Olduvaiblog: Musings on the coming collapse

Home » Posts tagged 'Bail-in'

Tag Archives: Bail-in

Government Lays Groundwork To Confiscate Your 401k and IRA: “This Is Happening”

Government Lays Groundwork To Confiscate Your 401k and IRA: “This Is Happening”.

Mac Slavo
February 13th, 2014


This morning Reuters obtained a leaked proposal disclosing that European Union officials are looking for new and innovative ways to fund their immense debt levels. As noted by Zero Hedge, they’re no longer turning exclusively to central bankers to simply print more money as needed. Because last year’s bank bail-in forcing the confiscation of funds from average depositors in Cyprus worked so well, EU regulators and bankers have determined that they’ll use a similar method to fund their future endeavors.

In a nutshell, and in Reuters’ own words, “the savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.”

The solution? “The Commission will ask the bloc’s insurance watchdog in the second half of this year for advice on a possible draft law “to mobilize more personal pension savings for long-term financing”, the document said.”

Mobilize, once again, is a more palatable word than, say, confiscate.

This is what happens when governments run out of money.

But if you think this is limited to just Europe, then consider the words of President Barack Obama in his recent State of the Union address.

For all intents and purposes, a similar groundwork is being laid right here in America.

They’ve already taken over the health care industry… why not nationalize our retirement savings while they’re at it?

(Reprinted with permission from Sovereign Man. You can read the full analysis here.)

This is basically the offer that the President of the United States floated last night.

And like an unctuously overgeled used car salesman, he actually pitched Americans on loaning their retirement savings to the US government with a straight face, guaranteeing “a decent return with no risk of losing what you put in. . .”

This is his new “MyRA” program. And the aim is simple– dupe unwitting Americans to plow their retirement savings into the US government’s shrinking coffers.

We’ve been talking about this for years. I have personally written since 2009 that the US government would one day push US citizens into the ‘safety and security’ of US Treasuries.

Back in 2009, almost everyone else thought I was nuts for even suggesting something so sacrilegious about the US government and financial system.

But the day has arrived. And POTUS stated almost VERBATIM what I have been writing for years.

The government is flat broke.Even by their own assessment, the US government’s “net worth” is NEGATIVE 16 trillion. That’s as of the end of 2012 (the 2013 numbers aren’t out yet). But the trend is actually worsening.

In 2009, the government’s net worth was negative $11.45 trillion. By 2010, it had dropped to minus $13.47 trillion. By 2011, minus $14.78 trillion. And by 2012, minus $16.1 trillion.

Here’s the thing: according to the IRS, there is well over $5 trillion in US individual retirement accounts. For a government as bankrupt as Uncle Sam is, $5 trillion is irresistible.

They need that money. They need YOUR money. And this MyRA program is the critical first step to corralling your hard earned retirement funds.

At our event here in Chile last year, Jim Rogers nailed this right on the head when he and Ron Paul told our audience that the government would try to take your retirement funds:

I don’t know how much more clear I can be: this is happening. This is exactly what bankrupt governments do. And it’s time to give serious, serious consideration to shipping your retirement funds overseas before they take yours.

As former Congressman Ron Paul notes, the government will stop at nothing.

“They’ll use force and they’ll use intimidation and they’ll use guns, because you can’t challenge the State and you can’t challenge the State’s so-called right to control the money,” warns Paul. “It’s already indicated that they will confiscate funds and they will [confiscate] pension funds.”

This didn’t just happen over night. The move to make this reality has been going on for quite some time. The first time it was mentioned publicly in any official capacity was at a 2010 Congressional hearing:

Democrats in the Senate on Thursday held a recess hearing covering a taxpayer bailout of union pensions and a plan to seize private 401(k) plans to more “fairly” distribute taxpayer-funded pensions to everyone.

Sen. Tom Harkin (D-Iowa), Chairman of the Health, Education, Labor and Pensions (HELP) Committee heard from hand-picked witnesses advocating the infamous “Guaranteed Retirement Account” (GRA) authored by Theresa Guilarducci.

In a nutshell, under the GRA system government would seize private 401(k) accounts, setting up an additional 5% mandatory payroll tax to dole out a “fair” pension to everyone using that confiscated money coupled with the mandated contributions.  This would, of course, be a sister government ponzi scheme working in tandem with Social Security, the primary purpose being to give big government politicians additional taxpayer funds to raid to pay for their out-of-control spending.

You’d think that such an idea would be immediately dismissed by the American public, but it has only gained steam since, as evidenced by a 2012 hearing held at the U.S. Labor Department:

The hearing, held in the Labor Department’s main auditorium, was monitored by NSC staff and featured a line up of left-wing activists including one representative of the AFL-CIO who advocated for more government regulation over private retirement accounts and even the establishment of government-sponsored annuities that would take the place of 401k plans.

“This hearing was set up to explore why Americans are not saving as much for their retirement as they could,” explains National Seniors Council National Director Robert Crone, “However, it is clear that this is the first step towards a government takeover. It feels just like the beginning of the debate over health care and we all know how that ended up.

Such “reforms” would effectively end private retirement accounts in America, Crone warns.

A few years ago the government of the United States of America nationalized nearly 1/6th of our economy when they took over the health care system with forced mandates. In the process they essentially took control of $1.6 trillion in yearly industry revenues.

But that’s nothing compared to private savings. The total amount of retirement assets in America, including 401k, IRA and savings accounts is around $21 trillion. With our national debt coincidentally approaching the same, the government sees big money and potentially a way out of our country’s fiscal disaster.

This will start voluntarily with the MyRA and other state-sponsored programs. But when not enough Americans are making it their patriotic duty to turn over their funds to their government, they’ll mandate compliance with the stroke of a pen just as they did with thePatient Affordable Care Act.

