You should always be prepared to defend yourself, your home and your family. Â Even more so if you live in a cash-strapped county.
This is what happens when local governments – their economies decimated by Big Government policies and regulations – become dependent on federal handouts and then lose those funds.
Josephine County was once able to pay for their own law enforcement without federal assistance, but that was before radical environmentalists and their pet federal regulations got a stranglehold on the local economy, killing their timber and mining industries.
A terrified woman from Josephine County, Oregon, dialed 911 to report that her violent ex-boyfriend is trying to break into her home, but in response she was told that there are no officers on duty to help her.
The cash-strapped sheriffâ€™s department in the county had been forced to lay off 23 of its 29 deputies after losing millions in federal aid. The remaining six officers had their shifts slashed to eight hours Monday through Friday.
Unfortunately for the woman faced with an out-of-control jilted lover, her 911 call came on a Saturday.
Eventually, the crazed man forced his way into the house, choked his former girlfriend and raped her without no one there to stop him.
The suspect, Michael Bellah, was later arrested and pleaded guilty to kidnapping, assault and sex abuse.
The details of her horrific ordeal last August emerged on Tuesday after voters in Josephine and Curry counties with the lowest property taxes in the state turned down tax increases that would have increased the number of officers on the force.
Even if the county residents were to approve the levy, which would have raised taxes from 59 cents to $1.48 per $1,000 of property value for the next three years, it would have been too late for one local woman.
Liberals are of course blaming the voters and those evil Republicans for refusing to raise property taxes to make up the difference for a government-created problem. Â Â But why should financially struggling residents be forced to pay more when the problem could be solved by simply getting government off the back of local industries?
Welcome to the “new normal” under Obamanomics. Â In Europe, where Keynesian economics and Democratic Socialism has dominated for decades, unemployment rates are in the 20’s. Â For the younger generation, they’re even higher. Â Â Yet, instead of learning from their mistakes, Obama and the Democrats insist on repeating them. Â Â Millions of innocent people are being hurt in the process.
After a full year of fruitless job hunting, Natasha Baebler just gave up.
She’d already abandoned hope of getting work in her field, working with the disabled. But she couldn’t land anything else, either â€” not even a job interview at a telephone call center.
Until she feels confident enough to send out resumes again, she’ll get by on food stamps and disability checks from Social Security and live with her parents in St. Louis.
“I’m not proud of it,” says Baebler, who is in her mid-30s and is blind. “The only way I’m able to sustain any semblance of self-preservation is to rely on government programs that I have no desire to be on.”
Baebler’s frustrating experience has become all too common nearly four years after the Great Recession ended: Many Americans are still so discouraged that they’ve given up on the job market.
Older Americans have retired early. Younger ones have enrolled in school. Others have suspended their job hunt until the employment landscape brightens. Some, like Baebler, are collecting disability checks.
It isn’t supposed to be this way. After a recession, an improving economy is supposed to bring people back into the job market.
Sadly, until we get rid of Obamanomics, the jobs won’t be coming back. Â Business aren’t hiring because they never know when they’re going to be hit with a costly new regulation or tax. Â Â EntrepreneursÂ aren’t willing to take the risk to start a new business in such a hostile business climate.
President Obama heads into the third month of his second term, still unable to find a cure for a sluggish economy, weak employment numbers and his own slipping job approval scores.
Second terms are usually challenging for presidents who have won re-election without having the slightest idea about what they will do over the next four years. And thatâ€™s what we are witnessing now with Obama, whose biggest problem is the anemic, job-challenged economy.
[…] Â The depressing headlines of the past few days tell a sad tale of what the economy is like under his presidency:
â€“ â€œWeekly Jobless Claims Get Weaker as Outlook Dimsâ€ was the gloomy headline over a Reuters news wire story Thursday morning on the CNBC website.
â€œThe number of Americans filing new claims for unemployment benefits rose to its highest level in four months last week, suggesting the labor market recovery lost some steam in March,â€ Reuters reported.
â€“ â€œHiring Is Weaker at Private Companies,â€ a Washington Post headline blared Thursday.
â€œCompanies hired at the weakest pace in five months in March as recent strong demand for construction jobs evaporated and growth in the vast services sector slowed, signs that the economic recovery could be hitting a soft patch,â€ the newspaper reported.
Thatâ€™s the conclusion of the ADP National Employment Report Wednesday, which showed â€œthat private employers added 158,000 jobs last month.â€ The ADP job survey said â€œthe gain was the smallest since October.â€
A separate report Wednesday on the services industry, the economyâ€™s largest job sector, showed that employment growth â€œpulled back in March.â€
You do not hear any of these reports on the nightly TV news because the networks cherry-pick reports that feed the White House line of a continuing economic recovery.
[…] Â Thankfully, there are economic reporters who resist touting the White House line that everything is rosier under Obamaâ€™s policies.
â€œWeâ€™re approaching the four-year anniversary of the economic recovery, and it still doesnâ€™t feel like much of one, what with the unemployment rate at 7.7 percent and wages stagnant over the past five years,â€ Neil Irwin, the Postâ€™s veteran economic analyst, recently reported.
Even as the Obama White House prepares for aÂ star-studded White House concertÂ featuring Queen Latifah, Cyndi Lauper, and Justin Timberlake, figures from the U.S. Census Bureau reveal that roughlyÂ 50 million Americansâ€”one in sixâ€”now live below the poverty line.
Additionally, one in five American children have fallen below the poverty line; the last time poverty levels were this high, Lyndon Baines Johnson was president.
“In the last three years, there’s been a great change in the kinds of people we are serving,â€ said Director of Community Services at Catholic Charities of Baltimore Mary Anne Oâ€™Donnell. â€œThere are increasing numbers of people who owned a home, lost their jobs, end up living in their car and are coming with children to our soup kitchen.â€
The U.S. government defines a family of four earning under $23,021 as living in poverty. Income used to compute poverty status doesÂ notÂ include non-cash benefits, such as food stamps and housing subsidies.
Welfare program enrollments have exploded under President Barack Obama. Americans on food stamps nowÂ outnumberÂ the combined populations of 24 U.S. states, costing taxpayers more than double the amount spent on food stamps five years ago. In January 2009, 31.9 million Americans received food stamps. Today, that figure is 47.79 million.
For the Left, this is all part of theÂ Cloward-Piven strategyÂ to overwhelm the system with impossible demands, bringing about an inevitable collapse that will set the stage for a Communist revolution.
For corporations vying for their turn at the taxpayer trough, this is a dance with the devil…and they don’t even realize it.
