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Can the Government steal our savings? Yes it can!

Sorry, but today my post is a bit long. But that’s because the issue I deal with is quite serious.

Yesterday I exposed the horrific exposure of UK banks to the debt of European countries. Some of this money was loaned to countries that are financially stable, but a lot has been loaned to countries that are virtually bankrupt. Some of the “good debt” includes $328bn to Germany and $198bn to Holland. Some of the more dodgy loans include $242bn to socialist France, $137bn to almost bankrupt Ireland, $85bn to bankrupt Spain, $57bn to bankrupt Italy, though fortunately only $8bn to thoroughly bankrupt Greece.

So what happens if just one of these countries gets into trouble and debt-holders are forced to take a “haircut” of say 20% or 30%? Well, that would probably bankrupt a couple of UK banks. But this time, our Government is drowning in debt and so can’t afford to hand out tens of billions of taxpayers’ money to save its banker friends.

Question – where else could the Government find the money to yet again bail out bankrupt UK banks? Answer, by “doing a Cyprus” – by handing over some of the £550bn of our savings to the banks in return for some, probably largely worthless, shares in the bank we are saving from its overpaid over-bonused bosses’ greed and incompetence.

But surely no British government would dare confiscate our savings and hand them over to banksters? After all, aren’t the first £85,000 of our savings guaranteed? Unfortunately, I have bad news for you

A joint paper from the US Federal Deposit Insurance Corporation (FDIC) and the Bank of England (BoE) dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland; and that in future major bank bailouts will not be paid for by taxpayers but by shareholders and creditors.

Most people probably think that when they deposit money in a bank, they still own that money. Wrong. When you put money in a bank, you are lending money to that bank in return for, you hope, some interest. This means the money belongs to the bank and you are one of the bank’s creditors.

The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It explains that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.”

The key points of the report are probably:

1. Future bank bailouts will be funded by shareholders and creditors (including depositors)

2. In the case of a major bank failure, depositors (savers) will be “bailed in” and will either lose part (or all) of their money or else part (or all) of their money will be converted to banks shares in the failed bank

3. A EU directive – the EU Recovery and Resolution Directive – allows insured deposits to be bailed in. In layman’s terms, this means that deposits up to £85,000 in the UK and up to €100,000 in the Eurozone can be used to cover the failed bank’s losses

You have been warned. This is NOT an April fool’s joke. Repeat, this is NOT an April fool’s joke.

(Incidentally, the Australian government recently passed a law reducing from 7 years to 3 years the time that a bank account there could be dormant before the contents of that supposedly “dormant” account could be moved from the bank to the Australian government. All around the world, governments are realising that there are rich pickings to be had in bank deposits. This is NOT an April fool’s joke)

1 comment to Can the Government steal our savings? Yes it can!

  • Scotty

    If I read that right, at least in the US insured depositors money is can’t be “bailed in” up to the amount insured under current law. The UK is not so lucky. Is that correct?

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