And just like Obamacare it will be enforced by the barrel of a gun. Failure to comply will mean confiscation without recourse and prison time.

All they need now is a trigger.

And that trigger will likely come in the form of another stock market collapse. Wipe out Americans’ in a stock market crash and scare the heck out of them with more economic bad news, and millions of our countrymen will be all too willing to hand it over to Uncle Sam. Panic is a powerful motivator and what better way to get people on board than by threatening them with squalor and destitution in their old age if they don’t go along with it?

Government officials have been actively working to make this a reality for years. The Europeans are doing the same.

You can put your head in the sand or cover your ears and pretend this is not happening, but that won’t change the outcome.

They will take everything they can get their hands on.

Europe Considers Wholesale Savings Confiscation, Enforced Redistribution | Zero Hedge

Europe Considers Wholesale Savings Confiscation, Enforced Redistribution | Zero Hedge.

At first we thought Reuters had been punk’d in its article titled “EU executive sees personal savings used to plug long-term financing gap” which disclosed the latest leaked proposal by the European Commission, but after several hours without a retraction, we realized that the story is sadly true. Sadly, because everything that we warned about in “There May Be Only Painful Ways Out Of The Crisis” back in September of 2011, and everything that the depositors and citizens of Cyprus had to live through, seems on the verge of going continental. In a nutshell, and in Reuters’ own words, “the savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.” What is left unsaid is that the “usage” will be on a purely involuntary basis, at the discretion of the “union”, and can thus best be described as confiscation.

The source of this stunner is a document seen be Reuters, which describes how the EU is looking for ways to “wean” the 28-country bloc from its heavy reliance on bank financing and find other means of funding small companies, infrastructure projects and other investment. So as Europe finally admits that the ECB has failed to unclog its broken monetary pipelines for the past five years – something we highlight every month (most recently in No Waking From Draghi’s Monetary Nightmare: Eurozone Credit Creation Tumbles To New All Time Low), the commissions report finally admits that “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.”

The solution? “The Commission will ask the bloc’s insurance watchdog in the second half of this year for advice on a possible draft law “to mobilize more personal pension savings for long-term financing”, the document said.”

Mobilize, once again, is a more palatable word than, say, confiscate.

And yet this is precisely what Europe is contemplating:

Banks have complained they are hindered from lending to the economy by post-crisis rules forcing them to hold much larger safety cushions of capital and liquidity.

The document said the “appropriateness” of the EU capital and liquidity rules for long-term financing will be reviewed over the next two years, a process likely to be scrutinized in the United States and elsewhere to head off any risk of EU banks gaining an unfair advantage.

But wait: there’s more!

Inspired by the recently introduced “no risk, guaranteed return” collectivized savings instrument in the US better known as MyRA, Europe will also complete a study by the end of this year on thefeasibility of introducing an EU savings account, open to individuals whose funds could be pooled and invested in small companies.

Because when corporations refuse to invest money in Capex, who will invest? Why you, dear Europeans. Whether you like it or not.

But wait, there is still more!

Additionally, Europe is seeking to restore the primary reason why Europe’s banks are as insolvent as they are: securitizations, which the persuasive salesmen and sexy saleswomen of Goldman et al sold to idiot European bankers, who in turn invested the money or widows and orphans only to see all of it disappear.

It is also seeking to revive the securitization market, which pools loans like mortgages into bonds that banks can sell to raise funding for themselves or companies. The market was tarnished by the financial crisis when bonds linked to U.S. home loans began defaulting in 2007, sparking the broader global markets meltdown over the ensuing two years.

The document says the Commission will “take into account possible future increases in the liquidity of a number of securitization products” when it comes to finalizing a new rule on what assets banks can place in their new liquidity buffers. This signals a possible loosening of the definition of eligible assets from the bloc’s banking watchdog.

Because there is nothing quite like securitizing feta cheese-backed securities and selling it to a whole new batch of widows and orphans.

And topping it all off is a proposal to address a global change in accounting principles that will make sure that an accurate representation of any bank’s balance sheet becomes a distant memory:

More controversially, the Commission will consider whether the use of fair value or pricing assets at the going rate in a new globally agreed accounting rule “is appropriate, in particular regarding long-term investing business models”.

To summarize: forced savings “mobilization”, the introduction of a collective and involuntary CapEx funding “savings” account, the return and expansion of securitization, and finally, tying it all together, is a change to accounting rules that will make the entire inevitable catastrophe smells like roses until it all comes crashing down.

So, aside from all this, Europe is “fixed.”

The only remaining question is: why leak this now? Perhaps it’s simply because the reallocation of “cash on the savings account sidelines” in the aftermath of the Cyprus deposit confiscation, into risk assets was not foreceful enough? What better way to give it a much needed boost than to leak that everyone’s cash savings are suddenly fair game in Europe’s next great wealth redistribution strategy.

BOE Stress Testing Banks For Property Crash – Risk Of Bail-Ins | www.goldcore.com

BOE Stress Testing Banks For Property Crash – Risk Of Bail-Ins | www.goldcore.com.

Published in Market Update  Precious Metals  on 12 February 2014

By Mark O’Byrne


Today’s AM fix was USD 1,286.50, EUR 942.84 and GBP 778.47 per ounce.
Yesterday’s AM fix was USD 1,282.75, EUR 938.09 and GBP 780.83 per ounce.

Gold climbed $15.30 or 1.2% yesterday to $1,289.90/oz. Silver rose $0.15 or 0.75% to $20.20/oz.

Gold in British Pounds, 10 Years – (Bloomberg)

Gold is marginally lower today in all currencies after eking out more gains yesterday after Yellen confirmed in her testimony that ultra loose monetary policies and zero percent interest rate policies will continue.

