Monday, March 18, 2013

Banking Collapse?


Click here for related story {Reuters}

We recall with crystal clarity that moment in 2008 when Senator Schumer [Democrat - NY] announced that he was concerned that Lehman Brothers was "insolvent" and unable to meet its obligations. 

The consequent run on Lehman caused its collapse, creating a domino effect as Bear Stearns and AIG then collapsed, and the rest of Wall Street was faced with massive client account liquidations as morbid fear spread throughout the financial community -- and the investing population. 

That collapse cost the US roughly $22 Trillion, according to the GAO.


As we ease into the New World Order, can we expect the IMF to direct our banks to impose taxes, similar to those to be imposed on Cypriot banks, on US savings accounts?  The official concept is to impose a 3% tax on savings deposits below €100,000 [US$130,000] and to 12.5% for deposits above €100,000. 

That's a fairly massive tax which depositors will go to great lengths to avoid, particularly since they've likely already paid a tax on their earnings which they then deposited into their local banks.


We rank this move as one of the most stupid concepts emanating from the IMF to date.


This move will likely cause a run not only on Cypriot banks, but on all the banks within the European Community as depositors anticipate similar measures in EC banks to "stabilize the economies and reduce debt."

One rationale for this move was that Russians [and other foreigners] were depositing their savings in Cyprus banks to avoid being taxed on those savings at home. 

We suspect that foreigners will no longer make any deposits in Cypriot banks, significantly eroding/destroying the lending capacity of those banks in Cyprus or internationally.





Can we look forward to this process occurring in the US?  It seems the Socialist dominated United Nations, the IMF, and the World Bank all seem to be having a greater sway in US financial policy -- a fairly worrisome situation since those organizations all depend on US contributions to support them.



In years past, we watched Middle Class citizens of Third World countries across the globe pull their savings out of local and national banks when their governments attempted to tax those accounts; governments, such as Argentina and Venezuela restructured and revalued their monetary units, wiping out life savings of their Middle Classes. 




The more astute citizens recognized the warning signs and moved their cash out of the country; efforts to increase taxes on incomes and savings in Venezuela in 1980 caused a run on the Workers' Bank, with a subsequent movement of citizen's deposits out of Venezuela [much of the cash ended up in Miami in the form of condominiums - creating an unprecedented real estate boom] -- and a depletion of Workers' Bank deposits.

Panicked depositors in 1929

We expect this poorly thought-out IMF concept to destabilize the European banking communities in the near term, and to unsettle depositors throughout the globe who will fear for the safety of their savings. 

We also expect to see new investment categories emerge here in the US in which depositors will place their savings, but which will not have the FDIC safety net -- and which will destabilize the US economy once again.

 



Footnote:
The IMF is saturated with posturing, highly paid, and untaxed Socialists and Emerging Nation, self-styled  "economists" who have no grasp of reality, and who view those with savings and real income [excluding themselves, of course] as "greedy capitalists" and subject to unrealistic taxation.



Notably, IMF executives have an average compensation of $181,000 - untaxed, plus living expenses.

More senior executive salaries approach $500,000, plus living expenses [housing, leased-chauffeur-driven limousines, expense accounts, armed guards, etc.].

We doubt if these executives park their savings in banking systems in Europe now, but more likely will find them in off-shore accounts not subject to IMF or World Bank oversight.




DISCLAIMER:
Our expertise in addressing this issue is based on several years conducting international financial analysis at the US State Department's Bureau of Intelligence and Research.