Is The U.S. Economy Edging Closer To A Colossal Collapse?

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GDP, greed, stock market, stock market crash, U.S, U.S. debt, U.S. Economy, United States, Wall Street

What do 1929, 2000 and 2007 all have in common?  Those were all years in which we saw a dramatic spike in margin debt.  In all three instances, investors became highly leveraged in order to “take advantage” of a soaring stock market.  But of course we all know what happened each time.  The spike in margin debt was rapidly followed by a horrifying stock market crash.  Well guess what?  It is happening again.  In April (the last month we have a number for), margin debt rose to an all-time high of more than 384 billion dollars.  The previous high was 381 billion dollars which occurred back in July 2007.  Margin debt is about 29 percent higher than it was a year ago, and the S&P 500 has risen by more than 20 percent since last fall.  The stock market just continues to rise even though the underlying economic fundamentals continue to get worse.  So should we be alarmed?  Is the stock market bubble going to burst at some point?  Well, if history is any indication we are in big trouble.  In the past, whenever margin debt has gone over 2.25% of GDP the stock market has crashed.  That certainly does not mean that the market is going to crash this week, but it is a major red flag.

The funny thing is that the fact that investors are so highly leveraged is being seen as a positive thing by many in the financial world.  Some believe that a high level of margin debt is a sign that “investor confidence” is high and that the rally will continue.  The following is from a recent article in the Wall Street Journal…

The rising level of debt is seen as a measure of investor confidence, as investors are more willing to take out debt against investments when shares are rising and they have more value in their portfolios to borrow against. The latest rise has been fueled by low interest rates and a 15% year-to-date stock-market rally.

Others, however, consider the spike in margin debt to be a very ominous sign.  Margin debt has now risen to about 2.4 percent of GDP, and as the New York Times recently pointed out, whenever we have gotten this high before a market crash has always followed…

The first time in recent decades that total margin debt exceeded 2.25 percent of G.D.P. came at the end of 1999, amid the technology stock bubble. Margin debt fell after that bubble burst, but began to rise again during the housing boom — when anecdotal evidence said some investors were using their investments to secure loans that went for down payments on homes. That boom in margin loans also ended badly.

Posted below is a chart of the performance of the S&P 500 over the last several decades. Every time margin debt has soared to a dramatic new high in the past, a stock market crash and a recession have always followed.  Will we escape a similar fate this time?

What makes all of this even more alarming is the fact that a number of things that we have not seen happen in the U.S. economy since 2009 are starting to happen again.  See 12 Clear Signals That The U.S. Economy Is About To Really Slow Down:  http://theeconomiccollapseblog.com/archives/12-clear-signals-that-the-u-s-economy-is-about-to-really-slow-down

At some point the stock market will catch up with the economy.  When that happens, it will probably happen very rapidly and a lot of people will lose a lot of money.

Unfortunately most Americans rely on the mainstream media to do much of their thinking for them.  They will never see the colossal collapse coming!

Source:  http://theeconomiccollapseblog.com/archives/whenever-margin-debt-goes-over-2-25-of-gdp-the-stock-market-always-crashes

 

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Capitalism is…

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Billionaires, capitalism, earth, Elite, Forbes list of billionaires, GDP, Oxfam, people, photos, planet, Poor, population, Poverty, power, Rich, wealthy, world

Shocking amount of wealth and power held by 0.001% of the world population. Oxfam reported that the fortunes made by the world’s 100 richest people over the course of 2012- roughly $240 billion – would be enough to lift the world’d people out of poverty four times over!

 

U.S. vs. China

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air pollution, charts, China, CO2, comparisons, Debt, defense spending, environment, exports, GDP, governments, Greenhouse gas, market capitalism, population, social media, surplus, U.S, Unemployment Rate, United States

The U.S. has the the world’s largest debt while China has the biggest global surplus. China is highest in air pollution and carbon emissions too!

 

U.S. Economic Black Hole On Horizon!