Citi Futures are looking for gold to increase by a further 8.5% by the end of March after gold closed above its 50 DMA every day for the last two weeks and closed above its 100 DMA for two straight days. RBC are less bullish but expect gold prices to increase another 10% and surpass $1,400/oz in 2014.

Gold touched resistance at $1,294/oz  yesterday. A close above the $1,294/oz to $1,300/oz level should see gold quickly rally to test the next level of resistance at $1,360/oz. Support is now at $1,240/oz and $1,180/oz.

Yellen confirmed that the U.S. recovery is fragile and said more work is needed to restore the labor market. She signalled the Fed’s ultra loose monetary policies will continue and the Fed will continue printing $65 billion every month in order to buy U.S. government debt.

The dovish take from Yellen’s testimony yesterday should support gold prices. Continuing QE makes gold attractive from a diversification perspective.

Market focus shifts from the U.S. to the UK today and the Bank of England’s quarterly inflation report.

The U.K. has already almost breached the unemployment level that was a target for considering tightening policy, and Governor Mark Carney is widely expected to update the market on interest rate guidance.

Possibly of more importance is the fact that the Bank of England is to test whether UK banks and building societies would go bust if house prices crash. A ‘stress test’ will examine whether banks will need bailing out, or bailing in as seems more likely now, if house prices materially correct again.

Preparations have been or are being put in place by the international monetary and financial authorities, including the Bank of England for bail-ins. The majority of the public are unaware of these developments, the risks and the ramifications.

The test is being drawn up by the Bank’s Financial Policy Committee, whose members include Governor Mark Carney.

A Nationwide Building Society survey just out showed house prices had risen by 8.8% in January over the same month last year. London house prices have all the symptoms of a classic bubble.

Many UK banks are already over extended and the real risk is that many banks would not be able to withstand house price falls. This heightens the risk of bail-ins.

Download our Bail-In Guide: Protecting your Savings In The Coming Bail-In Era(11 pages)

How Dangerous Is China’s Credit Bubble for the World? |

How Dangerous Is China’s Credit Bubble for the World? |.

February 7, 2014 | Author 

Global Meltdown Predicted by Charlene Chu

Following on the heels of a report that appeared in the Telegraph on the topic, William Pesek at Bloomberg has recently also written an article about Charlene Chu (formerly with Fitch, nowadays with private firm Autonomous Research) and her opinions on China’s shadow banking system and the dangers it represents. The article is ominously entitled “China, the Death Star of Emerging Markets”. 

China has recently made unwelcome headlines, as one of the shadow banking system’s countless ‘wealth management trusts’ which was evidently invested in a bankrupt venture (in this case in a coal company – reportedly a great many such investments in insolvent coal mines exist) was about to go belly-up and then was bailed out at the last minute. Here is a recent article by Mish on the trust that was ironically named “Credit Equals Gold Number 1”. At first it was reported that the trust wouldn’t be bailed out, but in the end its 700 investors were able to ‘breathe a sigh of relief’ as Tom Holland remarked in the South China Morning Post (SCMP). However, Holland also cautioned  that by bailing out this trust, China has laid the foundations for a much bigger crisis down the road, as moral hazard has increased considerably as a result.



shadow banking chinaThe size of shadow-bank lending relative to China’s GDP, via the SCMP






Interestingly, Holland actually disagrees on a major point with Charlene Chu and Pesek. Let us first look at what Pesek writes:


“On any list of banking accidents waiting to happen, China is assured a place at the very top. But could a crash there take the entire global economy down with it? Absolutely, says Charlene Chu, who until recently was Fitch’s headline-generating analyst in Beijing. Chu has fearlessly trod into an area that China is trying desperately to keep off limits: its vast shadow-banking system. Now that she’s working for a private firm that doesn’t have to rely to governments for revenue, as do rating companies, Chu is free to speak completely openly. And is she ever.

“The banking sector has extended $14 trillion to $15 trillion in the span of five years,” Chu, who is now with Autonomous Research, told the Telegraph. “There’s no way that we are not going to have massive problems in China.” What’s more, she added, China “could trigger global meltdown.”

The travails of Greece continue to preoccupy the world, but its $249 billion economy is a rounding error compared to China’s $8.2 trillion one. In December 2005, for example, China announced its output had unexpectedly grown by $285 billion. In other words, it had suddenly found an economy bigger than Singapore’s that its statisticians hadn’t known about. Today, simply put, a Chinese crash would make the 2008 collapse of Lehman Brothers seem like a mere market correction.

The kind of meltdown Chu suggests is possible would end Japan’s revival, slam economies from South Korea to Vietnam, savage stock and commodity prices everywhere, force the Federal Reserve to end its tapering process and prompt emergency national-security briefings in Washington. So feel free to obsess over Turkey and Argentina, but the real “wild card” is the world’s second-biggest economy.”


(emphasis added)

As noted above, that certainly sounds quite ominous.


Opinions Differ …

Not so fast, says Tom Holland. While agreeing that China will eventually face a credit crisis and quite possibly a severe economic downturn, he points to the fact that the closed capital account and China’s vast foreign reserves make a ‘global contagion’ event of such enormous magnitude unlikely. This particular scare story he avers, is not something to worry about, which he inter alia tries to buttress by comparing China’s situation to Indonesia’s prior to the Asian crisis. Below are a few relevant excerpts from his article:


“As a headline, it was certainly eye-catching. “Currency crisis at Chinese banks could trigger global meltdown,” declared a story in the Sunday edition of London’s Daily Telegraph. The article noted nervously that foreign currency borrowing by Chinese companies has almost quadrupled in just four years to more than US$1 trillion.Any substantial appreciation of the US dollar – and many analysts are indeed expecting gains this year – could open up a dangerous cross-currency mismatch, forcing Chinese borrowers to default and inflicting shattering losses on international lenders, the story warned.


