M.F. Global = 1st Cyprus
There has been at least one universal principle that has been fundamental up until now that the savings of ordinary people should be protected in these bank failures, up to a threshold of 100,000 euros in the European Union or 100,000 dollars in the United States. There has been also a fundamental those who invested in markets and had accounts at brokers were guaranteed that if the broker went bust, your money was segregated. I have been harping about the bankers in New York warning that this is the group that is destroying our future, that of our children, and possibly our grandchildren.
The vast majority of people are ignorant. They go day to day more concerns about sports or shopping for the latest fashion. Ask them who represents them in Washington and they are clueless. These people are also the cause of the problem for they are oblivious as to what is taking place, their lack of interest in current events is exactly why there is so much corruption. The Romans said –Given them games and free bread and they will leave us alone. It is sadly so true. They will wake up only when there is nothing left to save. They are on a cruise to nowhere absolutely oblivious to the world around them.
Why are financial institutions always in need of bailouts and rescue plans? FIRST the banking system model is inherently subject to booms and busts because it is fundamentally flawed and began as a fraud. Once upon a time you paid a bank to hold your money for safekeeping. Then the banks figured they could lend your money out and make a profit keeping just 8% or less to cover withdrawals. Then when a crisis would hit, they could not get the cash back in time to meet the demand for withdrawals and the bank would close and the assets, loans they made, were then liquidated at deep discounts. They created the Federal Reserve with the power to create money in times like that to meet the demand for withdrawals without having to dump assets in a panic. Then World War I came and instead of the Fed stimulating the economy by buying corporate paper to directly create jobs, politicians instructed the Fed to buy only government bonds. The Fed was never returned to what it was intended to do and today it can take over any corporation if it deems they are too big to fail no longer limited to banks.
After PhiBro took over Solomon Brothers, Goldman Sachs took over J. Aaron. Suddenly, the trading of commodities became the mainstay of bankers. Then Robert Rubin of Goldman Sachs/US Treasury Secretary pushed to overruleGlass–Steagall. That opened the door for these banks to then be officially trading with other people’s money.
Today, the bankers who are trading banks are typically also primary dealers and when they blow up because they are liable for deposits on a demand basis yet invest long-term, they then turn to the government for bailouts threatening them that if they do not cover their losses, government cannot sell its debt.
It was Martin Glenn who was the judge in New York on M.F. Global. He was the first one to engage in FORCED LOANS by abandoning the rule of law to help the bankers by protecting them from losses taking client accounts to cover M.F. Global’s losses. That is no different from what we saw in Cyprus.
This idea of taking money from depositors to protect the bankers is nothing knew. It is the final step in the process of major political change. The bondholders of these banks like the bankers should not be bailed in, as part of resolution plans. They should lose whatever they have and politicians have to stop borrowing and pampering these UNTOUCHABLES.