â€œBoomtown 1: Washington, The Imperial Cityâ€ exposed the cronyism and luxurious lifestyle of Washington, DCâ€™s power elite. On Friday â€œBoomtown 2: The Business of Food Stampsâ€ Government Accountability Institute (GAI) President Peter Schweizer and Breitbart News Executive Chairman Stephen K. Bannon exposed how politicians and corporations have used the countryâ€™s food stamps program to profit on the backs of tax payers.
Though the food stamps program was always meant to be a â€œsafety netâ€ to provide temporary assistance, Schweizer pointed out that it has â€œbecome an insider game of power and profitâ€ for corporations who are attempting to get a slice of the $75 billiion provided by the taxpayers.
The Obama administration is proudly shattering welfare records with an astonishing number of people collecting public benefits long term, especially food stamps.
In fact, as I discussed in a special to be aired onÂ HannityÂ tonight, Obama and his friends have actually found a way to meld corporate cronyism with food stamp abuse to line their pockets while undermining our election systems at the same time.
Under Obama, the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, has exploded with a record number of people â€“ 46 million and growing â€“ getting free groceries from the American taxpayer. Adding insult to injury, a federal audit revealed last year that many who donâ€™t qualify for food stamps now receive them under a new â€œbroad-basedâ€ eligibility program that disregards income and asset requirements.
Obama says the food stamp extension is part of his intention to eradicate â€œfood insecure households.â€ However, itâ€™s really part of a massive redistribution of wealth. Last year, taxpayers were forced to pay more than $80 billion, including anÂ estimated $750 million a year in outright fraud.
[…] Â According to the study, the current food stamp Electronic Benefit Transfer (EBT) card industry is dominated by three main players: J.P. Morgan Electronic Financial Services, Affiliated Computer Services, and eFunds. Together they collect money from 49 states and three territories. In fact, since 2004, 18 of 24 states that contract with J.P. Morgan have paid more than $560 million to the financial monolith.
There is little wonder then that those three companies appear to be perfectly content with the exploding food stamp rolls â€“ and wholly unconcerned about rampant fraud and abuse. As the GAI study observed, â€œThe more persons enrolled in the program, the more money the EBT industry makes.â€ That may also help explain why, when the state of Florida initiated an eight-month program to detect and prevent fraud among its three million EBT card users, J.P. Morgan saw fit to assign just one employee to the program.
And then there is this: During the 2008 election, Barack Obama received more than $800,000 from J.P. Morgan alone. After his election, the American Recovery and Reinvestment Act, initiated by Obama and passed by a compliant Congress, made two major changes to existing food stamp policies. First, it increased benefits by 13.6 percent. Second, it actively encouraged states to add more recipients to their food stamp rolls.
And the corporate cronyism and political payoffs donâ€™t end there. The House and Senate Agricultural Committees have jurisdiction over all food assistance and distribution programs, including the food stamp program. So, just as one might expect, analysis by the GAI uncovered a clear trend of increasing contributions to Agriculture Committee members of both the House and Senate on the part of J.P. Morgan that clearly coincides with their entry into the lucrative EBT card, food stamp market.
Between 1998 and 2002, JP Morganâ€™s total contributions per election cycle averaged $82,897. After the bank entered the EBT services market until the 2010 election cycle, their average donation per cycle more than doubled to $215,120. And the Agriculture Committees, in turn, have broadly expanded the number of food stamp recipients.
Of course, the more recipients that are added to the food stamp rolls, the more voters Obama can count on at election time. And the offshoots of Obamaâ€™s former client and campaign partner ACORN not only assure that those voters are registered but also that they know to whom they are beholden for their government handouts.
The foundation for the housing crisis was laid with the Community Reinvestment Act in 1977, where the government took it upon itself to encourage home ownership by pressuring banks to lend to lower-income buyers, often to meet arbitrary racial quotas. Obviously they haven’t learned a thing from where that got us.
Would it surprise anyone to learn that as a lawyer, Obama sued banks to force them to issue subprime loans? Â He also worked for ACORN, which specialized in using the Community Reinvestment Act to shake down banks and pressure them to loan money to low-income minorities or face “discrimination” charges.
According to the Washington Post, the Obama administration is pushing big banks to make more home loans available to Americans with bad credit â€“ the same kind of Â government guidance that helped blow up the housing market:
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs â€” including those offered by the Federal Housing Administration â€” that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Think about this statement. The administration is asking banks â€“ banks that Washington bails out; banks that Washington crafts regulations for â€” to embrace risky policies that put the institution and its investors (not to mention, all of us) in a Â precarious position. So precarious, in fact, that banks have to ask government if they can be freed of any legal or financial consequences.
These types of government policies initially emerged the mid-1970s, when â€œprogressiveâ€ Democrats in Congress began a campaign to help low-income minorities become homeowners. This led to the passage, in 1977, of theCommunity Reinvestment ActÂ (CRA), a mandate for banks to make special efforts to seek out and lend to borrowers of meager means. Founded on the premise that government intervention is necessary to counteract the fundamentally racist and inequitable nature of American society and the free market, the CRA was eventually transformed from an outreach effort into a strictÂ quota systemÂ by the Clinton administration. Under the new arrangement, if a bank failed to meet its quota for loans to low-income minorities, it ran the risk of getting a low CRAÂ ratingÂ from theÂ FDIC. This, in turn, could derail the bankâ€™sÂ effortsÂ to expand, relocate, merge, etc.Â From a practical standpoint, then, banks had no recourse but to drasticallyÂ lower their standardsÂ on down-payments and underwriting, and to approve many loans even to borrowersÂ with weak credit credentials. As Hoover Institution Fellow Thomas Sowell explains, this led to â€œskyrocketing ratesÂ of mortgage delinquencies and defaults,â€ and the rest is history.
The CRA was by no means the only mechanism designed by government to impose lending quotas on financial institutions. For instance, the Department of Housing and Urban Development (HUD) developedÂ rulesÂ encouraging lenders to dramatically hike their loan-approval rates for minority applicants and began bringingÂ legal actionsÂ against mortgage bankers who failed to do so, regardless of the reason. This, too, caused lenders to lower their down-payment and income requirements.
Moreover, HUDÂ pressuredÂ the government-sponsored enterprises Fannie Mae and Freddie Mac, the two largest sources of housing finance in the United States, to earmark a steeply rising number of their own loans for low-income borrowers. Many of these were subprime mortgagesâ€”loans characterized by higher interest rates and less favorable terms in order to compensate lenders for the high credit risk they were incurring.
