Posted on 04/04/2013 1:33:08 AM PDT by Perseverando
Growing wealth inequality means that the wealthy have nowhere to hide and that events like those in Cyprus will happen in more countries around the world, including developed nations, said Marc Faber, the contrarian investor and publisher of the Gloom, Boom & Doom Report.
"It will happen everywhere in the world, in Western democracies," Faber said "Squawk on the Street" on Tuesday. "You have more people that vote for a living than work for a living. I think you have to be prepared to lose 20 to 30 percent. I think you're lucky if you don't lose your life."
"If you look at what happened in Cyprus, basically people with money will lose part of their wealth, either through expropriation or higher taxation," he added.
"The problem is that 92 percent of financial wealth is owned by 5 percent of the population. The majority of people don't own meaningful stock positions and they don't benefit from a rise in the stock market. They are being hurt by a rising cost of living and we all know that the real incomes of median households has been going down for the last few years," he said.
(Related: China's Colossal Credit Bubble Next Big Risk: Marc Faber)
(Excerpt) Read more at cnbc.com ...
You need to think about what happened here. Roughly around 2005....Cyprus banking operations were doing ok. Some corruption existed but they were still operational.
Enter the Russian billioniares because they lack total trust in Russian banks, the door was wide open by the Cypriot political leadership, and the Euro was about to be adopted by the island. Everyone was upbeat about this relationship. Strangely enough, the political leadership held a wide-open door without any huge taxes or residence requirements.
So the Russians came and put the money into the bank. Come 2008 as the Greeks are sliding into terrible woes...the Cypriot banking establishment is buying up Greek bonds. No one today in the Cyprus banking establishment will explain why. The general feeling is that the Communist-led Cyprus government had endorsed this. The President of the island....who stayed all the way up to December of 2012....was apparently in favor of buying the bonds.
As you can guess...the bonds failed miserably (although they promised a big return on their investment, go figure). By the spring of 2012, it was readily apparent that massive sums of money had vanished down the money pit. They were already by summer of 2012....talking to the EU and asking for a deal to help stabilize their banks.
The Russians helped to make this loss possible by dumping their money into a third-world banking system that was only marginally only able to handle what they had prior to 2005. As for greed and abusive investment strategies? These Cypriot bankers are basically clowns, and just allowed political players to manipulate the system enough to bankrupt the entire island. And the EU? They went by the rules...you only have 100,000 Euro protected by the general insurance that they operate. Anything above that is “lost”, except for what cash is still in existence.
All of this to happen in the US? If the banks were this stupid, we are only covered up to a certain amount in each bank. Beyond that....we’d lose our cash as well.
It is good to be poor!
For a very long time now, we’ve been mired in the age of the Marxist Revolution by Stealth.
The massed proletariat don’t need to overthrow society with Molotov cocktails anymore - all they need is one Obama in the White House to lead the mass confiscation, and all the resources of society are - bang! - transferred from society’s producers to society’s takers.
Yes, the society will slowly disintegrate, as fewer and fewer people produce anything of value, but, let’s face it, no one cares about that, and hey, let’s get in there and grab while the grabbing’s good.
President Obama is working hard to make sure our assets are safe here.
The money quote.
Wink Wink
Sorry, I couldn’t resist.
The thing is, they punished the very people who gave their banks liquidity. The large depositors. By doing so they’ve only further damaged their banking system. Dumb on steroids. Large depositors all over the world are now going to be looking for ways to pull their money out before they’re caught again when the music stops. And that just further tightens the screws on the banks leading to more of the same.
When banks fail, depositors lose their money. I’m not entirely sure why so many conservatives find this to be such a disturbing fact.
So true, so true. And if your a lazy bum who wants to love the good life without putting in any effort, why not vote yourself your "fair share" of some greedy rich guy's bank account?
You can end all this “wealth seizing” by bringing back tariffs, and ending taxes on income and wealth....income taxes are so pushed by Free Traders
The EU is the Failure of Free Trade. It is beyond just mere Socialism (Free Trade requires Socialism to placate both the masses and the elite)....the notion that you can create wealth by redistributing it away from you has been proven to be a failure....Free Trade has failed.
