Are Harper and Flaherty Setting Up Canada to be Another Cyprus?

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jerrym
Are Harper and Flaherty Setting Up Canada to be Another Cyprus?

There are quite a few articles proposing that Flaherty's budget is proposing to do just that on pages 144 and 145 of the document, using bureaucratic language to cover their tracks. There is part of me that remains skeptical about this because if this is what the Cons are up to, they are playing a very risky game with the support of voters.

"The politicians of the western world are coming after your bank accounts.  In fact, Cyprus-style “bail-ins” are actually proposed in the new Canadian government budget.  When I first heard about this I was quite skeptical, so I went and looked it up for myself. It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013″ which the Harper government has already submitted to the House of Commons. ... In addition, it is being reported that the European Parliament will soon be voting on a law which would require that large banks be “bailed in” when they fail.  In other words, that new law would make Cyprus-style bank account confiscation the law of the land for the entire EU. ...

if the banks take extreme risks with their money and lose, “certain bank liabilities” (i.e. deposits) will rapidly be converted into “regulatory capital” and the banks will be saved.

In other words, the banks will just be allowed to grab money directly out of your bank accounts to recapitalize themselves.

That may sound completely and utterly insane to us, but this is how things will now be done all over the western world."

http://www.infowars.com/cyprus-style-bail-ins-are-proposed-in-the-new-20...

 

Here are several other sources saying much the same thing. 

http://canadianawareness.org/2013/03/federal-budget-implements-the-finan...

http://canadafreepress.com/index.php/article/54142

http://silverdoctors.com/canada-includes-bail-in-provision-for-systemica...

http://www.munknee.com/2013/03/canada-the-european-union-are-proposing-c...

http://lucas2012infos.wordpress.com/2013/03/28/sd-canada-includes-deposi...

 

abnormal

Quote:
... if the banks take extreme risks with their money and lose, “certain bank liabilities” (i.e. deposits) will rapidly be converted into “regulatory capital” and the banks will be saved.

In other words, the banks will just be allowed to grab money directly out of your bank accounts to recapitalize themselves.

The only question is who owns the regulatory capital - if it's the depositors this effectively means that one asset (i.e., bank deposits) will be converted to some sort of equity - not quite a confiscation (but close to it).

 

Michael Moriarity Michael Moriarity's picture

The relevant section is on page 145. I quote it here in full:

2013 Flaherty Budget wrote:

The Government proposes to implement a "bail-in" regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.

I wouldn't have known what this really meant, but those who understand such things caught on quickly. I heard it mentioned by an American commentator on an RT discussion show a few days ago. He even got the page number right. It really does appear as if this is a contingency plan to do a Cyprus-style seizure of bank deposits whenever the oligarchs deem that necessary. Does Harper really think his government can get away with doing this, or was the paragraph inserted by some bureaucrat?

 

NDPP

 

Depositor Haircuts Spreading: Canada Endorses Cypriot Financial Harshness  - by David Lendman

http://www.globalresearch.ca/depositor-haircuts-spreading-canada-endorse...

"Bad ideas spread fast. Canada endorses Cypriot harshness.."

How fortunate the NDP alerted us so quickly to this and is so all over it....

jerrym

The Cyprus "haircut" could leave some depositors bald. 

"Depositors with more than €100,000 in Bank of Cyprus are set to get shares in the bank in exchange for at least 37.5 per cent of their uninsured deposits, while a further 22.5 per cent of their deposits will be put into a special fund attracting no interest and could see further write-offs.

Residents of Cyprus are able to withdraw no more than €300 in cash per day from each bank where they hold an account and local businesses have to limit transactions to €5,000 a day.

Credit card transactions are limited to €5,000 a month, while Cypriot customs officials will ensure that travellers take just €1,000 in bank notes out of the country per trip.

Some 18 per cent of the deposits held in Cypriot banks by residents of other eurozone countries were pulled out in February, according to figures published on Thursday by the Central Bank of Cyprus. Such deposits had fallen 41 per cent since June to €3.9bn, the data showed."

http://www.ft.com/intl/cms/s/0/4a1bb1d6-9926-11e2-af84-00144feabdc0.html...

 

The BBC noted that even the remaining 40% of a depositor's savings can not be withdrawn for at least 6 months and the amount that will be allowed to be taken out of the country is strictly limited.

Russia Television (RT) pointed out that after the first announcements of the haircut and closure of the banks in Cyprus, the Bank of Cyprus branch in London and another international city I can't remember remained open allowing withdrawls to be made. When a RT newsman asked if this allowed the very wealthy man (often these Russians used Cyprus to avoid income taxes) to withdraw all their money, he smiled and said that there were always many ways to get one's money out of such a situation.

This suggests that avenues were left open for the multi-millionaires and billionaires to get their money out of Cyprus, leaving those with more than $100,000 but not very wealthy holding the bag - people who had saved enough over a lifetime to live out their retirement and small businessmen and farmers with much of their money being operating cash rather than true personal earnings. Remember that initially the haircut was going to be about 6% for everyone. When the rebellion of ordinary savers made the EU bankers realize they had a political crisis on their hand the speculation was that a 20 to 25% haircut over $100,000 would do the job because of the all the Russian billiionaire's money in the Cypriot banks. Initially, Russian President Putin was very angry about what was happening to Russian money in this deal. Suddenly, he said he didn't care anymore. I think the fix was done to protect billionaires' money and the haircut became a crewcut for the rest who had over $100,000 more than doubled to make the deal work. That's my hypothesis.

Such an approach allows the very wealthy to keep all their money and not have to worry about income or wealth tax rises to pay off the debt in the future , while avoiding working class riots from those with less than $100,000. Meanwhile those over $100,000 take a major hit.  

The BBC noted that even the remaining 40% of a depositor's savings can not be withdrawn for at least 6 months and the amount that will be allowed to be taken out of the country is strictly limited.

Russia Television (RT) pointed out that after the first announcements of the haircut and closure of the banks in Cyprus, the Bank of Cyprus branch in London and another international city I can't remember remained open allowing withdrawls to be made. When a RT newsman asked if this allowed the very wealthy man (often Russians avoiding income taxes) to withdraw all their money, he smiled and said that there were always many ways to get one's money out of such a situation.

This suggests that avenues were left open for the multi-millionaires and billionaires to get their money out of Cyprus, leaving those with more than $100,000 but not very wealthy holding the bag - people who had saved enough over a lifetime to live out their retirement and small businessmen and farmers with much of their money being operating cash rather than true personal earnings. Remember that initially the haircut was going to be about 6% for everyone. When the rebellion of ordinary savers made the EU bankers realize they had a political crisis on their hand the speculation was that a 20 to 25% haircut over $100,000 would do the job because of the all the Russian billiionaire's money in the Cypriot banks. Initially, Russian President Putin was very angry about what was happening to Russian money in this deal. Suddenly, he said he didn't care anymore. I think the fix was done to protect billionaires' money and the haircut became a crewcut for the rest who had over $100,000 more than doubled to make the deal work. That's my hypothesis.

Such an approach allows the very wealthy to keep all their money and not have to worry about income or wealth tax rises to pay off the debt in the future , while avoiding working class riots from those with less than $100,000. Meanwhile those over $100,000 take a major hit.  

 

jerrym

With a senior European Union lawmaker confirming that the Cyprus model could be a model for future troubled banks in the EU (http://rt.com/business/cyprus-deal-new-template-dijsselbloem-889/), the quick implementation of this model in Flaherty's budget, suggests that the EU may be pushing Canada to have a similar system in place so that our banking system is 'harmonized' with the direction the European system appears to be headed.

The EU is already pushing for Canada to give up many of its economic and trade practices. For example, the European Union wants Canada to al permit increased imports of European dairy products, eggs and poultry, which could end Canada's agricultural supply management system.

"Another tough issue has arisen from European demands for extended patent protection in Canada on brand-name pharmaceuticals. Premiers have written to Ottawa in opposition to any agreement that would push up the cost of prescription drugs. By some estimates, the deal requested by the EU would slap provinces with more than $1 billion a year in extra drug costs.

The EU has also pressed for a deal giving European companies the opportunity to bid on large contracts being tendered by city governments in Canada on everything from school buses to transit systems. In exchange, Canadian firms could do likewise in the huge European procurement market. The Harper government says important sectors like education and health will be exempted from the procurement rules under CETA and the overall impact will benefit Canada. But the prospect of opening up local procurement to EU contractors has spawned concern across the country. Toronto is among the municipalities that passed resolutions asking to be exempted from CETA procurement provisions.

Another contentious issue surrounds the investment provisions. CETA is expected to contain measures similar to Chapter 11 under the North American Free Trade Agreement. The provision gives companies the right to sue national governments that are party to the agreement if the firm believes it is being discriminated against by government decisions. Critics say these provisions imperil the power of governments at all levels to bring in rules protecting the environment, worker safety and other priorities."

http://www.thestar.com/news/canada/2013/02/15/slow_going_for_final_stage...

 

In view of al these other demands for harmonization, it would not surprise me if there are demands that the Canadian financial system be harmonized with the EU. With Harper desperate to use such a free trade deal as part of his next election campaign, he is likely quiite will to sacrifice much to obtain it and therefore is in a very poor bargaining position vs. the EU.

ygtbk

This story has more details:

http://www.cbc.ca/news/politics/story/2013/04/02/f-rfa-macdonald-canada-cyprus-banks.html

The idea is apparently for banks to issue higher risk / higher return bonds (dubbed "contingent capital").

 

KenS

Once the government went down this road, I think they were caught in a lose-lose situation.

The more detail thye put in about how this would work, the more it would be treated in practice as an imminent plan... and undermine confidence in banks and the financial system.

By not saying that deposit insurance levels of bank deposits would not be touched... they start speculation that no one will be spared from the haircut. And maybe no one will be spared is as bad for confidence as saying explicitly that no one will be spared.

If they backtrack and alter the budget legislation to exclude smaller [insured] deposits... that will just raise more questions.

One thing we know for sure- large holders of cash- which is virtually all businesses [including a high proportion of those classified as small]... are going to be looking for how they WILL protect themselves. They'll find somewhere to park [or nominally park] their millions and billions that they circulate.

A new angle and niche industry has just been spawned for the absurdly rewarded residents of Bay Street, Wall Streer, and the City.

NDPP

The Confiscation of Bank Savings to 'Save the Banks'  -  by Prof Michel Chossudovsky

http://www.globalresearch.ca/the-confiscation-of-bank-savings-to-save-th...

"Canada's Deposit Confiscation Proposal. A short section of the 400 report entitled 'Risk Management Framework for Domestic Systematically Important Banks' identifies bail-in procedure for Canada's chartered banks. The word confiscation is not mentioned. Financial jargon serves to obfuscate the real intent which essentially consists in stealing people's savings..."

ygtbk

And the Star follows along a day after the CBC:

http://www.thestar.com/news/canada/2013/04/04/jim_flahertys_cyprusstyle_bank_rescue_plan_walkom.html

Apparently CDIC would still be in effect. The reference to mutual funds makes no sense since they are not bank liabilities.

jerrym

The following article confirms once again that the Canadian budget is proposing that Canada should follow the Cyprus model in dealing with a collapse of one of its big six too-large-too-fail banks (note its never small banks or credit unions) giving them the green light to engage in extremely risky financial dealings as they will be bailed out by depositors, executives can get ever larger bonuses and bank shareholders face little risk. 

The article also notes that this is all driven by the use of the fractional reserve system in which bank reserves to meet depositor demand have been whittled down to something like 2% so that loans can be highly leveraged creating higher profits and greater risk of loss of depositor's money.

"As Economist Murray Rothbard has pointed out banks operating under the fractional reserve system are always by definition insolvent. At the height of the pre 2008 bubble some U.S.. banks were leveraged at over 30 to 1. The FDIC has never had more than about 2% of the funds necessary to cover all U.S. deposits they purport to insure. When a bank has loans outstanding that are 10 or 20 or 30 times the amount it holds in deposits and the bank is failing their depositors funds have already been squandered! They aren’t seizing the depositors money. It’s ALREADY gone! ...

Your money is officially no longer safe in any of the major Canadian banks. As we've witnessed in Cyprus the Canadian government will be looking to loot the accounts of depositors in the event that one or more of the "too big to fail" banks depletes its capital to the point of no return. The failed system of fractional reserve lending has proven disastrous and the time has come to protect your assets from being stolen by the government."

http://beforeitsnews.com/financial-markets/2013/04/cyprus-and-the-canadi...

jerrym

We need an organized information and resistance campaign and demonstrations to the potential takeover of bank deposits by the Big Six Banks of Canada. The Cypriots, even though they were facing national bankruptcy, were still able to get the insured deposits (those up to 100,000 Euros) from being stolen by the fiananciers. 

jerrym

RBC bank has just announced that 50 employees are losing their jobs to temporary foreign workers who will take over their Canadian jobs in IT systems support, where they "facilitate various transactions for RBC Investor Services in Toronto, which serves the bank’s biggest and wealthiest institutional clients. ... Their jobs with the regulatory and financial applications team would be terminated at the end of April.

"There are a lot of angry people," Moreau (an employee facing lay-off) told Go Public. "A lot those people are in their late 50s or early 60s. They are not quite ready for retirement yet, but it may be very difficult to employ them."

http://www.cbc.ca/news/canada/british-columbia/story/2013/04/05/bc-rbc-f...

So our financial institutions, thanks to Harper, are now in the process of being able to steal their depositors' bank accounts, but also eliminate Canadian employees in order to use and abuse cheaper foreign temporary workers.

If Canadians do not organize against both of these problems, both of them will only get a lot worse and spread to other industries as they employ more foreign workers and find ways of stealing wages instead of deposits. 

Stargazer

This is all over facebook. Have a look at the RBC page, which is full of people who will be taking their money out of RBC (including me). RBC claims they didn't do anything wrong, it was IGATE who did it. No one is buyingh their bad PR. Tomorrow RBC is going to feel a little tiny bit of what the laid off workers are feeling.

 

 

kropotkin1951 kropotkin1951's picture

RBC is one of the main financiers of the tar sands. When I protested the Olympics that was my main focus since they were one of the sponsors.  Notice how SNC Lavalin, RBC and Tim Horton's all abused the temporary workers program.  I wonder why a Chinese company thought they could get away with such behaviour.

janfromthebruce

k1951, thank you for revealing that RBC is a major investing in tar sands.