Cyprus Stealing Private Bank Accounts - Is This America's Future? Do You Care?

After Western banking centers closed on friday, Cyprus announced that they would be

taxing local accounts up to 10% of their value to help pay for the bailing out of failed

Cypriot banks. This unprecedented financial rape of private accounts lays the banking 

failures on the public rather than letting the banks fail and removing the bad debt from the system. There has been lots of hand wringing in Europe about how this was the only

financial solution or their (Cyprus') major banks would succumb to bankruptcy.

So why should you care about Cyprus?  This is a major testing ground to see how the 

public will react to the stealing of their private funds to bail out banks who have made bad bets in Europe and the US.  Don't think it will happen in the USA? HAH! Think again.

Thoughts on Cyprus from The Golden Truth:  

THE GOLDEN TRUTH

Will The Cyprus Bailout Trigger The Next Financial Crisis?

In an a deal that needs to still be approved by the Cypriot Parliament, an international banking consortium led by the IMF agreed to bailout of Cyprus.  Part of the deal includes the imposition of a levy on bank on bank savings accounts:  10% on bank balances in excess of 100,000 euros ($131,000) and 6.75% on balances below 100,000 euros.  Cypriots lined up at ATM machines over the weekend - they can withdraw cash until the ATMs run out of cash up to the amount that has already been set aside for the levy.

This story has received close to no coverage in the U.S. despite the potential implications for people who keep their money in banks in every country.  As a result of this situation in Cyprus, there's now fear that depositors all over southern Europe will take their money out of banks out of fear of this type of deal becoming a model for the next round of sovereign bailouts in general.  A Washington Post blog article does a good job summarizing the situation:

The European Central Bank will now be on high alert, monitoring activity in Greece, Spain and beyond for evidence that the Cyprus precedent will result in new runs on those nations’ banks. Expect a flood of central bank liquidity into those nations if there is any hint that depositors across Europe seem to be thinking that Cyprus is the new normal and that their seemingly safe bank deposits could be reduced 10 percent without warning  (LINK).

The "flood" of Central Bank liquidity referenced above largely refers to the Federal Reserve, which has been quietly funding a massive "ghost" bailout of the European banking system all along.  For those of you who are unaware, 50% of the $1.8 trillion in the Federal Reserve bank excess reserve account is money that has been given to the U.S. subsidiaries of the European Banks who are Primary Dealers in this country (LINK).  In other words, the U.S. is pretty much keeping Europe from collapsing right now.

Without that flood of U.S.-based liquidity into the European too-big-to-fails, there is no question that either interest rates in the ECB system would shoot through the roof in order to attract capital OR the ECB system would be insolvent.  The reason the Fed is the savior in this process is that U.S. too-big-to-fail/prosecute are inextricably tied to the fate of ECB banks via a massive and deadly web of OTC off-balance-sheet derivatives.

The Cyprus situation may in fact ignite a run on the banks in Europe and - for those paying attention in this country (which isn't very many) - a small run in this country.  Myself and others have been advising people to keep only a minimal amount of cash in the banking system for quite some time.  The reason?  Even though great pains have been taken by DC/Wall Street to ensure us that "the water is fine" in the banking system, the world is one unforeseen "small" event away from a global liquidity crisis.  Quite frankly, anyone who can read and think, and who still trusts the banking system in this country, is either incredibly naive or tragically stupid, especially after Eric Holders wonderful Senate testimony two weeks ago about the big banks being too big to prosecute for crimes.

Read the rest here:

And thoughts from Karl Denninger from the Market-Ticker.com 

You Have Been Warned:

Here it is folks, in plain English.

WHEN, not if if happens here do not say you weren't warned.

Cypriot officials insisted no levy on smaller depositors was impossible. One senior Cypriot official involved in the talks said that because about 35 percent of all deposits are below the threshold, exempting them would mean a rate so high for the rest that it would no longer be viewed as a tax.
"If this is successful then it will be used in the future," said the dejected official, predicting Spanish and Italian banks could face similar levies. "If this is not successful then who cares about Cyprus."