The chance that China will suffer a currency crisis at any time in the foreseeable future is precisely zero. And even if the country were struck by crisis, there would be no danger of a global financial meltdown. It is certainly true that China’s foreign liabilities have grown rapidly in recent years; a quadrupling since 2009 is about right. But, if anything, the Telegraph’s figure of US$1 trillion is rather too modest. According to Beijing’s State Administration of Foreign Exchange, at the end of 2013 China had foreign liabilities of a thumping US$3.85 trillion; roughly 40 per cent of its gross domestic product.

But the lion’s share of those liabilities – some US$2.32 trillion – consists of highly illiquid inward foreign direct investment. That money is staying where it is. On top of that, a further US$374 billion is foreign portfolio investment in China’s stock and bond markets. That’s money that has flowed in under Beijing’s qualified foreign institutional investor program, whose rules impose strict limits on the size and frequency of repatriation payments. However, that still leaves around US$1.15 trillion in short-term foreign liabilities, consisting largely of loans from international banks.


In 2014, China has no such problems [compared to Indonesia prior to the Asian crisis, ed.] . External debt is small relative to GDP. And with US$3.82 trillion in foreign reserves at the end of last year, Beijing can cover China’s near-term foreign liabilities more than three times over. Sure, the shrinkage of the central bank’s balance sheet were it actually forced to sell assets in order to fund the country’s external liabilities would inflict a painful monetary tightening on China’s domestic economy.

But with Beijing sitting on such a large pot of foreign reserves, such an extreme crisis is hardly likely. And even if it did happen, there would be no “global meltdown”. Despite the opening of recent years, Beijing’s controls on the free flow of capital mean China’s financial sector remains relatively closed, and the exposure of the global financial system to the country is low.

That’s not to say there wouldn’t be casualties from a sudden strengthening of the US dollar against the yuan, or from a marked slowdown in China’s domestic economy. At the end of October last year Hong Kong’s banking system was owed US$300 billion by mainland banks and another US$100 billion by mainland companies. Clearly the local pain would be intense. But a Chinese currency crisis triggering global meltdown? Happily not.”


(emphasis added)

Readers may recall that we have also recently mentioned the exposure of Hong Kong’s banks to Mainland China. We believe Mr. Holland is correct in one sense, but we also think he underestimates the contagion potential.


Contagion Through Many Different Channels

It is true that China’s closed capital account as well as the government’s tight control over the financial system makes China’s situation fundamentally different from that of countries with open capital accounts from whence foreign investors can at anytime flee in droves if they get cold feet over an overextended bubble.

In fact, we have  pointed out in the past that the great degree of central control over the economy (and especially the banking system) which China’s government enjoys makes it inherently more difficult to time a putative demise of the credit bubble than elsewhere – and such things aren’t easy to time to begin with.

However, a sharp decline in the yuan’s exchange rate may be seen as necessary by China’s leadership if a crisis threatens social stability (and with it the party’s rule) in China. China has already devalued a great deal on one occasion (in 1994), an event that in hindsight seems to have precipitated a chain reaction (first the yen followed the yuan lower, and then the currency pegs in various ‘Asian Tiger’ economies went overboard).

Today, China is a far bigger player in the world economy than in 1994, and we believe that Mr. Holland underestimates how today’s economic and financial interconnectedness may produce contagion effects even in light of the closed capital account and China’s large reserves. We also don’t necessarily regard  the exposure of Hong Kong’s banks as a de facto ‘internal affair’, as the territory is outside of the ambit of China’s capital controls and the yuan. It is not only Hong Kong’s banking system that one must worry about though. Consider what would happen if China were indeed forced to draw down its reserves to serve the $1.5 trillion in short term foreign liabilities, or a sizable chunk thereof. Given that this would inevitably result in a much tighter domestic monetary policy (provided the PBoC doesn’t take inflationary measures independent of its forex reserves), all sorts of malinvestments in China would be revealed as unsustainable. A number of industries would be faced with a major bust, and it is a good bet that commodity imports would plunge.

However, once that happens, one must immediately begin to worry about Australia’s banks, which have financed a giant housing bubble  on the back of the country’s commodities boom and in turn rely greatly on short term foreign funding. So there would immediately be a crisis in both Hong Kong’s and Australia’s banking systems, and it does not take a great leap of the imagination to see how contagion could spread further from them. Naturally many other raw materials exporting countries would also be hit hard, we mainly picked Australia as an example because its banks are so reliant on short term foreign funding, so they would presumably be among the first in line.

Lastly, here is a recent chart of NPLs in China’s official banking system (listed banks only, i.e. the biggest ones):



Statistic_id235732_non-performing-loan-npl-ratio-of-chinas-listed-banks-2012NPLs at China’s biggest banks – this looks good! In fact, it looks too good – click to enlarge.



As can be seen, NPLs at the major banks have declined to a negligible percentage (compare this with crisis-stricken Spain’s near 13% or so NPL ratio, which is understated to boot). However, there are plenty of credible rumors that China’s banks are keeping loans that would normally be regarded as dubious alive by all sorts of tricks. Not only that, they are definitely backing a great many of the ‘shadow banking’ businesses, which have developed in China mainly in order to circumvent  restrictions on banking activities.

In view of everything that is known about credit growth in China, we would regard this extremely low NPL ratio as a contrary indicator even if it were credible.



No-one knows for sure how big a problem China’s economy will eventually face due to the massive credit and money supply growth that has occurred in recent years and no-one know when exactly it will happen either. There have been many dire predictions over the years, but so far none have come true. And yet, it is clear that there is a looming problem of considerable magnitude that won’t simply go away painlessly. The greatest credit excesses have been built up after 2008, which suggests that there can be no comfort in the knowledge that ‘nothing has happened yet’. Given China’s importance to the global economy, it seems impossible for this not to have grave consequences for the rest of the world, in spite of China’s peculiar attributes in terms of government control over the economy and the closed capital account.