Additional pressure toward this end was applied by community organizations like the pro-socialistÂ ACORN. ByÂ accusingÂ banksâ€”however frivolously or unjustlyâ€”of having engaged in racially discriminatory lending practices that violated the mandates of the CRA, these groups commonly sued banks topreventÂ them from expanding or merging as they wished. Barack Obama, ACORNâ€™s staunch ally, was strongly in favor of this practice. Indeed, in a 1994 class-actionÂ lawsuit against Citibank, Obama represented ACORN in demanding more favorableÂ termsÂ for subprime homebuyer mortgages. After four years of being dragged through the mud, a beleaguered Citibankâ€”anxious to put an end to the incessant smears (chargingÂ racism) that Obama and his fellow litigators were hurling in its direction (to say nothing of its mounting legal bills)â€”agreed to settle the case.
ForbesÂ magazine puts itÂ bluntly: â€œObama has been a staunch supporter of the CRA throughout his public life.â€ In other words, he has long advocatedÂ the very policies that already have reducedÂ the real-estate market to rubble. And now he is actively pushing those very same practicesÂ again.
President Barack Obama, who has increased the national debt by $53,377 per household, hasÂ proclaimed Aprilâ€œNational Financial Capability Month,â€ during which his administration will do things such as teach young people â€œhow to budget responsibly.”
â€œI call upon all Americans to observe this month with programs and activities to improve their understanding of financial principles and practices,â€ Obama said in an official proclamation released Friday.
[…] Â The proclamation on the White House website links to two other government websites: the site for the Consumer Financial Protection Bureau, and MyMoney.gov, which includes materials from 21 federal agencies.
Listed among the â€œpopular topicsâ€ onÂ MyMoney.govÂ is â€œManaging Debt and Credit,â€ which includes a link to a page on the Federal Reserveâ€™s website called â€œGetting the most from your credit card.â€ Tip 2 on that page is: â€œStay Below Your Credit Limit.â€
When Obama was inaugurated on Jan. 20, 2009, the total debt of the federal government was $10,626,877,048,913.08. As of the close of business on March 28, 2013, the total debt of the federal government was $16,766,988,432,792.62â€”an increase of $6,140,111,383,879.54 since Obama took office.
That means that under Obama the federal debt has increased $53,377 for each one of the 115,031,000 households the Census Bureau says there are now in the United States. The president is required by law to submit a budget proposal for the next fiscal year by the first Monday in February.
Thus far, Obama has not submitted his budget proposal for fiscal 2014.
Itâ€™s the liberal way to perceive yourself as diametrically opposed to what and who you actually are. Therefore, Barack Obama being a financially incapable liberal is precisely the reason why the man who has yet to submit a budget proposal for 2014 feels heâ€™s qualified to teach young people â€œhow to budget responsibly.â€
Whatâ€™s next, Bill and Hillary Clinton running a Marital Cohesiveness and Fidelity Seminar? How about first daughters Sasha and Malia, who took not one but two spring break vacations, sharing with the younger set how to spend a week at the Atlantis in the Bahamas and River Run in Sun Valley, Idaho on a limited budget? Sorry, but if Barack Obama is financially capable, then outgoing MSNBC hostÂ Ed SchultzÂ is qualified to host a new â€œEradicate Bias in the Mediaâ€ show.
Then again, this is the president who is expert at exempting himself from what he insists others do. That is why a person who clearly has no understanding of sound financial principles can say with a straight face: â€œI call upon all Americans to observe this month with programs and activities to improve their understanding of financial principles and practices.â€
Wait! When Obama says â€œall Americansâ€ does â€œallâ€ include himself and theÂ $10 million dollarÂ vacationer heâ€™s married to, or does â€œallâ€ just mean everybody except Mr. and Mrs. Obama?
Either way, the president must truly believe that heâ€™s an authority on stretching a dollar, because in his â€œNational Financial Capability Monthâ€ proclamation, he said that his â€œ[a]dministration is dedicated to helping people make sound decisions in the marketplace.â€ That marketplace, by the way, is theÂ same marketplaceÂ that heâ€™s currently in the process of destroying. It could be that President Obama thinks that the soundest way to save money in the marketplace is to exchange the marketplace for something altogether different.
One of the big differences between the United States and Cyprus is that the U.S. government can simply print more money to get out of a financial crisis. But Cyprus cannot print more euros, which are controlled by international institutions.
Does that mean that Americans’ money is safe in banks? Yes and no.
The U.S. government is very unlikely to just seize money wholesale from people’s bank accounts, as is being done in Cyprus.
But does that mean that your life savings are safe?
No. There are more sophisticated ways for governments to take what you have put aside for yourself and use it for whatever the politicians feel like using it for.
If they do it slowly but steadily, they can take a big chunk of what you have sacrificed for years to save, before you are even aware, much less alarmed.
That is in fact already happening.
When officials of the Federal Reserve System speak in vague and lofty terms about “quantitative easing,” what they are talking about is creating more money out of thin air, as the Federal Reserve is authorized to do â€” and has been doing in recent years, to the tune of tens of billions of dollars a month.
When the federal government spends far beyond the tax revenues it has, it gets the extra money by selling bonds. The Federal Reserve has become the biggest buyer of these bonds, since it costs them nothing to create more money.
This new money buys just as much as the money you sacrificed to save for years. But more money in circulation, without a corresponding increase in output, means rising prices.
Although the numbers in your bank book may remain the same, part of the purchasing power of your money is transferred to the government. Is that really different from what Cyprus has done?
Through the centuriesÂ â€“Â in historic cultures like that of Yap Island who used giant, immovable stone disks for commerce, to today’s United States, whose Dollar fiat currency exists primarily in digital formÂ â€“Â “money” is able to be exchanged for goods and services because society agrees to accept it (at a certain rate of exchange).
But what happens when a society starts doubting the value of its money?
Fed, the Great & Powerful
The podcast goes into the mind-blowingly simple process by which new money is created in America by the Federal Reserve (or the “Fed”). That is to say:
The Fed holds a meeting
Those in the room decide how many more dollars they think the world needs
Someone walks over to a computer and adds that many dollars to the banks, with a few clicks of the keyboard
The banks then, if they want to, lend this new money out into the economy on a fractional basis, adding even more “thin air” dollars to the nation’s money supply.
This unique ability in America lends the Fed enormous power. The power to create new money from nothing. With no limit.
And with that power, the Fed can control and/or influence economies and markets the world over.
[…] Â Money is not wealth. It is merely aÂ claimÂ on wealth.