That's not a prediction it is a statement of fact, and it will come here too.

"IT WILL BE USED IN THE FUTURE"

Got that?

Your 401k or IRA?  

It's not yours.

They'll steal it, along with your bank account.  FDIC and SIPC insurance be damned to 

Hell.

They just admitted that they will do exactly that to bail out their friends who made bad bets and themselves who failed to enforce the law prohibiting these losses from accumulating without the institutions being closed long before you could lose a single penny.

 And an even more powerful post From Mr. Denninger regarding why this will happen in the USA,because no one is paying attention  and NO ONE IN USA CARES about what happens in the rest of the world. 

America's March Toward Cyprus Status

It's coming folks.

The sort of disruption you're seeing in Cyprus, with outright confiscation of bank deposits and brokerage accounts, especially retirement assets such as 401ks and IRAs.

Here.

In America.

Within two years.

How do I know?

Because the precedent has already been set, and you, the common American, sat for it.

You allowed the GM bailout to take place where the seniority of bondholders was ignored and they were screwed while the UAW was made whole.

You allowed Obamacare to be passed with the Congress denoting it was a "fine" rather than a Tax, because Congressknew that a direct, unapportioned tax was unconstitutional -- and then you sat again when Judge Roberts of the USSCrewrote Obamacare to be that very same unconstitutional direct Tax.

You allowed John "I'm a traitorous jackass" McCain to suspend his campaign to make sure TARP passed, then you cheered both him and Obama for shoving that piece of crap legislation down Congressional throats, and just two weeks later you returned nearly all of the people who voted for it to office.

You still allow people like John Boehner to make the following sort of statement without showing up outside his office and home and refusing to leave until he resigns in disgrace:

House Speaker John Boehner broke from some Republicans on Sunday when he agreed with President Obama and other Democrats who say the country does not have an immediate debt crisis.
“We do not have an immediate debt crisis,” the Ohio Republican said on ABC’s “This Week.”

In a word, bullcrap.

You can read the rest here.......

MARKET-TICKER.org

To round out commentaries on Cyprus today and why it is so important that you

understand the ramifications of these actions, Bruce Krasting's thoughts on Cyprus.

How Black Accounts Work...A Cyprus Connection?

MONDAY, MARCH 18, 2013

How Black Accounts Work – A Cyprus Connection?

A central criticism of the decision to seize a portion of the bank accounts in Cyprus is that the “bite” hits small guys who have accounts with a balance of less than E100k. As I write, it appears that there will be some revisions to the deal that was announced over the weekend. Those changes will likely minimize or eliminate the hit on these “smaller” accounts.

It is a travesty (and a crime) if Cypriots who live and work in the country have a portion of their accounts clipped. The small guys were not part of the problem, so they should not have been part of the solution. This obvious conclusion begs the question, “Why did they do it in the first place?” There are two possible answers:

The folks who put the original plan together were a bunch of misinformed idiots. They did not consider the fairness aspect, nor did they consider the deposit rules on <E100k sized accounts. The plan was hatched and announced before the big Finance Ministers, politicians and the ECB had a chance to consider the broader Macro issues and the possibility of a deposit run in other EU countries.

Given how so many other aspects of the EU financial story have been mismanaged, there is some possibility that this is how it played out. The whole process was bungled; no one ever considered the contagion risks. It was a complete screw up from beginning to end.

I have a very hard time believing that this scenario is correct. I think all of the EU deciders were involved with the choice. There was consideration of the related risks, the decision was made to go forward in spite of those risks.

NOTE: It’s my bet that the decision was communicated to key US officials. Bernanke, Jack Lew and Obama were all informed before it was public.

To me, the only possibility for including the sub E100k in the haircut was because many of the smaller accounts, were also hot money accounts from foreign depositors. The folks in the EU must have understood this when they pulled the plug. (That, or we go back to the “idiots” answer)

You can read the rest of his thoughts here.....

More from Bruce Krasting on his blog site

Again, it is time to pay attention to what is happen in Europe and around the
world to understand what will soon be happening here.

Don't think it will happen here?  Think again!