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Ukraine Goes Cyprus 2.0, To Tax Deposits Over 100,000 Hryvnia (To Appease IMF?) | Zero Hedge

Ukraine Goes Cyprus 2.0, To Tax Deposits Over 100,000 Hryvnia (To Appease IMF?) | Zero Hedge.

It would appear the IMF’s dirty little fingerprints are all over this latest piece of legislation in Ukraine. The Ukraine Finance Ministry is proposing to take a very-similar-to-Cyprus approach to bailing in its despositors:

  • *UKRAINE PROPOSES NEW TAX ON DEPOSITS EXCEEDING 100,000 HRYVNIA
  • *UKRAINE TAX PROPOSAL WOULD INCLUDE 1.5% OF ALL DEPOSITS

This would appear a measure designed to stabilize the budget for potential IMF negotiations and fits perfectly with what the IMF has consistently hinted as the next steps for many nations.

This is further to the news last week that a 25% deposit “tax” was being considered…

Via Tax News,

Ukraine’s parliament is to consider draft laws which would ban foreign-currency bank deposits and introduce a 25% tax on interest on deposits in banks and other financial institutions in circumstances where the interest received is more than 5% above the rate set by the National Bank of Ukraine.

The proposed amendments to banking and tax legislation were put forward by Yevhen Sihal, who is a member of the country’s ruling Party of Regions. In an explanatory note submitted with the drafts, he argued that the higher tax rate will encourage consumer spending, reduce the cost of business loans, and provide extra funding for the country’s Pension Fund. Sihal also explained that his tax proposal is based on the experience of the Russian Federation.

Sihal’s proposals have united the National Bank of Ukraine (NBU) and the country’s Communist Party in opposition. The NBU was quoted as saying that it was concerned about the politicization of economic issues, and that its policy was to increase the deposit base in line with international practice, while Communist leader Petro Symonenko suggested that theowners of large deposits will simply move their funds abroad to avoid the tax.

We assume, just as with Cyprus, that the big money has already left the building leaving small businesses and the average joe to foot the IMF-demanding bill (for the good of the country) to get their bailout funds.

Ukraine Goes Cyprus 2.0, To Tax Deposits Over 100,000 Hryvnia (To Appease IMF?) | Zero Hedge

Ukraine Goes Cyprus 2.0, To Tax Deposits Over 100,000 Hryvnia (To Appease IMF?) | Zero Hedge.

It would appear the IMF’s dirty little fingerprints are all over this latest piece of legislation in Ukraine. The Ukraine Finance Ministry is proposing to take a very-similar-to-Cyprus approach to bailing in its despositors:

  • *UKRAINE PROPOSES NEW TAX ON DEPOSITS EXCEEDING 100,000 HRYVNIA
  • *UKRAINE TAX PROPOSAL WOULD INCLUDE 1.5% OF ALL DEPOSITS

This would appear a measure designed to stabilize the budget for potential IMF negotiations and fits perfectly with what the IMF has consistently hinted as the next steps for many nations.

This is further to the news last week that a 25% deposit “tax” was being considered…

Via Tax News,

Ukraine’s parliament is to consider draft laws which would ban foreign-currency bank deposits and introduce a 25% tax on interest on deposits in banks and other financial institutions in circumstances where the interest received is more than 5% above the rate set by the National Bank of Ukraine.

The proposed amendments to banking and tax legislation were put forward by Yevhen Sihal, who is a member of the country’s ruling Party of Regions. In an explanatory note submitted with the drafts, he argued that the higher tax rate will encourage consumer spending, reduce the cost of business loans, and provide extra funding for the country’s Pension Fund. Sihal also explained that his tax proposal is based on the experience of the Russian Federation.

Sihal’s proposals have united the National Bank of Ukraine (NBU) and the country’s Communist Party in opposition. The NBU was quoted as saying that it was concerned about the politicization of economic issues, and that its policy was to increase the deposit base in line with international practice, while Communist leader Petro Symonenko suggested that theowners of large deposits will simply move their funds abroad to avoid the tax.

We assume, just as with Cyprus, that the big money has already left the building leaving small businesses and the average joe to foot the IMF-demanding bill (for the good of the country) to get their bailout funds.

An invaluable lesson for U.S. Citizens from the bank confiscation in Cyprus

An invaluable lesson for U.S. Citizens from the bank confiscation in Cyprus.

