Watch Out: the Government “Bail-In” is Spreading

Written by: Jack Boylan

Remember that Cyprus “bail-in” (otherwise known as stealing) from earlier this year? Those unlucky enough to have assets in those banks took a hefty haircut as the EU (European Union) declared that a bailout was in order. In what was promised to be a one-time deal this bailout was going to be partially, a bail-in. That cutesy wording meant that depositors were going to contribute (a lot!) to the process, whether they liked it or not. As depositors (and many other people) screamed that this was unfair at least and almost certainly illegal, the powers that be relented partially. Only the “wealthy” depositors would pay. After all, they were bad and besides this was a onetime emergency never to be tried again.

But while the rest of the world quietly, if reluctantly, accepted the promise, more than a few looked at the Cypress situation as a brilliant idea. And while the European central bankers scoffed at the skeptics as uneducated rubes for doubting there sincerity, many were privately thrilled at this new tool. And, wow, it hasn’t taken long to spread:

Now that “bail-ins” have become accepted practice all over the planet, no bank account and no pension fund will ever be 100% safe again. In fact, Cyprus-style wealth confiscation is already starting to happen all around the world.

That may sound hyperbolic, and maybe it is, but there are some developments that you may not be up to speed on as they are happening rapidly. In Poland, probably the most well known case, the government is going after private pensions rather than bank depositors, but the end result is the same:

He said that what remained in citizens’ pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.

While it has made the news, the coverage has been much lighter (thus far at least) than the Cypress debacle. There is much more at the link, including a very quiet provision put into Canadian legislation giving them power for these kinds of maneuvers. It seems the idea is just too difficult for politicians to resist. Nothing has been confiscated there yet, but they are apparently getting ready. In fact the politicians are getting ready all over the place as money sources for government is rapidly disappearing. Politicians, like all thieves go where the money is, to borrow a famous phrase from the wild, wild west. And Canada isn’t the only country that is seemingly doing better than some others that has greased the wheels for future theft. There are a lot and it seems to be gaining some steam:

The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

These developments are important for all investors to keep an eye on. As of now, there is no such talk in the U.S., but many people have mutual funds invested in foreign countries as well as domestic companies that do business all over the world. If there is a worldwide “bail-in” mentality it will hurt all investors. And does anyone doubt that there may eventually be a call for “fairness” so as to help out the government? There are plenty of worries going on in the world for investors to fret over, but this issue could end up in a really bad place. As always. It’s a good idea to be sure that your portfolio is ready for all circumstances.


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Watch Out: the Government “Bail-In” is...

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