You can’t print your way to prosperity. History is abundantly clear on that.
With the clarity of hindsight, it’s now obvious how the Fed has now painted itself into a corner.
[…] Â Cyprus has awakened the world to the reality that central planners can appropriate their money with the bang of a gavel. And while we don’t yet know with certainty how things will unfold in Cyprus, we can project that events there have shaken society’s confidence in the soundness of fiat currency in general. If we know it can be confiscated or devalued overnight, we are less likely to unquestioningly accept its stated value. This doubt that strikes at the very foundation of modern monetary systems.
Cyprus is meaningful in the way that it shines a light on both the importance of hard assets and the risk it poses to market stability. It certainly increases the risk of our prediction ofÂ a 40%+ stock-market correction by September, as investors begin to realize that current high values are simply the ephemeral effect of too much money, instead of a sign of true value.
At this point, prudence suggests we prepare for the worst (by parking capital on the sidelines, investing in our personal resilience, etc.) and add to our hard asset holdings (likeÂ precious metalsÂ bullion, productive real estate, etc.) as insurance to protect our purchasing power. The dollar may strengthen for a bit versus other currencies and perhaps the financial markets, but the long-term trend is a safer and surer bet: Dollars will be inflated. There will be more of them in the future than there are today. So, while our dollars still have the purchasing power they do, we should use the window of time we have now to exchange paper money for tangible wealth at today’s prices.
Cypriot President Nicos Anastasiades has struck a deal with the European Union and International Monetary Fund that will seize up toÂ 40%Â of uninsured funds from wealthier depositors with over 100,000 euros and will not siphon funds from those below that amount.
The 10 billion euros ($13 billion) bailout plan calls for the Cyprus Popular Bank to be dissolved and all its viable assets transferred to the countryâ€™s biggest bank, Bank of Cyprus.
Presently, Cypriot banks have imposed a 100 euros ATM withdraw limit, and Cyprus border officials at air and sea ports have been ordered toÂ confiscateÂ the funds of any traveler attempting to leave with over 10,000 euros.
How dare they try to keep the money they worked so hard for and saved AFTER taxes were already paid on it? Â Don’t they know that private property is an illusion under Socialism? Â That the government is free to spend as irresponsibly as it wants, and can steal your money at will to pay the tab? Â That’s what they’ve been voting for all this time, right? Â Or didn’t they realize it?
Understandably, Cypriots are desperately trying to get their money out, but it’s too late:
The president of Cyprus assured his people a bailout deal he struck with the European Union was in their best interests, but banks will remain closed until Thursday – and even then subject to capital controls to prevent a run on deposits.
The ruling class insists that stealing money out of their bank accounts is “in their best interests.” Â Doesn’t that make them feel better? Â They’ll be patriotic and happy to “share the sacrifice” for the greater good, right? Â Of course not!
Despite the closed banks and a lock for payments in the past week,Â more money flowed out of Cyprus than in previous weeks, Frankfurter experts report for payments.Â Prior to the escalation of the crisis in Cyprus accruing on the payment system Target liabilities of Cypriot central bank to the European Central Bank (ECB) had increased daily at approximately 100 to 200 million euros. In recent days was after Parliament the stabilization program initially had to fail,Â the daily has risen to more than double.Â Just in the last week so could cash assets have been withdrawn from Cyprus in the billions, although the Cypriot central bank has actually issued a lock.
How is it possible that cash is leaving the country even with a bank halt? It isn’t, unless of course, the banks aren’t really halted, and some outbound wire transfers, which are permitted, are more equal than other wire transfers which are stuck on the island. Of course, that would imply an “Europe Farm” type of arrangement, which in the bastion of fairness, equality and honesty which is Europe, would be absolutely impossible.
On the other hand, if indeed the drain of the Cypriot banking system has continued despite all the enacted halts during the past week, then it’s game over for Cyprus, which will soon have only the ECB to thank for providing liquidity, an arrangement that may not be the best long-term outcome for a nation whose economy has basically been gutted in the span of one week.
It also means game over for the bailout as envisioned, as the EUR17 billion is history, and much more cash will have to be injected to cover for the stealth outflows.
Savings accounts in Spain, Italy and other European countries will be raided if needed to preserve Europe’s single currency by propping up failing banks, a senior eurozone official has announced.
The new policy will alarm hundreds of thousands of British expatriates who live and have transferred their savings, proceeds from house sales and other assets to eurozone bank accounts in countries such as France, Spain and Italy.
The euro fell on global markets after Jeroen Dijsselbloem, the Dutch chairman of the eurozone, told theÂ FTÂ andÂ ReutersÂ that the heavy losses inflicted on depositors in Cyprus would be the template for future banking crises across Europe.
Translation: it now officially sucks to be an unsecured creditor in Europe. In other words:Â an uninsured depositor.
Why this ad hoc dramatic shift in the European approach to bank solvency, which if anything makes the link between bank and sovereign closer than ever, and crushes all that Draghi achieved in the summer of 2012?
Simple: because what Cyprus allowed was theÂ effective usurpation of democracyÂ – the only reason the Cypriot bailout “passed” (at least so far) is because it was structured as a bank restructuring, a financial system “resolution”, not a tax,and thus not in need of a parliamentary, democratic vote.Â Because as Cyprus also showed, votes to deprive depositors of cash, whether insured or uninsured, simply won’t fly.
Hence the shift.
However, there is a problem: it means that depositors are now fair game everywhere, and that the ESM or EFSF, with their unlimited scope but “democratic” impleention pathway, are on the backburner.
And now, the scramble to pull uninsured deposits out of banks everywhere begins. Thanks to the new Eurogroup head.
“You ask for miracles, Theo. I give you Diesel-BOOM”
And now, every European depositor is going to their local financial dictionary to look up the definition of General Unsecured Claims, only to see a picture of… themselves.
To anyone paying attention, reality is now painfully obvious. These bankrupt, insolvent governments have just about run out of fingers to plug the dikes. And history shows that, once this happens, governments fall back on a very limited playbook:
As Cyprus showed us, bankrupt governments are quite happy to plunder peopleâ€™s bank accounts, especially if itâ€™s a wealthy minority.
Aside from bank levies, though, this also includes things like seizing retirement accounts (Argentina), increases in civil asset forfeiture (United States), and gold criminalization.
Just another form of confiscation, taxation plunders the hard work and talent of the citizenry. But thanks to decades of brainwashing, itâ€™s more socially acceptable. Weâ€™ve come to regard taxes as a â€˜necessary evil,â€™ not realizing that the country existed for decades, even centuries, without an income tax.