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banks, corruption, cuts, Dangerous, Economic bubble, economic collapse, Economy, Federal Reserve, Food Stamps, foreclosures, fraud, GDP, global crisis, Greece, greed, Japan, media blackout, national debt, profits, Social Security, stock market, U.S, Unemployment, United States, Wall Street

What is going to happen when the greatest economic bubble in the history of the world pops?  The mainstream media never talks about that.  They are much too busy covering the latest dogfights in Washington and what Justin Bieber has been up to.  And most Americans seem to think that if the Dow keeps setting new all-time highs that everything must be okay.  Sadly, that is not the case at all.  Right now, the U.S. economy is exhibiting all of the classic symptoms of a bubble economy.  You can see this when you step back and take a longer-term view of things.  Over the past decade, we have added more than 10 trillion dollars to the national debt.  But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars.  Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks.  But the Dow does not keep setting new records because the underlying economic fundamentals are good.  Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929.  Margin debt is absolutely soaring, and every time that happens a crash rapidly follows.  But this time when a crash happens it could very well be unlike anything that we have ever seen before.  The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up.  After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars.

But most Americans are only focused on the short-term because the mainstream media is only focused on the short-term.  Things are good this week and things were good last week, so there is nothing to worry about, right?

Unfortunately, economic reality is not going to change even if all of us try to ignore it.  Those that are willing to take an honest look at what is coming down the road are very troubled.  For example, Bill Gross of PIMCO says that his firm sees “bubbles everywhere”…

We see bubbles everywhere, and that is not to be dramatic and not to suggest they will pop immediately. I just suggested in the bond market with a bubble in treasuries and bubble in narrow credit spreads and high-yield prices, that perhaps there is a significant distortion there. Having said that, it suggests that as long as the FED and Bank of Japan and other Central Banks keep writing checks and do not withdraw, then the bubble can be supported as in blowing bubbles. They are blowing bubbles. When that stops there will be repercussions.

And unfortunately, it is not just the United States that has a bubble economy.  In fact, the gigantic financial bubble over in Japan may burst before our own financial bubble does.  The following is from a recent article by Graham Summers…

First and foremost, Japan is the second largest bond market in the world. If Japan’s sovereign bonds continue to fall, pushing rates higher, then there has been a tectonic shift in the global financial system. Remember the impact that Greece had on asset prices? Greece’s bond market is less than 3% of Japan’s in size.

For multiple decades, Japanese bonds have been considered “risk free.” As a result of this, investors have been willing to lend money to Japan at extremely low rates. This has allowed Japan’s economy, the second largest in the world, to putter along marginally.

So if Japanese bonds begin to implode, this means that:

1)   The second largest bond market in the world is entering a bear market (along with commensurate liquidations and redemptions by institutional investors around the globe).

2)   The second largest economy in the world will collapse (along with the impact on global exports).

Both of these are truly epic problems for the financial system.

And of course the entire global financial system is a giant bundle of debt, risk and leverage at this point.  We have never seen anything like this in world history.  When you step back and take a good, hard look at the numbers, they truly are staggering.  The following statistics are from one of my previous articles entitled “Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers“…

–$70,000,000,000,000 – The approximate size of total world GDP.

–$190,000,000,000,000 – The approximate size of the total amount of debt in the entire world.  It has nearly doubled in size over the past decade.

–$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States.  But those banks only have total assets of about 8.9 trillion dollars combined.  In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.

–$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range.  At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.

The financial meltdown that happened back in 2008 should have been a wake up call for the nations of the world.  They should have corrected the mistakes that happened so that nothing like that would ever happen again.  Unfortunately, nothing was fixed.  Instead, our politicians and the central bankers became obsessed with reinflating the system.  They piled up even more debt, recklessly printed tons of money and kicked the can down the road for a few years.  In the process, they made our long-term problems even worse.  The following is a recent quote from John Williams of shadowstats.com…

The economic and systemic solvency crises of the last eight years continue. There never was an actual recovery following the economic downturn that began in 2006 and collapsed into 2008 and 2009. What followed was a protracted period of business stagnation that began to turn down anew in second- and third-quarter 2012. The official recovery seen in GDP has been a statistical illusion generated by the use of understated inflation in calculating key economic series (see Public Comment on Inflation). Nonetheless, given the nature of official reporting, the renewed downturn likely will gain recognition as the second-dip in a double- or multiple-dip recession.

