In 2013, the banks of Cyprus confiscated the deposits of many of their clients. There was no warning, and there was little in the way of explanation, except to say that it was “necessary,” as the banks had been mismanaged to the point that, unless the deposits were confiscated, the banks would fail.
Governments and banks the world over nodded in agreement. This was clearly the right thing to do.
But, hang on a moment. The depositors had entrusted the banks with the safeguarding of their wealth. This was a case of theft. The bankers had, in effect, robbed the banks.
At that time, I wrote on the subject, stating that, by endorsing the theft as “necessary,” the banks and governments of the world had given the act their seal of approval.
Well, of course they would. They’re all in the confiscation business, jointly and severally. Their approval is much the same as a sheep and two wolves voting on what will be had for dinner. With the depositor in the role of the sheep, the outcome of the vote is pre-ordained.
And yet, partly because the “respectable” banks and governments publicly agreed with the theft and partly because Cyprus is just a tiny, inconsequential island, the people of the larger world accepted the concept that, when a bank gets itself in trouble, it should have the authority to rob its depositors in order to create a bail-in.
The precedent has been set. And, for this reason, we can, in future, expect banks and governments to further pillage those who are foolish enough to store their wealth in banks.
As I’ve mentioned in previous essays, the EU now has a bail-in law that allows any bank within the EU to confiscate deposits if it unilaterally decides that it’s in an “emergency” situation. This law was passed in 2014. Canada had already passed its bail-in law in 2013, and the US pre-empted the trend by passing its bail-in law in 2010—three years prior to the Cyprus theft. Cyprus was therefore the trial balloon to see if the banks and governments could pull off such a theft without causing rebellion. They were imminently successful and therefore opened the door for further confiscation.
But what form will that take? As I suggested at the time, we should expect that the most obvious next step would be the confiscation of the contents of safety deposit boxes located in banks, and, indeed, there have been EU countries that have made inroads into this area.
And, in the US in April 2015, Chase Bank advised clients who rent safe deposit boxes that the storage of “cash or coins other than those found to have a collectible value” was no longer acceptable.
But now, Greece has led the way with the next trial balloon—mass confiscation of safe deposit boxes, plus confiscation of securities and wealth held in private homes.
The new confiscation legislation has been termed a means of addressing tax evasion, which suggests that the only persons who will lose their wealth will be those who have defrauded the tax system. However, it will be up to the Greek government to unilaterally decide whether assets contained in a safe deposit box have been adequately explained as to their origins and funding.
So, what might they have planned? Will it be the occasional confiscation as situations arise in which a taxpayer is not forthcoming with requested information? Apparently not. The Greek parliament is set to pass regulations “permitting the mass confiscation of safe deposit box contents and financial assets such as securities,” Zero Hedge reports.
The financial blog continues:
Once the necessary regulations are in place for the operation of an automatic system to collect debts, the tax authorities will be able to issue online confiscation notices and immediately get their hands on the contents of safe deposit boxes, confiscating cash, precious stones, jewelry and so on. They will also be able to confiscate shares and other securities.
The Independent Authority for Public Revenue expects to collect €690 million of “new debts” from “major debtors.” If this projected number sounds more to the reader like a government revenue target than an assessment of unknown levels of wealth currently in safe deposit boxes, he can be forgiven for being suspicious. In fact, the mere existence of such a large projected number is more suggestive of a looting expedition.
But, of course, it would be easy to view this development as being of little importance, as it’s taking place in Greece, a country that’s known to be in economic difficulty, due to its unpayable debt. Not to worry, then. Except…
Europe in general is over its head in debt and EU membership assures that all countries in the EU share that debt. Across the pond, in Canada and the US, the debt level is even greater. We can therefore anticipate that Greece will prove to be the trial balloon for each of the latter jurisdictions.
And of one thing we can be sure: There will be no announcements that such confiscatory laws will be passed, since the other confiscatory laws were also unannounced.
Since no notice is required that a confiscation is going to happen, you’re unlikely to know of your loss until you hear that the safe deposit boxes of other individuals have been emptied. At that point, yours may also have been emptied.
In periods of economic crisis, banks and governments have a habit of resorting to desperate measures to save their skins. Such a period is presently unfolding. The warning flag is out—soon, a “safe” deposit box will be anything but safe.
There are two ways to say goodbye to your safe deposit box. The first is to wait until it has been emptied by the bank. The second is to clear it out yourself. I would wholeheartedly recommend that you choose the latter.
Editor’s Note: Chances are you keep most of your money in one country—and at one bank. If that’s the case, you could lose everything during a surprise bail in. (They’re always a surprise.)
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