Well, it happened again.
China’s stock market plunged, sending more than half a trillion dollars to money heaven.
What a surprise, it turns out that a massive credit bubble is actually unsustainable and will eventually burst. Shocker.
And just like what happened last year when Chinese stocks tanked, the government is stepping in to centrally plan the stock market recovery.
– Greek Capital Controls To Remain For Months As Germany Pushes For Bail-In Of Large Greek Depositors (ZeroHedge, July 26, 2015):
Two weeks ago we explained why Greek banks, which Greece no longer has any direct control over having handed over the keys to their operations to the ECB as part of Bailout #3’s terms, are a “strong sell” at any price: due to the collapse of the local economy as a result of the velocity of money plunging to zero thanks to capital controls which just had their 1 month anniversary, bank Non-Performing Loans, already at €100 billion (out of a total of €210 billion in loans), are rising at a pace as high as €1 billion per day (this was confirmed when the IMF boosted Greece’s liquidity needs by €25 billion in just two weeks), are rising at a pace unseen at any time in modern history.
A little under 24 hours before Europe opens for trading, and just under 12 hours before the open of equity futures, and things are not looking good.
– Draghi Freezes Greek ELA, Varoufakis Tells BBC “Looking At Imposing Capital Controls, Closing Banks” (ZeroHedge, June 28, 2015)
– The Situation Escalates – Greece Is Now Taxing Cash Withdrawals (Secular Investor via ZeroHedge, May 11, 2015):
The saga (or drama, if you like) in Greece is continuing and even though the country was able to make a 200M EUR interest payment to the IMF earlier this week, markets shouldn’t be too optimistic just yet as that payment is less than 5% of the total cash amount it has to pay in the next 4-5 weeks.
Indeed, Greece has just 3 days left to find 750M EUR to meet the requirement of a principal payment to the IMF which is due next Tuesday, and we consider it to be quite impossible for the country to meet this demand without finding additional sources to generate cash from.
– Swiss National Bank Hints At Capital Controls (ZeroHedge, Jan 7, 2015):
Even as the whispers that the imposition of capital controls by Greece, which is now running out of both time, negotiating leverage and tax money is just a matter of time, get louder with every passing day if not acknowledged by Greek officials yet, it was none other than one of the supposedly most “rock-solid” central banks in the world that fired a shot across the bow of global financial stability when it hinted that not Greece but another country may be the first to engage in capital controls. The country: Switzerland.
– Ukraine Introduces Capital Controls (Zerohedge, Sep 22, 2014):
A few days ago we showed how when Obama said there would be “costs” for Moscow in the Ukraine-Russian conflict, he got the recipient country of said costs woefully wrong, as confirmed by the economic data released by Ukraine which showed its Industrial Production crater at a pace on par with the Lehman collapse, confirming the Ukraine economy was on the verge of a spectacular implosion just in time for the harsh, Gazprom-free winter to finish off what little economic activity is left.
The resulting selloff in the Hryvnia and Ukraine bonds, was therefore, hardly surprising.
Which probably means the news reported by Bloomberg moments ago, which cites Ukraine’s Unian news service, that the Ukraine central bank just instituted restrictions on Hryvnia use, i.e., capital controls, should also not come as a surprise, yet for all those expecting Russia to crater first under the weight of western sanctions, to see said cratering take place in western-backed (and IMF guaranteed) Ukraine is probably just a little unpleasant.
– Ukraine Capital Control Crunch: Largest Bank Limits Cash Withdrawals To $100 Daily (ZeroHedge, March 2, 2014):
As we warned on Friday, the military escalation in Ukraine has had dire consequences for the financial state of the country, its banks, and ultimately its people. The central bank promised to rescue domestic banks so long as they agreed to its complete control and it appears the first consequences of that “we are here to help you” promise is coming true:
- UKRAINE’S PRIVATBANK LIMITS ATM WITHDRAWALS TO UAH1,000/DAY ($103/day)
Privatbank is Ukraine’s largest bank and while claiming this move is temporary (just like Cyprus’ capital controls), the bank has also ceased new loans amid what it calls “geopolitical instability”. In summary, you can’t have your money back! Expect long angry lines at Ukrainian banks on Monday morning (and at the pace of collapse in the Hyrvnia, hyperinflation next).
