Thread: Max Keiser: European Bank Run Begin's - The debt bomb just got bigger

The debt bomb just got bigger


A trader reacts on the IG Group trading floor in London March 18, 2013. (Reuters/Neil Hall)

By Max Keiser

The amount of debt worldwide is more than all of the bank accounts in the world, and the current financial situation in Cyprus is the inevitable next phase: Confiscation.

All pretense is now gone that central or global bankers can ‘securitize’ growth by packaging and repackaging debt; by hypothicating and rehypothicating debt; by regulating and rergulating debt. Since the bond market rally began in the early 1980s (yes, it’s that old) each crisis has been met by central and global bankers – the IMF, EU and ECB, to name a few – and their Wall St. and City of London brethren with an increase in debt, and an extension of the debt’s maturity.

The result has been – as of 2007 – the biggest mountain of on-balance sheet and off-balance sheet debt in history: A staggering $220 trillion in debt in America’s $14-trillion economy alone (when you include all public, private and [COLOR=#366B01 !important]contingent liabilities[/COLOR] of unfunded entitlement programs). Deals in the global debt derivatives market now stand in excess of $1 quadrillion, riding above a global GDP of approximately $60 trillion.

But starting in 2007, and then becoming spectacularly apparent in 2008 with the Lehman collapse, the ability of the world’s taxpayers to pay either the interest or principal on this debt has hit a brick wall. And for several years now, governments around the world have tried the same old tricks of ‘extend and pretend.’ Repackage and extend the maturity, and pray that tax receipts start picking up enough to pay some of the debt off. It didn’t work. The debt bomb just got bigger. Now in Cyprus we see the inevitable next phase: Confiscation.

To pay off the debts that were incurred to finance the biggest wealth grab in history, we see in Cyprus, as well as central and global banking institutions around the world, a trend to just reach in and grab people’s money from their ‘insured’ bank accounts. We should have figured out this was coming when JP Morgan (read: Jamie Dimon) reached in and illegally stepped ahead of customers at MF Global and grabbed over $1 billion, with the help of his crony pal Jon Corzine.

Have we learned our lesson yet? They have more debts to pay than there is money in all the bank accounts in the world. This means that chances are, you – whoever you are, and whatever country you live in – will have a sizable percent of your savings stolen by banksters.

Since the crisis hit (and for several years leading up to it) we’ve been recommending on ‘Keiser Report’ to put as much money as you can in gold and silver. Our advice then and now is: The only money you should keep in a bank is money you’re willing to lose.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

Source: RT

More at EndtheLie.com - The debt bomb just got bigger | End the Lie – Independent News

Gold Rises, Dollar Rises, Stocks Fall: The Cyprus Disaster Begins

Written by Gary North on March 18, 2013

Gold rose on the news from Europe. Stock markets plunged around the world. So did the price of oil.

Over the weekend, Eurozone bureaucrats at a closed meeting came up with a plan. The committee demanded that the government of Cyprus impose a tax of 6.7% on all bank accounts under $130,000, and close to 10% on all accounts over $130,000. If the government refuses, the Eurozone will not provide a $13 billion bailout for the banks of Cyprus.

The story is all over the European press, for good reason. The Eurocrats had always said that bank accounts would be sacrosanct. This announcement says, “We lied.” But they also assured depositors that this will never happen again. “Trust us.”

The president of Cyprus on Sunday begged the parliament to impose the tax. He admitted that he had promised depositors that he would never, ever tax their accounts. He had said this at his inauguration speech: “absolutely no reference to a haircut on public debt or deposits will be tolerated.” To make himself perfectly clear, he added: “such an issue isn’t even up for discussion.”

Let me translate this in three words: You dumb clucks.

For a month, rumors of this plan had floated around the corridors of the European Union’s headquarters. Depositors could have sent their euros to Germany. They could have withdrawn currency. But the president said he would never do this. So, the masses sat tight.

Dumb, dumb, dumb.

The Cypriot parliament was supposed to ram through the tax yesterday, but it postponed the decision until Monday afternoon (their time). The president did not get the votes. If the parliament refuses, then he is the dumb cluck.

The government has closed the banks. The press still refers to this as a “holiday.”

It is clear what any rational Cypriot should do if the government delays. He should call his bank and transfer his money (euros) to a German bank as soon as the bank “holiday” ends.