ShanghaiShanghai’s A-share index (which is heavily weighed toward banks) continues to wallow near its lows of the past several years – click to enlarge.




The BIS is currently ‘warning regulators and governments’ about excessive borrowing and shifts in borrowing patterns by emerging market-based companies.

Why, thanks boys for this timely intercession! What would we do without you?



Charts by: SCMP and Forbes / Pricewaterhouse-Coopers, BigCharts

Shutting Off the Money Tap – International Man

Shutting Off the Money Tap – International Man.

By Jeff Thomas

Recently, an HSBC depositor in Swindon, UK attempted to withdraw £10,000 from his account (which was in credit of about £50,000) and was told that he could withdraw no more than £1,000 without providing adequate proof as to how the funds would be used.

The depositor later stated:

“HSBC will not let me take out anything over £1,000 cash over the counter. I gave them warning, but they say they must know what I will use it for—they want to see evidence of hotel bookings, etc. In short, they refuse to give me my cash. HSBC say it is new internal rules to help prevent money laundering.”

An HSBC spokesman stated:

“In these instances we may also ask the customer to show us evidence of what the cash is required for. The reason for this is twofold, as a responsible bank we have an obligation to our customers to protect them, and to minimise the opportunity for financial crime.”

Further Developments

After less than a week of this policy having been implemented, it generated significant outcries from depositors—so much so that HSBC has already backed down. They had this to say:

“However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal. We are writing to apologise to any customer who has been given incorrect information and inconvenienced.”

So… apparently, it was a mere misunderstanding. Some mid-level manager apparently became overzealous in exercising what he considered to be “reasonable caution.”

So, what are we to make of this? Well, the message is clearly that we are to say to ourselves, “Cooler heads have prevailed. Tempest in a teacup. Problem solved.”

But this is not so. Similar instances of refusal to return funds over £1,000 have taken place in HSBC branches in Wilshire and Worcestershire in the past week. This tells us that this was an HSBC policy decision—that it came from senior HSBC management.

This attempt at greater control over depositors’ funds has a broader significance. Over the years, we have predicted that as the Great Unravelling progresses, we shall observe the seizing of wealth and monetary control by governments and banks, acting in concert.

Over time, both wealth in general and the control over it will move inexorably into the hands of the banks and the political leaders. As this unfolds, we shall see numerous trial balloons, such as this one by HSBC and others. (The Cyprus bail-in was a similar but more successful trial balloon.)

Some will succeed, others will fail, but the central programme will move inexorably on. That programme will be driven by a new assumption—that the holding of wealth and the management of wealth are so central to national and international stability that only the central banks and governments can be entrusted with them. The individual cannot be trusted to control his own wealth.

The Bank Takes on the Role of a Regulatory Body

In floating this new policy, the banks have changed their traditional role as a monetary storage facility. They have now been granted the authority to refuse the return of funds that have been entrusted to them, based upon their authority to be satisfied that the money will be well spent by the depositor. If the depositor is, in effect, being expected to prove to the bank that he does not plan to perform a criminal act, the bank goes beyond its function as a business and becomes a regulatory body.

Without delving into conspiracy theories, there can be little doubt that the UK government has provided extraordinary latitude to HSBC (and presumably other banks)—latitude that, not long ago, would have been considered reprehensible.

However, throughout Europe, the US, and much of the rest of the world, we are seeing a growing tendency for governments to allow banks to control depositors’ funds.

As stated above, the 2013 Cyprus bail-in is a similar case—one in which the banks literally stole depositors’ funds with the tacit approval of the Cypriot government, and to much encouragement from the EU.

Since that time, Canada has passed legislation allowing its banks to do the same; and, more recently, the IMF has announced a similar plan for the EU.

As regular readers of this publication will know, we frequently publish reminders that, historically, when a nation is in the final stages of decline, the government invariably performs a last squeeze of the lemon—a final confiscation of the public’s wealth.

They tend to do this through whatever means they feel may succeed. As that is the case, in the future, we can expect to see increasing:

  • Confiscation: As we have already seen and will soon see on a larger scale, banks will be given the right to steal depositors’ funds, as stated above.
  • Capital Controls: This will take many forms, but of particular interest will be an increase in governmental control over the expatriation of individuals’ money.
  • Civil Forfeiture: Law enforcement authorities of all branches now have the authority to seize the assets of any individual who is under suspicion of a crime. (This is particularly the case in the US. It is not necessary that the individual be convicted or even charged.) This will be on the increase and has begun to reach the point of “shakedowns”—stopping people expressly to seize assets.
  • Freezing of Assets: In the EU and US, accounts are presently frozen for a variety of reasons—the client may be “suspected of a crime,” or his transactions may be deemed to be “inappropriate.” In the future, reasons for freezing assets will expand to “the threat of a possible run on the bank,” and “concern for the stability of the economy.” Governments will additionally simply use the nondescript blanket term, “temporary emergency measure.” (As Milton Friedman noted, “Nothing is so permanent as a temporary government program.”)

As these events unfold, the average depositor will be pressed to continue to function economically, but, as troubled as he might be, he will go along, as he really doesn’t have a choice. (Should he object too strenuously, he may well be investigated.)

Each of the above justifications for shutting off the money tap sound reasonable… It’s just that they happen to be a lie.

As stated above, when a nation is in the final stages of decline, the government invariably performs a last squeeze of the lemon—a final confiscation of the public’s wealth.

That process has now begun and will inexorably expand and continue until the confiscations have reached the point of greatly diminished returns or collapse of the governments’ power, whichever comes first.

If the reader sees this as even a 50/50 possibility, he would be wise to take steps to safeguard his wealth by removing it from a system that has become a threat to his continued ownership of his wealth.

