Best of the Week
Most Popular
1. Dollargeddon - Gold Price to Soar Above $6,000 - P_Radomski_CFA
2.Is Gold Price On Verge Of A Bottom, See For Yourself - Chris_Vermeulen
3.Dow Stock Market Trend Forecast 2018 - Nadeem_Walayat
4.Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - P_Radomski_CFA
5.Why The Uranium Price Must Go Up - Richard_Mills
6.Dow Stock Market Trend Forecast 2018 - Video - Nadeem_Walayat
7.Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - GoldCore
8.More Signs That the Stock Market Will Rally Until 2019 - Troy_Bombardia
9.It's Time for A New Economic Strategy in Turkey - Steve_H_Hanke
10.Fiat Currency Inflation, And Collapse Insurance - Raymond_Matison
Last 7 days
Gold Exodus to Reverse - 22nd Sep 18
Bitcoin Trader SCAM WARNING - Peter Jones, Dragons Den Fake Facebook Ads - 22nd Sep 18
China Is Building the World’s Largest Innovation Economy - 21st Sep 18
How Can New Companies Succeed in the Overcrowded Online Gambling Market? - 21st Sep 18
Golden Sunsets in the Land of U.S. Dollar Hegemony - 20th Sep 18
5 Things to Keep in Mind When Buying a Luxury Car in Dubai - 20th Sep 18
Gold Price Seasonal Trend Analysis - Video - 20th Sep 18
The Stealth Reason Why the Stock Market Keeps On Rising - 20th Sep 18
Sheffield School Applications Crisis Eased by New Secondary Schools Places - 20th Sep 18
Precious Metals Sector: It’s 2013 All Over Again - 19th Sep 18
US Dollar Head & Shoulders Triggered. What's Next? - 19th Sep 18
Prepare for the Stock Market’s Volatility to Increase - 19th Sep 18
The Beginning of the End of the Dollar - 19th Sep 18
Land Rover Discovery Sport 'Approved Used' Bad Paint Job - Inchcape Chester - 19th Sep 18
Are Technology and FANG Stocks Bottoming? - 18th Sep 18
Predictive Trading Model Suggests Falling Stock Prices During US Elections - 18th Sep 18
Lehman Brothers Financial Collapse - Ten Years Later - 18th Sep 18
Financial Crisis Markets Reality Check Now in Progress - 18th Sep 18
Gold’s Ultimate Confirmation - 18th Sep 18
Omanization: a 20-year Process to Fight Volatile Oil Prices  - 18th Sep 18
Sheffield Best Secondary Schools Rankings and Trend Trajectory for Applications 2018 - 18th Sep 18
Gold / US Dollar Inverse Correlation - 17th Sep 18
The Apple Story - Trump Tariffs Penalize US Multinationals - 17th Sep 18
Wall Street Created Financial Crash Catastrophe Ten Years Later - 17th Sep 18
Trade Wars Are Going To Crash This Stock Market - 17th Sep 18
Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - 17th Sep 18
Financial Markets Macro/Micro View: Waves and Cycles - 17th Sep 18
Stock Market Bulls Prevail – for Now! - 17th Sep 18
GBPUSD Set to Explode Higher - 17th Sep 18
The China Threat - Global Crisis Hot Spots & Pressure Points - 17th Sep 18 - Jim_Willie_CB
Silver's Relationship with Gold Reaching Historical Extremes - 16th Sep 18
Emerging Markets to Follow and Those to Avoid - 16th Sep 18
Investing - Look at the Facts to Find the Truth - 16th Sep 18
Gold Stocks Forced Capitulation - 15th Sep 18
Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - 15th Sep 18
Trading The Global Future - Bad Consequences - 15th Sep 18
Central Banks Have Gone Rogue, Putting Us All at Risk - 15th Sep 18
Gold Price Seasonal Trend Analysis - 14th Sep 18
Growing Number of Small Businesses Opening – and Closing – In the UK - 14th Sep 18
Gold Price Trend Analysis - Video - 14th Sep 18
Esports Is Exploding—Here’s 3 Best Stocks to Profit From - 13th Sep 18
The Four Steel Men Behind Trump’s Trade War - 13th Sep 18
How Trump Tariffs Could Double America’s Trade Losses - 13th Sep 18
Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - 13th Sep 18
Trading Cryptocurrencies: To Win, You Must Know Where You're Wrong - 13th Sep 18
Gold, Silver, and USD Index - Three Important “Nothings” - 13th Sep 18
Precious Metals Sector On a Long-term SELL Signal - 13th Sep 18
Does Gambling Regulation Work - A Case Study - 13th Sep 18
The Ritual Burial of the US Constitution - 12th Sep 18
Stock Market Final Probe Higher ... Then the PANIC! - 12th Sep 18
Gold Nuggets And Silver Bullets - 12th Sep 18
Bitcoin Trading - SEC Strikes Again - 12th Sep 18

Market Oracle FREE Newsletter

Trading Any Market

Are Your Bank Savings Safe From Bail-Ins?