Lesson from bank confiscation in Cyprus

It was almost exactly one year ago to the day that an entire nation was frozen out of its savings… overnight.

Cypriots went to bed on Friday thinking everything was fine. By the next morning, they had no way to pay bills or buy food.

It’s certainly a chilling reminder of how quickly things can change. And why.

The entire crisis sprang from a mountain of debt. The government had accumulated too much debt. The banking system had accumulated too much debt.

And banks had lost a lot of their customers’ money making risky, stupid bets on things like Greek government bonds.

By March 2013, Cypriot banks were almost entirely devoid of cash.

Sure, customers could log on to a website and check their bank balances.

But there’s a huge difference between a number displayed on a screen, and a well-capitalized bank that actually holds abundant cash.

The government was too insolvent to bail anyone out. And as a member of the eurozone, Cyprus didn’t have the ability to print its own money.

So they did the only thing they could think of– confiscate customer deposits.

And they imposed capital controls on top of that to make sure that people couldn’t withdraw their remaining funds out of the banks as soon as the freeze was lifted.

It was a truly despicable act. But again, even though it all unfolded overnight, the warning signs were building for at least a year. Especially the debt.

When countries, central banks, and commercial banks accumulate too much debt, and specifically too much debt relative to assets, you can be certain there is trouble ahead in the system.

Think about it like your own personal finances. If you have a million dollars in debt, that seems like a lot. But if you own a home worth $5 million, you are still in good shape financially.

If, on the other hand, you have a million dollar mortgage for a home that’s worth $250,000, you’re in deep trouble.

The US government’s official, ‘on the books’ debt now exceeds $17.5 trillion. This is an enormous figure.

If the Uncle Sam just happened to have $20 trillion or so laying around, however, this debt load wouldn’t be a big deal. But that’s not the case.

By the US government’s own admission, their own financial statements show net equity (assets minus liabilities) of MINUS $16.9 trillion.

That’s including ALL the assets: Every tank. Every bullet. Every body scanner. Every highway.

Then you have to look at the Central Bank, which is itself teetering on insolvency.

The Federal Reserve’s balance sheet has exploded since 2008, and right now the Fed’s net equity (assets minus liabilities) is about $56 billion.

That’s a razor-thin 1.34% of its $4 trillion in assets (it was 4.5% before the crisis).

Here’s the thing: in its own annual report, the Fed just admitted that it had accumulated ‘unrealized losses’ totaling $53 billion. This is almost the Fed’s ENTIRE EQUITY.

So in the Land of the Free, you now have an insolvent government and insolvent central bank underpinning a commercial banking system that is incentivized to make risky, stupid bets with their customers’ money.

To be fair, I’m not suggesting that bank accounts in the US are going to be frozen tomorrow morning.

But a rational person should recognize that the warning signs are very similar to what they were in Cyprus last year.

And if there is one thing we can learn from the Cyprus bail-in, it’s that it behooves any rational person to have a plan B, even if you think the future holds nothing but sunshine and smiley faces.

Having a plan B can mean a lot of different things depending on your situation– moving some funds abroad, securing a second source of income, having an escape hatch overseas, owning physical gold, holding extra cash, etc.

You’re not going to be worse off for having a plan B based on the possibility that there -could- be some problems down the road.

But if those consequences are ever realized,and Plan B becomes Plan A, it might just turn out to be the smartest move you’ve ever made.

If you think this makes sense then I encourage you to sign up for our free Notes From the Field if you haven’t already done so, and you can also share this article with your friends below so they’re not without a plan B if things do take a turn for the worse.

March 17, 2014
Dallas, Texas, USA

Navy Seals Take Over North-Korea-Flagged Oil Tanker In Libya | Zero Hedge

Navy Seals Take Over North-Korea-Flagged Oil Tanker In Libya | Zero Hedge.

Tensions around the North-Korea-flagged tanker that “illegally” obtained oil from rebels who hold a Libyan port have been escalating for the last week. However, The BBC reports that overnight US forces, at the request of both the Libyan and Cypriot governments, boarded and took control of the commercial tanker Morning Glory. The raid by Navy Seals took place in international waters south of Cyprus, said spokesman Rear Adm John Kirby. The US Seals operated from the USS Roosevelt, a guided missile destroyer, which “provided helicopter support and served as a command and control and support platform” and are now in “full control” of the vessell carrying 234,000 barrels of illicity-obtained oil. The message is clear – don’t mess with the Petrodollar.