Editor’s Note: The best way you can safeguard yourself and your savings from the measures of a desperate government is through internationalization. There are some very practical strategies you can implement from your own living room. Going Global from Casey Research is a comprehensive A-to-Z guide on this crucially important topic. Click here to learn more.

On the Other Side of Collapse: Notes from the Island of Cyprus

On the Other Side of Collapse: Notes from the Island of Cyprus.

by Lakis Polycarpou, originally published by City of the Future  | TODAY

This is an interview with my cousin, Sofia Matsi. Sofia is a health campaigner, artist, permaculture designer and sustainability activist. She lives in Nicosia, Cyprus.

Last year, Sofia witnessed first hand the near complete collapse of the island’s economy–an event which culminated in a highly controversial bailout plan that included an unprecedented confiscation of up to 10 percent of customer bank deposits and the dismantling of the country’s banking industry.

The deal was the fifth Eurozone bailout in recent years–after Greece, Ireland, Portugal and Spain–that was orchestrated by the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB), together called “the Troika” in Greek and Cypriot slang.

Cyprus has been de facto partitioned since 1974, when Turkey invaded and forced Greek Cypriots out of the northern part of the island. In 2004, Cyprus joined the Eurozone, in part as a way to protect the island from further Turkish aggression.

In this interview, Sofia talks about her experience of the crisis, her efforts to develop her father’s land as a permaculture site, and her work to help build “The Movement of Life,” an organization that promotes ecological sustainability, resilience and economic self-reliance for Cypriots.

LP:  Can you tell me about the situation right now in Cyprus? What is the mood of the people now? How has that changed in the past year?

SM:  Well, almost exactly a year ago we gave our first presentation as The Movement of Life here in Cyprus. At that time, those of us in the movement were aware of the danger of a financial crisis; there were new elections coming up, and along with that was the threat of committing Cyprus to the Troika plan.  And that was going to happen with the elections in mid-February.

So we were rushing around, trying to figure out what was going to happen, what the outcome would be. What eventually ended up happening is that we were told as a nation to listen to what Troika was saying. And what Troika was proposing was a huge loan, and we wouldn’t really understand where would that end.

So that brought us to the bailout announcements in March. Some people were surprised, but those of us in the Movement of Life, were already talking about these things.

After that, though, the bailout gave a big push to many, many groups in Cyprus who wanted to to be more independent and self-sufficient. It gave power to groups that were already thinking of working in this direction, like people who were saving seeds, people who had always wanted to start organic farming.

So things started popping up from this — lectures were happening all summer long, lectures on how to create your own organic farm, worm composting, and stuff like that. As a team, we decided to get more practical, and stop just lecturing people, and demonstrating how to. How to compost, how to do worm composting, how to do the seed saving.

What we observed is that before the bailout announcements, people were not so interested. People were like, “yeah, oh well, you’re saying what you’re saying, but I don’t think it affects me, and I don’t think it matters.”

But then after, we saw increased interest from people. People wanted more, wanted to be more independent and self-sufficient. Again, there’s a huge segment of the population who don’t really realize, even now, that there’s a tremendous need to be more independent as Cypriot citizens, and we cannot depend on the lifestyles we had before. Plenty of people keep going with that same lifestyle, but I think the majority, if not all of us, realize that we are in a very tight situation, financially at least.

What’s been the impact of the financial crisis on you and your family?

Well, that’s … a bit strange also. I don’t know if others from the States have heard my family’s news, but what changed for us was that we started realizing — personally, I started realizing–that we cannot maintain the same lifestyle as before.

When the bailout announcement was made, the banks were closed for 10 days. That meant that cash flow got very tight, there were fewer and fewer products at the supermarket, so we started wondering, what does it mean to be sustainable? We couldn’t produce anything at home. Personally, that filled me with panic at that point. Because I realized, I don’t have anything to eat, I don’t produce anything, and I can’t trade anything with anyone.

So that made me want to be more resilient, more independent. And talking to my parents, they also slowly started understanding what was behind this idea of becoming more independent, so permaculture came into the mix. Permaculture was in my life as a concept, but at that point it became more of a need, to learn practically more about permaculture, because it seemed like a very good answer for many of the problems.

So I started searching for workshops [for a permaculture design course], I found one, I talked to you, we narrowed down some options, and I ended up taking a course in Greece. My dad did the same; after I came back, he was convinced that this was a very good solution for the future, because we decided that the land that we have as a family, could be utilized. And why not start very well from the beginning?

Just to be clear, this is land that from your father’s side of the family, in the foothills …

And my mom. My mom has a field in Vysakia. So that land is sitting there, nobody’s using it. There are people who’s biggest problem is that they don’t have the land. So at least we don’t have that challenge. We only have the challenge of getting started!

So yeah, we understood — I personally realized — that we cannot maintain the same lifestyles as before.

And it’s not random. If I had a big job, if I had a big career job, then I would probably not be thinking that way. But I’ve been back from [graduate school in] the US for the three years, and I have been doing like three jobs in order to survive and it’s been exhausting. And I realized, there is no potential. And this was before the crisis. I don’t see any potential in big career jobs for us at this point. It doesn’t matter how many Ph’ds or how many Masters you have. That won’t get you anywhere. I’ve asked for a job, I’ve sent my CV out repeatedly. Every time the semester changed, I would send my CV to local colleges and universities and ask for an art position job, but things weren’t moving. And I realized that must be for a reason also.

Sofia and crew with their recently built greenhouse
Sofia and crew with their recently built greenhouse

So how’s it going with the land? What have you done so far? What do you plan to produce?

Ideally, we would like to produce as many things as we can fit on that land. That would be like a food forest, seasonal vegetables — and because we have space, we would like to make an income out of that. We would ideally like to live off of what we make.