The government can open the banks but not pass the tax. Wham! The run begins. Or it can keep the banks closed. A depression begins: a frozen economy. Or it can pass the tax bill. Then it can open the banks. There will still be a bank run. “Fool me once, shame on you. Fool me twice, shame on me.”

The Eurocrats who came up with this plan over the weekend must have known this would trigger bank runs in Cypress. If they did not foresee this, they are economic idiots. Did they think that the sheep will sit still a second time and be sheared? This seems hard to believe.

They also did not expect the government to postpone the tax for a day.

I think this policy is deliberate. I think they knew this would happen. They are sending a message to the PIIGS politicians: “Bail out your own banks, or else get ready for a bank run like Cyprus got.” Their goal is to cause a bank run in Cyprus. They want to send a message to any large government that thinks it can sit on the sidelines on the assumption that the Eurozone will bail them out or bail out their banks. It won’t. It can’t. It does not have the money. Its voters will not allow it.

They chose Cyprus, which is a tiny island nation. If its banks go under, so what? If its politicians pull out of the Eurozone, so what? Its crisis is just what the bankers in northern Europe need: an announcement of a “no tolerance” rule. It will scare Club Med politicians.

But it’s a risky policy. It may scare depositors even more than it scares politicians. This may trigger banks runs in Spain, Portugal, and Italy. If I had my money in any of these nations’ banks, I would transfer the money to a German bank.

Mohammed El-Erian, CEO of Pimco, the world’s largest bond fund, said this: “In Europe, it could well undermine the recent tranquil behaviour of depositors and creditors in other vulnerable European economies – in particular Greece, Italy, Portugal and Spain. Despite assurances from European officials that Cyprus is ‘exceptional’ and the measures are ‘unique’, this weekend’s actions have increased the risk premium.”

This is a desperation move by Eurozone bureaucrats. They risk fomenting a bank run out of Italian and Spanish banks. Depositors who want to avoid becoming like Cypriot depositors have a way out: transfer money to German banks.

This is a high-risk crap-shoot. Eurozone bureaucrats have to be really desperate to announce a bank account tax policy that cannot be enforced by the Eurozone, only by national governments. If a government looks as if it will comply, the bank runs will begin. If it says it will not comply, bank runs still may begin. The depositors will know that the government may abandon the euro. To make money on this, they must get their euros into German banks.

This indicates just how desperate the Eurozone leaders are. They pretend that there is calm. They pretend the system is not coming apart. Then they make an announcement that is rational only on the assumption that the euro experiment is coming apart.

Continue Reading on www.telegraph.co.uk



Read more: Gold Rises, Dollar Rises, Stocks Fall: The Cyprus Disaster Begins

Putin hits out at "dangerous" Cyprus bank deposit levy

• A Rubicon crossed
• Cyprus deposit grab sets bad precedent

By Lidia Kelly and Alexei Anishchuk
MOSCOW | Mon Mar 18, 2013 5:15am EDT

(Reuters) - Russian President Vladimir Putin criticized on Monday a levy imposed by the European Union on bank deposits in Cyprus as unfair and setting a dangerous precedent.
"While assessing the proposed additional levy on bank accounts in Cyprus, Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous," Kremlin spokesman Dmitry Peskov told journalists.
Russian citizens account for the majority of the billions of euros held in Cypriot banks by foreign depositors, and Russian banks are heavily exposed to the island as a favored offshore centre for big business.
The levy, imposed as part of a 10 billion euro bailout, sparked panic among Cypriots over the weekend and hit Russian and other European financial markets on Monday.
As the Cyprus parliament prepares to vote on the measure on Monday, the government in Nicosia was working on a plan to soften the blow for smaller savers.
Russian Deputy Finance Minister Sergei Shatalov earlier said the tax would be acceptable if it was levied only on interest earned by savers.
There are almost 70 billion euros in deposits held in Cyprus. A little less than half that is held by non-residents, most believed to be Russian.
At the end of last year, Russian banks had around $12 billion on deposits with Cypriot banks and corporate deposits accounted for another $19 billion, according to Moody's credit-rating agency.
That figure is more than twice the size of the bailout, which had been repeatedly delayed amid concerns from other EU states that the closebusiness and banking ties with Russia made Cyprus a conduit for money-laundering.
It ranks as the largest source of foreign direct investment into Russia - money that is largely Russian in origin.
NO DECISION ON RUSSIAN LOAN
Russia has made no decision yet on whether to extend the duration or ease the terms of a sovereign loan to Cyprus, a government source told Reuters earlier on Monday.
European Union officials have said they expect Russia to extend the 2.5 billion euro ($3.27 billion) loan by five years, until 2021, and refinance terms.
Cyprus' Finance Minister Michael Sarris had planned to travel to Moscow on Monday for meetings to try to pin down new loan terms. A second Russian government source said Sarris would now travel on Wednesday.
The levy on savers, meanwhile, should not alter domestic capital flows, the news agency Prime quoted Deputy Economy Minister Andrei Klepach as saying.
Officials have also said Russian investors are interested in buying a majority stake in Cyprus Popular Bank and increasing their holdings in Bank of Cyprus - the two biggest banks on the Mediterranean island.
The involvement of any Russian investors - private or state - in recapitalization of the island's struggling banks is still a matter for discussion, the first government source said.
"There has been no decision yet," the source said.
($1 = 0.7654 euros)
(Moscow Newsroom; Editing by John Stonestreet)