Via AFP,

US Navy Seals boarded and took control of an oil tanker that had loaded crude at a rebel-held port in eastern Libya and escaped to sea, the Pentagon said Monday.

No one was hurt “when US forces, at the request of both the Libyan and Cypriot governments, boarded and took control of the commercial tanker Morning Glory, a stateless vessel seized earlier this month by three armed Libyans,” Pentagon press secretary Rear Admiral John Kirby said in a statement.

The operation was approved by President Barack Obama and was conducted in the early hours of Monday (just after 0200 GMT) “in international waters southeast of Cyprus”.

The Morning Glory’s evasion of a naval blockade at the eastern port of Sidra prompted Libya’s parliament to sack Prime Minister Ali Zeidan last week.

Adm Kirby said the operation had been authorised by President Barack Obama and that no-one had been hurt.

“The Morning Glory is carrying a cargo of oil owned by the Libyan government National Oil Company. The ship and its cargo were illicitly obtained,” he said, adding that it would now be returned to a Libyan port.

North Korean?

The Morning Glory originally was a North Korean-flagged ship, but Pyongyang on Wednesday denied any responsibility.

The ship was operated by an Egypt-based company that was allowed to temporarily use the North Korean flag under a contract with Pyongyang, North Korean state news agency KCNA said.

Pyongyang had “cancelled and deleted” the ship’s North Korean registry, as it violated its law “on the registry of ships and the contract that prohibited it from transporting contraband cargo”.

Next Steps..

The loading of the Morning Glory and its escape to sea marked a major escalation in the struggle between Tripoli and the rebels, and triggered the ouster Tuesday of liberal-backed premier Ali Zeidan, who fled the country

the US move is likely to act as a deterrent to any further attempts to illicitly buy oil from the rebel-controlled ports.

Don’t mess with the Petrodollar…

Navy Seals Take Over North-Korea-Flagged Oil Tanker In Libya | Zero Hedge

Navy Seals Take Over North-Korea-Flagged Oil Tanker In Libya | Zero Hedge.

Tensions around the North-Korea-flagged tanker that “illegally” obtained oil from rebels who hold a Libyan port have been escalating for the last week. However, The BBC reports that overnight US forces, at the request of both the Libyan and Cypriot governments, boarded and took control of the commercial tanker Morning Glory. The raid by Navy Seals took place in international waters south of Cyprus, said spokesman Rear Adm John Kirby. The US Seals operated from the USS Roosevelt, a guided missile destroyer, which “provided helicopter support and served as a command and control and support platform” and are now in “full control” of the vessell carrying 234,000 barrels of illicity-obtained oil. The message is clear – don’t mess with the Petrodollar.

Via AFP,

US Navy Seals boarded and took control of an oil tanker that had loaded crude at a rebel-held port in eastern Libya and escaped to sea, the Pentagon said Monday.

No one was hurt “when US forces, at the request of both the Libyan and Cypriot governments, boarded and took control of the commercial tanker Morning Glory, a stateless vessel seized earlier this month by three armed Libyans,” Pentagon press secretary Rear Admiral John Kirby said in a statement.

The operation was approved by President Barack Obama and was conducted in the early hours of Monday (just after 0200 GMT) “in international waters southeast of Cyprus”.

The Morning Glory’s evasion of a naval blockade at the eastern port of Sidra prompted Libya’s parliament to sack Prime Minister Ali Zeidan last week.

Adm Kirby said the operation had been authorised by President Barack Obama and that no-one had been hurt.

“The Morning Glory is carrying a cargo of oil owned by the Libyan government National Oil Company. The ship and its cargo were illicitly obtained,” he said, adding that it would now be returned to a Libyan port.

North Korean?

The Morning Glory originally was a North Korean-flagged ship, but Pyongyang on Wednesday denied any responsibility.

The ship was operated by an Egypt-based company that was allowed to temporarily use the North Korean flag under a contract with Pyongyang, North Korean state news agency KCNA said.

Pyongyang had “cancelled and deleted” the ship’s North Korean registry, as it violated its law “on the registry of ships and the contract that prohibited it from transporting contraband cargo”.

Next Steps..

The loading of the Morning Glory and its escape to sea marked a major escalation in the struggle between Tripoli and the rebels, and triggered the ouster Tuesday of liberal-backed premier Ali Zeidan, who fled the country

the US move is likely to act as a deterrent to any further attempts to illicitly buy oil from the rebel-controlled ports.