Yet when bankrupt governments get desperate enough, they begin imposing new taxesâ€¦ primarily WEALTH taxes (Argentina) or windfall profits taxes (United States in the 1970s).
This is indirect confiscationâ€“ the slow, gradual plundering of peopleâ€™s savings. Again, governments have been quite successful at inculcating a belief that inflation is also a necessary evil. Theyâ€™re also adept at fooling people with phony inflation statistics.
Governments can, do, and will restrict the free-flow of capital across borders. Theyâ€™ll prevent you from moving your own money to a safer jurisdiction, forcing you to keep your hard earned savings at home where it can be plundered and devalued.
Weâ€™re seeing this everywhere in the developed worldâ€¦ from withdrawal limits in Europe to cash-sniffing dogs at border checkpoints. And it certainly doesnâ€™t help when everyone from the IMF to Nobel laureateÂ Paul Krugman argue in favor of Capital Controls.
Wage and Price controls
When even the lowest common denominator in society realizes that prices are getting higher, governments step in and â€˜fixâ€™ things by imposing price controls.
Occasionally this also includes wage controlsâ€¦ though wage increases tend to be vastly outpaced by price increases.
Of course, as any basic economics textbook can illustrate, price controls never work and typically lead to shortages and massive misallocations.
Wage and Price controlsâ€“ on STEROIDS
When the first round of price controls donâ€™t work, the next step is to impose severe penalties for not abiding by the terms.
In the days of Diocletianâ€™s Edict on Prices in the 4th century AD, any Roman caught violating the price controls was put to death.
In post-revolutionary France, shopkeepers who violated the â€œLaw of Maximumâ€ were fleeced of their private propertyâ€¦ and a national spy system was put into place to enforce the measures.
Despite being completely broke, governments will dramatically expand their ranks in a last desperate gasp to envelop the problem in sheer size.
In the early 1920s, for example, the number of bureaucratic officials in the Weimar Republic increased 242%, even though the country was flat broke from its Great War reparation payments and hyperinflation episode.
The increase in both regulations and government officials criminalizes and/or controls almost every aspect of our existenceâ€¦ from what we can/cannot put in our bodies to how we are allowed to raise our own children.
War and National Emergency
When all else fails, just invade another country. Pick a fight. Keep people distracted by work them into a frenzy over men in cavesâ€¦ or some completely irrelevant island.
Why do we have such massive deficits? Â Because if the government actually tried to collect the amount it needs to cover its current spending levels and unfunded liabilities, it would trigger a revolt – and that’s not a metaphor.
The truth is that our politicians have been very careful in their labeling of government receipts and payments so as to keep most of the coming bills associated with ‘Take As You Go’ off the books. Consider, for example, Uncle Sam’s promises to pay me my Social Security and Medicare benefits starting in roughly 10 years. The present value (the value in the present) of these promises is $400,000. How does this differ from my holding a Treasury bond valued at $400,000?
Fundamentally, it differs not at all, which means that the government has a lot more debt than it’s reporting.
How much more?
I’m not sure you want to know. I recently calculated the fiscal gap using the CBO’s AFS forecast. The fiscal gap measures the present value difference between all projected future federal expenditures (including servicing official debt) and all projected future taxes. The fiscal gap is thus the true measure of our government’s total indebtedness and the true measure of fiscal sustainability.
How big is the fiscal gap?
Brace yourself. It’s $222 trillion large! In comparison, official debt in the public’s hands is only $11 trillion.
Here’s one way to wrap your head around our $222 trillion fiscal hole: closing it via tax hikes would require an immediate and permanent 64 percent increase in all federal taxes. Alternatively, the government could cut all transfer payments, e.g., Social Security benefits, and discretionary federal expenditures, e.g., defense expenditures, by 40 percent. Waiting to raise taxes or cut spending makes these figures worse.
In short, our government is totally broke. And it’s not broke in 30 years or in 20 years or in 10 years. It’s broke today.
In other words, in four years, the interest on the debt will consume almost half of all revenue that the government collects, and each year after that it will get progressively worse â€” until it consumes all revenues.
As the interest on the debt grows, we wonâ€™t be able to borrow enough to pay our bills, and the government will have to either simply print more money to pay up or default. It will likely at least try printing money, and this is when inflation will zoom atmospherically. Even Ben Bernanke, the head of the Federal Reserve,Â acknowledged this scenarioÂ last year.
The chance that the United States will avoid this path in our near future is infinitesimal, but there is a chance. An unexpected business boom could spare us â€” socialistÂ Norway stays solvent via exploiting oilÂ revenues, and the United States has some of the biggest oil reserves in the world â€” or a massive downsizing of government could spark a boom â€” as happenedÂ during the Harding administrationÂ and at theÂ end of WWIIâ€” but thereâ€™s little chance of either happening.
The great majority of U.S. spending is claimed to promote â€œfairness,â€ while critics have argued that it is immoral for Baby Boomers â€” the group mainly responsible for electing political spendthrifts â€” to heap devastating debt on their children and grandchildren. Ironically, the imminent demise of the dollar has accelerated to where the dollar will almost certainly crash during most Boomersâ€™ lifetimes, so they will have to suffer along with their offspring.
I’ve heard some liberals excuse Obama’s frequent vacations by saying “Reagan and Bush used to go back to their ranches all the time.” Â Exactly. Â Those ranches were their own private property, and the only expense was security. Â No hotel bills, no lavish parties, no celebrity entertainment, no room service.
The Obamas, on the other hand, choose to vacation in the most expensive accommodations at the most exotic destinations that have NOTHING to do with building foreign relations.
In the first three months of the year, members of the first family have been on three vacations, averaging a vacation a month. And now it’s being reported that the first daughters are on a spring break vacation in the Bahamas.
The Obamas began the new year in Hawaii. “President Obama departed Hawaii this morning for Washington, after spending NINE days vacationing with family and friends in his native state. Hereâ€™s a quick look at how he spent his vacation,”Â ABC reported on January 6, 2013.
[…] Â Then the first lady and their daughters vacationed in Aspen over President’s Day weekend. “First Lady Michelle Obama arrived in Aspen on Friday afternoon and is here with her daughters for a ski vacation,” Aspendailynews.com reported in February. “Few details about her trip were available. Sources said she is staying at the home of Jim and Paula Crown, owners of the Aspen Skiing Co. She is reportedly skiing at Buttermilk today, where the Crowns, of Chicago, own a home on the Tiehack side.”
