Tag Archives: mark carney

BoE Says G20 Nations To Enact Bank Deposits Theft Within 12 Months

1 Nov
"The UK at the heart of a renewed globalisation" - Bank of England, 24 October 2013, speech by Governor Mark Carney

“The UK at the heart of a renewed globalisation” – Bank of England, 24 October 2013, speech by Governor Mark Carney

In a speech given in London on 24th October, former Goldman Sachs alumnus, now Governor of the Bank of England and chairman of the internationalist Financial Stability Board, Mark Carney, announced the target date for completion of the new global bank “bail-in” regime (‘The UK at the heart of a renewed globalisation,’ page 5, pdf here):

Systemic resilience depends on being able to resolve failing banks in a way that does not threaten the entire system…

To avoid these risks, we need to make the resolution of global banks a real option…

At the St Petersburg summit in September, G20 leaders mandated the FSB to develop these proposals. The Bank of England is now working intensively with other authorities and the financial industry. Our aim is to complete the job by the next G20 Summit in Brisbane.

The G20 summit in Brisbane is on 15-16 November, 2014.

The terms “resolution”, “resolve”, and “resolving” will be quite familiar to regular readers.

Here at barnabyisright.com, for many months now we have (exclusively?) analysed, and publicised, the secretive international banker plan to “resolve” (ie, “bail-in”, a la Cyprus) insolvent banks across the globe — including Australia. Unsurprisingly, no one in the mainstream media has yet touched the subject.

For those interested to learn more:

G20 Governments ALL Agreed To Cyprus-Style Theft Of Bank Deposits … In 2010

Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget

Australian Banks “Welcome” Cyprus-Style Bail-In Plan

IMF Tells Australian Lawmakers To “Prevent Premature Disclosure Of Sensitive Information” On Bank Bail-Ins

Australian Banks Demand Protection From Derivatives Losses Under Bail-In Plan

Crisis Management: APRA To Be Given Power To “Direct” Your Super

New Zealand Banks “Pre-positioning For Cyprus-Style Bail-In

Canada Plans Cyprus-Style “Bail-In” Using Depositors Money

Timeline For “Bail-In” Of G20 Banking System

IMF Calls For 10% “Tax” On All EU Households With “Positive Wealth”

UPDATE:

My fail. Comprehension fail. I read it wrong.

It appears that the “job” freshly mandated by the G20, the one Carney aims to see completed by the G20 Summit in November 2014, is not the enacting of legislation enabling bank bail-ins. Rather, it is for the FSB “to assess and develop proposals by end-2014 on the adequacy of global systemically important institutions’ loss absorbing capacity when they fail”:

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Nonetheless, the FSB’s Narrative Progress Report on Financial Reforms to the St Petersburg G20 Summit makes clear (page 4-5) that “legislative reforms to implement the Key Attributes of Effective Resolution Regimes [TBI: which includes the plan for depositor bail-ins] are necessary… further actions are needed to give authorities additional resolution powers and … We therefore urge that all G20 countries change legislation as needed to meet the Key Attributes by end-2015” …

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And the St Petersburg G20 Summit Leaders Declaration (page 17) makes clear that our political leaders continue to write completely blank cheques to the private banking industry — using bank depositors’ accounts — by happily going along with every single thing they are told to do by the ex-Goldman Sachs alumni-chaired FSB:

“We renew our commitment to make any necessary reforms to implement the FSB’s Key Attributes of Effective Resolution Regimes for all parts of the financial sector that could cause systemic problems.”

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We will be watching the new laws submitted to Parliament by the Abbott government very closely in coming months. Especially given the banksters’ man, Joe Hockey, is Treasurer, and couldn’t wait to get over to Wall Street to receive his instructions immediately after the election.

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Timeline For “Bail-In” Of G20 Banking System

14 Jul

This-Is-What-It-Feels-Like-To-Have-Your-Life-Savings-Confiscated-By-The-Global-Elite

How did it happen?

How did we come to a place where an unknown, unelected body of bankers and bureaucrats — chaired since its inception by former Goldman Sachs men — has duped the G20 heads of government into endorsing a scheme to “bail-in” the insolvent private sector banking system by stealing the savings of taxpayers?

