Ann Barnhardt's take
'THIS (CYPRUS) OPENS UP ENORMOUS POSSIBILITIES...'
POSTED BY ANN BARNHARDT - MARCH 18, AD 2013 10:47 AM MST
'... for the Administration.'
Thus spoken on CNBC this day.
A couple of points. First, there STILL is confusion about these confiscations, dating back to the MF Global theft. People are still trying to say that the money that was/is confiscated, both from the MF Global customers and the Cypriot bank accounts is somehow "investment" capital.
No, no, no, no, no.
If you deposit money in a custodial account, you are NOT investing in the brokerage firm or in the bank. The MF Global customers were not investors in MF Global or sharing in any way in MF Global's proprietary trading profits. The people of Cyprus are not investors in their banks. The people of Cyprus who deposited money in the bank were not signing on to a share in an uber-leveraged scheme involving repos and credit default swaps on Greek sovereign paper.
THEY WERE PEOPLE WHO SIMPLY DEPOSITED THEIR MONEY, THEIR PROPERTY IN CURRENCY FORM, THE FUNGIBLE PROXY FOR THEIR LABOR AND CREATIVE CAPACITY WHICH THEY HAD ACCUMULATED, INTO A SACROSANCT, INSURED, CUSTODIAL DEMAND DEPOSIT AND/OR TIME DEPOSIT ACCOUNT.
The MF Global accounts were the same - they were fully-backed demand deposit accounts that were used to margin the account holder's futures and options positions. They were the sole, private property of the account holder and MF Global had ZERO ownership interest in that customer money.
Do you know why people used to keep fairly large balances in brokerage accounts like MF Global? Because before MF Global, brokerage accounts were guaranteed 100% by the exchange. No maximums. If a firm failed, the purpose and role of the exchange was to backstop and guarantee the firm with zero liquidity interruption. And, remembering that on the day MF Global imploded and the customer funds were swept and wired to JP Morgan, the Chicago Mercantile Exchange had an emergency slush fund of over EIGHT BILLION DOLLARS ready to go, the fact that the customers were not made INSTANTLY whole by the Chicago Mercantile Exchange is totally nefarious and criminal regardless of the circumstances.
Now the total integral failure of the brokerage paradigm has occurred in the retail banking paradigm. All deposits in the EU *were* insured up to 100,000 Euro, just like the farcical FDIC insurance. Now everyone knows that it is all total cow poop, just like the guarantees on brokerage accounts has been proved multiple times to be total cow poop.
Oh, and the oligarchs are trying to call this a "tax". Um, no. Taxes are passed by legislatures. This is Christine Legarde and some German bureaucrats arbitrarily, forcibly confiscating private bank accounts. Any "law" passed ex post facto in Cyprus will merely be a show trying to make it appear that this is not the arbitrary tyranny that it is.
Finally, I don't care how much Russian money laundering is going on in Cyprus, and yes, I know it is huge. This is totally beside the point. Just because criminal money laundering is happening through Cypriot banks doesn't mean that anyone has the right to confiscate the money of innocent Cypriots. The whole Russian money laundering excuse is a total red herring. Look, the nation with the largest absolute quantity of money laundering is the United States of America. Think HSBC. Think Wachovia. Think Washington Mutual. Think Bank of America. Does that mean that every bank account in the entire country can be levied - and not just in the banks with the money laundering but EVERY ACCOUNT IN EVERY BANK IN THE NATION? Of course not.
Bottom line: I shut down my brokerage firm precisely because I knew that there was no longer any rule of law and that customer money was totally indefensible. Now the same thing has happened in the retail banking sector and Obama regime cronies are openly declaring on national television that across-the-board private property confiscations are being regarded as "opening up enormous possibilities."
DO NOT sit around and wait for your money, be it in retirement accounts, stock accounts, money market accounts or even in simple bank accounts or CDs, to be stolen. There is probably going to be a small reaction lag as the low-information populaces of the Southern European countries (Greece, Italy, Spain, Portugal) are slow on the uptake of what has happened, but it won't last forever. Once Guido in Naples gets his head around this, the Eurozone will be O.V.E.R. And the the US banks carrying HUNDREDS OF TRILLIONS OF DOLLARS in leveraged European sovereign debt over-the-counter derivatives will implode into a black hole-esque singularity at the speed that information can cross the Atlantic Ocean, which AIN'T VERY DARN LONG, kids.
**If you haven't seen it already, I have an 8-part, 2.5 hour YouTube presentation recorded just recently in November 2012, explaining exactly these topics on YouTube. Click on the link that says "YouTube" on the left to go to my YouTube Channel homepage. Part 1 of the econ presentation should be at the top of the list.
Emphasis mine. While I admit this is possible, I don't think it likely. It assumes a rational reaction from the European herd of sheep, and the same reaction in our herd. If Ann's reasoning were correct, the whole thing would have collapsed in 2008, because everyone would have seen through the farce of just printing up more money to cover AIG.
When the European derivatives implode, I think the Fed will instead choose to print to cover any US exposure to it, vs trying to engage in direct levy's on Bank accounts. Since the banks don't actually spend the money the fed loans them to stay solvent, the print to cover mechanism is non-inflationary. The 1s and 0s in the bank accounts here just stay the same, the banks balance sheets will always magically come out in the black. As long as the banks don't lend that money and as long as the economy is contracting and money velocity stays low, this won't have much of an impact. . Our printing press can prevent us from getting sucked into Europe's black hole, and thus prevent the dominoes from spreading here. It preserves the status quo and just ups the numbers on the Feds own balance sheets - you know, the ones we aren't allowed to see. Yes, technically the banks owe that money back to the Fed, but the fed can talk as long as they want getting it back - because interest rates are basically negative. Why? Inflation..
The currency destroyer here is the Deficit spending. The government is printing money AND spending it. Entitlements continue to grow. We will run 1-2 Trillion in deficits for each year from now on, and perhaps more as Obamacare comes into full effect. Our collapse occurs when Foreign powers dump the dollar in reaction to the clearly unsustainable path we are on, and all of those dollars overseas come home to America - looking for something, anything to buy before the dollar is worthless. This will drive prices up - and the govt will most likely respond by upping the entitlement payouts - thus provding us with the Wage/price spiral needed for hyperinflation. The politicians aren't going to let their little herd of sheep starve - not while they can steal and print more.
Congress may eventually make a play for 401k and IRA money or even try the direct bank account levy, but it won't be because they "need" the money, but simply, because they want control. Just like Obamacare isn't about healthcare at all, but about control of who will get what treatment. Don't be too outspoken our your daughter won't get the treatment she needs for that Pneumonia. Don't make waves or the EBT we forced you onto will be cut off. They want us all to be beggars.
