Michael F. Cannon
ObamaCare supporters promised the law’s employer mandate would require employers to provide workers with comprehensive insurance. But they apparently didn’t read the bill very closely. It’s a recurring theme.
According to the Wall Street Journal, employers and employee-benefits consultants have found, and federal regulators now confirm, that the law actually requires most employers to offer no more than very flimsy coverage. Many employers are now exploring the option of offering limited-benefit health plans that cover preventive services and maybe “$100 a day for a hospital visit” but “wouldn’t cover surgery, X-rays or prenatal care.” Indeed, the law could push many employers to reduce the amount of coverage workers receive on the job.
The Obama administration’s reaction demonstrates they had no idea what they were doing. The Wall Street Journal:
Administration officials confirmed in interviews that the skinny plans, in concept, would be sufficient to avoid the across-the-workforce penalty. Several expressed surprise that employers would consider the approach.
“We wouldn’t have anticipated that there’d be demand for these types of band-aid plans in 2014,” said Robert Kocher, a former White House health adviser who helped shepherd the law. “Our expectation was that employers would offer high quality insurance.”
The Law of Unintended Consequences strikes again.
This and other employer responses to the law could make the roll-out of ObamaCare’s health insurance “exchanges” even more of a train wreck.
- To the extent ObamaCare’s employer mandate pushes firms to offer bare-bones plans, premiums for plans offered through Exchanges will rise. The healthiest workers will enroll in their employers’ bare-bones plans, but workers who have expensive illnesses (or with dependents who have expensive illnesses) will seek more-comprehensive coverage through the Exchanges. The influx of sick consumers will increase the premiums for Exchange-based plans. Many of these sick workers won’t receive any premium-assistance tax credits or cost-sharing subsidies because their employer’s bare-bones plan will likely satisfy ObamaCare’s definition of adequate – and because the statute forbids those entitlements in the 33 states that have declined to establish an Exchange.
- Employers are also renenwing their health-benefits contracts early (i.e., before January 1, 2014), which allows them to avoid many of ObamaCare’s regulatory costs for several months. That move could also increase premiums for Exchange-based plans by encouraging workers with high-cost illnesses to seek coverage through Exchanges while healthy workers stick with their employer’s plans.
- Many employers are also considering self-insuring their health benefits, an arrangement in which the employer bears the risk that is usually borne by the insurance carrier and just hires someone (often an insurer) to administer the coverage. This strategy allows also employers to avoid many of ObamaCare’s regulatory costs and could also increase premiums in the Exchanges and small-group market.
Again, the Journal:
Regulators worry that some of these strategies, if widely employed, could pose challenges to the new online health-insurance exchanges that are a centerpiece of the health law. Among employees offered low-benefit plans, sicker workers who need more coverage may be most likely to opt out of employer coverage and join the exchanges. That could drive up costs in the marketplaces.
These are the sort of unintended consequences that ObamaCare’s opponents warned would plague any attempt by Congress to centrally plan one-sixth of the U.S. economy.
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Campaigners warn against rise of the ‘mega-farms’: Could massive pig, fish and dairy units harm the environment?
Cahal Milmo , Tom Levitt Sunday 12 May 2013
Farming in the British Isles is on the verge of a dramatic step towards industrialisation with the establishment of "mega-farms" for salmon, pigs and cows, which opponents claim put the environment and human health at risk. The Government signalled its backing yesterday for large-scale farms ahead of an announcement this week of a timetable for plans for a 25,000-capacity pig farm in Derbyshire. A decision on a planned 1,000-cow dairy unit in Wales is also imminent.
Pressure to meet growing demand for protein by radically increasing the size of farms has also spread to Ireland, where the authorities are backing plans to build one of the biggest salmon farms in the world in Galway Bay, doubling Irish salmon production at a stroke.
Farmers and officials insist the introduction of modern facilities offers a solution to Britain’s voracious appetite for cheap meat by increasing production while maintaining or improving animal welfare standards and without affecting the environment.
