Cologne Institute of German Business Warns of Deposit Protection May Not Survive in Europe

 

The Cologne Institute of German Business sees in the planned European deposit insurance is simply incapable of proving protection against a bank crash in Europe. The EU deposit guarantee is simply not practical under any concept of austerity. The Eurozone still has inherent significant risks in the balance sheets of European financial institutions. This is primarily because where the USA took the bad loans from the banks and stuffed them into Freddie and Fanny, in Europe, the bad loans are still on the books of the banks. Systemically, this has been the leading problem why Europe has been unable to recover and Quantitative Easing merely robber savers of their income and it failed completely to stimulate the economy. Banks were still reluctant to lend and people would not borrow if they did not have confidence in the future.

The Termination of Cash Approaching Rapidly

The hunt for money is intensifying with the aid of banks no less. India was the balloon. They simply canceled the current with no notice and imposed a 90% tax on anyone holding the high denomination notes. This is how the world governments operate. The first bail-in was done in Cyprus. We were even contacted by members of the government trying to push back against the EU. We provided the solution, but the government did what the EU wanted because this was a test. If they got away with it in Cyprus, then the “bail-in” would become a contagion. The politicians lied, as usual, and said that policy would NEVER be applied in Europe. It is now standard around the world. We warned, Cyprus, then Greece – who would be next.

Germany & THE 800 POUND GORILLA

The derivative exposure mentioned by Martin Armstrong is what has been covered on Global Geopolitics numerous times over the years under the following posts:

Is Deutsche Bank Kaputt?

New financial MELTDOWN set to sink EU as German banks lose £14,292,610,000.00 in 90 DAYS

Deutsche Bank Exodus Continues As Real Estate Chief Leaves For Blackstone

Is Deutsche Bank the next Lehman?

Deutsche Bank Is Scared: “What Needs To Be Done” In Its Own Words

End of the eurozone? Germany’s biggest lender Deutsche Bank CRASHES with first annual loss

Deutsche Bank shocks with warning of €6bn losses

 

This week, a German cooperative savings bank in the Bavarian village of Gmund am Tegernsee with less than 10,000 in population, announced it will begin charging retail customers to hold their cash starting in September. This will apply to accounts greater than €100,000 euros. This means the bank will charge customers 0.4 percent, which amounts to a direct pass-through of the current level of the ECB’s negative deposit rate. After speaking directly with banking sources, what is happening is that cash is flooding into German banks from around Europe just to park avoiding the negative deposit rate. Now, the banks are starting to pass the negative rates back to the clients. However, much of this flow of capital has also been money fleeing other banks outside of Germany for fear that the euro will break and they will get Deutschemarks.

Is Deutsche Bank Kaputt?

It looks like Deutsche Bank is heading toward failure. Why might we be concerned?

The problem is that Deutsche is too big to fail — more precisely, that the new Basel III bank resolution procedures now in place are unlikely to be adequate if it defaults.

Let’s review recent developments. In June 2013 FDIC Vice Chairman Thomas M. Hoenig lambasted Deutsche in a Reuters interview. “Its horrible, I mean they’re horribly undercapitalized,” he said. They have no margin of error.” A little over a year later, it was revealed that the New York Fed had issued a stiff letter to Deutsche’s U.S. arm warning that the bank was suffering from a litany of problems that amounted to a “systemic breakdown” in its risk controls and reporting. Deutsche’s operational problems led it to fail the next CCAR — the Comprehensive Capital Analysis and Review aka the Fed’s stress tests – in March 2015.

German ‘bail-in’ plan for government bonds risks blowing up the euro

Quick reminder: “Bail-out” means the government bails the banks out, whereas “bail-in” means the citizens pick up the tab. Germany’s Fourth Reich is once again forcing its will upon the EU.

 

‘If I were a politician in Italy, I’d want my own currency as fast as possible: that is the only way to avoid going bankrupt,’ said German ‘Wise Man’

A new German plan to impose “haircuts” on holders of eurozone sovereign debt risks igniting an unstoppable European bond crisis and could force Italy and Spain to restore their own currencies, a top adviser to the German government has warned.

“It is the fastest way to break up the eurozone,” said Professor Peter Bofinger, one of the five “Wise Men” on the German Council of Economic Advisers.

The Government Will Never Let It Happen!

