False Sense Of Security

Ending the Ownership of Money

"The overriding effect that the elimination of cash will have on people will be that they will lose their freedom of monetary movement. They will be subject to government and banking surveillance of every transaction and, increasingly, will be subject to legislation that limits currency movement. Once this point is reached, governments will be free to move to a stage in which they declare that money is not the possession of the individual or company. It’s the possession of the government and the government 'allows' the public to use its currency in order to conduct commerce. As such, individuals and companies had best 'behave,' or they might find the privilege taken away and the money confiscated." Continue reading →

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Central Bank Lies & Consequences

"We now have two examples in three years of a major central bank simply walking away from its supposedly most fundamental obligation. The lies upon which fractional reserve banking exists are beginning to catch up to it. Citizens everywhere in the Eurozone now have good reason to wonder if their banks will be next. After Cyprus and Greece, why should anyone believe anything the ECB says? If the ECB is willing to shut banks in a crisis, what assurance do we have that the Bank of England, Federal Reserve or the Bank of Japan won't do the same? Answer: None. Today's highly leveraged banks can fail very fast, stretching the capacity of even the strongest central banks." Continue reading →

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Greece Closes Banks and Stock Markets, Introduces Capital Controls

"The banks in Greece and the Athens Stock Exchange will remain closed until at least July 6, the day after the referendum on the austerity measures demanded by the country’s creditors. In the meantime, cash withdrawals at ATMs will be limited to 60 euros ($66) and transfers abroad will be forbidden. Greece is the second Eurozone country, after Cyprus in 2013, to impose capital controls. The move is evidently aimed at preventing panicked Greek investors and savers from taking their money out of the nation’s banks and moving it elsewhere. In the days before the predictable stall of the negotiations with Europe, many Greeks rushed to withdraw their money." Continue reading →

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China’s Stocks Enter Bear Market as Rate Cut Fails to Stop Rout

"Chinese stocks tumbled, sending the benchmark index into a bear market, as signs of an exodus by leveraged investors overshadowed the central bank’s effort to revive confidence with an interest-rate cut. The retreat marks an end to the nation’s longest-ever bull market, a rally that’s lured record numbers of individual investors and convinced traders to bet an unprecedented amount of borrowed money on further gains. Zhang Gang, a strategist at Central China Securities strategist in Shanghai, called Monday’s losses 'panic selling' that will likely continue as margin investors are forced to liquidate their holdings and the recent selloff spurs more mutual fund redemptions." Continue reading →

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Cyprus: 16 months of capital controls, banks still pitifully capitalized

"It’s been over a year since the banking system in Cyprus officially went bust. On Friday, March 15, 2013, practically everyone in the country went to bed thinking that everything was just fine. Many had probably gone to the bank that very day to do business, or logged on to an Internet banking platform. Yet the very next morning, they woke to a completely new reality: the nation’s banks were broke, and the government was in no position to rescue them. All the promises they had been told about government guarantees and having a ‘well-regulated’, sound banking system turned out to be lies." Continue reading →

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IMF pronounces Bulgaria’s banks safe, 2 weeks before bank run

"Earlier this summer, IMF bureaucrats went to Sofia, Bulgaria to study the country’s economic progress. And roughly a month ago, they released an official report which stated, among other things, that Bulgarian banks are 'stable and liquid.' Talk about epic timing. Because less than two weeks later, Bulgaria’s banking system was in the throes of a full-blown crisis. There was a run on two of the nation’s largest banks—several hundred million dollars had been withdrawn in a matter of hours. And the Bulgarian central bank had to step in and take over both of them or risk a collapse in the entire system." Continue reading →

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Bill Bonner: The Dumbest Investment Mistake You Can Make

"There could be a 15-day cooling off period… which could be extended by the Fed, in the interest of market stability. Economists don’t know what will work because no one can know what the future will bring. But we all know what won’t work: central financial planning. Likewise, investors can’t consistently choose good investments; because they don’t really know the future. All they can know is what isn’t true and, knowing that, avoid bad investments. That’s why investing is often called a 'loser’s game.' You don’t win by choosing winning investments; you win by not losing. You don’t win by pretending to know what is true; you win by knowing what is false." Continue reading →

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Fed looks at imposing exit fees on bond funds

"Federal Reserve officials have discussed whether regulators should impose exit fees on bond funds to avert a potential run by investors, underlining concern about the vulnerability of the $10 trillion corporate bond market. US retail investors have pumped more than $1 trillion into bond funds since early 2009. This has created a boom environment for fixed income money managers, but raises the prospect of a massive disorganized flight of money out of the industry should interest rates rise sharply in the coming years. Exit fees would seek to discourage retail investors from withdrawing funds, thereby making their claims less liquid and making a fire sale of the assets more unlikely." Continue reading →

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Bursting Switzerland’s bubble

"Last year, SNP chief Thomas Jordan requested a [buffer] to be introduced for Swiss banks, forcing them to hold an additional one percent of risk-weighted assets to stave off the potential dangers of the housing boom. Earlier this year, as worries about a bubble increased, the SNB instigated a number of policies to prevent any more dramatic rises. This included doubling the capital buffer requirement to two percent. However, despite a partial slowdown since January, Jordan told reporters in March that the work was not yet done. 'The pace has slowed, but we are far away from the soft landing we want. We don’t yet see the slowdown that we would like to see.'" Continue reading →

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Bulgarian Pres. Blames ‘Lack Of Faith In Institutions’ For Bank Runs

"Bulgarians’ lack of faith in institutions sparked runs on two banks and triggered the worst financial crisis in 17 years, the nation’s president said. 'Let me make this very clear: there is no banking crisis in my country, but there is a crisis of confidence,' Rosen Plevneliev said today. With low trust in institutions, rumors, attempts at destabilization and speculative attacks can 'create a panic,' the president said. The central bank blames an 'organized attack' of 'criminal actions' for the run on First Investment Bank. Corporate Commercial Bank lost deposits because of a dispute between a majority shareholder and a large depositor, Capital newspaper reported June 18, citing unidentified people." Continue reading →

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