Monday, March 25, 2013

Cyprus Banking Crisis Resolution–A Great Depression Credit-Anstalt Banking Moment?

My last post was very explicit in its nature.  A single, almost imperceptible perturbation can lead to incomparable devastation.  There was a reason for that remark.  And, that reason has now come to pass.  That is, the seemingly imperceptible banking crisis of a very small nation, Cyprus, has led to the  confiscation of the vast majority of its banking deposits to deal with the losses created by banking executives; a truly criminal act.  Now, we can argue whether those deposits are drug money or Russian mafia money or whatever.  That’s irrelevant to the bigger picture.  As noted on here many times, all major international banks are money launderers in today’s deregulated financial system.   What is relevant is that in a world of deregulated finance, the precedence has now been set to confiscate deposits to pay for banking crimes and malfeasance.  These are the dynamics needed to create a bank run. 

I just have to put this paragraph in here.  Andrew Ross Sorkin wrote an completely useless op-ed in the New York Times that we shouldn’t worry about Cyprus.  That it is insignificant.  It is so small that it is imperceptible.  You know, like that single neutron in my last post.  Of course, Sorkin is a shill for the corporate state over at CNBC when he’s not writing about things he doesn’t understand for what has become an ever-more-useless newspaper.   This is the type of dumbed-down nonsense that really defines the idiocy of the corporate state and its mainstream media.   His op-ed about the insignificance of Cyprus is the type of nonsense that typically ends up defining major tipping points – the extreme arrogance and ignorance of people who have no idea what they are talking about.  This Cyprus banking crisis may be the most significant event since the 2008 crash; the onset of this crisis.

Depositor’s assets in Cyprus are being confiscated to pay for the mistakes of the banking executives at their bank.   This bank “bailout”, courtesy of depositor’s confiscated deposits, in Cyprus looks a lot like the Credit-Anstalt banking fiasco that tipped off an eventual continent-wide run on banks in Europe on the start of the Great Depression.   Credit-Anstalt bank was very similar to the Cyprus banking crisis in that it too was an oversized bank in a comparatively small Austrian economy that was rife with mismanagement, huge bad business bets, massive bad loans and, of course, the precursor to all of this, massive management corruption covered up for years by equally crooked politicians.   Without writing a book, the mismanagement of the Credit-Anstalt banking crisis eventually started a massive run across European banks and led to the back end of the crisis that we now know as the Great Depression.  

The next six to twelve months in Europe will be very telling.   Especially, if this form of criminal confiscation employed in Cyprus is used in future dealings with the criminogenic, politically-propped up, private for-profit banking rot in Europe as it appears the Euro banking thugs are intimating it will be.   If countless propped up insolvent zombie banks across Europe require future bailouts and depositor’s money is confiscated to foot the bill, a European-wide run on these banks to remove deposits most certainly could ensue as happened eighty years ago.  And that panic could easily spread worldwide as that small perturbation creates what could be an unstoppable chain reaction. 

Regardless of how this plays out, it certainly will have unintended consequences and its potential significance cannot be overestimated. 

posted by TimingLogic at 1:14 PM

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