Financial Stability Board: Key Attributes of Effective Resolution Regimes for Financial Institutions, October 2011 (click to enlarge)

Financial Stability Board: Key Attributes of Effective Resolution Regimes for Financial Institutions, October 2011 (click to enlarge)

How did we come to a place where the European Union, the UK, the USA, Canada, and now Australia and New Zealand, have all begun implementing a new regime for “addressing the problem” of “moral hazard” associated with government bail outs for “too-big-to-fail” financial firms — supposedly “without exposing the taxpayer to the risk of loss” — by stealing the savings of taxpayers?

FSB – G-SIFI, Nov 4, 2011 (click to enlarge)

FSB – G-SIFI, Nov 4, 2011 (click to enlarge)

Here is the timeline to date (click the links to verify original sources):

FEBRUARY, 1999 – Following recommendations by then President of the Deutsche Bundesbank (German central bank) and later the Vice-Chairman (2003-present) of the Board of Directors of the Bank for International Settlements (BIS), Hans Tietmeyer, G7 Finance Ministers and Central Bank Governors endorse the creation of a new body, the Financial Stability Forum (FSF). It is funded by the BIS, and based in Basel, Switzerland.

Former Goldman Sachs vice chairman and managing director, and now President of the European Central Bank (ECB), Mario Draghi, is appointed the first chairman of the FSF. Its stated purpose is to promote stability in the international financial system“:

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30 MAY, 2006Chairman and CEO of Goldman Sachs from 1999-2006, Henry “Hank” Paulson, appointed Secretary of the Treasury by George W. Bush. During his tenure at Goldman, it became a major player in the creation and sale of collateralised debt obligations (CDO’s), including subprime mortgage-backed securities ($135 billion from 2001-2007). A tax loophole introduced under former President George HW Bush enables Paulson to meet the conflict of interest preconditions for assuming a government position, by “divesting” most of his $700 million fortune in Goldman Sachs’ stock, tax-free.

During Paulson’s first 15 months as Secretary of the Treasury, Goldman Sachs sells $30 billion in toxic mortgage products to pension funds, foreign banks and other investors (including a 59% increase in 2006), and makes billions betting against its own products. In 2006 and 2007, as the housing bubble bursts, Goldman distributes $22.3 billion in year-end profit-sharing rewards to its 31,000 employees and $112 million in bonuses to Paulson’s successor, Lloyd Blankfein.

15 SEPTEMBER, 2008Lehman Brothers files for bankruptcy; credit crunch; stockmarket panic; Global Financial Crisis:

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21 SEPTEMBER, 2008 – On a Sunday, Goldman Sachs is authorised to change its investment bank status, and becomes a traditional bank holding company, thus making it eligible for bailout funds.

26 SEPTEMBER, 2008 – French President Nicholas Sarkozy says “we must rethink the financial system from scratch”.

29 SEPTEMBER, 2008 – USA’s House of Representatives rejects the $700 billion Wall Street bank bailout bill promoted by Secretary of the Treasury, Henry Paulson. Dow Jones Industrial Average (DJIA) index plummets 777 points:

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1 OCTOBER, 2008 – US House of Representatives agrees to “bail out” Wall Street’s too-big-to-fail (TBTF) banks, passing amended Emergency Economic Stabilization Act, including the Troubled Assets Relief Program (TARP) enabling the government to purchase up to $700 billion in “toxic assets” such as mortgage-backed securities (derivatives) from private sector banks. Despite being a prime cause of the subprime meltdown, Goldman Sachs is the largest individual recipient of public funds ($12.9 billion) from the bailout of insurance giant, AIG, makes $2.9 billion from “proprietary trades” on its own AIG account, and receives a further $10 billion directly from the US Treasury as an “investment” in preferred stock:

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7 OCTOBER, 2008 – World Bank President Robert Zoellick calls for “a new multilateral network for a new global economy”, says that “We will not create a new world simply by remaking the old”.

13 OCTOBER, 2008 – British Prime Minister Gordon Brown says “We must create a new international financial architecture for the global age”, and that “We are proposing a world leaders’ meeting in which we must agree the principles and policies for restructuring the financial system across the globe”.