What continues to unfold in the systemic and economic crises is just an ongoing part of the 2008 turmoil. All the extraordinary actions and interventions bought a little time, but they did not resolve the various crises. That the crises continue can be seen in deteriorating economic activity and in the panicked actions by the Federal Reserve, where it proactively is monetizing U.S. Treasury debt at a pace suggestive of a Treasury that is unable to borrow otherwise.

And there are already lots of signs that the next economic downturn is rapidly approaching.

For example, corporate revenues are falling at Wal-Mart, Proctor and Gamble, Starbucks, AT&T, Safeway, American Express and IBM.

Would revenues at Wal-Mart be falling if the economy was getting better?

U.S. jobless claims hit a six week high last week.  We aren’t in the danger zone yet, but once they hit 400,000 that will be a major red flag.

And even though we are still in the “good times” relatively speaking, the federal government is already talking about tightening welfare programs.  In fact, there are proposals in Congress right now to make significant cuts to the food stamp program.

If food stamps and other welfare programs get cut, that is going to make a lot of people very, very angry.  And that anger and frustration will get even worse when the next economic downturn strikes and millions of people start losing their jobs and their homes.

What we are witnessing right now is the calm before the storm.  Let us hope that it lasts for as long as possible so that we can have more time to prepare.

Unfortunately, this bubble of false hope will not last forever.  At some point it will end, and then the pain will begin.

Source:  http://theeconomiccollapseblog.com/archives/americas-bubble-economy-is-going-to-become-an-economic-black-hole

 

Wal-Mart’s Employee Hellcare (Photo with words)

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benefits, Business, corporations, employees, GDP, greed, healthcare, media, power abuse, profits, unethical, Wal-Mart, Walmart

Wal-Mart cheats their employees out of as many benefits as possible, treats their employees like children, and then they wonder why they are bad-mouthed by former employees and the press?! – John Loeffler, Fountain City, Wisconsin

 

How Capitalism Is Dismembering America

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America, Americans, Big Pharma, capitalism, CEOs, corruption, Economic inequality, Economy, Elite, fraud, GDP, Goldman Sachs, greed, Gross domestic product, inequality, Lehman Brothers, Medicare, mega-banks, mega-corporation, middle class, oligarchs, Payroll tax, plutocracy, Poor, power-hungry, Social Security, tax evasion, taxes, U.S, United States, Urban Institute, Wealthiest

If there’s any way capitalism can work, it has to be regulated. Otherwise greed takes over.

Too many Americans are unaware of the extreme disparities that have been caused by the unregulated profit incentive of capitalism. Our winner-take-all system is flailing away at once-healthy parts of society, leaving them like withered limbs on a trembling body, even as the relative few who benefit promote the illusion of opportunity and prosperity for all. Concerned citizens armed with facts are not fooled. Instead, the more they learn the angrier they get. And as in revolutions of the past, discontent leads to change.

Hacking Off the Poor Half of Society

Some wealthy and uninformed individuals have referred to the lowest-income 47% of Americans as the “takers,” who enjoy government benefits at the expense of the high-earning one percent. But their claim is meaningless. The total amount paid out in ‘welfare’ (Temporary Assistance for Needy Families) is less than the investment income of just three men in a single year.

The monthly TANF income for a family of four is less than what the average member of the Forbes Top 20 made in one second at the office.

The 47% don’t own stocks. They don’t own anything. The so-called ‘takers’ have ZERO wealth. The value of any assets owned by nearly half of the country is surpassed by their debt.

Slashing the Security of the Elderly

Recipients of ‘entitlements’ are accused by the uninformed of getting something for nothing. The opposite is true. According to the Urban Institute, the typical two-earner couple making average wages throughout their lifetimes will receive less in Social Security benefits than they paid in. Same for single males. Almost the same for single females.

Getting something for nothing? Yes, the rich are. Tax expenditures, which are deductions and exemptions that primarily benefit the highest-earning individuals, cost about 8% of the GDP, the same percentage that goes to Social Security and Medicare.

If just one of the tax breaks for the rich, the $113,700 cap on Payroll Tax, were eliminated, Social Security would be almost entirely funded for the next 75 years.

Slicing Up Justice

In the last few months American citizens, some of them children, have been arrested for:

·         Looking for Indian arrowheads on federal land.

·         Throwing peanuts on the school bus.

·         Lying about a home address to get the kids into a better school.

