We have seen previously that there are many similarities between Australia’s economy, and that of Canada. In particular, the fact that, while both appeared to sail through the first wave of the GFC unscathed, the supposed economic strength of both is based on “houses and holes” – a housing bubble, and mining boom – financed by an over-leveraged banking sector.
Given these similarities, this news should be of real concern.
Cyprus-Style Bank Account Confiscation Is In The New 2013 Canadian Government Budget
The politicians of the western world are coming after your bank accounts. In fact, Cyprus-style bank account confiscation is actually in the new Canadian government budget. When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013” which the Harper government has already submitted to the House of Commons. This new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks” in Canada. “Economic Action Plan 2013” was submitted on March 21st, which means that this “bail-in regime” was likely being planned long before the crisis in Cyprus ever erupted. So exactly what in the world is going on here? In addition, as you will see below, it is being reported that the European Parliament will soon be voting on a law which would require that large banks be “bailed in” when they fail. In other words, that new law would make Cyprus-style bank account confiscation the law of the land for the entire EU. I can’t even begin to describe how serious all of this is. From now on, when major banks fail they are going to bail them out by grabbing the money that is in your bank accounts…
The following comes from pages 144 and 145 of “Economic Action Plan 2013” which you can find right here. Apparently the goal is to find a way to rescue “systemically important banks” without the use of taxpayer funds…
Canada’s large banks are a source of strength for the Canadian economy. Our large banks have become increasingly successful in international markets, creating jobs at home.
The Government also recognizes the need to manage the risks associated with systemically important banks — those banks whose distress or failure could cause a disruption to the financial system and, in turn, negative impacts on the economy. This requires strong prudential oversight and a robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.
So if taxpayer funds will not be used to bail out the banks, how will it be done? Well, the Canadian government is actually proposing that a “bail-in” regime be implemented…
The Government proposes to implement a “bail-in” regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.
So if the banks take extreme risks with their money and lose, “certain bank liabilities” (i.e. deposits) will rapidly be converted into “regulatory capital” and the banks will be saved.
In other words, the banks will just be allowed to grab money directly out of your bank accounts to recapitalize themselves.
That may sound completely and utterly insane to us, but this is how things will now be done all over the western world.
Your humble blogger always finds it interesting to observe closely the language used by politicians throughout the Western world.
They all use the same phraseology, and cookie-cutter slogans –
“Canada’s large banks are a source of strength for the Canadian economy”
“strong prudential oversight”
“Economic Action Plan”
“Supporting Jobs And Growth”
Here’s one I really love, and expect to hear from our politicians very soon –
“This will reduce risks for taxpayers”
Er … hello?!
Those people with bank deposits – savings – that you plan on stealing to “bail-in” the banks … ARE the taxpayers.
Seems we have added a new variant to the slogans from the Ministry Of Truth in Orwell’s 1984:
SAVERS ARE NOT TAXPAYERS
One thing you can be sure of.
Some of us will be studying the upcoming May 2013 Budget for Australia rather closely.