15 NOVEMBER, 2008 – First ever summit meeting for heads of government of the Group of Twenty (previously, a G20 summit of Finance Ministers and Central Bank Governors held since 1999). Titled the “Leaders Summit on Financial Markets and the World Economy”, the Washington Summit agrees on an “Action Plan” for financial market reform. It includes an expansion of the Financial Stability Forum to include emerging countries such as China:

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2 APRIL, 2009 – G20 London Summit Declaration on Strengthening the Financial System gives the freshly renamed Financial Stability Board (FSB) a “broadened mandate” and “enhanced capacity”:

FSB_broadenedmandate

8 NOVEMBER, 2010 – FSB report to the G20 Progress since the Washington Summit on the Implementation of the G20 Recommendations for Strengthening Financial Stability states that “Good progress has been made in defining a policy framework to address the moral hazard risks posed by systemically important financial institutions (SIFIs)”, and that “The FSB is submitting to the G20 Seoul Summit a set of recommendations and timelines for implementation of this framework”:

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Within the “recommendations”, for the first time the spectre of “bail-in” of banks is formally (though blink-and-you-miss-it briefly) mentioned —

“…higher loss absorbency could be drawn from a menu of viable alternatives and could be achieved by a combination of capital surcharges, contingent capital and bail-in debt:

FSB_Update_bail-in

11-12 NOVEMBER, 2010 – G20 Seoul Summit endorses “the policy framework, work processes and timelines proposed by the FSB to reduce the moral hazard risks posed by systemically important financial institutions (SIFIs) and address the too-big-to-fail problem”, “without… exposing the taxpayers to the risk of loss”:

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4 NOVEMBER, 2011 – Former Goldman Sachs co-head of sovereign risk and managing director of investment banking, chairman of the Bank for International Settlements’ Committee on the Global Financial System, and Governor of the central Bank of Canada, Mark Carney, is appointed the new chairman of the Financial Stability Board. He replaces fellow Goldman Sachs alumnus and current European Central Bank President, Mario Draghi.

4 NOVEMBER, 2011 – FSB states that “the development of the critical policy measures that form the parts of this framework has now been completed. Implementation of these measures will begin from 2012:

FSB_Implementation_from_2012

The FSB’s Key Attributes of Effective Resolution Regimes for Financial Institutions expressly identifies “bail-in” of banks as one of the “powers” that must be given to a single “Resolution authority” for each nation (G20) or jurisdiction (EU):

Financial Stability Board: Key Attributes of Effective Resolution Regimes for Financial Institutions, October 2011 (click to enlarge)

Financial Stability Board: Key Attributes of Effective Resolution Regimes for Financial Institutions, October 2011 (click to enlarge)

In the preamble, it is stated that one of the objectives is to make it possible for “unsecured and uninsured creditors to absorb losses”:

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Each nation or jurisdiction is required to set up a “Resolution authority”, which is to be “responsible for exercising the resolution powers over firms…”:

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The Resolution authority is to be given power to “transfer or sell assets and liabilities, legal rights and obligations, including deposit liabilities and ownership in shares, to a solvent third party,”without consent:

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Key Attribute 3.3 clearly states that any transfer of a bank’s assets or liabilities (ie, deposits) by the Resolution authority “should not require the consent of any interested party or creditor to be valid”, and, that any such action will not be deemed a “default” of the bank’s legal obligations –

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25 JUNE, 2012 – Government of Cyprus requests bailout from the EU, due to losses in its banking system associated with the Greek debt crisis.

10 DECEMBER, 2012 – A joint paper by the Federal Deposit Insurance Corporation (USA) and the Bank of England (UK) titled Resolving Globally Active, Systemically Important, Financial Institutions states that “the authorities in the United States (U.S.) and the United Kingdom (U.K.) have been working together to develop resolution strategies that could be applied to their largest financial institutions”:

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FDIC and BoE: Resolving Globally Active, Systemically Important, Financial Institutions, December 2012 (click to enlarge)

FDIC and BoE: Resolving Globally Active, Systemically Important,
Financial Institutions, December 2012 (click to enlarge)

It further identifies that “This work has taken place in connection with the implementation of the G20 Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions”:

FDIC and BoE: Resolving Globally Active, Systemically Important, Financial Institutions, December 2012 (click to enlarge)

FDIC and BoE: Resolving Globally Active, Systemically Important,
Financial Institutions, December 2012 (click to enlarge)

The paper explains that its focus is “the application of ‘top-down’ resolution strategies that involve a single resolution authority applying its powers to the top of a financial group”, and how such a strategy could be implemented “for a U.S. or a U.K. financial group in a cross-border context”:

FDIC and BoE: Resolving Globally Active, Systemically Important, Financial Institutions, December 2012 (click to enlarge)

FDIC and BoE: Resolving Globally Active, Systemically Important,
Financial Institutions, December 2012 (click to enlarge)

With regard to the USA, it explains that “the strategy has been developed in the context of the powers provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and that such a strategy would “assign losses to shareholders and unsecured creditors (meaning, bank depositors):