·         Sitting on a milk crate.

Meanwhile, not a single banker was arrested for these actions:

·         HSBC Bank laundered money for Mexican drug cartels.

·         Goldman Sachs designed and sold mortgage packages that were meant to fail.

·         Bank of America and Lehman Brothers hid billions of dollars of bonuses and loans from investors.

Severing the Head from the Global Body

If you could gather together the world’s 200 richest individuals, ask each one his or her net worth, get the actual numbers from Forbes, and then add it all up, the total would be more than the total wealth of half the population of the world, 3.5 billion people.

The U.S. is one of the greatest contributors to this shameful disparity. It’s no coincidence that we’re both the third least taxed developed country and the fourth highest in wealth inequality among all nations. It’s also no surprise, with so little revenue going to the general public, that our country is the fourth worst in the overall well-being of its children.

Castrating the Taxman

Corporations have doubled their profits and cut their taxes in half in ten years. The burden of taxes, which Oliver Wendell Holmes called the price of a “civilized society,” has been shifted to workers. For every dollar of employee payroll tax paid in the 1950s corporations paid three dollars. Now it’s 22 cents.

Globalization has allowed U.S. corporations to stop paying for national defense and infrastructure and all the benefits of the U.S. legal and educational systems.  All of the following companies had sizable U.S. revenues, but they claimed losses here while declaring billions of dollars of profits overseas.

·         Bank of America, with 82% of its revenue in the U.S., declared $7 billion in U.S. losses and $10 billion in foreign profits.

·         Citigroup, with 42% of its revenue in North America (almost all U.S.), declared a $5 billion U.S. loss and a $28 billion foreign profit.

·         Pfizer, with 40% of its revenues in the U.S., declared almost $7 billion in U.S. losses to go along with $31 billion in foreign profits.

·         Abbott Labs, with 42% of its sales in the U.S., declared a $256 million U.S. loss and $12 billion in foreign profits.

·         Dow Chemical, with 32% of its sales in the U.S., declared a $15 million U.S. loss against foreign profits of over $5 billion.

Conclusions

If there’s any way capitalism can work, it has to be regulated. Otherwise greed takes over. Blind greed. The sneering head at the top of the body watches limbs being chopped off, but it doesn’t seem to recognize that we’re all bleeding to death.

Source:  http://www.alternet.org/economy/how-capitalism-dismembering-america?paging=off

Hall of Hypocrisy Featuring Google, Microsoft and Monsanto!

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13th Amendment, agriculture, America, Americans, Attorneys, Baby Boomers, bailout, banks, Barack Obama, benefits, Big Oil, Big Pharma, Brazil, Canada, capitalism, Caterpillar, Cathy Koch, CEOs, chairman, China, citizens, coal, communications, consumers, corporations, crime, crops, decline, defense, Department of Defense, Department of Homeland Security, Depression, dirty politics, Doug Oberhelman, Drugs, economic, Economic inequality, Eduardo Saverin, Eli Lilly, Elite, environment, Ernest Moniz, exemptions, Facebook, FDA, Federal Government, federal law, federal taxes, food, Food Czar, Freedom, funding, GDP, General Electric, globalization, GMOs, Google, greed, grocery stores, Gross domestic product, Human Rights, Hypocrisy, hypocrite, Illinois, imprisonment, income, inequality, investments, Jeffery Immelt, Jobs, Jobs Council, kids, law firms, legislators, lobbyists, male, Mary Jo White, median income, Medicare, mega-banks, mega-corporation, Michael Taylor, Microsoft, middle class, Monsanto, National Defense Authorization Act, natural gas, oil, Pfizer, poison, poisoning, poisonous, politics, Poor, Poverty, power-hungry, President, Project on Government Oversight, Quantitative Easing, Quantitive Easing, REIT, research, SEC, Secretary of Energy, Security and Exchange Commission, Sequestration, slavery, Social Security, state taxes, stock market, Surveillance, survival, tax dodgers, Tax Dollars, tax evasion, tax havens, taxes, taxpayers, technology, The GEO Group, Toxic, U.S, U.S. Government, U.S. House of Representatives, U.S. Senate, Unemployment, United States, Urban Institute, Vice President, Washington, Washington D.C., wealthy, white, world

Capitalist greed is splitting our country in two. But rather than look objectively at their failures, many of those responsible have been hypocritical, portraying themselves as advocates of freedom and prosperity while the greater part of America slides toward poverty.

