The Phaserl


The Worst Place in the World to Bank

by Simon Black, Sovereign Man:

It started with an illegal wiretapping scandal.

Jean-Claude Junker, after spending nearly 18 years in office as Prime Minister of Luxembourg, was forced to resign in 2013 after evidence surfaced of his complicity in a domestic spying operation.

So what does a disgraced politician who resigns in shame do?

Why, receive a promotion, of course.

Less than a year later, Junker was appointed to the most powerful political office in Europe– President of the European Commission.

(I say “appointed” because Junker was selected by the reigning political establishment, not by voters.)

Aside from being one of Europe’s most prominent unelected policymakers, Junker has become legendary for his bizarre quips and daft behavior.

(Here’s some incredible footage of an intoxicated Junker marching in place and slapping around other world leaders at a press event.)

Among Junker’s most famous quotes are perhaps the truest eight words in politics: “When it gets serious, you have to lie.”

That was from 2011 when Junker was caught lying about a secret meeting about Greece’s debt crisis.

On the surface, the politicians insisted that Greece was just fine.

Yet all the while they were lying to the public, they were preparing for an emergency behind closed doors.

I was reminded of this quote recently when the European Central Bank published results of its bank “stress tests”.

The ECB conducted these tests to prove that Europe’s biggest banks were just fine and would be able to withstand another major crisis.

Surprise, surprise, nearly every bank in Europe passed with flying colors, as if the ECB were saying, “Nothing to see here people…”

One of the ECB’s primary missions, after all, is to maintain stability in the financial system.

And when your financial system is this toxic, the ECB can’t maintain stability by telling the truth about their insolvent banks.

“When it gets serious you have to lie.”

Here’s the reality: Europe’s banking system is toast.

Wholesale interest rates on the continent are already negative.

Negative interest rates essentially penalize any bank that tries to be responsible and hold extra reserves

What an unbelievably stupid policy.

Rather than encourage banks to be conservative with their customers’ deposits, the ECB is practically forcing them to make as many loans as possible.

So it’s not exactly much of a shocker to find out that, in their haste to loan out almost 100% of their customers’ money, many of the loans went belly-up.

EU data showed that by the end of September 2015, 17% of Italian loans were non-performing. The non-performing loan rate is a shocking 43.5% in Greece, and 50% in Cyprus.

(That data is nearly a year old, so the numbers are worse now.)

This is a huge problem. Banks have lost a big chunk of their depositors’ savings.

There’s a lot of talk now about government bail-outs. And some of that has already taken place.

In Italy, the government already had to step in with a 150 billion euro guarantee just to forestall a potential bank run.

But the Italian government is one of the most bankrupt in the world, with a debt level that exceeds 130% of GDP; they’re in no position to bail anyone out.

That’s why, as of January 2016, European “bail in” legislation has taken effect.

The rules are already in place whereby depositors can be held liable for the idiotic financial decisions of their banks.

If the bank goes under, they can take your money down with it.

It’s already happened.

In 2013, the government of Cyprus froze EVERY bank account in the country, locking every single depositor out of his/her savings.

These risks are very real.

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