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With regard to the UK, it explains that “the strategy has been developed on the basis of the powers provided by the U.K. Banking Act 2009 and in anticipation of the further powers that will be provided by the European Union Recovery and Resolution Directive, and that the strategy would “involve the bail-in (write-down or conversion) of creditors at the top of the group in order to restore the whole group to solvency”:

FDIC and BoE: Resolving Globally Active, Systemically Important, Financial Institutions, December 2012 (click to enlarge)

FDIC and BoE: Resolving Globally Active, Systemically Important,
Financial Institutions, December 2012 (click to enlarge)

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The paper expressly identifies the origin of the “framework” for the bail-in strategy as being the FSB —

“It should be stressed that the application of such a strategy can be achieved only within a legislative framework that provides authorities with key resolution powers. The FSB Key Attributes have established a crucial framework for the implementation of an effective set of resolution powers and practices into national regimes”:

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14 MARCH, 2013Reserve Bank of New Zealand releases draft Open Bank Resolution policy, which includes “bail-in” for failing banks using depositors’ money.

16 MARCH, 2013 – Cypriot Government agrees to EU-imposed conditions for receiving bail out funds, terms which include “bail-in” of Cypriot banks using depositors’ savings.

Cyprus is widely seen as a template for similar actions throughout the EU and the world. Forbes magazine states that “A new strategy has been unveiled around the world, with the first test run in Cyprus. Despite early denials, the ‘bail-in’ strategy for insolvent banks has already become official policy throughout Europe and internationally as well.”

21 MARCH, 2013 – Canadian Government’s Economic Action Plan 2013 states that “The Government proposes to implement a ‘bail-in’ regime for systemically important banks”, aimed at recapitalising failing banks by “the very rapid conversion of certain bank liabilities into regulatory capital”. It further states that “This will reduce risks for taxpayers”:

Canada Budget 2013 Economic Action Plan, March 21, 2013, page 145 (click to enlarge)

Canada Budget 2013 Economic Action Plan, March 21, 2013, page 145 (click to enlarge)

14 MAY, 2013 – Australian Government Budget 2013-14 Portfolio Budget Statement for the Australian Prudential Regulation Authority identifies implementation of the FSB-directed bank bail-in regime as a key strategic objective for 2013-14 —

“consolidate the prudential framework by enhancing prudential standards where appropriate, in line with the global reform initiatives endorsed by the G20 and overseen by the Financial Stability Board:

page 134, Portfolio Budget Statements, Australian Prudential Regulation Authority, Australian Government Budget 2013-14, 14 May 2013 (click to enlarge)

page 134, Portfolio Budget Statements, Australian Prudential Regulation Authority, Australian Government Budget 2013-14, 14 May 2013 (click to enlarge)

20 MAY, 2013 – The European Parliament’s Economic and Monetary Affairs committee issues a press release stating that “The case in Cyprus showed how important it is to have clear procedures for making shareholders, bondholders and ultimately depositors foot the bill”.

Bank of England deputy governor Paul Tucker says that draft EU bank rescue laws would be a milestone towards “a global system”.

JUNE, 2013 – Reserve Bank of New Zealand releases its Open Bank Resolution (OBR) Pre-positioning Requirements Policy, stating that the OBR provides the flexibility to assign losses to creditors (meaning, bank depositors):

Reserve Bank of New Zealand, Open Bank Resolution (OBR) Pre-positioning Requirements Policy, June 2013 (click to enlarge)

Reserve Bank of New Zealand, Open Bank Resolution (OBR) Pre-positioning Requirements Policy, June 2013 (click to enlarge)

In Definitions, the OBR states that “‘Customer account’, ‘customer liabilities’, or ‘customer liability accounts’ are unsecured liabilities of the bank represented by a range of products such as cheques, savings and other transactional accounts and including term deposits, and that these are considered “in-scope for pre-positioning”:

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The OBR further states that “The Implementation Plan is a key part of the documented evidence that pre-positioned arrangements to quickly close the bank, freeze a portion of customers’ claims to meet potential losses, and reopen the next business day and continue banking services, are in place”:

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The first requirement for “Pre-positioning” is stated as being “That the bank can be closed promptly at any time of the day and on any day of the week, freezing in full all liabilities and preventing access by customers and counterparties to their accounts”:

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27 JUNE, 2013 – The European Union agrees on “bail-in” rules as part of the Bank Resolution and Recovery Directive.

1 JULY, 2013 – Mark Carney appointed to a second term as chairman of the FSB; also becomes Governor of the Bank of England.

