During the American Economic Depression of the 1930’s, some bank deposits were devalued by 40%. In simple terms, this meant that deposits valued at $1,000 were deemed to be worth only $600. A plan agreed at the G20 Summit in Brisbane (November 16, 2014), allows for depositors’ money to be used to bail out ‘failing’ banks. That is, a contingency has been put in place to allow governments to use their citizens’ money to rescue banks which get into difficulties, because of their faulty mortgage lending policies, or reckless gambling on the derivatives market.
As this plan stands, only the deposits of larger investors will be used to bail out banks, but this may not remain the case. The techical ruse being used to bring about this robbery is one of redefining a customer’s bank deposit as a part of a banks’ capital structure, with other bank creditors having precedence (called ‘super priority’), over them in terms of any monies to be repayed in the case of a bank failure. These ‘preference’ creditors will include those with protected deposits, which include those guaranteed by the UK government up to £85,000, any other secured liability, any liabilities on OTC derivatives,* and any liabilities owed to an employer or former employer in terms of salary or pension. That is, the enormous salaries and pensions of top bank executives will be given more protection than the deposits of those who have worked and saved in the real world. The situation is made more diabolical by some banks tying savings products to the performance of their derivative gambling.
*Over-the-counter (OTC) derivative markets deal in financial contract linked to the future value of an underlying asset (e.g. the movement of interest rates or of a currency value, or of a mortgage debt portfolio. In effect, banks can play roulette, by betting whether an asset’s value goes up (black) or down (red). If the bet comes off, it can be extremely profitable, but, if not, the damage can be almost incalculable. The International Swaps and Derivatives Association (ISDA), estimated that, at the end of 2012, over-the-counter derivatives trade was worth $606 trillion, with the total world GDP for that year being only a seventh of that. The vast dimension of derivatives trading makes policing of it as difficult as spotting a criminal in the Amazon.
It is not that such amounts of money have a physical reality outside of computer digits, but are deemed to be real, rather like the naked emperor being told he was splendidly dressed by sychophantic courtiers.
The ‘super priority’ list is contained in the UK’s Treasury Consultation Document, which was drawn up prior to the G20 Summit, and formed part of a simulation exercise, carried out on November 10, of how to save a large bank from financial collapse. This was an Anglo-American initiative, attended by the American Treasury Secretary, Jack Lew,the Federal Reserve Chairperson, Janet Yellen, the UK’s Chancellor of the Exchequer, George Osborne; the Bank of England Governor, Mark Carney, and various representatives of financial regulatory organisations. This ‘banking war game’ was hosted by the American Federal Deposit Insurance Corporation (FDIC), which has a specific fund to insure bank deposits. Then, why the panic?, those of zealous faith may ask, our deposits are insured! This is partially true, very partially true – 1.15% of deposits are insured.
Although banks send out masses of ‘special offer’ letters, it can safely be assumed that your postman will not be delivering one headed: ‘Notice of Imminent Failure’. Our political masters wish to avert ‘bank runs’ and civil unrest, so, like a corrupt weatherman, they will not inform you of the financial storm gathering pace. It is equally certain that the corrupt banking cartels have warned their billionaire investors, as is evident by Goldman Sachs manipulating the gold market since early 2013, so as to lower prices, and enable their rich friends to buy cheaply.
Each country within the G20 has agreed to adopt its own version of this thinly disguised bank heist. All countries will give preference to the borrowings of the banks (of less than 7 days maturity) from other financial institutions, and to any liabilities incurred as a result of OTC derivatives trades. That is, banks’ borrowing and gambling debts (with the borrowed money) are secured.
From November 16, 2014, larger depositors in the UK were demoted to the rank of ‘fully paid up privates’ in the Great Army of bank creditors. The UK Treasury’s Consultation Document also informs such depositors that partial repayment (1.15% of their deposit), will be delayed, with banks being declared as ‘failing’ rather than ‘failed’, that is, dying rather than dead. The ‘dying’ bank will be picked over by the courts, as a carcase by vultures, which will decide, after due legal process (an expensive eternity), were the burden lays, and that is always on the least powerful.
The de facto situation will be that such deposits, without certain value, will not be able to be used as mediums of exchange. They will effectively cease to be money.
In the event of a major bank failure, the ‘secured deposit’ promise of the UK government will come under severe threat. ATM’s may allow you to withdraw in a week what was once your daily limit, perhaps enough to buy food, and pay for other essentials. There will be strict limits on the amount of gold the ‘average’ person will be allowed to own. All purchases by cash over a prescribed limit will be reportable to the government, and a ‘big-spender’ will be accused of acquiring cash by crime. People will be driven to recycle their money within the ‘black market’, which will come under more intense government surveillance.
The police will raid you at dawn, demanding that you show them the mattress in which you are accused of stashing your cash. It will not be an excuse to declare: “I once did save money in a matress, but one night a thief broke in and stole my money, just like the government”.
We are on the eve of this reality. Just as World War II. was a continuation of World War I., the (derivatives gambling) causes of the banking collapse of 2008 were not eradicated, and this will lead to the same result, but this time governments will demand that you pay the bill.
Although many believe in Darwin’s Theory of Evolution, a sense fills the air of people asking: what is the point of evolution if this is what we have become? – ruled by those so little removed from the slime.
lenin nightingale 2014