Some of the candidates:

1. The “Get a Job” Critic

This usually well-connected person criticizes the jobless for being lazy. But in a recent poll that asked if “the government in Washington should see to it that everyone who wants to work could find a job,” 68 percent of the general public agreed, while only 19 percent of the wealthy were in agreement.

Apparently they feel the free market will find those jobs. But as they staunchly adhere to their notion, large corporations are holding trillions in cash, transferring millions of jobs overseas, and paying low-level wages to those who have managed to stay employed.

2. The Illusionist

It all started with a “world is flat” reverie by which every individual in the world is empowered to accomplish great things. Then on to “create your own job” hyperbole and on a global scale to the capitalist’s belief that “a billion people have been lifted from poverty through free-market competition.”

The message being spread by the people at the top is that everyone benefits and everyone has opportunities.

The reality is that only the top of the mountain is flat. Or more accurately, the plateau just below the top of the mountain is flat. Perhaps 10 percent (or somewhere between 5 and 20 percent) of the U.S. is doing reasonably well, especially with 93 percent of non-home wealth owned by the richest quintile of Americans. Everyone else has experienced a 35-year decline in income. But hypocrisy bares its contemptuous soul with its hurrahs for the ever-growing stock market.

Outside our borders, world inequality has decreased, but largely because of the rapid ascent of China, while INSIDE China inequality has grown at a pace rivaling the U.S. There may be a half-billion young Chinese laborers who are technically above poverty level, but GDPs don’t measure the quality of life or asset distribution of 70-hour-per-week factory workers.

3. The Self-Made Man

Wealthy individuals pride themselves on their successes from meager beginnings. Many of this self-congratulatory group grew up as educated white males in the richest nation ever in the most productive time in the history of the world. They rode the technology engine for 30 years benefiting from federal funding that provided almost half of basic research funds into the 1980s and half of research in the communications industry as late as 1990.

Now, of course, it’s much different. Globalization and automation have eliminated many of the old opportunities. Half of college graduates are unemployed or underemployed. And while it’s always been more of a struggle for the lowest-income people, it’s even worse now, with more than half of those individuals in the bottom income quintile remaining there 10 years later. Compared to other developed countries, the U.S. ranks near the bottom in economic mobility.

4. The Government Hater

This candidate opposes government intervention of any type, unless it’s for national defense, homeland security, surveillance, prison funding and the drug war, any subsidies to oil and coal and agricultural companies, bailouts and Quantitative Easing, tax expenditures that mainly benefit the rich and anything to do with women’s bodies.

5. The Revolving Doorman

Here’s another candidate who hates government interference, but will tolerate it if there’s a friend in the regulator’s chair. A friend like Mary Jo White, connected for 36 years to a law firm that would be monitored by her new position as head of the SEC.

A report by the Project on Government Oversight stated that “Former employees of the Securities and Exchange Commission (SEC) routinely help corporations try to influence SEC rulemaking, counter the agency’s investigations of suspected wrongdoing… and win exemptions from federal law.”

General Electric has a particularly smooth-spinning revolving door in the back of its corporate offices. After eliminating 37,000 jobs over ten years, CEO Jeffery Immelt was appointed as chairman of President Obama’s Jobs Council. Secretary of Energy nominee Ernest Moniz has served on GE’s advisory board. And Cathy Koch, a lobbyist for the tax-avoiding company, was appointed chief advisor on tax and economic policy.

6. The Entitlement Basher

This person claims that Social Security recipients are ‘takers.’

Here are the facts. According to the Urban Institute the average two-earner couple making average wages throughout their lifetimes will receive less in Social Security benefits than they paid in; same for single males.

Meanwhile, tax expenditures (deductions and exemptions which primarily benefit the very rich) cost us about 8 percent of the GDP, which is almost exactly the same percentage that goes to Social Security and Medicare.

7. The New American – Love It and then Leave It at Tax Time

Unlimited candidates for the Hypocrisy Hall here, starting with companies like Google and Microsoft that hold onto their foreign cash to avoid taxes, but actually keep the cash in U.S. banks, taking advantage of publicly-funded national security to safeguard the assets they’re not paying taxes on.