Do you know how much land it is?

It’s 7.5 hectares (about 18 acres).

That’s a good sized piece of land. I imagine a lot of people in Cyprus have some land. In the last generation, both of your parents grew up in villages where people farmed a lot as part of their livelihood. So people in Cyprus do have land. Maybe not everybody.

Yeah, I think most of families have at least a piece of land that they can use. It’s not like other countries where people live in the city and they have no contact with an open piece of land that they can use. That’s not the case with us in Cyprus.

Sofia’s father Alexis working the compost pile
Sofia’s father Alexis working the compost pile. Photo by Sofia Matsi.

So in a way, something like permaculture is particularly useful in Cyprus.

I think so, yeah! I think that it actually makes sense on a big scale. Of course permaculture could make sense in a cityscape too because you can do more collaborative projects in urban spaces. But it actually makes a lot of sense here, because there’s a lot of land that it could be applied to.

I have a lot of memories of  Cyprus, from when we used to go back to visit. There are certain traditional attitudes and  practices there that we’re trying to rediscover in the United States, like the importance of local food, and planting productive trees — I remember the one time our grandparents came to the United States, our grandfather wondered why no one planted  productive trees. In Cyprus people plant olive trees, they plant lemon trees, it’s part of the culture. Do you think that permaculture and other sustainability ideals have an easier sell in a place like Cyprus?

I would say yes. I would say compared to other countries, we are very close to what our grandparents used to do. So functional is a part of our daily life. We have lemon trees and olive trees right down in front of the house over here. What I was sadly observing today though was that I passed by many neighborhoods and I kept seeing unpicked mandarins. It was all over the place, mandarins, mandarins, or orange trees, and they were full of fruit. That’s not a good sign! At least the fruit should be disappearing a bit, every time I pass by, but it seems like it’s the same! So the functional tree is there, but people don’t really care about it.

At least it’s there. Because it takes a lot of years to grow a tree.

Definitely. But that is also a sign that we’re don’t yet have serious hunger problems. That’s why those trees are full of fruit. Slowly, if we really had a problem, those would be utilized.

Last week you were telling me about the impact of the crisis on people’s lives– that at the beginning the media presented it  like a horror movie, but after the bailout there was almost a news blackout, even as people were losing their jobs.

It seems really strange. At the beginning they told us if we didn’t sign the Troika agreement, we were gonna, you know, go without food, we wouldn’t have anything to sustain our country, we would lose everything. And so, they said, we needed to sign those agreements in order to survive.

Now we’ve signed those agreements, and taken steps toward those “logical” solutions. And people have been losing their jobs, ever since, continuously. Nothing has improved on that side. We do have food, now of course. The tragic scenario of not having food because everything is imported in Cyprus, that we don’t produce almost anything, that we cannot sustain our country — those threats were, thankfully, solved, at least in some peoples’ minds.

But actually the situation has another face, that’s slowly leading us in that direction. We are losing our jobs at this point, and we don’t even know what to do with our spare time, because we’re not trained. We’re not trained to use the land, we’re not trained to survive. And we’re not told that that’s something that would be good to do.

The government is not really supporting … even though I have seen that the government now at least has a sponsorship for young farmers. So that’s good news at this point. Pushing that way, at least. No more lawyers, teachers, all of these people who are now unemployed. We need people who know how to do useful things.

Can you tell me about the heirloom seed movement?

We have a local group, it’s called Kyprianou Sporoi, which means Cypriot Seeds. And they are active in saving heirloom seeds from their grandparents, uncles, whoever wants to offer seed to them. They first check whether the seeds are valid–they do it with this test of repeating cycles of growth, and when the product comes out the same two consecutive times, then they know it’s traditional.

Traditional seed saving and exchange. Photo by The Movement of Life

They’ve been active with this silently, but after last year, they came out much stronger, with more focus on creating collective gardens, community gardens in schools, showing people how to be more independent. And they always use their own seeds. They never use hybrid seeds.

We are lucky that we had the chance to collaborate with the largest heirloom seed group in Greece, Peliti. They came and gave us a good solid knowledge of the importance of saving seeds. Because we knew it was important but we didn’t have enough knowledge.

In the past, other local teams had planted community gardens, but with no thought of the seeds they were using; they were just buying plants, ready-made, from nurseries. Now, at least, all of the teams admit that it was a mistake to use all of those hybrids, now we know that we need to return to our traditional seeds. We actually had a meeting today and we talked about how important it is to start finding traditional seeds in Cyprus, saving them and learning how to reproduce them.

So, yeah, it’s an effort, and it’s a whole campaign to convince people — not to convince, but more to make them more sensitive on this part.

To raise awareness.

It’s only a matter of realizing how important it is to not be taken advantage of by the big corporations that sell you seeds to keep you dependent on them. I think it only takes an hour or so for people to understand how urgent this matter is. I think we have made a huge step in making people more sensitive about this.

Winter lettuce in the greenhouse. Photo by Sofia Matsi
Winter vegetables in the greenhouse. Photo by Sofia Matsi

Can you tell me more about the Movement of Life?

I was involved in activating the movement. It’s like, say, the Transition Movement, which is a good theory, it says a lot on the need to change, but if someone doesn’t actually do something about it in their own towns, you can’t really grasp what is the Transition Movement about.

So that’s what we did in Cyprus. The Movement of Life was a good concept, it had a good goal, but nothing was happening, so we felt the need to activate it. We started with a few lectures, and then we started being more practical, with workshops and stuff.

What was the movement’s initial goal?

The original goal was to fight for food for all, water for all, energy for all, sustainable energy, unpatented water; food for all means organic, safe food, non genetically modified, so it’s all those matters that we’re worried about …

I guess what I’m getting at is: Was that connection between financial problems sustainability always there in the movement?