A spokeswoman for the Department for Environment, Food and Rural Affairs said: "Increasing the efficiency of food production will help us meet rising demand for food. This can be done on any scale and in ways that actually deliver environmental benefits. Large-scale farms are required to meet the same environmental and animal welfare standards as all UK farms."
But campaigners claim approval of the schemes would cause a rush towards factory farms across the country, imperilling countryside and coastline in a dash for cheaper food. Lord Melchett, the Soil Association’s director of policy, said: "The solution is not to create huge-scale intensive operations that threaten our landscape, farming and rural communities. Large-scale industrial farms may be able to produce food a little more cheaply in the short term, mostly through reducing the number and cost of people employed. But we will end up paying a high price for what may be marginally cheaper food."
In the Derbyshire village of Foston, opponents claim plans for a vast indoor pig farm represent a dramatic leap towards techniques already employed in other parts of Europe and the US, where 100,000-capacity pig farms are common. A petition against the farm has collected more than 25,000 signatures including the actors Sir Roger Moore and Dominic West as well as the TV chef Hugh Fearnley-Whittingstall. Sir Roger has described large-scale farms as "concentration camps for animals". Opponents claim such farms will create enormous animal welfare problems where disease could spread quickly and the environment will struggle to cope with the slurry.
Midland Pig Producers, the company behind the Foston proposal, says it has worked exhaustively to ensure it meets all the concerns with state-of-the-art air scrubbing equipment to remove odour and an anaerobic digester to turn slurry into methane to power the farm. It claims it will also pioneer improved welfare conditions by using new "freedom farrowing crates" allowing sows and piglets greater movement. "We believe farms in the UK will have to get more efficient if the consumer’s demand for British meat at a reasonable price is to be met," the firm says.
The National Pig Association denies Foston represents the industrialisation of pig farming. It will, they argue, offer the chance of increasing UK pork production as well as establishing higher welfare standards than European or US competitors. "Big does not necessarily mean bad in pig farming. Foston will apply technology and techniques that ensure better animal welfare and environmental standards," a spokesman said.
In Wales, the Government is expected to receive an inspectors’ report at the end of May on whether a Powys dairy farmer can proceed with plans to build a 1,000-cow unit. Fraser Jones wants to triple the capacity of his farm near Welshpool. His opponents insist the scheme’s approval will open the way for similar farms across the UK. Carol Lever of the World Society for the Protection of Animals said: "The importance of this decision should not be underestimated. If we allow this industrial dairy to go ahead, it could potentially change farming and the countryside for ever." Mr Jones defends the plan, saying: "We have gone to great lengths to address people’s concerns. The cows, which would be inside for 250 days a year, would be continually monitored and the dairy would promote good animal welfare."
Similar arguments are being rehearsed about plans for offshore mega-farms. Environmentalists warn that BIM’s proposals to build a fish farm off Ireland’s Aran islands, capable of producing six million organic fish a year, risks playing havoc with the ecosystem by introducing a "huge quantity of biomass" into Atlantic waters. If approved, the scheme will be five times larger than any existing salmon farm off the British Isles.
Campaigners fear it will devastate wild salmon and trout stocks by introducing parasites and polluting waters with waste from the fish. Ken Whelan, professor of biology and environment at University College Dublin, described it as a "giant experiment". "The concern is it is moving very fast from a greenfield site to something bigger than Ireland’s current national production. If people are truly interested in being sustainable, you have do it on a staged basis to be certain of the impacts." BIM did not respond to requests for comment. Previously, it said its proposals amounted to safe, efficient and sustainable fish farming.
Scottish producers insisted yesterday there are no plans for similar deepwater offshore farms in Britain but The Independent on Sunday understands that at least one major international aquaculture company is undertaking site feasibility studies in Scotland. An industry source said: "There is a strong desire to explore the feasibility of offshore farms where scales of production could be increased. The Irish situation is being watched closely."
Too close for comfort
Residents in Foston, Derbyshire, fear their health will be at risk if plans by Midland Pig Producers (MPP) are approved. The "mega-farm" will exacerbate conditions for those who live in Foston, who say it is already home to a women’s prison, a Traveller site and an intensive poultry farm.
Sue Weston, 48, and her husband Steve, 50, believe their house, valued at nearly £500,000 six years ago and which overlooks the 70-acre MPP site, may now be impossible to sell. "It’s going to be practically in our living room. We had the estate agent back and asked him what would happen if it’s built. He said: ‘You might not get £200,000 for it. I dare say you will never sell it.’"
Their son Tom, 19, had open-heart surgery two years ago. Mrs Weston believes the farm will be a threat to his life. "I don’t feel that I can live here and put Tom’s health at risk. Infections could be fatal to him."
Audrey Connors and Michael Connors put their house up for sale, but did not get any viewings. Mrs Connors said: "We just gave up. Who wants to buy a house with that monstrosity in front of it?"
Statistics: Posted by yoda — Sun May 12, 2013 12:18 am
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Top trader predicts that the end of Fed money printing could be ‘a messy process’ for bonds
Posted on 07 May 2013
David Zervos, head of global fixed income at Jefferies, told Bloomberg TV’s Erik Schatzker and Sara Eisen on ‘Market Makers’ that the Federal Reserve’s QE program is ‘the greatest monetary policy experiment of our lifetime and I do not think that anyone is smart enough, me, any central banker up there’ to figure out how to properly exit.
Mr. Zervos said, ‘I am not criticizing them, I just do not think that we know how to handle this when we need to handle it. We have never done it before and it will be a messy process.’??
Zervos on whether investors should still be running with the bulls:
‘Yes, there is always an end game and there is always doing too much. We should always be cognizant of the fact that this monetary stimulus…The costs are really the inflationary consequences that come in the future from having printed too much money and not being able to pull that monetary base out of the economy fast enough as people decide they want to start lending again.’
On whether investors will lose confidence in the ability of central banks:
‘It could. It could if people’s inflation expectations become unglued. if you believe that ultimately we are putting too much in and we will not be able to get it out and it will create a big drag for businesses because they will have to manage inflation risks as well as all of their other business risks and that has a negative impact on real growth. But i think we are very far away from that.
‘Look at the data in the last three months on inflation. Everywhere around the globe is that it is coming down, not going up. These guys have bullets and they can fire them. The greatest mistake that people make is talking about QE and all these monetary policies as if people are pushing on a string. We are not. This is powerful stuff.’
On whether we’re going to shift to where the cyclicals come out on top because the economy improves:
‘I think you have got to get the consumer back for that. the one balance sheet that still is hindering a recovery is the consumer’s balance sheet. The consumer is still funding a large portion of its debt at very high rates. They have not been able to refinance. Maybe our new man Mel Watt who is going to come in and give everyone principal forgiveness–he might be the savior in that case.
‘But my point is that businesses for four years have ranked problems through the NFIB survey and one of the consistently greatest problems is sales. Poor sales. If businesses just saw people coming back and spending I think we would be in much better shape. We have to get house prices up or figure out a way to get people lower funding costs. Those are the big issues. Those are what will drive business sentiment and I think we are still a ways away from that.’
On whether investors should tune out macro noise as Warren Buffett said he does:
‘I think the world did a lot of that before 2008. A lot of people said I did not need macro. They said I don’t need to look at whether GDP is at four or two per cent, I don’t need to think about the fed or their balance sheets. And I think a lot of people got hurt very badly by not focusing on the macro. Now, Warren has an unbelievable way of doing business that he finds himself quite liquid when other people are not liquid. He has set himself up very well to be — I think he mentioned it in his talk, a lender of last resort type figure in the market, which is a wonderful way to do business.