Then there are pharmaceutical companies like Eli Lilly and Pfizer who denounce the idea of consumers purchasing cheap prescription drugs from Canada, but then shift patents and profits to offshore tax havens to avoid paying U.S. taxes.

On the individual level, 1,700 Americans renounced their citizenships in 2011. The top Hypocrisy Hall candidate is Eduardo Saverin, who found safe refuge in the U.S. after his family was threatened in Brazil, benefited from American research and technology to take billions from his 4 percent share in Facebook and then skipped out on his tax bill.

Finally there are CEOs like Doug Oberhelman of Caterpillar, who threatened to leave Illinois unless the highly profitable company received a tax break that allowed the company to pay less than 1 percent of its total net income in state taxes, and then said, “Legislators in Illinois have created an environment that is unfriendly to business and investment.”

8. Realtor for the Slaves

The GEO Group, operator of private prisons, is trying to qualify as a “real estate intensive industry” (REIT). In a company profile GEO refers to itself as having “attractive real estate characteristics.”

What is the nature of GEO’s property? The 13th Amendment says “Neither slavery nor involuntary servitude, except as punishment for crime where of the party shall have been duly convicted, shall exist within the United States.” The private prisons have a room ready for the kids on the school-to-prison pipeline.

So Who Makes It to the Hall?

Only those who can aspire to duplicitous extremes, like Monsanto, whose website proclaims “Monsanto is committed to assuring the safety and quality of our products and promoting a culture of integrity through our business conduct,” after their communications director said “Monsanto should not have to vouchsafe the safety of biotech food. Our interest is in selling as much of it as possible.”

Now, that is worthy of recognition.

Source:  http://www.nationofchange.org/hall-hypocrisy-1364823391

 

The Great Cyprus Bank Robbery Fallout! Is Italy Next?

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accounts, bailout, Bank account, bank accounts, bank holidays, Bank of Cyprus, Bank run, banks, Belgium, Berlin, Brussels, chief economist, collapse, corruption, Cyprus, Cyprus Popular Bank, D.C., Debt, deception, Depression, derivatives collapse, economic collapse, Economy, Elite, Elitists, emergency, Energy, energy giant, EU, European Union, euros, eurozone, Finance Minister, financial crisis, France, fraud, gas industry, gas reserves, Gazprom, GDP, German, German Commerzbank, Germany, global, Greece, Greek Reporter, Herbert Hoover, IMF, insurance, International Monetary Fund, island, Italy, Joerg Kraemer, lies, London, Mediterranean, Michalis Sarris, money, money laundering, New York Times, Paul Joseph Watson, Paul Krugman, planet, politics, Politics of Cyprus, Portugal, President Anastasiades, Quotes, retirement funds, Russia, Russians, Sky News, Spain, stock portfolios, tax, taxpayers, the elite, The Great Cyprus Bank Robbery, theft, U.S, United States, unsafe., Vladimir Putin, Washington D.C., wealth tax, world

*Note:  The IMF headquarters is in Washington D.C. Also, Russia has $31 billion in Cyprus accounts.

The Great Cyprus Bank Robbery Shows That No Bank Account, No Retirement Fund And No Stock Portfolio Is Safe

The global elite have now proven that when the chips are down they are going to go after any big pile of money that they think they can get their hands on.  That means that no bank account, no retirement fund and no stock portfolio on earth is safe.  Up until now, most people assumed that private bank accounts were untouchable and that deposit insurance actually meant something.  Now we see that there is no pile of money that is considered “off limits” by the global elite and deposit insurance means absolutely nothing.  The number one thing that any financial system depends on is faith.  If people do not have faith in the safety and stability of a financial system, it will not work.  Well, the people that rule the world have just taken a sledgehammer to the trust that we all had in the global financial system.  They have broken the unwritten social contract that global banking depends on.  So now we will see a run on the banks, and this will not just be limited to a few countries in southern Europe.  Rather, this will be worldwide in scope.  Yoda may have put it this way: “Begun, the global bank run has.”  All over the world, frightened people are going to start pulling money out of the banks.  A lot of that money will go into gold, silver and other hard assets.  And as money starts coming out of the banks, this could cause many of the large banks that have been teetering on the edge of disaster to finally collapse.

