Tag Archives: reserve bank

“Possession Is Nine Tenths Of The Law” The New Rule For Bank Deposits

20 Mar

quote-do-what-thou-wilt-shall-be-the-whole-of-the-law-aleister-crowley-44869

Pandora’s Box has been opened.

And all the demons of lawlessness – shrieking “Do what thou wilt” and “Might beats Right” – have flown out.

From the New Zealand Herald:

Kiwis with money in the bank could see their nest eggs and savings dwindle in a government move the Greens say is a “Cyprus-style solution” to help out failing banks.

New Zealand banks are readying their IT systems for Open Bank Resolution, a Reserve Bank policy that in extreme cases like insolvency would see a bank’s losses shouldered in part by its shareholders and creditors – including everyday depositors.

The Reserve Bank has the power to freeze bank deposits but up to now has lacked the technical infrastructure to implement it – hence their requirement for banks with retail deposits of more than $1 billion to change their systems and meet their requirements by July 1.

Under the policy, which can only be activated by the Minister of Finance, if a bank fails a statutory manager is appointed to calculate the bank’s liabilities.

The statutory manager can then freeze a percentage of customers’ bank deposits to cover those liabilities before it reopens the next trading day.

But the Green Party’s co-leader Russel Norman said OBR was a “Cyprus-style solution” that would see small depositors suffer to fund big bank bailouts.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank,” he said. “Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

…

Prime Minister John Key said the OBR policy was a “last-resort facility” and when told that few people seemed to know about it he responded that it was unlikely to be used.

Yeah right.

Where have we heard that before?

Oh yes, that’s right. Cyprus.

Where the Finance Minister told the people on March 1st that: “There is really no more stupid an idea even to consider […] a haircut on bank deposits.”

Only days later, a 10% “haircut” on deposits is a very ‘live’ option.

Now you know just how much you can trust the politico-bankster “unholy alliance” to safeguard your savings.

There is an old saying: “Possession is 9/10ths of the law.”

Clearly, this “logical rule of force that has been recognized across ages” is now the new (old) standard for law and order.

They have it. And you don’t.

Suggestion.

Find somewhere else to stash your cash.

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Stevens’ Nonchalance ‘Stunning’

2 Mar

This excellent article by David Uren at The Australian suggests that he may be the only mainstream journalist in Australia who is awake to international developments, and not in awe of every utterance from RBA Governor Glenn Stevens:

If the Reserve Bank raises rates again tomorrow, it will risk repeating the mistake it made in early 2008, when it failed to see the global financial crisis coming.

Now, as then, it is beguiled by soaring commodity prices and believes Australia can shrug off what it sees as essentially local woes in the industrialised world.

In 2008, it was the subprime crisis, and today it is the sovereign debt crisis, focused for the moment in Europe.

Glenn Stevens’s nonchalance about the Greek debt crisis at the recent parliamentary hearings was stunning.

It had been no more than a marginal influence on the RBA’s decision to hold rates steady in February, he said.

“There is a bit of uncertainty about how all of that is going to be resolved. I do not think, myself, at this point, that those issues will directly present a serious problem for Australia. After all, it is a sovereign debt issue for Europe.”

Europe still represents about a quarter of world GDP and its unity and sound finances matter a lot for global financial stability.

US academics Kenneth Rogoff (a former IMF chief economist) and Carmen Reinhart have been among the most influential analysts of the developments of the past two years because of their analysis of crashes in 66 countries stretching back two centuries. “Serial default remains the norm,” they say.

There is often a lag of some years, leading policymakers to believe “this time it is different”.

Rogoff, who did predict the GFC, is currently warning that China is in a bubble, one that he believes will burst within ten years. If so, then so much for the belief that Australia is on the verge of a new China-fuelled mining boom.

Glenn Stevens appears to be in a bubble of his own, oblivious to the ever-growing warnings from leading international economists about the Eurozone crisis, and/or a new Asia Crisis triggered by the inevitable bust of China’s real estate bubble.

A man who apparently does not learn from his epic failures of the past, should no longer be permitted to retain such enormous power over the economy, and the lives of 22 million Australian citizens.

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