So Who Knew? In February Cyprus Deposit Outflows Soared To A Three Year High
Add this curious finding to the to do list for the 'task force' investigating who not only circumvented the capital controls, but had advance knowledge it was coming. Surely they will get right on top of that.
http://www.zerohedge.com/news/2013-03-28/so-who-knew-february-cyprus-deposit-outflows-soared-three-year-high
Add this curious finding to the to do list for the 'task force' investigating who not only circumvented the capital controls, but had advance knowledge it was coming. Surely they will get right on top of that.
http://www.zerohedge.com/news/2013-03-28/so-who-knew-february-cyprus-deposit-outflows-soared-three-year-high
The Cyprus saga contains at least two broadly-applicable lessons: First, by initially going after all bank accounts rather than just those large enough to be uninsured, Europe’s leaders gave a rare glimpse of how they really feel about private property, which is that it’s only private until the state needs it. That they backtracked in the face of public outrage (and the prospect of continent-wide bank runs) doesn’t change the fact that they’d have done it if they could have gotten away with it. Second, the revised “template,” by sparing small accounts, puts an even heavier burden on large accounts, which in some cases might be wiped out like any other unsecured creditor of a failed borrower.
So we’re left with a very different sense of what it means to have money in the bank. Small savers now know that their government will take their accounts if some future crisis makes it politically feasible. Large depositors now know that they’re unsecured creditors of extremely shaky institutions. In other words, a bank account yielding 1% is actually both riskier and lower-yielding than a portfolio of dividend paying stocks – or even a portfolio of junk bonds.
This turns the traditional risk/reward calculus on its head. Which, make no mistake, is a good outcome for the world’s governments and central banks. Cutting interest rates to zero and aggressively lowering the value of the dollar, euro and yen are intended to cause savers to become investors and investors to become speculators. The further out we all move on the risk spectrum the greater the chance that the old, indebted economies will “grow” through the next election cycle.
But turning savers and retirees into growth stock and junk bond investors means that the next 30% stock market correction (now long overdue based on charts like these) will be catastrophic for people who actually need their money. Meanwhile, in the bubbly here-and-now the same process will starve even well-run banks of deposits, since their CDs and savings accounts are now high-risk/low-return and thus not worth the trouble. The near-certain result: more banks will need bailouts, more savers will be expropriated, and more money will migrate towards risk.
The other unintended consequence of all this is — does it even have to be said? — a migration out of paper and into real assets. If there was ever a time to load up on physical gold and silver, this is it.
http://dollarcollapse.com/the-economy/risk-free-is-so-2012/
So we’re left with a very different sense of what it means to have money in the bank. Small savers now know that their government will take their accounts if some future crisis makes it politically feasible. Large depositors now know that they’re unsecured creditors of extremely shaky institutions. In other words, a bank account yielding 1% is actually both riskier and lower-yielding than a portfolio of dividend paying stocks – or even a portfolio of junk bonds.
This turns the traditional risk/reward calculus on its head. Which, make no mistake, is a good outcome for the world’s governments and central banks. Cutting interest rates to zero and aggressively lowering the value of the dollar, euro and yen are intended to cause savers to become investors and investors to become speculators. The further out we all move on the risk spectrum the greater the chance that the old, indebted economies will “grow” through the next election cycle.
But turning savers and retirees into growth stock and junk bond investors means that the next 30% stock market correction (now long overdue based on charts like these) will be catastrophic for people who actually need their money. Meanwhile, in the bubbly here-and-now the same process will starve even well-run banks of deposits, since their CDs and savings accounts are now high-risk/low-return and thus not worth the trouble. The near-certain result: more banks will need bailouts, more savers will be expropriated, and more money will migrate towards risk.
The other unintended consequence of all this is — does it even have to be said? — a migration out of paper and into real assets. If there was ever a time to load up on physical gold and silver, this is it.
http://dollarcollapse.com/the-economy/risk-free-is-so-2012/
So Who Knew? In February Cyprus Deposit Outflows Soared To A Three Year High
- Eurozone
The decision to crush Cypriot depositors (first all of them, then just the uninsured ones) came in March, without any prior hints of the carnage that was about to be unleashed upon Cypriot bank unsecured liabilities. Or so the media narrative goes, because the last thing needed is to give skeptics any indication the "ad hoc" Troika plan was not so ad hoc after all, and some individuals - notably the whaledepositors - were warned in advance, sparing them the indignity of pulling a few billion at €300 per day. Alas, as just released central bank data shows, there may be cracks in the narrative because in February, at a time when the Eurozone was supposedly getting better every day and the Dow Jones was on the verge of its all time high, Cypriot depositors pulled the largest amount of cash in over three years.
Add this curious finding to the to do list for the 'task force' investigating who not only circumvented the capital controls, but had advance knowledge it was coming. Surely they will get right on top of that.
Source: Goldman
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