Tag Archives: Banking Collapse

The Global Collapse . . . A Clarification

In a piece last week http://www.globalmagnacarta.org/wp-admin/post.php?post=622&action=edit

I am concerned I may have unintentionally created an ambiguity about our supposed protection from another banking collapse and so I offer further observations.

To remind you these are the words I am referring to:

“When the bad debts, like the Greek bubble finally bursts (because the value of their debt is way in excess of their worth as a country), the domino effect upon other similar situations and countries will crash the banks. Hence the unprecedented brutal pressure on Greece by Brussels and the Troika to keep playing, because they know what is at risk! When it happens, however, they will simply close their doors and lock in all of the cash they are holding.

The wages you have earned, or the money you have saved, or the pension you have contributed to will become an ‘asset’ of the bank into which they have been paid. As an ‘asset’ the bank can then use it to cover its indebtedness. Not only will they lock the doors and switch off the ATM’s but hold a piece of paper at the window, from our politicians, telling us that what they are doing is quite legal and to go away and annoy someone else.

A directive has come out from the European Commission that all EU countries must comply with so-called bank and resolution recovery directives (BRRD), mandating that all the money banks are holding become part of their capital structure and no longer money belonging to savers!

“But that’s theft” I hear you say. NO . . . it’s legalised theft, like the taxpayer bail-out, because it comes with the full collusion of our politicians!

To add insult to injury in the UK, the Financial Services Compensation Scheme is reducing the amount of compensation from £85,000 to £75,000 when a bank goes bust, instead of increasing it. (Does Osborne know something, do you think?!)

Between them the banks and politicians screwed us as ‘taxpayers’ last time and will screw us again this time as ‘account holders and savers’ with a bail-in instead of a bail-out!”

As 2008 played out it is important to remember that only one bank actually went bust . . . Lehman Bros! The rest were insolvent and should have gone bust but for our taxpayer money, which bailed them out because they were ‘too big to fail’.

Given no bank went bust we had no call upon any Government compensation scheme . . . and there isn’t one that covers the theft of our ‘tax’ money. This time around I believe a similar type of theft will occur and it will be even more financially intolerable.

Once the banks close their doors and entrap our money they will become solvent again (with a bit of financial jiggery pokery). Although they have stolen our savings we will have no claim upon the Government compensation scheme because they haven’t gone bust!

With a ‘bail in’, our savings and current account moneys cannot be returned to us because if this happened the banks would go bust again! And as they have not gone bust we cannot claim under the compensation scheme . . . What an odious but perfect “Catch 22”.

The global financial system is now so corrupt that if it was not so seriously threatening and contemptuous of our wellbeing it would be a joke. Banks declare that at the very core of their business model is trust and without it they could not look after the money en-“trusted” to them.

If this is the case, why do we need a government backed ‘compensation’ scheme? And here is the ultimate joke. This compensation scheme uses our money, which we pay in taxes, to compensate us when the money we deposit in banks is stolen by those banks! The precedent has already been created, because 2008 saw that same tax money stolen by the very banks we are being protected from!!!

(I suppose the banks would argue that in stealing our taxes they are saving us from having to make a claim for compensation . . . but at this point my brain is beginning to hurt!)

Not only that, there is no authority within this shambolic bureaucracy that we can turn to for any justice, with financial crimes that are now regularly being perpetrated upon us. Not even the late and great Agatha Christie could have come up with a plot as devious or corrupt as this. I mean, am I missing something or has it all become quite farcical now?

Well, that’s it. I feel I have cleared up any ambiguity I may have been guilty of and will wait for the coming implosion which, I think, will see the end of any remaining credibility our current financial system is tenaciously hanging on to.

Until the next time.

 

Thinking from his Book: Global Magna Carta. Returning Power to the 99% . . . If They Want It! By J T Coombes

Money is Now Getting Scary!

 

Public BankingWhen Richard Nixon stopped backing the dollar with gold in 1971 and replaced it with the promises of governments as to its worth, the global financial system entered the world of fairy tale. Now 95% of global money is provided by private banks, who produce it out of thin air on a computer screen and lend it to us as credit, not cash. We are being charged for something that costs them very little to produce, whilst also placing us under a debt ‘obligation’.

Since the 2008 financial disaster banks have been printing more and more money, creating more and more debt and the only people benefitting are large corporations and the super-rich. They have been able to borrow this flood of money at virtually zero interest and use it to buy back their own shares, artificially inflating share prices to an all-time high and paying vast bonuses and salaries to the few. All of this at a time when profits are going down and unemployment is going up!

In recent years we have had the dot-com bubble, followed by the sub-prime mortgage bubble. What we are now facing “The Mother of All Credit Bubbles” that will dwarf both the dot-com and sub-prime bubbles combined and multiplied several times over!

Because money is being printed without any means of control and issued as debt at incredibly low interest rates, it is difficult for banks to make any money with traditional lending. They are therefore continuing their pre 2008 practices of high risk gambling with derivatives and subprime loans that demand higher interest rates for higher risk.

It won’t be mortgages that burst the bubble this time but subprime student loans, subprime car loans, subprime government debt and subprime corporate debt. In America student loans not only account for nearly half of government ‘assets’ but those ‘assets’ are now being looked at by the rating agencies in the same manner as sub-prime mortgages in 2007 and we all know the outcome of the downgrading of that debt!

Nearly one in three loans are delinquent by 30 days or more in the US and we are talking here about an outstanding debt of $1.3 trillion. In the UK it is now estimated that over 70% of students will not repay their loans after 30 years, when they are automatically written off.

Car loans are becoming seriously worrying, as lenders adopt the subprime mortgage strategy and drop their lending standards to attract more custom to the higher interest bearing loans that are now up there with student debt. Fitch ratings agency is expressing concern that defaults are beginning to grow at a more rapid pace than has been seen in a long time.

All of these debts have been created out of thin air and printed into being by computers as a result of this credit based money system. Cash doesn’t figure anywhere. UK national debt has nearly tripled since 2008 at £1.36 trillion (projected) and in the US it has nearly doubled at around $18 trillion.

Credit depends on trust. I lend you £20 in anticipation that you will pay it back. With such eye watering amounts now lent out as subprime debt, where the anticipation of getting paid back is very uncertain, this lack of trust will again implode the financial system as it did in 2008.

Cash will become the only trustworthy ‘money’ because you can hold and store it. Nobody will want to deal in credit and our plastic will be quite useless. (As the reality of the last crisis became apparent US depositors took out $550 billion in cash in just 2 hours and would have bankrupted the country in 24.)

Banks will shut down ATM’s and bolt doors to lock in creditor’s money to hold on to reserves. The Governor of the Bank of England said as much when he assured taxpayers their money would be safe, “as banks would look to their creditors if another failure occurs”. THEY ARE THE SAME PEOPLE! Taxpayers are also bank creditors with their accounts and savings. The rabbit is being skinned in more than one way!

Money is becoming really scary and maybe it will take a disaster such as this to begin a revolution that demands a debt free sustainable banking system. Don’t underestimate how painful it will be, as cash becomes the only means to buy food, petrol and basic essentials.  It will require visionary leadership to get through it.

Current indicators suggest this financial tsunami will hit the next government. No party wants to talk about it because it doesn’t get votes, through lack of public awareness, although the effect upon that public will be devastating. Will they be able to deal with it? . . . We shall see.

 

Until the next time

 

Thinking from his Book: Global Magna Carta. Returning Power to the 99% . . . If They Want It! By J T Coombes