Many of you may not believe that they would ever come after bank accounts, retirement funds or stock portfolios in the United States.

Many of you may be entirely convinced that the Great Cyprus Bank Robbery could never happen in America.

Well, where do you think this whole plan was dreamed up?

It was the IMF that reportedly pushed the hardest for the wealth tax in Cyprus, and the IMF is headquartered right in the heart of Washington D.C.

Almost every nation on the planet has to deal with the IMF.  It is an organization that is dominated by the United States and that is always involved when there is an international debt crisis.

If the IMF thinks that it is a great idea to steal from bank accounts to solve a financial crisis in Cyprus, why wouldn’t they impose a similar solution in other countries in the future?

And if bank accounts are no longer safe, are there any truly safe places to put your money?

You can trust the politicians when they tell you that an unannounced “wealth tax” will never happen where you live if you want, but that is the exact same lie that the politicians in Cyprus were telling their people until the day that it happened.  The following is from an article in the Cyprus Mail…

And after all, President Anastasiades had emphatically declared in his inauguration speech that “absolutely no reference to a haircut on public debt or deposits will be tolerated,” adding that “such an issue isn’t even up for discussion.” Finance Minister Michalis Sarris made similarly reassuring statements, arguing that it would be lunacy for the EU to impose such a measure because it would threaten the euro system.

At this point, politicians in Cyprus have been given two very unappealing options.  Either they vote yes on the wealth tax and destroy all faith in the banking system of Cyprus, or they vote no and they are forced out of the eurozone.  In either case, we will probably see the financial system of Cyprus collapse and their economy plunge deep into depression.

At this point, the vote has been delayed until Tuesday.  Apparently some additional “arm twisting” was required to get the needed votes.

And there have been proposals to change the terms of the wealth tax.  Reportedly, some politicians want to impose a maximum rate of up to 15 percent on bank accounts of over 500,000 euros so that the rate on smaller accounts can be decreased.

It has also been announced that the earliest that banks in Cyprus will reopen will be Thursday.

But what is happening in Cyprus is small potatoes compared to how this will affect the rest of the world.  The entire planet is watching this unfold, and as a recent article by Lucas Jackson described, faith in the global financial system is being greatly shaken…

It would be hard to over-emphasize how significant the Cyprus situation is.  The EU demonstrated under no uncertain circumstances that they will destroy the rule of law to maintain their own power.  It was a recognition of tyranny that many of us have always assumed was the case but yesterday became reality.

The damage done here is not related to the size of the haircut – currently discussed between 3 and 13% – but rather that the legal language which each and every investor on the planet must rely on in order to maintain confidence in the system has been subordinated to the needs of the powerful elite.  To the power elite making the major decisions in DC, London, Berlin, France, Brussels, et. al., laws are like ice cream, easily melted.

Which begs the question, who is next?  Will it be Portugal?  Greece? Spain?  Italy?  France???

Will they impose a “one-time” tax on your bank account?  Your house?  Your stocks and bonds?  Retirement accounts?

The global elite have declared open season on all large piles of money, and now many people all over the world will consider taking money out of the bank to be the rational thing to do.  This will especially be true in countries in southern Europe since they would probably be the next to have wealth confiscated.

This is so abundantly clear that even Paul Krugman of the New York Times understands this…

It’s as if the Europeans are holding up a neon sign, written in Greek and Italian, saying “time to stage a run on your banks!”

Tomorrow and the days immediately following should be very interesting.

The global elite have truly “crossed the Rubicon” by going after private bank accounts.  It is almost as if they purposely chose the most damaging solution possible to the financial crisis in Cyprus.

Many in the financial world are absolutely stunned by all of this.  For example, David Zervos is describing this move as a “nuclear war on savings and wealth“…

All of us should really take a moment to consider what the governments of Europe have done. To be clear, they initiated a surprise assault on the precautionary savings of their own people. Such a move should send shock waves across the entire population of the developed world. This was not a Bernanke style slow moving financial repression against risk free savings that is meant to stir up animal spirits and force risk taking. This is a nuclear war on savings and wealth – something that will likely crush animal spirits. This is a policy move you expect from a dictatorial regime in sub-Saharan Africa, not in an EMU member state. If the European governments can clandestinely expropriate 7 to 10 percent of their hard working citizen’s precautionary savings after the close of business on a Friday night, what else are they capable of doing? Why even hold money in a bank account? Are they trying to start a bank run?

