If you think that a bank has the right to your deposits in order to square their books, then all banks everywhere go away.
The problem is that they lie right up until the time they can’t, because the penalty for lying is so much less than the penalty for telling the truth and watching the bank go down the tube in an hour.
France, Spain, and Italy are just over the brink. This is why the Germans couldn’t do anything for the Greeks. This isn’t the last bank holiday Europe is going to have.
And we’re not in any better shape. Puerto Rico’s out there, as are a whole bunch of cities who can’t make good on even their revenue bonds any more.
So, if the bank is going to lie, and worse, if the government TELLS the bank to lie (2008), and this ‘bail-in’ happens in Europe, then it won’t be long before the smart ones read the writing and start shifting deposits over to something more convertible and real (diamonds, copper, silver - but not gold - the US wrecked the market in gold by allowing more paper to be written on gold than was actually on deposit).
The 1 percent are talking to their money managers as we speak. Somehow - most bank deposits, wherever they are, will be declared ill-gotten - if for no other reason than they tried to move it out.
It will destroy WORLD banking. Not just Greek banking.
“Why should we believe you?” will be the question on everyone’s lips in every press gaggle in the country involving banks.
“Nothing to hide? Open the books - today.” This will be what every large investor says to their private banker.
The bail-in will trigger all of it. The snow will come down the hill.
Use cash to pay off any debts. You improve your overall financial security, and your regularly monthly expenses go down.
And no bank is going to be mad and unlikely to prevent savings moved over to pay off a credit card.