– Ukraine Imposes Capital Controls, Limits Foreign Currency Withdrawals (ZeroHedge, Feb 28, 2014):
Yesterday we reported that as part of the Ukrainian central bank’s plan to bailout the nation’s largely insolvent private banks, it would provide any needed funding but only “if they will remain under open control of the National Bank of Ukraine.” And since the new CB head Stepan Kubiv’s allegiance to Europe were already well-known, this was merely a quick and efficient way of providing Europe with all the banking details including asset holdings of the local population. Today, the annexation of the country’s banking system by a “benevolent” Europe is complete.
Itar-Tass reports that Ukraine’s national bank has imposed temporary limits to withdraw money from foreign currency deposits to sums equivalent to no more than 15,000 hryvnias (about $1,500) a day, National Bank Chief Stepan Kubiv told a press conference. Or, as the citizens of Cyprus call it – capital controls.
– Not exactly the brightest way to smuggle gold… (Sovereign Man, Nov 16, 2013):
Thailand is known for a lot of things– quintessential white sandy beaches, hard partying nightlife, quiet Buddhist reverence…
But what a lot of people don’t realize is that Bangkok is probably one of the most important cities in the world when it comes to illegal trafficking.
Human trafficking. Narcotrafficking. Money laundering. Weapons. Forged documents. Etc.
Bangkok is just as vital to these industries as New York or London to the global financial sector.
And now, thanks to India’s sagging economy, they can add one more to this list: gold smuggling.
Recently, India has been in a state of economic turmoil. Beset on all sides by spiraling inflation, economic stagnation, and a rapidly depreciating currency.
In response the Indian government imposed capital controls in a feeble attempt to curb gold imports and reduce its widening current account deficit.
This constitutes theft, plain and simple. By eliminating options to hold anything other than rapidly depreciating paper, Indian politicians essentially stole the purchasing power of people’s savings
– The Great Cyprus Bank Robbery (Ron Paul, April 1, 2013):
The dramatic recent events in Cyprus have highlighted the fundamental weakness in the European banking system and the extreme fragility of fractional reserve banking. Cypriot banks invested heavily in Greek sovereign debt, and last summer’s Greek debt restructuring resulted in losses equivalent to more than 25 percent of Cyprus’ GDP. These banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.
Watch the video here:
– ‘This isn’t going to stop with Cyprus’ (RT, March 28, 2013):
The Cyprus liquidity crisis will only lead to violence, Wide Awake News founder Charlie McGrath has told RT. The journalist warns that the Cyprus solution may serve as a model as the wider EU deals with the financial crisis.
RT: The authorities have promised to reopen the banks on Thursday – do you think Cypriots can sigh with relief now?
Charlie McGrath: No, not at all. And let’s examine the word reopen, because they are not really reopening. They are putting on all these capital restrictions on the people of Cyprus, 300 euros is the max withdrawal they can make. They can only take 3,000 maximum amount if you are going to travel. You live in Cyprus and you have relatives that live in the United States and the UK, wherever and you want to send them money – you absolutely cannot.
The so-called establishment media is talking about, there’s been enough time that has passed since the announcement of this deal that they don’t think there’re going to have a bank run but the real reason they don’t think they’re not going to have a bank run is because they are really not opening the banks. They’re going to have all type of guards and police and very limited funds that the people of Cyprus can take. So, I don’t think they should be relieved at all, nor should Europe nor the rest of the world for that manner.
RT: At this point – how do you convince panicked savers across Europe that the EU won’t dig into their accounts, next?