‘He has been rewarded handsomely for it, but I do not think that he set himself up that way without thinking about some of the macroeconomic costs that could come through. He has seen history repeat itself. We get ahead, we go too far, we get too excited about tech stocks or emerging markets, Mexico. He watches it all go up and says I will be there when it comes crashing down.’
On why Lloyd Blankfein is talking about 1994:
‘A lot of people have made that comparison and there are a lot of valid comparisons that when the Fed pulls the liquidity away and the economy takes off, it will not be good for bonds. It’s going to be ok for equities. Equities didn’t have a great 1994, but they didn’t sell off a lot. 1995 was an amazing year once the economy got traction. Look, people take carry when you give it to them.
‘They took a lot of carry in 1990-1993. They’ve taken a lot of carry now. People who are over levered in interest rates base are going to suffer when the Fed or the rest of the central banks pull back. But we’re a ways away from that.’
On whether he has confidence that the Fed will engineer a fairly orderly exit:
‘Absolutely not. We have said it before on this show and have written about it for years now. This is the greatest monetary policy experiment of our lifetime and I do not think that anyone is smart enough, me, any central banker up there, I do not claim to be smart enough.
‘I am not criticizing them, I just do not think that we know how to handle this when we need to handle it. We have never done it before and it will be a messy process.’
On emerging markets:
‘I am in the process of writing something about emerging markets and it is the parallels between 1995 to 1998, when the bank of japan saw dollar yen go down to 80 and drove and engineered a very aggressive monetary policy response and took the yen back to 140. Between ‘94 and ‘98, the Japanese kind of went nuts and it saved them from really rolling over when they already had from the initial crash, but there was a wake of destruction in the process in emerging markets.
‘When the big developed markets central banks decide to play the competitive devaluation game, the emerging markets start flashing red. We’re early days, but emerging markets have not been great performers in the last few quarters and I worry that those who have decided they can pay back a lot of dollars, yen, or euros are going to find themselves with an inability to do so as we see these economies in the developed world take growth back through competitive devaluation from the emerging world.’
Statistics: Posted by yoda — Tue May 07, 2013 12:11 am
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Michael F. Cannon
View full post on Cato @ Liberty
Rehn: big bank depositors could bear cost of bank failure
People with big deposits could suffer a ‘haircut’ under planned European Union law if a bank fails, the EU’s economic affairs chief Olli Rehn said.
By Emma Rowley, and Reuters6:40PM BST 06 Apr 2013
Plans from Brussels put the onus on bank depositors, rather than the taxpayer, to bear the costs of bank failures.
"Cyprus was a special case … but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down," Mr Rehn, the European Economic and Monetary Affairs Commissioner.
"But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of €100,000 (£85,000) is sacred, deposits smaller than that are always safe."
Mr Rehn was referring to a directive being drafted by the European Commission on bank safety which would set out investor liability in the law of member states.
He was speaking in an interview with Finnish TV after Cyprus last month forced richer depositors to suffer heavy losses in order to secure a €10bn bail-out from the EU and the International Monetary Fund.
Cyprus had initially planned to make people with deposits under the crucial €100,000 mark to take a cut also, before backtracking in the face of an outcry. Smaller deposits are supposed to be protected by state guarantees.
Mats Persson, director of think-tank Open Europe said: "Rehn was only re-stating what’s in an EU proposal tabled in 2012, which quite sensibly suggests a mechanism whereby first, investors and secondly, large depositors – rather than taxpayers – foot the bill when a bank goes bust.
“However, there’s so much uncertainty around the precedent set by the Cyprus bail-out that his comments may still cause some jitters."
Mr Rehn also said that the European Central Bank should launch fresh action to help boost the recession-hit euro zone economy.
Statistics: Posted by yoda — Sun Apr 07, 2013 1:14 am
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ING internet banking in chaos after ‘mysterious’ withdrawals
Wednesday 03 April 2013
Financial services group is grappling with a major internet banking breakdown which has led to thousands of people unable to use their direct debit cards.
