For all those savers and investors young enough not to remember the 1971 American film classic, “Dirty Harry,” there is a scene in the beginning of the film in which the protagonist, San Francisco Detective Harry Callahan (played by Clint Eastwood) interrupts an afternoon bank robbery by shooting the three perpetrators as they try to escape.
Harry kills two of the robbers but one wounded bandit lying on the street contemplates picking up his fallen shot gun to shoot Harry. At this juncture, Clint Eastwood levels his .44 magnum hand gun at the wounded robber who is trying to recall if Callahan has fired all the rounds in his revolver. Callahan says, “I know what you’re thinkin’. Did he fire six shots or only five?… You’ve got to ask yourself one question…Do you feel lucky?… Well, do you, punk?”
In a complete role reversal of the good guys and the bad guys, the world banking elite has been, for some time now, pointing a great big dangerous gun at the heads of all savers and investors on the planet. The bullets in that gun are each a little different but still extremely deadly. Here is what investors worldwide are facing:
- Between $600 trillion and $1.25 quadrillion of extraordinarily risky derivative bets made by major world banks that have been placed on extremely shaky and suspect sovereign national debt (think Greece, Portugal, Spain, etc., etc.). These bets in the form of loans and/or credit default swaps have placed the participating banks’ capital at extreme risk. How extreme? Take a look at these statistics. The five largest US banks (JPMorgan Chase, Citibank, Bank of America, Goldman Sachs, and HSBC) are estimated to have a total derivative exposure in excess of $220 trillion. Weigh that against the combined assets of those same top five banks, $4.8 trillion, and you get a staggering 46 to 1 leverage! Want to fade that risk? Looking at it another way, America’s five “too big to fail” banks are carrying on their books, a notional trading value that is more than three times the gross domestic product of planet earth! Quoting Dirty Harry, “Do you feel lucky” enough to entrust your life savings to this type of insane risk taking? Just last year, JPMorgan’s commodity desk reported losing almost $6 billion in one week and this could well be just a tip of the iceberg.
- Massive inflationary money printing by the world’s central banks. The world’s central banks continue to accelerate unabated both their money printing and zero interest rates policy (ZIRP). Everybody by now should be well aware of the Federal Reserve’s Quantitative Easing 3 and 4, by which the Fed is extending its balance sheet to acquire toxic real estate and business loans along with federal debt at a $90 billion per month pace. Not to be outdone in this currency race to the bottom, the Bank of Japan announced today its intention to unleash the world’s most intensified monetary stimulus to date. According to Reuters, the B of J is “promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent the yen reeling and bond yields to record lows…The policy was viewed as a radical gamble to boost growth and lift inflation expectations and is unmatched in scope even by the US Federal Reserve’s quantitative easing program.” Monetary inflation coupled with low interest rates are robbing savers from both ends. Monetary inflation results in continual price increases that relentlessly punish consumers, whereas miniscule rates of return on bonds and savings accounts brutalize savers, especially retirees. Their yields on investment go down while their cost of living skyrockets.
- Seizure and subordination of both public and private pension funds. (See our last blog, IT’S HEAD FOR “THE MATTRESSES” TIME FOR SAVERS WORLDWIDE.) National governments, buried under spiraling debts and continual revenue shortfalls, have reverted to borrowing from or outright nationalizing the public and private pension funds of their citizens. Plans for this continue on all continents.
- Last but not least, the outright confiscation of the savings accounts of trusting depositors to help pay off sovereign loans to private banks. If you think the seizure of between $10 to $20 billion from Cypriot bank accounts by that government was just a one time event on a small island nation, you had better think again. The Cypriot government, broke and unable to make payments on sovereign loans to large European banks, caved in to the pressure of the European Central Bank and the IMF. Cypriot savers were literally robbed blind of their life savings in one night! However, Cyprus is a proverbial canary in the coal mine – it is but a harbinger of what surely is to come in many, many other debt ridden governments and banking systems throughout Europe, the Americas, and elsewhere.
Like a little more proof real close to home? The Economic Collapse blog is reporting that the new Canadian budget is proposing to implement a “bail-in” scheme to help protect “systemically important banks in Canada.” What is important here is that this proposal was included in Canada’s “Economic Action Plan 2013,” which means that this “bail-in” was likely being planned long before the crisis in Cyprus erupted. According to this “Economic Action Plan 2013,” the Canadian government is proposing a “robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one (i.e. large Canadian bank) becomes nonviable.”
In other words, “if the banks take extreme risk with their money and lose, ‘certain bank liabilities’ (i.e. deposits) will be rapidly converted into ‘regulatory capital’ and the banks will be saved.” To put it another way, “The banks will just be allowed to grab money out of your bank accounts to recapitalize themselves.” (Source The Confiscation of Savings in Canada? Cyprus-Style “Bail-Ins” Proposed by Ottawa Government)
Cyprus, and now Canada? Any more surprises out there? The answer is a resounding yes. Last week, Reuters reported that a new template for dealing with bank failure is being readied for full scale EU law, whereby in the case of a needed bail out for a failing bank, savings accounts of over 100,000 euros will be directly confiscated and “are not protected and shall be treated as part of the capital that can be bailed in.” This is according to European Parliament member Gunnar Hokmark.
So there you have it, the deadly arsenal aimed at trusting savers worldwide: outrageous bank-risk exposure, central bank monetary inflation, pension fund confiscation, and NOW, outright bank deposit confiscation. That’s a deadly combination that should make even Dirty Harry nervous.
From our perspective, no traditional savings institution or vehicle is safe from the rapacious insanity and greed of the world banking cartel. For real safety, your best bet is physical ownership of gold and silver.