A cautionary note for europeans reading this

[John Clark]

Dear all,

I still am very pushed for time (and likely will be until my family relocates in Q4 2012), however developments in Europe cause me to have further concerns for people located in that region, prompting this short note.

It's always difficult to tell whether or not the various politicians and public servants will succeed in contriving yet another scheme for delaying (and usually worsening) the impending necessary credit deflation that needs to occur to flush the toxic banking system clean. So although they may find yet another way to delay, things may also devolve very quickly so those who have still not yet heeded my suggestions to protect your wealth and savings I urge to think about this once more and decide for yourselves.

I mention this in light of a recent article that has come to my attention discussing what seems to be intentionally-leaked details of contingency planning going on by the beaurocrats in Europe in case the inevitable finally starts to happen in Europe. They are planning to unwind many of the key liberties that were the whole purpose of European union in the first place - capital/currency controls and freedom of movement.

Please consider the following post by Pater Tenebrarum which discusses this recent "leak":
Velvet Glove, Iron Fist

Please don't under-estimate how serious things might get. Remember that, at root, the international banking system (very much including the European banks) have created a stupendous amount of loans against the small (and mostly dwindling) deposit base. This has been the problem that actually peaked around the year 2000, but the consequences of which has been delayed and enlarged for more than a decade now. The bankers themselves know the true (as opposed to reported) state of their books - that is why they are holding the "it'll be armageddon if you don't do what we say" gun to the beaurocrats heads. If it turns out that it is time for this beast to roar then the notion of getting one's hands on their own savings will be a case of "the quick, or the dead".

Take care out there,

John

[Brian Reed]

Hi John,

thanks for the update.  Sorry to ask you to be redundant, but for those of us who have savings in Australian banks...what is your recommendation at this time?  

Brian Reed

---

From: John Clark <leve...@theinsideworld.net>
To: MonitoringTheMadness Google Group <monitoring...@googlegroups.com>
Sent: Tuesday, 12 June 2012 9:56 PM
Subject: [MonitoringTheMadness] A cautionary note for europeans reading this

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[John Clark]

Hi Brian,

The short answer to your question is this: my view is that people in Australia with "small" deposits in Aussie banks (e.g. less than around $100,000) don't need to take any action right now, but should remain vigilant.

Some further comments:
1. The larger the amount of savings, the more time is required to move it (particularly when moving into physical cash). That is why people with deposits that are not "small" might want to consider already moving some to physical cash.
2. My best guess is that if the virtually inevitable banking crisis were to develop in Europe right now, it would take some time to ripple down to Australia - giving Aussies a better window of opportunity to act.
3. It looks like interest rates are going to start circling the drain in Australia - I think it's highly likely that Aussie interest rates are now on a path towards zero (but perhaps not going as close to it as the USA or Germany, which in many cases are effectively at zero or negative). This, combined with the fairly ugly economic backdrop of a housing bubble deflating, deleveraging and Chinese economic troubles does not look too good for the Australian economy. All these factors should push down on the value of the Australian dollar over the longer term. The US dollar is one amongst a very limited set of currencies that is likely to be perceived as safer (relative to the other currency options) and therefore looks set to strengthen over the longer term as far as I can see. Australia's currency is not likely to be perceived that way.

Take care

John