As a concept it was. And we know that we’re not the only movement, and that’ s not the goal, anyway. We just try to act through an organized structure. And then from there on we join other movements so we can have our job done. So we can learn more things. We bring specialists in so they can talk to us about such and such, and I think they also appreciate our more organized action here in Cyprus.

Do you have any last thoughts?

I believe that — what I personally understand, at this point–is that the power to change things is in the hands of each individual. We have the power. Before I was panicking and thinking “it’s all about our politicians, it’s all about the decision makers.”

But at this point, I really feel that we can shift things around. And we have the power. Each individual has the power to control and to change and to demand things. I believe that tools such as permaculture can give you the knowledge and confidence to demand changes.

I do really believe that while we might be unemployed as young people here in Cyprus, while we might be ignored, while we might not have the funds for the desired lifestyle that our parents started living …  I believe that’s also a blessing.

I have been observing Greece a lot lately, and I’ve felt really fortunate to see how many young people react to this crisis in Greece. Many of them stick around Athens, they stick around, living miserable, routine lives, with no cash and working all day long.

But at the same time, you observe these professionals, very hard working young people creating societies from scratch, like the Free and Real. They made an entire community out of nothing. They make their own buildings, they’re engineers, designers, yoga instructors, all the specialties, and they all now live together very professionally and they thrive! They thrive without money, they thrive without anyone having to give them employment! So I feel very optimistic that this crisis/opportunity is actually a gift to us young people who actually want to change things. Because if things were given to us comfortably and with luxury, I don’t think we would easily comprehend the need for change. So, yeah, I think it’s a gift, at this point!

March 31, 2013 ‘Signs’ Introductory Post


The crises in Europe continues unabated. In the latest crisis, Cypriot citizens and businesses with uninsured deposits were hit with a ‘one-time tax’ that could be as high as 80% (see this). The narrative the media was sharing at one point was that rich, Russian oligarchs would be the main ones to be hit in this, as Cyprus supports an off-shore banking ‘haven’ for these plutocrats (see this). The Russians have NOT been pleased about this and after already moving ships off the coast of Syria (see this), they began an unannounced war games exercise in the Black Sea, a stone’s throw from entering the Mediterranean (see this). This was after the ECB’s first proposal that ALL depositors be hit with a ‘one-time tax of almost seven percent for insured deposits and close to ten percent for uninsured deposits (see this). Governments were being told to take money from their citizens in return for loan guarantees to help bail-out insolvent banks. This has changed from using the taxation system to support bail-outs; the taxpayer was not to be used to bail-out the banks. It would seem, however, that someone leaked the news to the Russian and British off-shore depositors, as they seemed to have moved their money out already (see this and this), leaving the citizens of Cyprus to bail-in the banks. Most certainly, it is beyond obvious that the crises in Europe are not over and is likely to continue to deteriorate (see this).

In light of this change, many are beginning to wonder if the elite have suddenly changed the rules (or put in place something that they’ve been planning) (see this). Marc Faber, the author of the Gloom and Doom Report website, suggests that developed nations the world over are likely to follow this model: to begin to implement a ‘wealth tax’ for anyone above an arbitrary cut-off (see this). This could mean that all of your assets are considered and a ‘one-time tax’ will be implemented to help support the banks (see this); you know, those institutions that have gambled their depositors’ property that they were entrusted with.

The Canadian government is actually preparing for something along these lines. Their first move has been for the federal government to hide in their latest budget a provision for a ‘depositor haircut’ (see this and this). A more general wealth tax may be in the future…


There is little doubt Canadian governments at all levels are testing the waters with respect to what they can force upon their citizens. As a vice-prinicipal, I have been subjected to the Ontario government’s latest salvo at educators, Bill 115 (see this). This bill was used to impose contracts on educators across the province. The government spun a tale that focused upon a wage freeze and the media conveniently played along, while the unions attempted their own spin by focusing on the constitutionality of collective bargaining rights. Regardless of the intent, what I found most distressing about the bill was the section that stated the government’s actions were above the rule of law, beyond the purview of the courts to judge (see this).

We also see the Canadian military pursuing the use of unmanned drones over Canadian territory (see this) and the media is trumpeting it (see this). Unmanned ‘eyes-in-the-sky’ have been increasingly used over Canadian skies by the RCMP and various local police forces (see this). So, is the Canadian government preparing to restrict the freedoms of its citizens in the future through the more widespread use of these drones? What better way to ensure the masses do not stray from their confines, as Noam Chomsky reminds us (see this).

Couple this with the American precedent to use such drones to assassinate ‘terrorists’ within their domestic borders (see this) and we are a stone’s throw away from a state that could not only spy on our every move, both aerially and digitally (see this), but target us for ‘elimination’ if we are deemed terrorists. Given that the definition of who is considered a terrorist shifts as governments deem fit (see this and this), the door is open for anyone who disagrees with or challenges the government to be labelled a ‘domestic terrorist’. But there could be more brewing here as there are some suggesting that the American government could be preparing for a potential civil war (see this and this). Where would the Canadian government lay its allegiance in such a war and what would be the impact on Canada considering that the U.S. is our most significant trading partner; and we have the world’s longest, unguarded border?

History and prehistory point to examples of governments and societies collapsing because of such trends and actions (see this and this).

As geopolitical tensions rise, environmental concerns escalate, and economic sustainability and trust are increasingly questioned, one has to wonder when the tipping point will be reached and cause our hyper-complex, interconnected world to crack and crumble…


I stand before this faceless crowd
and I wonder why I bother
so much controlled by so few
stumbling from one disaster to another
I’ve heard it all so many times before
it’s all a dream to me now
a dream to me now
And if we’re lost
then we are lost together

Blue Rodeo, 1992
Lost Together, Lost Together

%d bloggers like this: