial system is going to crash? Well, the truth is that when you take a look at the cold, hard numbers it is not difficult to see why the global financial pyramid scheme is destined to fail. In the United States today, there is approximately 56 trillion dollars of total debt in our financial system, but there is only about 9 trillion dollars in our bank accounts. So you could take every single penny out of the banks, multiply it by six, and you still would not have enough money to pay off all of our debts. Overall, there is about 190 trillion dollars of total debt on the planet. But global GDP is only about 70 trillion dollars. And the total notional value of all derivatives around the globe is somewhere between 600 trillion and 1500 trillion dollars. So we have a gigantic problem on our hands. The global financial system is a very shaky house of cards that has been constructed on a foundation of debt, leverage and incredibly risky derivatives. We are living in the greatest financial bubble in world history, and it isn’t going to take much to topple the entire thing. And when it falls, it is going to be the largest financial disaster in the history of the planet.
The global financial system is more interconnected today than ever before, and a crisis at one major bank or in one area of the world can spread at lightning speed. As I wrote about yesterday, the entire European banking system is leveraged 26 to 1 at this point. A decline in asset values of just 4 percent would totally wipe out the equity of many of those banks, and once a financial panic begins we could potentially see major financial institutions start to go down like dominoes.
We got a small taste of what that is like back in 2008, and it is inevitable that it will happen again.
Anyone that would tell you that the current global financial system is sustainable does not know what they are talking about. Just look at the numbers that I have posted below.
The following is the global financial pyramid scheme by the numbers…
-$9,283,000,000,000 – The total amount of all bank deposits in the United States. The FDIC has just 25 billion dollars in the deposit insurance fund that is supposed to “guarantee” those deposits. In other words, the ratio of total bank deposits to insurance fund money is more than 371 to 1.
-$10,012,800,000,000 – The total amount of mortgage debt in the United States. As you can see, you could take every penny out of every bank account in America and it still would not cover it.
-$10,409,500,000,000 – The M2 money supply in the United States. This is probably the most commonly used measure of the total amount of money in the U.S. economy.
-$15,094,000,000,000 – U.S. GDP. It is a measure of all economic activity in the United States for a single year.
-$16,749,269,587,407.53 – The size of the U.S. national debt. It has grown by more than 10 trillion dollars over the past ten years.
-$32,000,000,000,000 – The total amount of money that the global elite have stashed in offshore banks (that we know about).
-$50,230,844,000,000 – The total amount of government debt in the world.
-$56,280,790,000,000 – The total amount of debt (government, corporate, consumer, etc.) in the U.S. financial system.
-$61,000,000,000,000 – The combined total assets of the 50 largest banks in the world.
-$70,000,000,000,000 – The approximate size of total world GDP.
-$190,000,000,000,000 – The approximate size of the total amount of debt in the entire world. It has nearly doubled in size over the past decade.
-$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
-$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
Are you starting to get the picture?
Every single day, the total amount of debt will continue to grow faster than the total amount of money until the day that this bubble bursts.
What we witnessed back in 2008 was just a little “hiccup” in the system. It caused the worst economic downturn since the Great Depression, but global financial authorities were able to get things stabilized.
Next time it won’t be so easy.
The next wave of the economic collapse is quickly approaching. A full-blown economic depression has already started in southern Europe. Unemployment is at record highs and economic activity is contracting rapidly.
The major offshore banking centers in Cyprus are on the verge of collapsing. It was just announced that they will now be closed until Tuesday, but nobody really knows for sure when they will be allowed to reopen. And there is already talk that when they do reopen that there will be strict limits on how much money people can take out.
And now the IMF is warning that the three biggest banks in Slovenia are failing and that a billion euros will be needed to bail them out.
The dominoes are starting to tumble, and the United States won’t be immune. In fact, the greatest financial problems that the United States has ever seen are on the horizon.
But you can just have faith that Ben Bernanke, Barack Obama and the U.S. Congress know exactly what they are doing and will be able to save us from the coming financial collapse if you want.
The mainstream media will provide you with all of the positive economic news that you could possibly want. They are giddy about the fact that the Dow keeps hitting all-time highs and they would have us all believe that we are in the midst of a robust economic recovery. You can listen to them if you want to.
But when you are tempted to believe that everything is going to be “okay” somehow, just go back and look at the numbers there were posted above one more time.
There is no way that the global financial pyramid scheme is going to be able to hold up for too much longer. At some point it is going to totally collapse. When that happens, will you be ready?