What a tangled web the global geopolitical situation has become.  Geopolitics and finance have always been interrelated but recently much more so.  As many readers know, I have speculated we would be hit over the head with a “truth bomb” from the East and most likely from Mr. Putin himself.  Just this week Britain has alleged Mr. Putin personally ordered a “hit” on an ex KGB agent for calling him a pedophile  (http://nypost.com/2016/01/21/murdered-ex-spy-accused-putin-of-pedophilia/).  Another story came out that Turkey shot down a NATO helicopter which made no press coverage at all in the West.  Also, Victoria Nuland recently travelled to Russia and was refused an audience by Mr. Putin.  This, after John Kerry had a meeting where he went into it saying “Assad must go” and came out saying Mr. Assad can stay …  Why all of this now?  I would simply say this reeks of desperation and also a VERY dangerous strategy to attack Mr. Putin personally.  I say “dangerous” because it raises the likelihood of a response from him.  Can you imagine the outrage were Russia to accuse president Obama or the Prime Minister Cameron of Britain for ordering the murder of someone who called them a pedophile?

Greek Deposits Become Eligible For Bail-In On January 1, 2016

The last few nails in the coffin are being driven in by the German-led Troika and soon Greece will be in 100% vassal state mode.

 

 

Earlier today, tucked away from the public’s eyes, there was another round of drama involving Greek securities this time focused on Greek senior bank bonds which promptly tumbled back to post-referendum/pre-bailout #3 levels.

The catalyst was Friday’s pronouncement by Jeroen Dijsselbloem who said depositors will be shielded from any losses resulting from the restructuring of the nation’s financial system, but that senior bondholders would certainly be impaired and probably wiped out. In other words, once again the super priority of various classes has been flipped on its head with general unsecured liabilities ending up senior to, well, senior bank claims.

Cyprus – Greece – Whose Next?

 

The Sovereign Debt Crisis began with Greece asking for help from the IMF to the day of Pi from the peak in the ECM 2007.15. The EU then crushed Cyrus [sic] to see how they could get away with not paying people or honoring their debts. The Cyprus experiment was the start of the Bail-In that is now a matter of law in just about every country.

Debt, War and Empire By Other Means

This is how the Fourth Reich is coming to be. If you’re still looking for Nazis, you’re 70 years too late. The German hegemony is conquering through other means.

“You have not anchored Germany to Europe,… You have anchored Europe to a newly dominant, unified Germany. In the end, my friends, you’ll find it will not work.“

– Margaret Thatcher

 How right she was.

 

 

This video below may help one to understand some of the seemingly obtuse demands from the Troika with regard to Greece.

The video is a bit dated, but the debt scheme it describes remains largely unchanged. The primary development has been the creation of an experiment called the European Union and the character of the targets.   One might also look to the wars of ‘preventative intervention’ and ‘colour revolutions’ that raise up puppet regimes for examples of more contemporary economic spoliation.

They’re Coming to Take Away Your Cash

The stories are all over the Internet. Governments are forcing us into a cashless society. Supposedly the pretext is terrorism, and the real reason is to take more control. No doubt more power appeals to politicians, and banning cash seems like the next step after mandatory reporting of cash transactions. However, I think there is a more serious driver than simple power lust.

A more compelling case is that cash banning is the logical follow up to bail-ins. Most people think a bail-in is when banks steal your deposit. So it seems to make sense that governments want to force people to keep their cash in the bank. Then they are easy meat for the next bail-in.

The War On Cash: Officially Sanctioned Theft

You’ve probably read that there is a “war on cash” being waged on various fronts around the world. What exactly does a “war on cash” mean?

It means governments are limiting the use of cash and a variety of official-mouthpiece economists are calling for the outright abolition of cash. Authorities are both restricting the amount of cash that can be withdrawn from banks, and limiting what can be purchased with cash.

These limits are broadly called capital controls.

The War On Cash: Why Now?

Why are governments suddenly acting as if cash money is a bad thing that must be severely limited or eliminated?

Bail-Ins Coming – EU Gives Countries Two Months To Adopt Rules

 

– 11 countries face legal action if bail-in rules are not enacted within two months
– Bail-in legislation aims at removing state responsibility when banks collapse
– Rules place burden on creditors – among whom depositors are counted
– Austria abolished bank deposit guarantee in April
– “Bail-in regimes” coming globally

The European Commission has ordered 11 EU countries to enact the Bank Recovery and Resolution Directive (BRRD) within two months or be hauled before the EU Court of Justice, according to a report from Reuters on Friday.

The news was not covered in other media despite the important risks and ramifications for depositors and savers throughout the EU and indeed internationally.

The article “EU regulators tell 11 countries to adopt bank bail-in rules” reported how 11 countries are under pressure from the EC and had yet “to fall in line”. The countries were Bulgaria, the Czech Republic, Lithuania, Malta, Poland, Romania, Sweden, Luxembourg, the Netherlands, France and Italy.