While the rest of the family was in Colorado, Obama went to Florida for a golf weekend. Â […]
Even First DaughtersÂ SashaÂ andÂ MaliaÂ need a break — a spring break, to be exact — from the White House every once in a while. The sisters and momÂ MichelleÂ escaped the cold wintry weather of Washington, D.C. in favor of sun and surf in the Bahamas on a recent trip, a source tellsÂ Us WeeklyÂ exclusively.
The siblings made the most of their vacation at the Reef Atlantis, the source says. In addition to soaking up the sun at the family-friendly cabanas and swimming with dolphins, Sasha, 11, and Malia, 14, also got the chance to dance the night away at CRUSH, Atlantis’ teen club, on Sunday, March 24.
An 11th-hour deal with the EU, which has saved the Cypriot economy from the brink, will see investors with more than â‚¬100,000 in the nationâ€™s largest banks forfeit a large chunk of their deposits.
The punishing deal â€“ which has been approved by the eurozone finance ministers â€“ will allow the country to receive the â‚¬10bn (Â£8.5bn) bailout it needed before the European Central Bank pulled funding and sent the island on the path to bankruptcy and a possible exit from the single currency.
Under the new agreement, all bank deposits under â‚¬100,000 will be secured and guaranteed by the state. The country’s second-biggest bank, The Popular Bank of Cyprus â€“ known as Laiki â€“ will be wound down whilst holders of deposits of more than â‚¬100,000 face big losses.
Over one-third of the 9.1 million full-time jobs among America’s diverse business franchises could be cut back or eliminated by Obamacare as small businesses struggle to maintain profitability while coughing up money to pay for Washington-mandated health care coverage, according to the International Franchise Association.
Cause premiums to skyrocket.Â In December,Â state insurance commissioners warnedÂ Obama administration officials that the law’s market regulations would likely cause “rate shocks,” particularly for younger, healthier people forced by ObamaCare to subsidize premiums for those who are older and sicker.
“We are very concerned about what will happen if essentially there is so much rate shock for young people that they’re bound not to purchase (health insurance) at all,” said California Insurance Commissioner Dave Jones.
That same month, Aetna CEO Mark Bertolini said ObamaCare will likelyÂ cause premiums to doubleÂ for some small businesses and individuals.
And a more recent survey of insurers in five major cities by theÂ American Action ForumÂ found they expect premiums to climb an average 169%.
Cost people their jobs.Â The Federal Reserve’s MarchÂ beige bookÂ on economic activity noted that businesses “cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff.”
Around the same time,Â Gallup reportedÂ a surge in part-time work in advance of ObamaCare’s employer mandate. It found that part-timers accounted for almost 21% of the labor force, up from 19% three years ago.
Meanwhile, human resources consulting firmÂ AdeccoÂ found that half of the small businesses it surveyed in January either plan to cut their workforce, not hire new workers, or shift to part-time or temporary help because of ObamaCare.
Tax the middle class.Â IBD reportedÂ in February that much of the $800 billion in tax hikes imposed by ObamaCare will end up hitting the middle class, including $45 billion in mandate penalties, $19 billion raised by limiting medical expense deductions, $24 billion through strict limits on flexible spending accounts, plus another $5 billion because ObamaCare bans using FSAs to buy over-the-counter drugs.
The Cyprus central bank decided to keep the banks closed until next Tuesday. The panic is building. This will build it even more.
The British media say the government is looking for Plan B. There is no Plan B.
There will be no tax on bank accounts, says the parliament.
Will there still be a bailout? The European Central Bank has saidÂ it will remove the life support tube on Monday. The head of the EuroGroup, which is a no-name committee of the eurozoneâ€™s finance ministers, said this: â€œIâ€™m not sure that this package is completely gone and failed, because I donâ€™t see many alternatives.â€ In short, â€œthe Parliament had better reconsider.â€ Or else.
Or else what? Default? Cyprusâ€™ departure from the eurozone? Do the Eurocrats want that? Do they want to risk a poster child for the PIIGS to imitate?
Meanwhile, panic builds. When the banks open their doors next week, they will face a true bank run. People now know: they cannot get their money. They never thought this could happen.
The central bank is playing kick the can. It is buying time. Maybe there will be a Plan B. Problem: if there is a Plan B, maybe the parliament will reject it. Then what?
A nation shuts down economically if its banks shut down. The banks can shut down in two ways: because of bank runs or by decree from the central bank. Today, the banking system has been shut down by decree.
The central bank cannot kick the can much longer. The economy will collapse without banks.
The British media are covering the story.
â€œWe donâ€™t have days or weeks, we have only hours to save our country,â€ Averof Neophytou, deputy leader of the ruling Democratic Rally party, told reporters as crisis talks in Nicosia dragged on into the evening.
The countryâ€™s two main banks â€“ Laiki and the Bank of Cyprus â€“ face potential failure if a bailout is not secured. One official told the Associated Press that Europe and the IMF were pressing for the two banks to be wound down. The Cypriot government was said to be considering the possibility of imposing capital controls amid fears that money would flood out of the country once its banks were reopened.
But if depositors cannot send their digital money out of the country, they can still demand currency. The effect is the same: bankrupt banks.
The central bank cannot print euros. It can bail out the system only if Cyprus pulls out of the eurozone. If it does, this will send a message to the PIIGS: â€œGet out. We did. Save yourselves. We did.â€
The people of Cyprus care more about their life savings than propping up financial institutions that lost billions on poor investments in socialist governmentsâ€™ debts. The idea that somehow they, and not the banks that made those decisions, should bear the brunt of those losses was always disconnected from reality.
Yet that is precisely the presumption the establishment has made â€” that rather than banks raising substantially more capital to address systemic risk, you and I should pay for bank bailouts â€” in response to the ongoing financial crisis that began in 2007, and has actually become the basis for such proposals considered all over the world, including the U.S.
In 2009, the G20 asked the International Monetary Fund (IMF) to come up with ways the financial sector might supposedly contribute to its own bailouts.
Interestingly, what the IMF came up with as a suggestion had already been implemented a few months earlier by the U.S. Congress in passing the Dodd-Frank so-called financial reform legislation.
Under Dodd-Frank, the Federal Deposit Insurance Corporation (FDIC) is allowed to charge assessments to about 60 bank-holding and insurance companies with $50 billion or more in assets to fund what is called an â€œorderly liquidation fund.â€ Really, itâ€™s just a bailout fund allowing the government to take over systemically risky institutions, recapitalize them, and allow them to reenter the market under new management.