In some cases, people have ‘lost’ thousands of euros from their accounts because of the fault while others have thousands of euros too much, Nos television reported.
Even account holders who are not allowed to overdraw have discovered their counts are deep in the red because of double bookings. Some people say long queues built up in supermarkets as people found they were unable to pay.
ING began by saying there were only a few incidents but later admitted the problem was much more serious.
The bank’s online banking website is currently out of action as thousands people try to check their bank balances. The telephone help line is also very difficult to reach
The problems have not affected direct debit or online payments, ING said.
‘The correct balances are in the ING computer system,’ spokesman Harold Reusken told Nos television.
‘But the delays in the payment traffic mean people are not seeing the correct amounts. As soon as all deposits and withdrawals have been checked, the balances will be correct again,’ he said.
Reusken could not say when the problems would be solved.
Statistics: Posted by yoda — Wed Apr 03, 2013 4:00 pm
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What would you do if you logged in to your bank account someday and it showed that you had a zero balance and your bank had no record that you ever had any money in your account? What would you do if all of the money in your bank account suddenly disappeared in a single moment? If you had not kept any paper records, which most Americans do not, it would be exceedingly difficult to prove to the bank that you actually had any money in the bank. If you don’t think that something like this could ever happen in the United States, you might want to think again. Cyber attacks against major banks in the United States are becoming more powerful and more sophisticated with each passing month. In fact, major U.S. bank websites have been offline for a total of 249 hours over the past six weeks. And just last month, thousands upon thousands of Chase customers logged into their bank accounts only to discover that their balances had all been reset to zero. Anyone that would want to cause complete and total economic chaos in the United States could accomplish it very easily by wiping out all of our bank account records. So please do not keep all of your money in a single bank, and from now on please keep a paper copy of all of your bank account statements. At some point it is likely that one of these cyber attacks will cause permanent damage to our banking system, and you want to be protected.
The mainstream media has generally been very quiet about the massive cyber attacks against our major banks, but behind the scenes authorities are truly alarmed. They don’t know how to stop these attacks, and they just keep getting more intense and more sophisticated.
Could you imagine how you would feel if you logged in to your bank account and all of your money was gone? That is exactly what happened to some Chase customers last month. The following is from a recent CNET article…
JP Morgan Chase denied this evening that it had suffered a hack that many customers claimed had suddenly reduced their checking account balances to zero.
After discovering the apparently empty accounts via the Internet or mobile devices, many Chase banking customers turned to Twitter to express their frustration and show screen shots of zero balances. Other users were greeted with messages that their bank account balances were unavailable.
But this was most definitely not an isolated incident. That same article noted that Chase and many of our other large banks have had their websites taken down for extended periods of time lately…
Customers’ suspicions about a possible security breach are natural, with the zero balances appearing less than a week after a massive distributed-denial-of-service attack rendered Chase’s Web sites useless for many hours. Customers trying to use the site’s tools were instead greeted with a note that the site was “temporarily down.”
Hackers have ratcheted up their assaults on financial institutions in recent months, using DDoS attacks to take down Wells Fargo, Bank of America, Chase, Citigroup, HSBC, and others.
In fact, as I mentioned above, major U.S. bank websites have been offline for an astounding 249 hours over the last six weeks alone. The attacks just keep getting larger and bank officials are becoming very alarmed about the power of these cyber attacks. The following is from an article that was posted on CNBC this week…
Major U.S. bank websites have been offline a total of 249 hours in the past six weeks, perhaps the clearest indication yet that American companies are prime targets in an unrelenting, global cyber conflict.
The heavier-than-usual outages are the result of a remarkable, sustained attack that began seven months ago and repeatedly knocks banks offline for hours at a time, frustrating consumers and bank security professionals alike.
“Literally, these banks are just in war rooms, sitting at controls trying to stop (the attacks),” said Avivah Litan, a bank security analyst with Gartner Group, a consulting firm. “The frightening thing is (the attackers) are not using as much resources as they have on call. The attacks could be bigger.”