3 JULY 2013 – The Financial Times warns that the EU’s newly agreed ‘Bank Resolution and Recovery Directive’ “swings Europe from one extreme – a system laden with implicit government guarantees that protected bank creditors from bearing losses – to the other”, and “risks old-style bank runs”.

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To be continued…

Observant readers will note that the G20 heads of government endorsed the FSB’s “recommendations” (Seoul, Nov 2010) a full year before the FSB actually completed their “framework”, and finally documented that the power to bail-in the banks using depositors’ savings would be a requirement (“Key Attributes…”, Nov 2011). Prior to this, the only reference to the possibility of bail-in (with no mention of depositors) was one obscure, and very brief, reference in the FSB’s 2010 “Progress…” report to the G20 Seoul Summit; the report on which the G20 leaders based their decision to formally endorse, and implement, the yet-to-be-completed FSB framework —

“…higher loss absorbency could be drawn from a menu of viable alternatives and could be achieved by a combination of capital surcharges, contingent capital and bail-in debt.”

Amidst all the celebrity shoulder-rubbing, champagne, caviar, and photo ops, I wonder how many of the G20 leaders actually read the document, much less noticed that tiny part.

Or — if any of them did — if any had the first clue what it meant.

See also:

G20 Governments All Agreed To Cyprus-Style Theft Of Bank Deposits … In 2010

Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget

But The Sheep Don’t Scatter: Banks Say “Sophisticated” Customers Have “Less Stable” Deposits

The Bank Deposits Guarantee Is No Guarantee At All

Think You’ve Got Cash In The Bank? Think Again

EU Confirms Plan For Cyprus-Style Theft of Bank Deposits

6 Jul

As warned here repeatedly…

G20 Governments All Agreed To Cyprus-Style Theft Of Bank Deposits… In 2010

Federal Reserve Governor Confirms – Bank Depositors Will Be Cyprused

Growing Political Deception On Bank Deposits Theft

The Bankers’ Net Is Closing

Federal Reserve Says Bank Bail-Ins Coming To The USA

… the internationalist banksters’ plan to set up a global regime for “resolution” of failing banks, wherein governments will give themselves free reign to “bail-in” the banks using depositors’ savings, is now slowly but surely being enacted by governments worldwide.

From The Telegraph (UK):

EU makes bank creditors bear losses as Cyprus bail-in becomes blue-print for rescues

New European Union “bail-in” rules to impose the losses of failed banks on shareholders, bondholders and some large depositors were agreed early this morning by Europe’s finance ministers.

…Jeroen Dijsselbloem, the chairman of the Eurogroup of finance ministers, hailed the agreement as a major step towards a “banking union” and away from state funded aid to recapitalise or bailout troubled banks across Europe.

…Greg Clark, the financial secretary to the Treasury, declared that Britain was happy with the new rules after securing concessions allowing governments flexibility on how to tailor bank “resolution” to national circumstances and existing British arrangements on banking levies.

…Under the deal, after 2018 bank shareholders will be first in line for assuming the losses of a failed bank before bondholders and certain large depositors. Insured deposits under £85,000 (€100,000) are exempt and, with specific exemptions, uninsured deposits of individuals and small companies are given preferred status in the bail-in pecking order for taking losses.

It is most important to recall what we have shown previously.

Do not be fooled into believing that, because Australia’s government has “guaranteed” (ie, insured) bank deposits up to $250,000, that this means your savings are safe, and that a failing Aussie bank will not be “bailed-in” using your money.

The government’s “guarantee” is limited, to just $20 billion per failed bank.

That’s less than one-tenth of the total amount of customer deposits — digital bookkeeping entries — actually “held” by Australian banks.

(see The Bank Deposits Guarantee Is No Guarantee At All )

To the best of my knowledge, Australia’s politicians have not yet begun to legislate the new, FSB-mandated and G20-agreed bank “bail-in” regime here.

But when they do, your savings will be exposed to confiscation.

Just as intended:

Earlier on Monday, Bank of England Deputy Governor Paul Tucker said the EU law on bank recovery and resolution would be a milestone towards a global system.

Growing Political Deception On Bank Deposits Theft

4 Jun

Truth-Lies

On All Fool’s Day 2013, this blog published the exposé — since cross-posted on globalresearch.ca — that G20 Governments All Agreed to Cyprus-Style Theft Of Bank Deposits In 2010.

It is telling to observe how politicians (and the media) worldwide are using the deceitful art of sophistry to obscure this truth.

