ZIRPing On Bail-Ins To The Bitter End

Hang onto your seats folks because after all of the warnings we have had and all the beta tests that have been completed we have officially entered the realm of economic insanity. Bail-ins and negative interest rate policy (NIRP) are now considered normal, viable solutions for fixing national and global economies. The Guerrilla warned about this madness when the Cyprus bail-in trial balloon was floated in 2013. Lest everyone forget that cheery episode here is what took place.


Thousands of Cypriots awoke to find that in some cases they had lost more than 40% of their savings. Their accounts were raided to cover the bad bets made by criminal bankers. But wait! Is writing “criminal” bankers an oxymoron? The Guerrilla leaves it to you to decide. In Cyprus, the populace’s muted response was the signal that the bankers and their technocrat cronies had been waiting for. Soon after the Cypriot “experiment” bail-ins became official policy at the Bank for International Settlements (BIS). They also became law in the western countries with the biggest debt bubbles. These profligate nations strategically implemented rules for bail-ins to deal with the final collapse of the paper Ponzi scheme.


Along the way the banksters not only convinced the populations of the West that paper is more valuable than a hard asset like gold, they also succeeded in convincing the citizenry that it is they, not the corrupt bankers who created it in the first place, who are responsible for the debt! Such is the wanton stupidity that reigns in so-called enlightened western nations.


In a move that can only be defined as bizarre the nation of Austria, typically a bastion of fiscal prudence, bailed-in a failing bank. The government seized the accounts of depositors, otherwise known as unsecured lenders, to pay the debts of the failed institution. Dear readers, do you think the government of Austria cares one iota about the fact that its actions left a number of its citizens in financial ruin? Not in the least! Who cares if a few people go hungry as long as the banksters’ criminal gambling debts have been covered?


The broader implications of the bail-in regime are much, much worse. Deutsche Bank, the largest bank in the European Union, is teetering on the brink of disaster. In addition, there are  numerous lesser-known, but equally vulnerable, EU banks that have failed the European Central Bank’s stress tests. These banks are so laden with toxic debt that a daisy chain of financial nuclear explosions is poised to erupt.


The potential for all out banking collapse in the EU has moved to DEFCON 5 – the most serious stage possible before detonation – with absolutely devastating consequences looming ahead. Banks have been granted all the benefits of nationalization, but none of the risks. Meanwhile the ordinary citizens of the West have been burdened with all the risks of nationalization and none of the benefits. Thus we see Austrian bank Heta Asset Resolution AG (HRA) “bailed-in” and sustained by the taxpayer, who lost his shirt after waking up to a 54% “haircut” on his accounts.


What we are witnessing is the lunacy of Keynesianism run amok. The theory that is constructive to throw good money after bad, pile debt atop debt, and hope that the situation changes. In the grand scheme of things, however, nothing will change. Heta Asset will collapse despite its bail-in, along with a majority of the Eurozone’s banks. The only thing that will change in this scenario is that YOUR account balance will be cut by more than half in the face of the imminent hyperinflation that will destroy the remainder.


The situation in the Eurozone exists because of financial mischief that took place when the plan for the EU was put in place in the late 1950s. A little-known dirty secret from that era is that the entire bond and financial structure of the EU was built on a foundation of stolen gold from World War Two. Phase two of the project involved injecting liquidity into the system using various forms of derivatives in the 1990s.


As with all things financialized, the further away the instruments get from the underlying asset, the more “weaponized” they become. In other words, when the chickens of volatility, a flash crash, a London-whale-sized bad trade, or simply poor fundamentals come home to roost, the financialized asset that has been re-hypothecated to dizzying levels comes apart in an explosion that can set off a daisy chain of other linked instruments. The resulting destruction is quick and catastrophic. The criminals of the global Ponzi scheme KNOW this and so they are putting whatever fingers they have into the holes in the financial dike.


The Real Story of Heta Asset Resolution AG


What isn’t being discussed about Heta Asset Resolution is why the bank was considered important enough to deserve a bail-in in the first place. Austria’s government is fiscally conservative so the decision to bail-in Heta could not have come lightly. The truth is that HRA is tied into the toxic web of derivative debt spun by Deutsche Bank. Had Heta been allowed to fail it could have been the trigger that brought down Deutsche and triggered the potential failure of other large banks in the West. Another fact is that Austria didn’t make the decision to bail-in Heta. It was Germany’s Bundesbank who ordered the bail-in via Angela Merkel’s administration. Despite the fact that quite a few German banks will see less profit due to the bail-in of HRA (some to the tune of a 15% loss), it was imperative that the bank stay viable.


HRA is an example of the daisy chain of regional financial triggers that could ignite a systemic series of bank failures that spreads across the Atlantic and potentially even to the Pacific Rim.  Forestalling the potential for far wider damage is the reason why lowly Heta was rescued from the brink.  


NIRP = The Endgame


The Guerrilla has been adamant since 2012 that NIRP is the beginning of the end for the system. With central banks pushing their benchmark borrowing costs into ever deeper negative territory they are punishing savers, distorting markets, and dragging more than $10 trillion of top-tier government debt below a yield of 0%. Truly, we have crossed the Rubicon.


NIRP is a financial carcinogen created deep within the Keynesian labs of central banks and its cancerous effects are manifold. Pension funds are devastated by zero returns, savings are eroded, the insurance bond market is destroyed, and government spending increases spelling DOOM for the system.



 Think about what NIRP does to an already illiquid, cash-strapped credit/lending market. Japan’s government recently borrowed money on terms that required the lenders to PAY interest for ten years rather than RECEIVE it!!! This is Alice in Wonderland insanity!


Since The Guerrilla is a simian fool in the eyes of über-smug Keynesians like Paul Krugman, he begs them to please explain why anyone would want to hold a note on which they lose money for a decade. To the Keynesian debt is an asset, so more debt must be a virtue, right?


WRONG! The Guerrilla is putting out a warning right now that the next step in the evolution of financial controls is already being implemented. The Economic Great Ape predicts that NIRP will fuse with Bank Account Mandatory (BAM) rules that are already in play in Sweden, Denmark, Switzerland, and Japan. Nations already shot through with the carcinogen of NIRP will be forced to face the harsh reality of BAM. What is BAM? It is simply the most nefarious control of capital and individual rights that any of us has ever seen. BAM requires that all cash in a person’s possession, whether it be in their home, in their business, or in their personal secret stash be placed in a bank-run checking account. In other words, it is fast becoming illegal for you to carry cash. Although those living in countries facing BAM do not currently have to comply with these rules, BAM will soon be made mandatory and punishable by law. Capital controls will force everyone to put their funds into the bank so that their accounts can be raided, re-hypothecated, and bailed-in. Full blown criminality will be laid bare for all to see.


Time is running out! There is simply not enough capital to rescue the banks. The only choice now is for the banksters to bail-in, print, and NIRP their way out of trouble. Unfortunately for them, and for us, they are merely delaying the inevitable. In the meantime, they are blowing bigger bubbles, creating in the process the largest financial tumor all of time. The bursting of this cancerous tumor will decimate the wealth and lifestyle of people around the world, including the citizens of the United States. The time to prepare is now!




The Guerrilla.