Bundesbank Warns German Banks To Expect At Least 50% Losses On Austrian “Black Swan”

Just over a month ago, on March 1, the Austrian financial world was shaken by news that the first bank bail-in following Cyprus would not take place in Greece as many had expected, but in Vienna: judged by the rating agencies to be one of the safest places in the world, where the bad bank that was created to help with the wind-down of the defunct Austrian lender Hypo Alpe Aldria, would itself be unwound, with creditors suffering the bulk of the pain in the form of the first official “core Eurozone” bail in.

Truly a “black swan” event.

This, together with the revelation of the sordid state of Heta’s books which was only revealed after the bail-in fact, was certainly a shock to bondholders, who had been treating Heta bonds as money good as recently as last summer, only to face losses as large as 50%.

…

Bank Deposits No Longer Guaranteed By Austrian Government

If you’re not already familiar with one of the more recent invented economic terms of the last few years, “bail-in”, it essentially means your respective government has given the banks the green light to legally take your deposits to cover their obligations should there be another crisis. Instead of the corrupt government bailing ‘out’ the banks, you, the depositor, are bailing them ‘in’. This is also an indication of an anticipated crisis.

In 2013, the United States reportedly missed one by a hair’s length.

 

– Austria will remove state guarantee of bank deposits
– Austrian deposit plan given go ahead by the EU
– Banks to pay into a deposit insurance fund over 10 years
– Fund will then be valued at a grossly inadequate €1.5 billion
– New bail-in legislation agreed by EU two years ago
– Depositors need to realise increasing risks and act accordingly
– “Bail-ins are now the rule” and ‘Bail-in regime’ coming

Bank deposits in Austria will no longer enjoy state protection and a state guarantee in the event of bank runs and a bank collapse when legislation is enacted in July. The plan to ensure that the state is no longer responsible for insuring deposits has been readied by the Austrian government in conjunction with the EU two years ago according to Die Presse.

Jim Willie: Syria, Pipeline Politics, OPEC & the US Dollar

Syria holds the key to peace, a new chapter in history and the dawn of a new age. Without oil being traded in Dollars, the US will collapse back into the stone age. With an attack on Syria the US might also collapse, should for example, a host of other nations (i.e. BRIC nations) retaliate by dropping the Dollar. This article highlights exactly what hangs in the balance and why Syria is the focus.

Syria is also only a stepping stone into Iran as it was already pre-planned to invade seven countries in five years. This was highlighted by then-General Wesley Clark in the video below. However, Iran might take the iniative by skipping that step and might set the entire Middle East on fire should Syria be attacked.

Syria is about the last gasp for the Petro-Dollar, the emergence of energy pipeline geopolitics, the rise of the NatGas Co-op, the new dominance of Russian Gazprom, the eclipse of OPEC, the fall of the house of Saud, and a grand adjustment process in global commerce and banking.

The NatGas Co-op eclipses OPEC and ushers in a new era.

Refer to trade settlement outside the USDollar and diversification away from USTreasury Bond reserves management. It took some time to realize it, but the Cyprus bank incident was a misdirected attack against Gazprom. It failed. The entire Arab Spring movement, an ambitious disruptive project waged with foolhardy ambitions, has turned on itself. Egypt fell, its US puppet discharged. The entire North African region will be in flames soon. The USGovt interfered with a grand industrialization project for European industry, to be placed on North Africa intended to take advantage of cheaper labor, available minerals, nearby resources, and easy shipping. The resentment of Europe will show up in the future. The Middle East and Persian Gulf region is shifting its salute to Russia & China, as the noisy sectarian battles have been a common fixture since long ago. Bahrain has erupted. Saudi is clamping down and converting into an Islamic police state to create the Iran-Saudi repressive bobsey twins. Chaos is the longstanding objective of the USGovt in foreign policy infection, no change in decades.

Syria is about a lot of things, most of which are volatile, many unsolvable. To be sure, the naval port of Tartus is valuable for the Russian Military, always eager to wrest a seaport. Like Lebanon, Syria is a hotbed stronghold for HezBollah, never to be taken lightly. They are mortal enemies to Israel, whose nations have exchanged covert violence for years. Syria might have tight relations with the Shiites of Iran, even some in Iraq. However, Syria represents the crossroads of many important shifting geopolitical roadways that pertain to the global financial structure and commercial systems. Syria is the tipping point for a Grand Global Paradigm Shift. It is the last stand for the Anglo Banker world. Syria will not go easily into the Russian camp, into the Gazprom fold, into the European energy market sphere. For if it does, the entire USDollar system of commerce and the USTreasury Bond system of reserves management will fall by the wayside and open a new era with Eastern dominance. But the Western powers cannot stop it. Clouds of whatever type do not halt pipeline flow, nor pipeline geopolitics.