For decades, I never paid much attention to the business pages. Then, Lehman Brothers went down and I passed the building each day watching former employees exiting with cardboard boxes, usually with a plant sticking up. They would walk past the satellite trucks and reporters and down into the subway and unemployment. It was surreal watching that company with its $800 billion implode, the biggest bankruptcy of all time.
It was the beginning of the age of too big to fail and it is the new normal. The latest bizarre twist comes from the European Union via Greece and Cyprus.
A couple member countries had a little banking trouble recently and the Bank for International Settlements (a shady Swiss bunch that seems to run the Universe and have its own country, like the Vatican) stepped in to smooth it out. Their brainchild? BAIL-INs, and they are coming to a bank near you real soon.
Bail-ins saved the toxic banks in Greece and Cyprus by taking depositor’s cash and reissuing worthless bank stock in its place. Bank gets liquid and depositors get a butt full of shoe.
On January 1, 2016, the EU announced that bail-ins would be their policy moving forward. The FDIC is said to be on board. And that, dear depositor, means that if your bank is toxic with derivatives or any other kind of gambling debt (or rife with just plain stupidity), you’ll have to cough up some money and give the poor dears a hand if they get in trouble.
But, don’t believe me. Buy The Coming Financial Crisis and read as Wolfe connects the dots in an indictment of a banking system that will literally take the money out of your pocket if they want to.
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