Preemptive Offenses

Tuesday, March 19, 2013

Cyprus, Continued

The most remarkable thing about the giga-theft of deposits in Cypriot banks contemplated by the EU is the degree of consternation over it in the Main Stream Media. Papers such as the New York Times and the Washington Post don't seem to know say. Of course, having endorsed -- heartily, at that -- similar schemes for use here in the Land of the Fee and Home of the Slave, it probably worries them a wee bit to witness the reactions of ordinary Cypriots:

NICOSIA, Cyprus (AP) — A plan to seize up to 10 percent of savings accounts in Cyprus to help pay for a €15.8 billion financial bailout was met with fury Monday, and the government shut down banks until later this week while lawmakers wrangled over how to keep the island nation from bankruptcy.

Though the euro and stock prices of European banks fell, global financial markets largely remained calm, and there was little sense that bank account holders elsewhere across the continent faced similar risk. Asian stock markets rose Tuesday, shaking off jitters sparked by Cyprus' financial crisis.

Political leaders in Cyprus scrambled to devise a new plan that would not be so burdensome for people with less than €100,000 in the bank.

The authorities delayed a parliamentary vote on the seizure of €5.8 billion and ordered banks to remain shut until Thursday while they try to modify the deal, which must be approved by other eurozone governments. Once a deal is in place, they will be ready to lend Cyprus €10 billion ($13 billion) in rescue loans.

I like that "new plan that would not be so burdensome for people with less than €100,000 in the bank" bit. When all else fails, there's always good old soak-the-rich class warfare. Will it fly this time? Maybe not so high or far:

Today legendary trader Jim Sinclair told King World News that all hell is breaking loose after the Cyprus catastrophe. Sinclair, whose father was business partners with another legendary trader, Jesse Livermore, had this to say in this extraordinary and exclusive KWN interview:

Eric King: "Jim, your comments over the weekend on King World News regarding the Cyprus disaster have electrified the world. But it also seems to have frightened a great many people."

Sinclair: "Well, it should have frightened many of the players involved, and served as a wake-up call. There was a great miscalculation made with regards to Cyprus, and the situation has quickly turned into a catastrophe. There was no real understanding of the entities that were behind the Russian corporations which have money in Cyprus, and the effect of what is in reality the confiscation of Russian ex-KGB money.

"The people at the IMF, which have spearheaded this disaster, never expected the ‘Cyprus Solution' to blow up in their face the way it has....

"This has quickly turned into a PR nightmare because it is not a 'tax,' but instead a 'confiscation.' They have stolen KGB money in order to meet the liabilities of the banks. Up to this point, bank depositors have been held whole in this most serious Western, and by consequence international financial meltdown....

"Taking Russian money is very foolish. You have to understand the culture of the people you are dealing with. The government leaders in Cyprus have no ability to protect themselves from the retribution of the former Russian KGB agents, including Putin himself.

Would anyone care to argue with Sinclair's assessment of the risks? The Cypriot parliament appears to appreciate them.

While it's pleasant to contemplate the prospect of multitudes of kneecappings of EU and Cypriot officials by persons with Russian accents and no sense of humor, that wouldn't put an end to the larger threat. Governments worldwide are starting to feel their oats. Except for America, private persons are ill-equipped to resist such thievery, and their political masters know it. There aren't many places to run. Not for Cypriots, and not for anyone else.

But we've been assured that this is a one-time, extreme-emergency-only measure! Never happen again, we promise! Oh, really?

"If I lived in Europe I'd have cleaned out my bank accounts and canceled direct deposit before I sat down to write this post. Because there's nothing quite as precedent-setting as a one-time, last-ditch emergency measure."

Besides, all the "best people" think it's the way to go. And we here in the U.S. possess rather a large aggregate of deposits -- promissory notes, most of them, but then, aren't all bank deposits really promises to pay? -- that our political masters have found rather tempting for a long time now:

Normally when we think of a wealth tax we think of property taxes, estate taxes or car registration fees. But there is a nice conglomeration of wealth nobody has dared to think would be taxable. And not just taxable, but easily stolen as well.

Your retirement plans.

Estimates vary, but there is roughly $ 18 trillion invested in the various IRA, 401k and 403b retirement plans. This also says nothing about the trillions more invested in regular ole brokerage accounts earmarked for retirement. Even though it doesn't come close to closing the $ 60 trillion gap, such a large and liquid pot of gold is irresistible to our progressively socialist politicians looking for perpetual re-election. Here we enter "conspiracy theory territory" where only "crazy right-wingers" imply such things as scare tactics to discredit the lovable and well-intending socialists. The only problem is it's happened before and quite recently as well.

In 2008 Argentina stole the private pensions of its workers, nationalizing those funds to deal with their own debt problems. Bolivia did the same in 2010, as did Hungary. And Bulgaria did their own scaled-down version of confiscating people's private pensions in 2011. Of course, those are just no-name South American countries and backwater Eastern European countries. That can't happen here in America! Why, we're Americans! We have rights!

Unfortunately, the Democrats took note of what Argentina did in 2008 and have since bantered around ideas of rescinding the tax benefits of those programs, even outright nationalizing them. There was hope with the Republican backlash of 2010 that such outright theft would be made impossible, but with the 2012 election decidedly going left, socialist politicians' chops have been re-whetted for a piece of your IRA pie. Ultimately, however, the real risk is not so much the political desires of socialist politicians, but that the economic situation is so dire it will essentially force the decision to confiscate people's retirement accounts. That is the true risk of promising ourselves everything.

Certain persons have actually advocated similar measures before Congress in open session.

A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered....

Under Ghilarducci's plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation....

"Short-term I propose . . . that the Congress allow workers to swap out their 401(k) assets, perhaps at August levels, for a guaranteed retirement account--just a one-time swap....

"How would this work? You go back to your districts and meet up with a 55-year-old who had had $50,000 in his account last month and now has $40,000 in the account. He can swap out that $50,000, valued in August, for that guarantee of what would become, if he retires at 62, a $500 a month addition to Social Security."

She made it out alive, too.

It's not just us hairy-eyed anarchist types in black capes and top hats who carry little round bombs with fuses sprouting from the top who are a bit concerned about the trend:

WASHINGTON, February 3, 2013 ― 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. The U.S. Consumer Financial Protection Bureau director Richard Cordray recently mentioned these accounts in a recent interview, stating "That’s one of the things we’ve been exploring and are interested in, in terms of whether and what authority we have."

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 "nationalization." 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. And what could be a safer investment than US bonds?

Scared yet? I am.

1 comment:

pdwalker said...

This is a CLEAR signal to reduce one's financiall exposure. Buy hard assets and get out while you can.

Maybe bitcoins?