So what motivated the global elite to do this?

According to CNBC, one of the motivations was to go after the Russians that had been using the banking system of Cyprus to launder money…

Indeed, the IMF is reported to have been keen on the levy as a way to stem the flood of Russian money into the island over the last few years which has promptedconcerns over money laundering.

Russian money accounts for about 25 percent of all money in the banking system of Cyprus, and obviously the Russians are quite upsetby what the IMF and the EU have decided to do.  Even Vladimir Putin is loudly denouncing this move…

Russian President Vladimir Putin called the tax “unfair, unprofessional and dangerous,” according to a statement posted on the Kremlin website. Russian companies and individuals have $31 billion of deposits in Cyprus, according to Moody’s.

And you haven’t heard a lot about this in the western media, but the Russians have actually stepped forward and have offered to help Cyprus out of this jam.  For example, there are reports that Russian investors are interested in buying the two banks that were the primary cause of this bailout…

Officials have also said Russian investors are interested in buying a majority stake in Cyprus Popular Bank and increasing their holdings in Bank of Cyprus – the two biggest banks on the Mediterranean island.

And according to Sky News, Gazprom has offered Cyprus a very large sum of money for the right to explore their offshore gas reserves that have not been developed yet…

The uncertainty comes as Russia’s finance minister said his country would consider restructuring its loans to Cyprus.

Russian energy giant Gazprom has also reportedly offered financial assistance to Cyprus in exchange for access to the island’s gas reserves.

So far the government of Cyprus has rejected the help of the Russians, but could they change their mind at some point?  Apparently the Russians are offering enough money to completely fund the bank bailout…

According to Greek Reporter, Gazprom made an offer over the weekend to the Cypriot government to fund the bank restructuring planned under the Cypriot bailout (which is set to cost up to €10bn) in exchange for exclusive exploration rights for Cypriot territorial waters. How reliable this story is remains to be seen, but it does hint at the geopolitical tension which we have been warning about.

Gazprom is known to be very close to the Russian government and despite Russian President Vladimir Putin overtly slamming the deposit tax – calling it “unfair, unprofessional and dangerous” –  it is unlikely that they would let this opportunity pass untouched. Fortunately, the Cypriot government is said to have rejected the deal off the bat, but if displeasure towards the eurozone and the EU grows, the Russian option may become increasingly appealing.

It will be very interesting to see what happens.

Meanwhile, some European officials are already suggesting that other nations in southern Europe should have a “wealth tax” imposed upon them.  The following comes from an article by Paul Joseph Watson…

Joerg Kraemer, chief economist of the German Commerzbank, has called for private savings accounts in Italy to be similarly plundered. “A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product,” he told Handelsblatt.

A “tax” of 15 percent on all financial assets?

Could you imagine if you woke up one morning and the government had decided to suddenly steal 15 percent of all the money that you had in bank accounts, retirement funds and stock portfolios?

If I had a bank account in Italy I would be very nervous right about now.

Under normal circumstances these kinds of things don’t happen, but governments will use an “emergency” to justify all kinds of things.  I recently came across an article that included a great quote by Herbert Hoover that put this beautifully…

“Every collectivist revolution rides in on a Trojan horse of ‘emergency’. It was the tactic of Lenin, Hitler, and Mussolini. In the collectivist sweep over a dozen minor countries of Europe, it was the cry of men striving to get on horseback. And ‘emergency’ became the justification of the subsequent steps. This technique of creating emergency is the greatest achievement that demagoguery attains.”

This is what the elite love to do.

They love to create order out of chaos.

And this is just the beginning.  The Great Cyprus Bank Robbery was just a beta test for what is coming next.

As the global financial system crumbles, the global elite are going to target our bank accounts, our retirement funds and our stock portfolios.  You might want to start thinking about how you will protect yourself.

Source:  http://investmentwatchblog.com/the-great-cyprus-bank-robbery-shows-that-no-bank-account-no-retirement-fund-and-no-stock-portfolio-is-safe/