Protective tariffs end the “war on the wealth creators” by rewarding those who invest in your economy, and punish those who do not. Free Traders reward those who redistribute wealth out of the country
Because most of the banks that are failing are do to one or two things theft/crime/criminal negligence or done with the assistance of the government and its agencies that are suppose to prevent it. In fact many in government ‘share’ in the Banksters ill gotten gains and many that are in those agencies have participated themselves in causes the banks/brokerage house to go under that they are now in charge of overseeing. The Justice depart has pretty well admitted that though crimes were more than likely committed in many of these case in their opinion the act of going after these Banksters would be in itself cause serious damage to the economy.
“You have more people that vote for a living than work for a living.”
Yep. The money quote. The only way a society like ours functions long term is when everyone has skin in the game, and when there truly is the hope for upward mobility via ones own efforts.
We have been ignoring as a society some ominous indicators for a long time.
Data from the CDC from 2010 (http://www.cdc.gov/nchs/fastats/unmarry.htm) show that nearly 41% of births in the US were to unmarried women. The rate is ~72% among blacks. The implications of those numbers alone are huge.
When your urban areas have an enormous influence on who winds up with political power, and those urban areas have statistics like the following, you are in trouble: High School graduation rate - Detroit (38%), Cleveland (34%). Baltimore (41%), Atlanta (44%), Chicago (55%), New York (61%); In recent annual reports 31,000 youth in Cook county Illinois were arrested for criminal offenses; As reported at the end of 2009, 800,000,000 dollars in ‘Recovery Act’ money had been spent in the Chicago zip code 60603 - with 19 jobs created.
These are just a few examples, but you can’t sustain those kinds of numbers, and our illiteracy rates, and our drop off of participation in the work force, and our numbers of people on assistance of some sort or another, and survive as a society. You just can’t.
Resentment is growing, and that also erodes the societal fabric - sometimes irreversibly. You can’t fix these things without openly discussing them, but we just keep ignoring the elephant in the room - for a variety of reasons - including the lack of media attention and our insistence on political correctness.
Russian millionaires and billionaires were putting their money into Cyprus long before 2005.
If you invest in say the market, you take on a certain amount of anticipated risk. You know you could lose it ALL.
When one puts money in a bank, on expects it to pretty much stay in there and the GOVERNMENT or some COLLECTIVE GOVERNMENT won't come in and make you take a loss of 40-60% on your “savings.”
The problem I have with what was done is if the bank failed, the GOVERNMENT didn't have enough to cover the insured losses. So, a bailout of some sort was needed.
What no one is questioning is why couldn't the Cyprus government cover it(we know the answer...really)? Everyone is blaming the Russians etc., but really where does the responsibility rest? Why are none of the corrupt bankers being prosecuted? Why did the EU have to bailout these banks? The talk about deposits being insured up to 100,000eu....but the government really isn't capable of said insurance and needed to look elsewhere.
I don't think many conservatives are so disturbed by the bank failure as we are about the ‘how it is handled.’ Deep down inside the recesses of our minds is the realization that ‘insured by the FDIC’ really is meaningless. Saving for retirement or a rainy day puts one at risk to lose 40-60% to the government, not the stock market. It is the realization for some that putting your money in the bank is just as risky as putting it in the global market.
If you saw your market portfolio was about to lose 40% of its value...you would change your investments. Right?
In the case of the Cypriot...they froze the accounts and took ALL control away from the “shareholder.”
Free market. Try it. When stocks fail, shareholders lose their money. When a horse stumbles in the final turn, gamblers lose their money.
If you don't have your money out of the bank by now, you're too late.
I’m more than doubtful that Cypriot bankers were just plain stupid. I suspect they had some cash motivation to buy all those Greek bonds. Corruption was the motivation, not stupidity.
When you deposit money in a bank, it's not as if the money sits in a vault somewhere and the bank pays you interest for the privilege of guarding it. The bank takes the money and does something with it, in the hopes of making more money on their investment than they pay you in interest.
When the underlying investments fail -- which they often do even when they are supposed to be "safe" -- then the bank fails.
BFL
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