So who is behind these attacks?
Some are blaming Chinese hackers, others believe that Iran is behind the attacks, and yet others are convinced that it is the work of Islamic terrorists.
It is kind of frightening that they cannot positively identify who is behind these attacks. Whoever it is, they sure do seem to have a tremendous amount of resources and they are very sophisticated.
And in the future, it may not be hackers on the other side of the globe that are attacking our banks. In fact, if someone wanted to “recapitalize the banks”, all they would have to do is wipe out all of our bank account records (including all backup records). Suddenly trillions of dollars of “unsecured liabilities” (that is what our bank accounts are) would be wiped out and the banks would suddenly be solvent again. Anyone that could not produce evidence that they actually had money in the banks would be in a lot of trouble. It would be the largest single wealth transfer in the history of the world, and it would throw the U.S. economy into utter chaos. This is a scenario that I am exploring in my new novel which will be coming out later this month.
And of course another way that your bank account could be wiped out in a single moment is if the government decides to “legally” steal it. We just witnessed this happen in Cyprus. In February, the Central Bank of Cyprus swore that such a thing could never possibly happen, but then one month later it did happen. The politicians will lie to your face until the very day comes when they steal your money.
Sadly, a very similar thing could easily happen in the United States someday. As I wrote about yesterday, the big banks are making incredibly reckless bets with our money. When those bets go bad, our money could very well be used to cover those bets.
One way this could be accomplished is by using a practice known as “rehypothecation”. It sounds complicated, but it really isn’t. Basically, the banks use money that clients have entrusted to them to cover their own gambling debts. This is how rehypothecaton is defined by Investopedia…
“The practice by banks and brokers of using, for their own purposes, assets that have been posted as collateral by their clients.”
An excellent article by Jeff Nielson detailed how this could result in the big banks grabbing our money when their trillions of dollars of reckless bets go bad…
1) Our banking regulators knowingly allow financial institutions to engage in recklessly misleading (if not outright fraudulent) contracts with their clients, through the use of complex “small print” in their account contracts with clients.
2) The three largest U.S. “banks” by deposit (JP Morgan, Bank of America, Citigroup) have made bets in their own rigged casino, which total well in excess of $100 trillion, an amount which completely dwarfs their total, combined deposits (and assets).
3) A large portion of those bets occur in the $60+ trillion credit default swap market. Pay-outs in these markets can (and do) exceed 300 times the amount of the original bet. It is bets in this market which “blew up” AIG, requiring more than $150 billion in immediate government aid.
4) Following the Crash of ’08; these same banks mooched a package of hand-outs, tax-breaks and “guarantees” (i.e. future hand-outs) from the Bush regime in excess of $15 trillion, the last time their gambling debts went bad on them – and all of these banks have been allowed to dramatically increase the total amount of their gambling since then.
5) It would take only a minor change in the gambling contracts in which these bankers engage to allow their creditors to seize funds out of ordinary bank accounts.
6) The existing language for the bank accounts of these U.S. banks is possibly already so vague (and prejudicial to clients) that it would allow these banks to reinterpret the terms of these bank accounts – and allow rehypothecation to be used to rob the holders of ordinary bank accounts, people who themselves make no “bets” in markets whatsoever. Alternately, customers could be blitzed with an offer for “new and improved” bank accounts, where terms allowing rehypothecation are slipped into the contract, with the banks knowing that the “regulators” will do nothing to warn account-holders of the gigantic risk they are taking.
But we are all covered by deposit insurance, right?
That is what the people of Cyprus thought too.
As we just saw in Cyprus, when there is a “banking crisis” sometimes government steps in and suddenly changes all of the rules overnight even though the vast majority of the population is against it.
Hopefully you can see that no bank account will ever truly be “safe” ever again.
Your money may be safe today, and your money may be there next week, but someday it could disappear in a single moment.
