Re-Blog from Andy Sutton at Silver Phoenix 500
When the bail-in first ripped through Cyprus in the first part of 2013, I wrote a series of articles about the topic and examined some documents from the Bank for International Settlements, the FDIC and Bank of England regarding treatment of depositors and their funds. To sum it up as we begin the latest chapter in what will no doubt morph into the biggest swindle ever to impact humankind, let’s recap what exactly the bail-in is.
It was determined in late 2012 that there are certain banks that simply cannot be allowed to fail – at any cost. They were quickly labeled ‘Too big to fail’. I and others added that they were too big to jail too since this select group pretty much received
carte blanche to do whatever it wanted, regardless of the risk, impact, or consequences. In the whitepapers, these banks were referred to as ‘G-SIFIs’ or Global Systemically Important Financial Institutions. Under the FDIC/Bank of England model of resolving the failure of such an institution, it was made very clear that unsecured creditors like bondholders would get their heads handed to them. What was even more disturbing was that, unlike previously, depositors were now lumped into the same category as bondholders.
Bondholders, by nature, assume a risk when they invest. This risk is well-understood. Concomitant with taking on such risk is a return on investment. Depositors, on the other hand, don’t have the same expectation of risk, and since 2008, they certainly don’t get much of a return – if any at all. Depositors, in fact, think that their paycheck is safe when it goes into the bank. They don’t consider their paycheck to be invested in that bank. Furthermore, they expect that when they write a check against the money in their account that the check will be paid. They also expect that if they go to the ATM that they’ll be able to access their money. They expect to be able to show up at the bank and withdraw their money if they so choose. All of these assumptions were being challenged prior to any talk of the bail-in with banks requiring waiting periods for withdrawing more than x dollars. I have received many emails from people stating waiting periods of up to a week to take out as little as $2,000 in cash.
So maybe one might argue that it is on the depositors for not reading the fine print or that they should be clairvoyant and realize that those gold FDIC guarantee stickers plastered all over every bank window aren’t worth the stuff they’re printed on. Normally I’d say some of the responsibility falls on consumers and maybe it still does; there certainly have been lots of articles and videos about all of this stuff. Nothing on the mainstream media though, as usual, and unfortunately, the public still hasn’t learned in that regard. From that perspective this is all on the public because you’d think after being lied to time and time again by the government and the media that people might become just a tad skeptical. Evidently not; especially when it is time to shop until you drop, spend money you don’t have on things you don’t need, then hope to pay it all off in the new year with stagnant wages. Yep, sounds like a winner.
The Latest Chapter
So why write more about this now, when everyone is firmly ensconced in holiday mode? Unfortunately, I don’t get to dictate when the establishment makes its moves and yes it has made