As they all begin to pass the necessary legislation to enact what they have already agreed to — in secret, without providing clear and transparent advice to the public — they are seeking to subtly imply that these measures are needed as a result of what happened in Cyprus.

When the truth is, little Cyprus was just the first test case for implementing the Goldman Sachs-headed internationalist Financial Stability Board’s new bank “bail-in” regime, agreed to by all G20 Prime Ministers and Presidents nearly 3 years ago.

Ponder carefully the emphasised passage in the following Reuter’s news story:

EU draft bank rescue law would not shield big deposits

(Reuters) – A draft law that a group of European Union lawmakers voted for on Monday would shield small depositors from losing their savings in future bank rescues, but customers with more than 100,000 euros in savings when a bank failed could suffer losses.

A group of lawmakers in the European Parliament’s economics committee overwhelmingly voted that, from 2016, large depositors in the EU might suffer losses if a bank gets into serious trouble. The plan was similar to a deal in Cyprus, where wealthy depositors at two banks took hits to save the country from bankruptcy.

Under the EU proposal, a bank would dip into large deposits of over 100,000 euros once it had exhausted other avenues such as shareholders and bondholders. But deposits under 100,000 euros would be spared.

“The case in Cyprus showed how important it is to have clear procedures for making shareholders, bondholders and ultimately depositors foot the bill,” a press release from the committee said after the vote.

See what I mean? The Cyprus “bail-in” test case, deceitfully used as an example of why governments supposedly need to pass legislation for “similar” actions in their own countries … legislation that they already agreed to pass anyway, nearly 3 years ago.

EU finance ministers agreed last week that large, uninsured depositors should be subject to losses but some countries may still seek some flexibility on how they wind down their banks.

The “finance ministers” agreed, “last week”?

This is a deception.

As shown previously, the Prime Ministers and Presidents of the G20 nations all agreed to the policy framework laid down by the Financial Stability Board (FSB) at the Seoul G20 Summit, way back in 2010.

A framework that explicitly includes “bail-in” of banks, using the deposits (i.e, savings) of bank “creditors”:

“Carry out bail-in within resolution as a means to achieve or help achieve continuity of essential functions…”

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There is something else that is very important to note.

The FSB, politicians, bankers, and bureaucrats all want you to believe that these new procedures might only place at some risk the savings of so-called “large” or “big” depositors.

This is untrue.

The FSB-recommended “powers” for the G20 nations’ new bank “resolution authorities” exhibit Orwellian deception and moral relativism at their finest. Embedded within their recommended “Safeguards”, is a caveat allowing those “resolution authorities” to act with impunity when it comes to the theft of depositors’ money:

“Resolution powers should be exercised in a way that respects the hierarchy of claims while providing flexibility to depart from the general principle of equal (pari passu) treatment of creditors of the same class…”

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In other words, whether you have more than (say) 100,000 Euro/Dollars/Pounds deposited in a bank, or less, it is recommended (by Goldman Sachs’ FSB) that G20 governments legislate powers enabling their “resolution authorities” the “flexibility” to treat you any way they see fit.

“Equal treatment” is only a “general principle” to these people.

You may be wondering, if G20 governments all agreed to this way back in 2010, then why are we only now seeing nations from Canada to Europe beginning to draft and pass bank “bail-in” legislation, behind a smokescreen of lies and deceit?

As can be seen from the FSB press release of November 2011:

“Implementation of these measures will begin from 2012. Full implementation is targeted for 2019.”

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Some nations’ politicians are simply moving faster than others, in the coordinated drive towards the ultimate goal of stealing your savings, in order to “bail-in” so-called “systemically important” banks:

Earlier on Monday, Bank of England Deputy Governor Paul Tucker said the EU law on bank recovery and resolution would be a milestone towards a global system.

Bank Of England Governor Lends Support For My Theory

1 Mar

Trust-equation

Former Goldman Sachs alumnus, now governor of the central Bank of Canada – and soon to be governor of the central Bank of England – Mark Carney, gave a speech a few days ago on “Rebuilding Trust In Global Banking.”

Reading the speech was somewhat surreal for your humble blogger. It evoked mixed feelings of hope, and dread. For what else is one to think, and feel, when the enemy lends support for the core essence of one’s own proposed solution to what is arguably humankind’s greatest material problem? (emphasis added)

Six years ago, the collapse of the global financial system triggered the worst global recession since the Great Depression.