[…] Â At least in Cyprus the peopleâ€™s representatives there actually had an opportunity to vote against such a levy. Whereas here, those fees are and will continue to be imposed by the banks with the blessing of government agencies â€” all without any vote in Congress.
It may happen sooner than anyone realizes. U.S. financial institutions are said to have as much $641 billion of exposure to financial institutions in Portugal, Ireland, Italy, Greece and Spain (PIIGS)Â according to the Congressional Research Service.
Should the Eurozone really break apart, and U.S. banks are caught in the crossfire, with the American people suddenly paying exorbitant fees for the â€œprivilegeâ€ of conducting business electronically, they can decide for themselves whether this was a good idea.
That is, for Congress to outsource and give unlimited grant of its taxing authority to faceless bureaucrats acting in concert with an international banking cartel with the goal of bailing itself out of its own foolishness.
In 1913, the 16th Amendment gave the federal government the power to tax American’s earnings for the very first time. Â Originally a 1% tax to pay for the war, it has ballooned into a confiscatory predator which continually siphons away your hard-earned money to feed the appetite of a government spending addiction that is never satisfied.
Since the immoral premise that government has a right to confiscate your earnings has gone unchallenged for the last 100 years, they now claim the right to steal your assets as well – property that you’ve acquired and invested in with after-tax dollars, through your own hard work an initiative. Â Nowhere is this more apparent than the recently instituted 3.8% Obamacare tax on home sales.
Think what is happening in Cyprus can’t happen here? Â It already is.
Cypriot lawmakers on Tuesday rejected a critical draft bill that would have seized part of people’s bank deposits in order to qualify for a vital international bailout, with not a single vote in favor.
The rejection leaves Cyprus’s bailout in question. Without external funds, the country’s banks face collapse and the government could go bankrupt. Nicosia will now have to come up with an alternative plan to raise the money: the government could try to offer a compromise bill that would be more palatable to lawmakers.
The bill, which had been amended Tuesday morning to shield small deposit holders from the deposit tax, was rejected with 36 votes against and 19 abstentions. One deputy was absent.
Too late. Â The threat has already been made. Â They have officially declared that they believe that the hard-earned money in private citizens’ Â bank accounts are fair game for the taking, and property rights are easily dispensed with when governments overspend. Â I wouldn’t trust them as far as I could throw them, and neither will most Cypriots!
The smart people will get their money out before they have another chance to try a scheme like this.
In Nigel Farage’s first TV appearance since the Cypriot wealth tax was announced, the Englishman pulls no punches. In all his years and all his experience of the desperation of the European Union’s leadership “never did [he] think they would resort to stealing money from people’s savings accounts.” The simple fact is that they know they cannot let any country leave, no matter how small, for “once one country goes, the whole deck of cards will come tumbling down.” There is nowÂ “clear irreconcilable differences” between the North and the South of EuropeÂ and now that they have done this in one country, “they are quite capable of doing it in Italy, Spain and anywhere.” The message that sends to people isÂ “get your money out while you can.”Â As far as his British constituents, he strongly recommends George Osborne (UK Chancellor) urge ex-pats to remove all their money and do monthly transfers from home.Â “Do Not Invest In The Euro-Zone,” he concludes,“you have to be mad to do soÂ – as it is now run by people who do not respect democracy, the rule of law, or the basic principles upon which Western civilization is based.”
“They are propping up a Eurozone that, in the end, will collapse in disastrous failure and they are prepared to do anything to do so.”
As a reminder, the United States government has been eying and researching how Americans use their 401k plans for quite some time now. Recently we saw the U.S. Consumer Financial Protection Bureau suggest the government help “manage” retirement plans.
[…] Â Â In February, theÂ Washington TimesÂ went so far as to ask “is your 401k about to be nationalized?”
The $19.4 trillion sitting in personal retirement accounts like the 401K may be too tempting an apple for a government that is quite broke, both monetarily and morally.Â The U.S. Consumer Financial Protection Bureau director Richard Cordray recently mentioned these accounts in a recent interview, stating â€œThatâ€™s one of the things weâ€™ve been exploring and are interested in, in terms of whether and what authority we have.â€
This agency, created by the 2010 Dodd-Frank-Act, is very concerned about how safe your retirement savings are. They are apparently concerned that retiring baby boomers may become victims of financial scams.
If the government takes control of retirement accounts, it will not be called â€œnationalization.â€ There will most likely be an indecipherable document that provides an opt-out option (initially), but why would you want to do that? The US government only wants to ensure the safety of your retirement funds; they did after all create a new bureaucracy for that specific purpose.Â And what could be a safer investment than US bonds?
Karl Denninger…cites some reasons for being concerned that this express train intends to flatten the US in the coming years. HeÂ lays out whywe may need recourse to something like this.
In two years federal medical spending along with Social Security and interest will, on current paths, reach the total of all tax receipts. At the outside the market will realize that Congress will never address the underlying issue with medical care because they have steadfastly refused to do soâ€¦. There is about $20 trillion in US Retirement â€œassets.â€ A â€œsmallâ€ 10% â€œone timeâ€ tax levy on those assets would fund the US Deficit a couple of years from now, and I will go out on a limb now and predict that exactly that will be done. Of course the â€œone timeâ€ aspect will be a lie tooâ€¦
He goes on to explain how the test case for this has already been successful. And how the American People have already allowed the legal precedents to allow this to happen to be codified in case histories all the way up to the USSC.
the precedent has already been set, and you, the common American, sat for it.
You allowed the GM bailout to take place where the seniority of bondholders was ignored and they were screwed while the UAW was made whole. You allowed Obamacare to be passed with the Congress denoting it was a â€œfineâ€ rather than a Tax, because Congress knew that a direct, unapportioned tax was unconstitutional â€” and then you sat again when Judge Roberts of the USSC rewrote Obamacare to be that very same unconstitutional direct Tax.
Mark my words, Obamacare has very little to do with Health Insurance. This is why nobody in governmentÂ feels any particular concernÂ over the fact that itÂ screws health insurance upÂ so badly. If you are in government and you want the power to run things by fiat, this law just gave you the keys to a Barchetta with a full tank of petrol.
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
Not to worry Komerade Amerikan. There are apps for this as well.Â Kelo v. New LondonÂ is a landmark case that helps put the subjects in their proper place. As long as your bank account can be construed as conferring a public benefit through public use, this lovely piece of jurisprudence would justify its seizure down to the last penny.
Bottom line: The state can steal your property, your wealth and your sustinence at any time they get pissed off enough or desperate enough to do so. You have no recourse to the law against this. The law is pathetically bastardized. Remember how that Arch-Conservative Supreme Court was poised to heroically strike down The AACA? Forget it Jake, we are all Cypriots now.
