They make the rules
The leaders of the planet’s 20 richest countries (G-20) recently got together to make some new rules regarding the high-stakes world of international finance. One of the first orders of business for German Chancelor Angela Merkel and President Barrack Obama was to help banks and screw workers and unions. Remember “to big too fail?” Well that’s now been guaranteed in the G-20 agreement. If a big bank gets in trouble they can now rest easy knowing that the new rules allow them to grab your association’s pension deposits to bail themselves out if they have to cut a check to another big, protected bank.
Russell Napier, writing in ZeroHedge, called it, “the day money died.” In any case, it may have been the day deposits died as money. Unlike coins and paper bills, which cannot be written down or given a “haircut,” says Napier, deposits are now “just part of commercial banks’ capital structure.” That means they can be “bailed in” or confiscated to save the megabanks from derivative bets gone wrong.
Rather than reining in the massive and risky derivatives casino, the new rules prioritize the payment of banks’ derivatives obligations to each other, ahead of everyone else. That includes not only depositors, public and private, but the pension funds that are the target market for the latest bail-in play, called “bail-inable” bonds.
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