Losing savings, jobs, and houses has been devastating for many. Something else was lost – trust in major banking systems. This deepened the cost of the crisis and is restraining the pace of the recovery.

The real economy relies on the financial system. And the financial system depends on trust. Indeed, trust is imbedded in the language of finance. The word credit is derived from the Latin, credere, which means “to have trust in.” Too few banks outside of Canada can claim credit today.

Bonds of trust between banks and their depositors, clients, investors and regulators have been shaken by the mismanagement of banks and, on occasion, the malfeasance of their employees.

Over the past year, the questions of competence have been supplanted by questions of conduct. Several major foreign banks and their employees have been charged with criminal activity, including the manipulation of financial benchmarks, such as LIBOR, money laundering, unlawful foreclosure and the unauthorized use of client funds. These abuses have raised fundamental doubts about the core values of financial institutions.

In my remarks today, I will discuss the breakdown of trust and what is required to rebuild it. The G-20’s comprehensive financial reforms will go a long way but will not be sufficient.

Virtue cannot be regulated. Even the strongest supervision cannot guarantee good conduct. Essential will be the re-discovery of core values, and ultimately this is a question of individual responsibility. More than mastering options pricing, company valuation or accounting, living the right values will be the most important challenge for the more than one-third of Ivey students who go into finance every year.

… most fundamentally, there has been a significant loss of trust by the general public in the financial system.

Yes, the financial system depends on Trust.

And yes, ultimately trust is a question of individual responsibility.

Which is where my alternate currency proposal shines, with its “Honour” rating system of self- and peer-regulation.

It is a system that is maximally decentralised.  “Every man his own central banker”.  Able to create and use his or her own “credere” (credit). Thus, it is more than just a currency system. It is a financial system.  One that eliminates banks.  By making every one of us a bank.

A bank built on our own, individual levels of Trust-worth-iness.

Resulting in a financial system comprising billions of individual banks. The actions of each one regulated by the level of public disHonour that each of us is prepared to accept. Firstly, in our selves. Secondly, in those with whom we choose to conduct transactions.

Carney claims that “virtue cannot be regulated”. It logically follows that he is arguing that the financial system  – which depends on trust – cannot be regulated.

However, he goes on to argue for just that:

Rebuilding Trust: The Five Cs

So what to do? A combination of institutional and individual initiatives – the “Five Cs” – is required.

The G-20’s comprehensive financial reforms will go a long way to rebuild trust…

Carney goes on to describe 4 “C’s”, all of which involve top-down regulation and action by the elites and “leaders” in the financial system.

In other words, he argues that “we” (meaning “they”) can solve the problem of broken trust – not by replacing those persons and institutions who broke trust – but by bailing out those who broke that trust (1st “C”), asking them to be more honest in their reporting (2nd “C”), allowing them to change the rules (3rd and 4th “C’s”), and then expecting everyone else to trust them not to break the rules again.

He then outlines his 5th “C” (emphasis added):

Core values

The fifth ‘C’ – core values – is the responsibility of the financial sector and its leaders. Their behaviour during the crisis demonstrated that many were not being guided by sound core values.

Er… as I was saying. Expecting the “financial sector and its leaders” to change their ways and so earn public trust, is like asking the fox with poultry feathers hanging out of its mouth to implement new ways of managing the keys to the hen house. When what is really needed, is to take the keys away from the fox, and instead, entrust each of the hens with keys to their own hen house.

To restore trust in banks and in the broader financial system, global financial institutions need to rediscover their values… But a top-down approach is insufficient… To move to a world that once again values the future, bankers need to see themselves as custodians of their institutions, improving them before passing them along to their successors.

Conclusion

Ultimately, it will be down to individual bankers, including the Ivey grads who will go into finance. Which tradition will you uphold? Will your professional values be distinct from your personal ones? What will you leave those who come after you?

It is all too easy to understand the source of the many internal contradictions in Carney’s arguments.  They are a natural derivative of his personal position.

He is what I call a “vested usurer”.

As an elite banker, it is naturally in his own interests to support a continuation and extension of the centralising, monopolising international financial system. It is that system which gives him his position, his power, his lifestyle, and his opportunities.

He is unable to conceive of a financial system in which the power of “money”  is decentralised, taken away from him and his kind (bankers), and given equally to every individual in the system.

It is your humble blogger’s firm opinion that the only way for humankind to enjoy a financial system that is truly built on Trust, is by building a maximally decentralised “money” system. One that is based on, and automatically regulated by, every individual’s own credere.