Don’t mess with the Petrodollar…

Cyprus throws out vital privatisation bill – Europe – Al Jazeera English

Cyprus throws out vital privatisation bill – Europe – Al Jazeera English.

Privatisation of state-owned companies is a critical element of the 10 billion-euro rescue package [EPA]
The Cypriot parliament has thrown out a vital privatisation bill the country needs to secure the next batch of international bailout money to avoid bankruptcy.

The country’s opposition-dominated parliament will vote again next week on a proposed road map for the sale of state assets following concerns that workers’ rights will not be safeguarded.

Government spokesman Christos Stylianides said on Friday that the legislation would be amended to accommodate concerns over rights and submitted to the House of Representatives again.

Prodromos Prodromou, the spokesman for the ruling right-wing Democratic Rally party, told The Associated Press news agency that politicians would re-convene on Tuesday, a day before the deadline set by creditors in order to release a 236 million-euro ($326 million) instalment.

The privatisation of state-owned companies is a critical element of a 10 billion-euro ($13.81 billion) rescue package for Cyprus, which agreed to the measures a year ago in a deal with other eurozone countries and the International Monetary Fund.

However, opposition to the privatisation plans has become strong, especially from left-wing parties that fear mass layoffs and the sale of national wealth. Workers at the state electricity, telecommunications and ports authorities have staged strikes to protest the bill.

‘Clear obligation’

The setback was particularly galling for the Cypriot government, which has repeatedly earned praise from lenders for exceeding its reform targets.

“Privatisations are a clear obligation,” Finance Minister Harris Georgiades recently said. “We have to understand that that if we sink, then we’ll all go down together.'”

Cypriot President Nicos Anastasiades, who brokered the initial accord with lenders a year ago, said reforms would continue. “I am determined that the country continue its path towards stabilisation and recovery,” he said on his official Twitter account.

Reform efforts were almost derailed in September when parliament again vetoed a bill recapitalising cooperative banks, before another hastily-convened session later approved it.

The terms of the rescue package took a huge toll on Cypriot banks after authorities seized large chunks of uninsured deposits, shut down the second largest lender and imposed capital controls.

Ukraine Imposes Capital Controls, Limits Foreign Currency Withdrawals | Zero Hedge

Ukraine Imposes Capital Controls, Limits Foreign Currency Withdrawals | Zero Hedge.

Yesterday we reported that as part of the Ukrainian central bank’s plan to bailout the nation’s largely insolvent private banks, it would provide any needed funding but only “if they will remain under open control of the National Bank of Ukraine.” And since the new CB head Stepan Kubiv’s allegiance to Europe were already well-known, this was merely a quick and efficient way of providing Europe with all the banking details including asset holdings of the local population. Today, the annexation of the country’s banking system by a “benevolent” Europe is complete.

Itar-Tass reports that Ukraine’s national bank has imposed temporary limits to withdraw money from foreign currency deposits to sums equivalent to no more than 15,000 hryvnias (about $1,500) a day, National Bank Chief Stepan Kubiv told a press conference. Or, as the citizens of Cyprus call it – capital controls.

Why is Ukraine doing this? Because when your currency is crashing at a record pace to unseen lows, what is the best way to limit FX transactions? Simple – just minimize the amount of foreign currency that can be in circulation.

Which is also why the the central bank’s capital controls do not touch local currency: there is more than enough of that in circulation since after all Ukraine has its own currency and can print it in infinite amounts: “For hryvnia deposits you may take as much as a million or two. Banks have liquidity,” Kubiv said.

Then there was the token propaganda:

The chief banker also noted that the situation on Ukraine’s currency market was under control. “The exchange rate may move in one direction and the opposite. There are just emotions and misinformation on the financial market,” he noted.

He assured the national bank would toughly stop violators of the currency law. For example, inspectors were sent to eight banks that had engaged in speculation, he said.

To summarize: first banks abdicate their control to a pro-European central bank, and now the citizens face their first (of many) capital controls which incidentally will simply aggravate the fund outflow situation even more, leading to an even faster drop in foreign reserves.

Finally comes the inflation. Wait until the people start rioting – think Egypt – when the economy collapses and a loaf of bread costs its wheelbarrow equight equivalent in Hryvnias. Just how fast will the countercoup in Ukraine take place then? Recall, in Egypt it was just over a year and a half…

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
SHTFplan.com

uncle-sam-retirement

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.