Putin hits out at dangerous Cyprus bank deposit levy | Reuters

Cyprus Crisis Shakes Markets, Euro Dives

Cyprus ATMs Emptied After EUSSR Bank Heist

Cyprus Pres Delays Parliament Vote On Deposit Tax Plan

First, They Came For The Cypriots...



Posted 06:15 PM
03/18/2013

Rule Of Law: Markets tumbled after Cyprus and the EU said they might tax private bank accounts to pay for a bailout. Arbitrary property grabs are a new low and a bad precedent in this crisis. Worse still, it can happen here.

As bad as tumbling markets around the world are, they seem to be the only signal strong enough to catch the attention of Europe's otherwise unaccountable bureaucrats who have long since learned to ignore street riots.

As stocks fell from Tokyo to New York, Europe's leaders are scrambling to say they had nothing to do with the cause — the shutdown of all Cyprus banks and ATMs for at least three days and the expropriation of a large chunk of each now-captive account, as a "tax" to pay for Cyprus' $13 billion EU bailout, Europe's fifth.

Cyprus Prime Minister Nicos Anastasiades bitterly asserted he had been "blackmailed" by the EU and the International Monetary Fund to go along with the idea on Saturday, or there'd be no bailout. Cyprus' central bank chief Panicos Demetriades said the same thing.

Aside from the fact that no fiscally responsible country should need a bailout and the roots of Cyprus' financial crisis is based on long-term big-spending government and low-information voters, the bank shutdown nevertheless sets an ugly precedent rooted in the growing arrogance of EU power.

Until now, tax hikes and haircuts for bond-holders have been how Europe's bailouts have been handled. (And, among the countries that never want to be in that position again, such as Estonia and Latvia, spending cuts.) At least markets could recognize such solutions and price in the risk accordingly.

But confiscating savings in banks and denying people access to their property without warning is something entirely different — and will do great damage to citizens' willingness to save, invest and build wealth.

Oh sure, the rationale was that most of the depositors were shady foreigners, particularly from Russia, laundering money. But the photos of Cypriots banging on bank doors and protesting, much as the people of Argentina did when the same thing happened to them in 2002, tells a different story of human suffering.

The expropriation of the tiny country's savings may have seemed like an easy test case for the EU because the population is small and some of the depositors are rich and unsympathetic, but the blowback will hit savings and investment — and future economic growth — all over Europe.

Worse still, it could catch on here.

Already Congressional Democrats are plotting the expropriation of Americans' private 401(k) and IRA retirement savings accounts in favor of "a guaranteed income." If bank accounts can be casually expropriated in Cyprus to pay for big-spending governments and bailouts, there is no reason a nice slice of the $19 trillion in retirement accounts can't get the same treatment.

If it happens, it will signal the end of individual freedom and the return of feudalism.
Frederick Hayek had a phrase for this: "The Road To Serfdom." Let's hope there will be more than just markets to make this state theft of private property stop.

Read More At Investor's Business Daily: EU Crosses Into Feudal Tyranny With Expropriation Of Cyprus Bank Deposits - Investors.com
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