In the “Trust Equation” depicted in the picture above, and in considering Mark Carney’s own argument, we can easily see why it is necessary to replace centralised banking, with individual decentralised banking.

The present financial system – and the bankers who rule it – scores very little, if not in the negative, for “C” (Credibility), “R” (Reliability), and “I” (Intimacy). And a big fat positive for “S” (SELF-Orientation). Result? By their own admission, they have earned a negative “T” (Trust-worth-iness) score.

The individuals, and businesses, with whom each one of us generally choose to buy and sell each day, typically have positive scores for Credibility, Reliability, and Intimacy. And although they may also have a positive score for Self-Orientation, we perceive that their C + R + I adds up to more than their S. We would not choose to buy and sell with them, if we felt that their T score was not a positive number.

The elites who make (and break) the rules of the global financial system, and the lower level bankers who operate it day-to-day, can never achieve a better T score than individuals. Even setting aside all other factors – an impossibility – it must be remembered that the financial system’s rulers such as Mark Carney are completely disconnected from 99.99% of those whose lives are affected by their decisions and actions. They score a massive negative for Intimacy. In the absence of Intimacy with each and every one of us who are impacted by their actions, they must always earn a negative Trust-worth-iness score.

The solution to this is crystal clear to this blogger.

Direct control of the financial system must be given to, and shared equally by, each of the individuals in the system.

Because it is only the individual interacting with another individual, who has a positive quantum of Intimacy. And that is fundamentally necessary to earn each others’ Trust.

UPDATE:

Oliver Marc Hartwich in Business Spectator:

Brutal data on Western debt march

Talk about the looming global currency war obscures an unpleasant reality: monetary policy remains the West’s only weapon to prevent imminent insolvency. Unfortunately, the medicine may kill the patient, rather than the disease.

Since the beginning of the global financial crisis, we have witnessed symptoms of the West’s economic malaise in over-indebted and over-committed governments. But if you thought that the eurozone crisis was bad and that the US fiscal cliff was a nightmare, you ain’t seen nothing yet. The fiscal problems of the Western world are so deep that they cannot be solved by some last-minute deals struck in the early morning hours.

The only way in which bankrupt governments like the US can keep living in the manner to which they are accustomed is by printing money. And although they may not do this directly, central banks are making it possible. Soaking up government debt through unorthodox monetary policy, ie. quantitative easing, they allow governments to continue spending as if nothing had happened.

There are two basic problems with these policies, however. The first is the most obvious. Historically, printing money on such large scales has always been the surest way to debase a currency. It may not happen immediately, and it may not even be visible for a while, but it is a matter of logic that a vastly inflated monetary base will sooner or later result in the destruction of a currency’s value.

The second problem is for the global economy. As most developed world central banks (with a few notable exceptions) are engaged in saving their governments from default, they are fuelling a global currency war – whether they intend to achieve competitive devaluations of their currencies or not. It may not even be a central bank’s primary goal to subdue its currency’s external value, but by providing support to its government on a scale like the US Fed, which has tripled its monetary base since the start of the global financial crisis, a weakening of the exchange rate is inevitable.

Unfortunately, for as long as the underlying fiscal problems of Western governments are not addressed and corrected, there is no escape from this march towards economic Armageddon.

In order to keep over-spending governments’ fiscal heartbeats going, monetary policy will come to the rescue – simply because there is no other way out. In the medium term, this will trigger both a debasement of currencies and increase tensions between trading partners. Currency wars and retaliatory trade policies will be the result. Both could bring globalisation as we took it for granted over the past two decades to its knees.

At the moment, monetary policy presents itself as part of the solution to the West’s sovereign debt crisis. If current policies continue much longer, it will become clear that it is part of the problem.

Central banks and governments are complicit in upholding the illusion of an all-caring, omnipotent and omni-responsible state. The longer they pretend this is viable, the more complete the destruction of the West’s economies and societies will be in the end.

What the West desperately needs is an exit strategy from this road to ruin. It needs to shrink its governments and social services to a level that can be financed out of taxes when its population ages. It needs to wean itself off the sweet poison of fresh central bank money.

It needs a new “money” system. Because the one we have known, is doomed. Hartwich’s “exit strategy” is no exit strategy at all – bloated government and social services are now a major sector of Western economies; shrinking them (“austerity”) is proven to make the situation worse.

The only question remaining, is whether the next “money” / financial system will free humanity from the power of the bankers, or, more comprehensively entrench humanity’s slavery.

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