Personal_Finance / Credit Crisis 2014 Feb 13, 2014 - 03:20 PM GMT

By: Raul_I_Meijer

Personal_Finance

I know you thought you’d seen some crazy stuff, but it’s going to get better, promise!

On the one hand you have Greek politicians claiming their economy is doing so well, they’ll present the troika with a big feel good surprise. On the other, Greek unemployment reached a new high at 28%, with youth unemployment now at 61.4%. That’s almost 2/3 of young people. What is to become of them?


On the one hand Italy sold debt today at record low rates, on the other its bickering and infighting government is teetering on the edge. Wonder who’s been buying the debt. Could one of the super Mario’s be involved?

On the one hand folks claim that the emerging market problems will have little effect on US financial markets, on the other US companies are starting to feel serious pain from those same problems. Not only do sales in developing markets fall, they’ve also invested a lot of money in them, anticipating huge growth potential. Oops.

On the one hand the UK government boasts a strong recovery and claims that is due to their brilliant economic policies, on the other BOE Governor Carney says he can’t lift interest rates because the recovery is “neither balanced nor sustainable”.

On the one hand the Yellen Fed stays a tepid taper course despite all the US recovery stories, without daring to even ponder interest rate rises, on the other Chinese official powers have gotten so spooked by the size and leverage of the shadow bank system they get real about tightening and interest rates, in the face of a sharp fall in auto sales growth, and an ominous default of a shadow bank investment product backed by a loan to a flat broke coal company.

On the one hand the OECD has been pushing rosy forecasts about anything anyone wanted to hear, on the other they are now forced to admit those forecasts were, essentially, made up out of thin air. Still, what looks like a great way to disqualify oneself :“Challenges were compounded by the unusually high speed and depth of cross-country interconnections between real and financial developments, the increased variability of economic growth compared with the pre-crisis period, the lack of timely data on many important financial factors, and the limited understanding of macro-financial linkages … “, will instead undoubtedly only be used to keep on churning out the nonsense. That’s both its MO and the reason it’s so royally funded, after all.

But the grand crazy stuff prize for the day goes to the Reuters article that details a leaked European Commission report in which Brussels considers confiscating (not their word of choice) 500 million Europeans’ personal savings and use them “to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis.”.

“The economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment ..”. That’s right, after all the bail-outs and nationalizations and stimuli, there’s still so much – bad – bank debt hidden in shady ledgers, there’s nothing left to lend out.

But wait, there is a source of wealth left. People have savings in bank accounts, and those are all registered digitally, so we know exactly what everyone has. We’ll take that, give them some sort of guarantee they will think is valid, and hand it to the banks. Who can then lend it out to the same people whose savings these are in the first place, and charge interest for the privilege. That’ll boost the economy!

Now, of course, if you’re like me, you first wonder what the root of the word “savings” is again, and then you’re also thinking, hold on, we’re talking about the same savings deposits the banks have used as collateral for their highly leveraged wagers, that they then lost. Right?

So those savings are already in the banks, but the banks’ “ability to channel funds to the real economy” is still “impaired”. But how can it be that Brussels, when it confiscates the savings, magically solves this impairment? What sleight of hand is this?

Well, they are talking about creating a secondary market for trading corporate bonds in the EU. But that doesn’t guarantee any trades will actually take place. The reason those bonds don’t sell is that not enough people want to buy them.

No, the real Brussels magic consists of reviving securitization markets. The banks will securitize loans and other “products”, which means they’ll slice and dice and tranche them, and sell them on to greater fools. Like you. Only this time, they’ll do so with the – implicit – backing of your savings. And let’s be fair: if you allow them to do this with your savings, you’re a prime candidate for them to sell their “securities” to (in finance, nothing means what it used to, “savings” are not safe and “securities” are anything but secure).

And no, you’re not mistaken: that is indeed the very model that broke the global financial system’s back in the first place.

There is no doubt in my mind that these ideas will be spun in ways that focus on triggering people’s feel good factors to such a degree the vast majority will actually leave their savings in the bank.

If I were you, I would think twice about going that route.

This article addresses just one of the many issues discussed in Nicole Foss’ new video presentation, Facing the Future, co-presented with Laurence Boomert and available from the Automatic Earth Store. Get your copy now, be much better prepared for 2014, and support The Automatic Earth in the process!

By Raul Ilargi Meijer
Website: http://theautomaticearth.com (provides unique analysis of economics, finance, politics and social dynamics in the context of Complexity Theory)

© 2014 Copyright Raul I Meijer - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
Raul Ilargi Meijer Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules