from TheEconomicCollapseBlog Website
If you still have money in European banks, you need to get it out.
This is particularly true if you have money in southern European banks. As I write this, the final details of the Cyprus bailout are being worked out, but one thing has become abundantly clear: at least some depositors are going to lose a substantial amount of money.
Personally, I never dreamed that they would go after private bank accounts in Europe, but now that this precedent has been set it should be apparent to everyone that no bank account will ever be considered 100% safe ever again.
Without trust, a banking system simply cannot function, and right now there are prominent voices on both sides of the Atlantic that are loudly warning that trust in the European banking system has been shattered and that people need to get their money out of those banks as rapidly as they can.
Even if you don't end up losing a significant chunk of your money, you could still end up dealing with very serious capital controls that greatly restrict what you are able to do with your money. Just look at what is already happening in Cyprus.
Cash withdrawals through ATMs have now been limited to 100 Euros per day, and when the banks finally do reopen there will be strict limits on financial transactions in order to prevent a full-blown bank run. And of course anyone with half a brain will be trying to get as much of their money as they can out of those banks once they do reopen.
So the truth is that the problems for Cyprus banks are just beginning.
The size of the "bailout" that will be needed to keep those banks afloat will just keep getting larger and larger the more money that is withdrawn. Cyprus is heading for a complete and total banking meltdown, and because the economy of the island is so dependent on banking that means that the economy of the entire nation is going to collapse.
Sadly, similar scenarios will soon start playing out all over Europe.
So if you hear that a "deal" has been reached to "bail out" Cyprus, please keep in mind that the economy of Cyprus is going to collapse no matter what happens. It is just a matter of apportioning the pain at this point.
According to the New York Times, it looks like much of the pain is going to be placed on the backs of those with deposits of over 100,000 Euros...
Does that sound bad to you? Well, if a deal is not reached, there is a possibility that those with uninsured deposits could lose everything.
According to Ekathimerini, EU officials are telling Cyprus to choose between a "bad scenario" and a "very bad scenario"...
So what percentage of the deposits in Cyprus are uninsured deposits?
Well, nobody knows for sure, but according to JPMorgan close to half of the total amount of money on deposit in EU banks as a whole is uninsured. Do you think that some of those people will start moving their money to safer locations after watching how things are going down in Cyprus?
They would be crazy if they didn't. And if you think that "deposit insurance" will keep you safe, you are just being delusional.
According to CNBC, very strict capital controls are coming to Cyprus.
These rules will apply even to accounts that contain less than 100,000 Euros...
A lot of people are going to lose a lot of money in Cyprus banks, and a significant percentage of them are going to be Russian.
And as I wrote about the other day, you don't want to have the Russians mad at you.
According to the Guardian, Moscow is already considering various ways that it might "punish" the EU...
Could this be the start of a bit of "economic warfare" between east and west?
One thing is for sure - the Russians simply do not allow people to walk all over them.
Meanwhile, things in Cyprus are getting more desperate with each passing day. Because they cannot get money out of the banks, many retail stores find themselves running low on cash.
In a few more days many of them may not be able to function at all...
But do you know who was able to get their money out in time? The insiders.
According to the Daily Mail, the President of Cyprus actually warned "close friends" about what was going to happen and told them to get their money out Cyprus...
Overall, approximately 4.5 billion Euros was moved out of Cyprus during the week just before the crisis struck.
Wouldn't you like to get advance warning like that? Well, at this point it does not take a genius to figure out what to do about any money that you may have in European banks.
The following is from a recent Forbes article by economist Laurence Kotlikoff...
Others are being even more blunt with their warnings.
For example, Nigel Farage, a member of the European Parliament, is warning everyone to get their money out of southern European banks while they still can...
And Martin Sibileau is proclaiming that if you still have an unsecured deposit in a Eurozone bank that you should have your head examined...
So where should you put your money? I don't know that there is anywhere that is 100% safe at this point.
But many are pointing to hard assets such as gold and silver.
The following is what trends forecaster Gerald Celente had to say during one recent interview...
I used to tell people that putting their money in U.S. banks was safer than putting it other places because U.S. bank deposits are covered by deposit insurance up to a certain amount.
But now we see that deposit insurance means absolutely nothing. If they decide to "tax" (i.e. steal) your money from your bank accounts they will just go ahead and do it.
So what should we all do?
Personally, I think that not having all of your eggs in one basket is a wise approach. If you have your wealth a bunch of different places and in several different forms, I think that will help.
But as the global financial system falls apart, there will be no such thing as 100% safety. So if you are looking for that you can stop trying.
Our world is becoming a very unstable place, and things are going to get a lot worse.
We are all going to have to adjust to this new paradigm and do the best that we can.