Friday, July 3, 2015

Could Greece become Cyprus all over again???

It looks like the deliberate theft of depositors' funds from banks, euphemistically labeled a 'haircut' or a 'bail-in' or a 'special tax', that happened on Cyprus some years ago, may be about to happen in Greece.  The Financial Times reports:

Greek banks are preparing contingency plans for a possible “bail-in” of depositors amid fears the country is heading for financial collapse, bankers and businesspeople with knowledge of the measures said on Friday.

The plans, which call for a “haircut” of at least 30 per cent on deposits above €8,000, sketch out an increasingly likely scenario for at least one bank, the sources said.

A Greek bail-in could resemble the rescue plan agreed by Cyprus in 2013, when customers’ funds were seized to shore up the banks, with a haircut imposed on uninsured deposits over €100,000.

It would be implemented as part of a recapitalisation of Greek banks that would be agreed with the country’s creditors — the European Commission, International Monetary Fund and European Central Bank.

. . .

Greek deposits are guaranteed up to €100,000, in line with EU banking directives, but the country’s deposit insurance fund amounts to only €3bn, which would not be enough to cover demand in case of a bank collapse.

With few deposits over €100,000 left in the banks after six months of capital flight, “it makes sense for the banks to consider imposing a haircut on small depositors as part of a recapitalisation. . . It could even be flagged as a one-off tax,” said one analyst.

There's more at the link.

I warned about this when it happened in Cyprus.  All around the world, laws have been amended or implemented to permit it.  Think it can't happen here?  It can and will happen in a skinny minute if the powers that be reckon it's the least painful way to pay off our otherwise unpayable debt burden, or restore order to a disordered financial system.

For the foreseeable future I'm going to be keeping a proportion of my savings in cash, in more than one safe place, rather than trust all my money to a bank.  I can only recommend that you do likewise.  (If you have sufficient savings [I don't, sadly], it might also be a good idea to use part of your reserves to buy gold coins and other easily negotiable forms of precious metals, as a store of value rather than an investment.)  I'm also going to make sure we have enough supplies to get by for three months if necessary.  Other than that . . . trust in God and keep your powder dry.  You may need it.



J Van Stry said...

Yeah, I've been moving my money out of the bank, and stocking up on foodstuffs myself. Part of it is Greece, and part of it is what I saw happen on Long Island a couple of years ago after the storms when for some strange reason, the government wasn't allowing gas, oil, or food, to flow onto the island for a week.
My father bought a gas generator for the house.

In the 60 years my parents lived there, never had power been out for more than a day. Then suddenly it was out for almost two weeks!
That says something right there.

clark myers said...

On the general subject of supplies to get by for three months - Mr Heinlein would have approved for a free lance writer - you just might have some new and old friends who are on the rolls of the Church of Jesus Christ of Latter Day Saints - smiley. Those friends will have useful specific suggestions.

One specific suggestion is to look at US (watch for bad HTML at the break Eastern space US )and other related topics on the site. No need to do it all by yourself and no religious test. A friend of Jerry Pournelle already has the definitive free lance book on the subject of prepping in work as a follow up to such suggestive works as Lucifer's Hammer and others.

Anonymous said...

If you have an IRA account and are truly worried about a savings account 'haircut', you can set up a self-directed IRA and buy gold and silver bullion and coins and keep them in your possession.

I am just starting to explore this concept, so I don't have any recommended companies to suggest. I do know it's fairly complicated and involved, and not something to do on your own.

trailbee said...

A cash supply and gas generator sound good. We already began on the food when the grids were attacked last year. Happy Fifth. Yes, really. :)

Bob the Ape said...

If you already have an IRA, it is relatively simple, with some research, to roll it over into a precious metals IRA. There are financial institutions which will manage a precious metals IRA for you.

Gold, at over $1000/ounce, is a bit pricey to buy unless as part of an IRA rollover; but silver is less than $20/ounce and there are precious metals dealers from whom you can buy silver bullion in one-ounce bars or rounds (or two, or five; or fractions of an ounce), as few as 10 at a time.