– Cyprus banks re-open – in pictures (Guardian, March 28, 2013):
Banks have re-opened on the island after 12 days – but capital controls are limiting withdrawals to €300 a day
– Cyprus banks reopen – but stock exchange will remain closed (Guardian, March 28, 2013)
– Cyprus Capital Control Details Revealed (ZeroHedge, March 27, 2013):
As of now, the banks are still expected to open tomorrow; some of the details of the capital controls to be put in place have been leaked (via Phileleftheros):
- *CYPRUS CONTROLS APPLY TO ALL ACCOUNTS, CURRENCIES
- *CYPRUS BANK CONTROLS INCLUDE CURBS ON CASHING CHECKS
- *CYPRUS BANK CONTROLS TO BE IN FORCE FOR 7 DAYS
- *CYPRUS CURBS INCLUDE BAN ON ENDING TIME DEPOSITS
- *CYPRUS CURBS TO INCLUDE PAYMENTS ABROAD
So no outflows allowed to a foreign country (cough Russia cough) and for only 7 days (Pluto Standard Time?); furthermore, talk is that carrying cash of over EUR3,000 across the border wil be banned.
– A Furious Cyprus Begins Investigating Who Breached The Capital Controls (ZeroHedge, March 27, 2013):
On Monday we reported the very disturbing news that despite the ongoing liquidity blockade, capital controls and (somewhat) closed Cyprus banks, one particular group of people – the very same group targeted to prompt this whole ludicrous collapse of the island nation – Russian Oligrachs had found ways to bypass the ringfence and pull their money out quickly and quietly. We said that, if confirmed, “If we were Cypriots at this point we would be angry. Very, very angry.” Turns out the Cypriots did become angry, and the questions are finally starting. As Spiegel reports, the Cypriot Parliament, which may or may not last too long once the banks reopen tomorrow and the people realize that in a fractional reserve banking system, those deposits you thought were there… they are gone, poof, has begun investigating the capital flight that may means the destruction of Cyprus has been for nothing. Sadly, it is now too little, too late.
Banks have been closed and accounts frozen in Cyprus recently. Nevertheless, large amounts were moved out of the country’s crippled financial institutions on the eve of the bailout package. Lawmakers are suspicious and are investigating both the government and the Cypriot central bank.
– Why Cyprus Matters (And The ECB Knows It) (ZeroHedge, March 23, 2013):
WHEN THE RED QUEEN IS AFTER YOUR HEAD
When Zig turns to Zag and the Red Queen is after your head then extraordinary care is necessitated. To quote Holmes, “The game is afoot” on the Continent.
I have been asked, with some frequency, why the bondholders have not been tagged in the Cyprus fiasco. That answer is simple. Most of Cyprus’s bonds are pledged as collateral at the ECB or in the Target2 financing program. Then one may also ask why the bonds of the two large Cypriot banks are not being hit. The answer is the same; most are held as collateral at the ECB or Target2. In both cases, remember uncounted liabilities, the government of Cyprus has guaranteed the debt. Consequently if the two Cyprus banks default it is of small matter as the sovereign has guaranteed the debt. However if the country defaults and leaves the European Union then it will matter and matter significantly as the tiny country of Cyprus would wipe out the entire equity capital of the European Central Bank. While it is not a matter of public record it is estimated that Cyprus has guaranteed about $11.6 billion of collateral at the ECB.
– Cyprus Officially Passes Capital Controls Into Law (ZeroHedge, March 22, 2013):
While it is unknown if the Cypriot parliament will agree to, and enact into law, the Troika-demanded deposit haircuts, after the shocking vote of mutiny against Merkel earlier this week that saw not one politician vote for the Europe suggested deposit tax levy (and even the ruling party abstained), a vote which will once more take place tomorrow, moments ago Cyprus became the first Eurozone country to officially implement governmental capital controls into legislation. At this point it had no choice: whatever happens with the deposit haircut, or with everything else, it is now inevitable that the local Cypriots will do all they can to pull as much money from domestic banking system as possible following the complete loss of faith and trust in banks, which is why the government had no choice but to intervene with its own “controls.”
Sadly, this marks a milestone in the development of the Eurozone – it’s all downhill, and accelerating, from here.
There are various other proposals which are currently being voted on, all of which are secondary to the Capital Controls one (the restructuring of the broke banks is perhaps the next most important one), until tomorrow’s vote on deposit haircuts.