And the general public is definitely starting to lose faith in the banking system. Google searches for the term “bank run” have been absolutely spiking recently. Just check out this chart which shows that searches for “bank run” are now the highest that they have ever been.
So what should we all do to protect ourselves?
As I mentioned earlier, it is important to not have all of your money in one bank, and from now on you will want to permanently keep paper copies of all of your bank account statements.
Someday you may need those statements in order to prove that you actually had money in the bank.
Our world is becoming increasingly unstable, and at some point financial disaster is going to strike.
By taking prudent precautions now, hopefully you will be able to minimize the damage to your family.
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Now savings could be raided across Eurozone: Finance chief warns more EU taxpayers could be targeted as Cyprus rescue set to become first of many
Jeroen Dijsselbloem spooked global markets with his comments
He said that owners and investors must be held responsible for failings
EU finance chiefs in last-minute agreement after 10 hours of negotiations
IMF chief: ‘It will form a lasting, durable and fully financed solution’
Savers with more than £85,000 will lose up to 40 per cent of their money
Uninsured funds to be frozen and used to pay off debts in bank restructure
Cyprus will not to need to vote on deal because bank law already in place
But Germany may have to hold vote before agreement can take effect
More than 60,000 British expats live on the island, so many face losses
By JAMES CHAPMAN
PUBLISHED: 18:26 GMT, 25 March 2013 | UPDATED: 22:41 GMT, 25 March 2013
Savers in the eurozone could see their bank accounts raided in the struggle to shore up the single currency, a senior EU official warned last night.
The Cyprus rescue package – under which bank customers will have a chunk of their cash seized to bail out troubled lenders – could become a template for dealing with other creaking banking systems, Jeroen Dijsselbloem suggested.
The remarks from the head of the eurozone’s finance ministers contradicted days of assurances that the Cyprus bank deposit raid was a ‘one off’.
Statistics: Posted by yoda — Mon Mar 25, 2013 9:31 pm
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This could NEVER happen where you live… right?
by SIMON BLACK on MARCH 18, 2013
Reporting from Sovereign Valley Farm, Chile
As you no doubt have heard by now, the government of Cyprus announced Saturday morning (when the banks were closed) that they would impose a ‘levy’ on bank deposits.
Originally they announced levies of 9.9% for accounts above 100,000 euros, and 6.7% for accounts below 100,000 euros.
In the face of such a massive backlash, they’re now talking about increasing the levy on larger deposits to 12.5%, and reducing the levy on smaller deposits to 3%.
A final vote on the measure won’t come until later this week. But they have imposed a mandatory ‘bank holiday’ this week to prevent people from withdrawing their savings.
And, according to the draft legislation, anyone who doesn’t hand over the money will be thrown in jail.
Now if this doesn’t prove the point of what we’ve been talking about for so long, I don’t know what will.
Cyprus is totally broke. And as we have discussed, bankrupt, insolvent governments have a very, very limited playbook that almost unilaterally involves stealing from their own citizens.
Bankrupt governments can, and do, steal from people. Pensions funds. Private property. And yes, even bank accounts.
This has happened so many times before throughout history; just over a decade ago in Argentina, for example, the government was in the middle of a debt and currency crisis. They shuttered bank accounts and completely vanquished the savings of their citizens.
Here’s my advice, plain and simple: do not hold the preponderance of your assets in insolvent, bankrupt nations. This includes the United States, Japan, and most of Europe.
Rather, move at least a portion of your assets to stable, independent countries. These are the same places that we routinely discuss in this column– Hong Kong, Singapore, Chile, Norway.
An Argentine friend of mine is staying down here at the farm with me, and this morning over breakfast I informed him this morning about what happened in Cyprus.
“Duh,” he responded. “What did they think would happen…?”
It just goes to show, there are two types of people– (1) Those who know that these things happen, and (2) those who refuse to believe that these things can happen.
One group will be able to protect what they have. The other will become victims.
Which one are you?
Statistics: Posted by yoda — Mon Mar 18, 2013 10:31 am
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