“The Fleecing Has Only Begun”

Friday, April 12, 2013
By Paul Martin

Andy Sutton

The story broke from nowhere and caught many off guard. To others it was the manifestation of previously unspoken fears. It was, and is, by far the biggest story of 2013, the decade, and quite possibly the millennium. It was the crossing of another Rubicon. For years and decades, the financial piranhas had wandered around the edges, nibbling a little here and a little there. Inflation, bailouts, and other monetary mischief had already eroded the value of most currencies. But never before had they actually made the boldest of moves – to steal what were always considered to be the most liquid and secure of funds – bank deposits. In a weekend, the liquid became the illiquid and the secure became the repossessed. Hey, let’s not split hairs here, the money was stolen. The media dutifully came up with another new buzzword – the ‘bail-in’. Talk about putting a positive spin on outright theft.

We’ve already covered Cyprus in great detail. That story goes on and is largely ignored by the mainstream press corps; however, Cyprus was just a small prize. There are much bigger fish to fry – like you. This week’s column will cover the groundwork that has already been laid to turn America into the next Cyprus. I am not positing here that we will necessarily be the next in line chronologically, but it will happen eventually – and likely sooner than later. There are other pools of wealth in other parts of the world that may serve as additional beta tests prior and I claim no inside knowledge of the blueprint, but can only attest to the fact that it does in fact exist and more importantly, to make you aware of it now.

Spain, Canada, and New Zealand have already adopted specific measures using the ‘bail-in’ approach to guarantee the solvency of the ‘too big to fail and too big to jail’ banksters using depositor money. For simplicity’s sake, a bail-in is pretty much the opposite of a bailout. In a bailout, which we all know far too well, everyone shoulders the losses of the offensive, insolvent institution. Think of TARP. However, that ‘socialization’ of losses tends to annoy folks; especially those who had no prior pecuniary interest in the aforementioned offensive institution. And yes, I do mean offensive.

However, in a bail-in, instead of getting the funds from the general public, the strategy is to swipe (not write-down, not give a haircut, etc.) depositor assets. This is done by a bit of wordsmithing. Under previous customary definitions, depositor assets were also known as the bank’s liabilities. Obviously an insolvent bank has more liabilities than assets (in simple terms) and as such changing the status of account holders from ‘depositors’ to ‘unsecured creditors’ means the bank can ‘repatriate’ your money to pay off its bad debts. Truth told, this is nothing new; there is already the precedent of a series of frighteningly similar situations that are already part of America’s decaying reputation as an advocate for private property rights.

The Precursor – Sentinel Management Group

The Rest…HERE

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