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.

Bailed-Out Euro Nations Expect Painful Challenges to Remain – Bloomberg

Bailed-Out Euro Nations Expect Painful Challenges to Remain – Bloomberg.

Photographer: Krisztian Bocsi/Bloomberg
Adjustment in Greece, after four years of cuts and efforts to make the economy more competitive, has come at “an extremely high socioeconomic cost,” Greek Finance Minister Yannis Stournaras said.

Bailed-out euro-area countries are facing “painful” challenges with worse-than-anticipated consequences of economic adjustment, including high unemployment and slow growth, central banks and finance ministries said.

Officials and ministers from Greece, Ireland, Portugal and Cyprus, in responses to European Union lawmaker questions published yesterday, described how their countries’ emergency aid had been followed by social hardship and continuing economic difficulties.

The bailout program had a “worse-than-expected impact on both output and employment,” Portugal’s finance ministry said. The program in Cyprus was “rigorous and painful,” according to the island’s central bank. Adjustment in Greece, after four years of cuts and efforts to make the economy more competitive, has come at “an extremely high socioeconomic cost,” Greek Finance Minister Yannis Stournaras said.

The testimonies come three-and-a-half years after Greece became the first euro-area country to be bailed out, using EU and International Monetary Fund loans. Since then the German-led path of aid in return for reforms and debt cuts has seen 396 billion euros ($538 billion) committed to the region’s four most fragile economies, with an additional 100 billion euros pledged for Spain’s banking sector. The bloc has endured the longest recession in its history and unemployment has reached record levels.

Bond Rally

Government bonds in the euro-area’s most indebted nations have rallied this year, pushing Portugal and Ireland’s 10-year yields to the lowest since 2010 and 2006 respectively, as recovery sign’s in the region have boosted demand for higher-yielding debt.

Portugal expects to restart bond auctions in the first half of 2014, its debt agency said yesterday, after selling one-year bills at the lowest yield since November 2009. Greece’s Stournaras said last week that the government may sell five-year notes in the second half of the year, for the first time since being shut out of the bond markets in 2010. It would follow Ireland, which sold bonds last week for the first time since completing its bailout program.

Greek 10-year yields have dropped 68 basis points this year to 7.74 percent, after touching 7.53 percent on Jan. 13, the lowest since May 2010. The yield on similar-maturity Portuguese securities reached the lowest since August 2010 at 5.07 percent yesterday.

More Accountability

EU lawmakers questioned whether the so-called troika, comprising the European Commission,European Central Bank and IMF, which sets conditions for the countries receiving bailouts and monitors their progress, should have been more accountable and could have prevented the most painful effects of austerity. The European Parliament’s economic and monetary affairs committee is today discussing the responses received about the troika’s work.

European lawmakers will continue to work to make the troika more accountable, EU Parliament President Martin Schulz said on Twitter yesterday. Schulz is a member of Germany’s Social Democrats, the junior partner in the country’s coalition government.

While finance ministries and central bankers said that the hardships associated with the bailout conditions could not be ignored, they said they backed the process.

Inevitable Program

“The program, although rigorous and painful, is the only way that will enable the country’s exit from the crisis,” Cyprus’s central bank said in its letter to the 28-nation European Parliament.

Portugal’s finance ministry said that it “remained convinced” a bailout program had been inevitable and that “on the whole it remains a suitable and rational response to the crisis of credibility threatening our country.”

Ireland’s bailout-program exit last month and its return to financial markets “confirms that our strategy of providing assistance to euro-area countries that requested it in return for strict conditionality is working,” Jeroen Dijsselbloem, the Dutch finance minister who chairs meetings of his 17 euro-area counterparts, said in his letter to EU lawmakers.

He said that while growth is returning to the euro area and the economic outlook is improving “a number of important challenges remain, most importantly unacceptably high levels of unemployment.”

Ireland’s bailout program can be considered a success, Michael Noonan, Ireland’s finance minister, said in his response to the parliament. Even so, unemployment is still high, economic growth has returned more slowly than predicted and the country’s overall level of debt remains elevated, with a peak of slightly over 120 percent of gross domestic product expected this year.

To contact the reporters on this story: Ian Wishart in Brussels at iwishart@bloomberg.net;Rebecca Christie in Brussels at rchristie4@bloomberg.net

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