People with bank accounts in Cyprus were shocked Saturday to learn that as part of an agreement reached with international creditors, the government has imposed a tax on all deposits to help bail out the nation and its banks.
While the island nation may be small, itâ€™s an international favorite for offshore bankingâ€“ particularly for wealthy Russians.Â The tax will range from 6.75% to 9.9%, depending on how much is in the account.
â€œThis is a clear-cut robbery,â€ Andreas Moyseos, a former electrician who is now a pensioner in Nicosia,Â told the New York Times. Iliana Andreadakis, a book critic, further added: â€œThis issue doesnâ€™t only affect the peopleâ€™s deposits, but also the prospect of the Cyprus economy. The E.U. has diminished its credibility.â€
And indeed, following the massive run on banks in Cyprus,Â many are concernedÂ that a minor panic could spread to the rest of the Eurozone.Â After all, it has just set a precedent for taxing private bank accounts atÂ exorbitant rates without warning.
The banks are closed until Tuesday, to prevent depositors from accessing their money. Â ATM’s have quickly run out of cash as desperate citizens line up to withdraw their money before it is confiscated:
In a move that could set off new fears of contagion across the eurozone, anxious depositors drained cash from ATMs in Cyprus on Saturday, hours after European officials in Brussels required that part of a new â‚¬10 billion ($12.6 billion) bailout must be paid for directly from the bank accounts of savers.
The move – a first in the three-year-old European financial crisis – raised questions over whether bank runs could be set off elsewhere.
Jeroen Dijsselbloem, president of the group of euro-area ministers, on Saturday declined to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered. Although banks placed withdrawal limits of â‚¬400 on ATMs, most of them had run out of cash by early evening. People around the country reacted with disbelief and anger.
Someone with â‚¬8,000 of life savings in the bank can ill afford to lose an arbitrary â‚¬540, but thatâ€™s exactly what is going to happen. The Cypriot parliament is probably not going to revolt this weekend, but any politician who votes for this bill is going to have a very, very hard time getting re-elected. This decision is important not only because of the precedent it sets with regard to bank depositors, but also because of the way in which it points up just how powerless all the Mediterranean countries (plus Ireland) have become. More than ever before, itâ€™s Germanyâ€™s Europe. Thatâ€™s bad for Cyprus â€” and itâ€™s not even particularly good for Germany.
It is difficult to describe the weekend bailout package to Cyprus in any other way. The confiscation of 6.75 percent of small depositors’ money and 9.9 percent of big depositors’ funds is without precedence that I can think of in a supposedly civilised and democratic society.Â But maybe the European Union (EU) is no longer a civilised democracy?
IÂ heard rumoursÂ about this when I visited Limassol last week, butÂ dismissed them as completely outlandish. And yet, here we are. The consequences are unpredictable, but we are clearly looking at a significant paradigm shift.
This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver.Â Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere – not that it would have mattered much as the trust is gone anyway. It is now difficult to expect any kind of limitation to what measures the Troika and EU might take when the crisis really starts to bite.
If you can do this once, you can do it again.Â if you can confiscate 10 percent of a bank customer’s money, you can confiscate 25, 50 or even 100 percent. I now believe we will see worse as the panic increases, with politicians desperately trying to keep the EUR alive.
Depositors in other prospective bailout countries must be running scared – is it safe to keep money in an Italian, Spanish or Greek bank any more?Â I dont know, must be the answer. Is it prudent to take the risk? You decide. I fear this will lead to massive capital outflows from weak Eurozone countries, just about the last thing they need right now. Even from the EU as a whole, I suspect, as the banking union is in place in most countries already.
If initially Europe came out as utterly deranged in its Cyprus deposit-confiscation scheme, at least it was consistent. Now, it appears that Europe is desperate to appear not onlyÂ completely incompetentÂ but alsoÂ unable to even make a simple decision and stick with it,Â following news from both the WSJ and the FT that the original confiscation thresholds of 6.75% and 9.9% for deposits below and over â‚¬100,000 is about to be revised.
From the FT: “a revised deal being discussed in Nicosia,Â with the blessing of the European Commission,Â would shift more of the burden on to deposits larger than â‚¬100,000, according to officials involved in the talks. Under a controversial deal struck with international bailout lenders in the early hours on Saturday, a 6.75 per cent levy would be imposed on all deposits under â‚¬100,000 while accounts over that threshold would be hit with a 9.9 per cent levy. The depositor levy was demanded by a German-led group of creditor countries to bring down the bailoutâ€™s price tag from â‚¬17bn…. Officials involved in last nightâ€™s talks said the changes in the levyâ€™s rates were in flux, but they could see the higher rate increase to as much as 12.5 per cent while the smaller deposits could be about 3.5 per cent.”
Elsewhere, according to the WSJ, the deposit “tax” would be under 5% for deposits under â‚¬100K, under 10% for deposits between â‚¬100 and â‚¬500K, and over 13% for deposits greater than half a million.
While this idiotic last minute revision will only infuriate Russian oligarchs even more, it will achieveÂ absolutely nothingÂ to streamline the passage of the bill through Cyprus parliament where it appears to have hung without enough support: the damage has already been done, and it is a virtual guarantee that Cyprus banks will suffer a full blown bank run the second banks reopen, which may be Tuesday, Wednesday, or never, at the current pace.Â That line around the block at your local neighborhood Nicosia ATM: that is not, and will not, be for people seeking to make aÂ deposit, that much we can guarantee, no matter what the final confiscation percentage is.
What is worse, however, is the painful demonstration of the absolutely and completely arbitrary decision-making process out of Europe. Sure: the ECB and the European Commission may decide to fully unwind the deposit confiscation scheme before all is said and done, but the genie is now out of the bottle, and it is very clear that in the European Disunion, a few unelected oligarchs will now determine until such time as the Eurozone finally implodes, just whose wealth and deposits are ripe for the taking. That not even Germany can make a decision and stick with it is just icing on the cake of the European Titanic.
This is the end result of the “Utopia” known as Democratic Socialism: large, powerful bureaucracies, out-of-control spending, runaway debt, forced redistribution, no respect for private property, and eventual collapse.
Europeans thought they could enjoy the unsustainable promises of Marxism without going full-blown communist. Â They chose a deceptive “third way” alternative, but it turns out the new boss is equally as destructive as the old one.
This is the path that Obama insists we follow, even as Europe’s warning signs glaringly flash “turn back now!”