Free Markets, Free People

Are we looking at a Cyprus moment here?

I have to preface this by saying absolutely nothing would surprise me any more.  Since this administration has come into office, what would have, or should have been, unthinkable previously has not only happened but has been cheered by a certain element of our population.  ObamaCare is the most visible evidence of this.  But there is plenty of other stuff too.  Drone strikes on US citizens are “okay”, i.e. “legal”.  Speaking of “legal” how about this:

The Obama administration is drawing up plans to give all U.S. spy agencies full access to a massive database that contains financial data on American citizens and others who bank in the country, according to a Treasury Department document seen by Reuters.

The proposed plan represents a major step by U.S. intelligence agencies to spot and track down terrorist networks and crime syndicates by bringing together financial databanks, criminal records and military intelligence. The plan, which legal experts say is permissible under U.S. law, is nonetheless likely to trigger intense criticism from privacy advocates.

More shredding of Constitutional guarantees.  And what do we hear for the most part?  A collective yawn.

We’ve all seen what has happened on Cyprus with the government imposing a “levy” on savers.  A “levy”.  Outright theft is what it is.  And even while they’ve lowered the amount of the “levy” they’re still imposing it.

Couldn’t happen here, could it?  Don’t bet on it.  What other government is desperate for revenue?  And where is it that 19 trillion dollars exist that is currently out of their reach?

Try 401(k)’s. Katie Pavlich has the story:

As a reminder, the United States government has been eying and researching how Americans use their 401k plans for quite some time now. Recently we saw the U.S. Consumer Financial Protection Bureau suggest the government help “manage” retirement plans.

The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.

“That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,” bureau director Richard Cordray said in an interview. He didn’t provide additional details.

The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams, according to three people briefed on the CFPB’s deliberations who asked not to be named because the matter is still under discussion.

The retirement savings business in the U.S. is dominated by a group of companies that handle record-keeping and management of investments in tax-advantaged vehicles like 401(k) plans and individual retirement accounts. The group includes Fidelity Investments, JPMorgan Chase & Co. (JPM), Charles Schwab Corp. (SCHW) and T. Rowe Price Group Inc. (TROW) Americans held $19.4 trillion in retirement assets as of Sept. 30, 2012, according to the Investment Company Institute, an industry association; about $3.5 trillion of that was in 401(k) plans.

So we have a new government agency (created in 2011) looking for a job to justify its continued existence and an administration and political elite looking for revenue while over 19 trillion dollars lays in front of them.  The statement “the …. bureau is weighing whether it should take on the role of helping Americans manage [their] retirement savings” should send shivers down your spine.  Why do they feel the need to consider such a thing?

Well, it’s because you need their protection:

This agency, created by the 2010 Dodd-Frank-Act, is very concerned about how safe your retirement savings are. They are apparently concerned that retiring baby boomers may become victims of financial scams.

That’s right, it’s save the geezers instead of the children.  You’re simply too dumb to manage the account you’ve spent your entire working life amassing.  You have to have government help to do it and that means what?  Government access and, one would assume, at some point government permission to spend your dollars.  How else does government save you from “scams”  (you know, like Social Security)?

You sputter, “but they have no right…”.  Since when has government really been concerned with rights?  If it can give spy agencies access to your financial records “legally” to combat terrorism, how big of a stretch is it to believe they’ll grant another agency access to your financial records (401(k)) to combat “scams?”

And, with the camel of government’s nose under the tent, how long before that access turns into some sort of “levy” for this service they provide that you never asked for?

~McQ

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33 Responses to Are we looking at a Cyprus moment here?

  • I wish I’d bet on this when they created 401’s.  I distinctly remember saying they’d get around to raiding them sometime in the future – well, as the movie from the 50’s said, “The future is now.”
     
    And Cyprus….heh.   Go figure.   I’ll bet small bank runs have already started in other on the brink countries like Spain and Italy, and they’re not publicizing it because it will further the crisis, but somewhere politicians are sweating.
    It’s a bitch when the Proles realize they’re about to be rolled, so best to keep them in the dark as long as possible.

    • The thorny (and somewhat funny) aspect of the Cyprus “event” is that apparently the Russians have $19 billion in Cyprus banks which seem as though they will be qualified for the “haircut,” which could be somewhere north of $2 billion.

      • I’m sure that was a factor when they raided the banks.   It was known they were trying to shave the ‘rich’, and couldn’t get enough so they went further down to pass the cut along to the proles too.  Tell me they didn’t know the Russians were going to be major victims of the raid.

        • Stealing from foreigners is always the better choice. Iceland did the same thing when their banks failed.
          But it should be pointed out that the Russians knew about the 100k insurance, and they still put their money there. And if the government did nothing, they would still be taking a haircut if the banks failed because the banks rely on deposits and not bonds.
          But were all Cypriot banks failing?

          • Unknown on your last question.
             
            As far as all of them taking haircuts, well, not sure but if they’re like all their neighbors, they deserve what they get for assuming money is going to magically flow into their country to fund their health systems and retirement plans.
            I’m offended by the idea that the government can do this, REALITY check for me.


            They got the government they wanted, which gave them free shit, now that government has come round to demonstrate it isn’t free after all.
            On reflection, I’m not sorry for them at all, but I DO understand how they’re all pissed :)
             

        • By a vote of 36 against, 0 in favor, with 19 abstentions, Cyprus lawmakers today rejected the “haircut” option.
          There is one simple reason to reject the “bank haircut” option.
          Just ask yourself if you would keep money in a bank if it was subject to a government-driven “bank haircut” ?
          To proceed would have lead to the destruction of banks in Cyprus and well as … you get the idea.
          It would have been real wrath of God type stuff.
          Fire and brimstone coming down from the skies!
          Rivers and seas boiling!
          Forty years of darkness! Earthquakes, volcanoes…
          The dead rising from the grave!
          Human sacrifice, dogs and cats living together… mass hysteria!

      • There may be some second thoughts on this plan when the next chartered airplane from Moscow lands in Nicosia and unloads a tour group of large, physically fit young males with brand new passports and carry on luggage which is double the allowable weight limit. If not, then the replacement guys might reconsider.

  • “Mighty nice retirement account you have there.  It’d be a shame if anything happened to it.”

  • McQ, this is a lil’ silly in a coupla ways.
    The new information sharing is NOT your personal financial data, carte blanch.  Read the article.  There isn’t a big database in the hills of Virginia with everyone’s financial information in it, contra the breathless hyperbole of the quoted section of the article.
    NOBODY in the US has to do what they did in Cyprus, as the US is not constrained by the Euro.  WE are doing it much more covertly, and have been for years.
    The misappropriation of retirement plans IS a real threat.  Merely ONE of about a dozen really good reasons to repeal Dodd-Fwank ASAP.

    • This is apparently only a “sharing” scheme, of data that is already collected.
      Since when has it ever just stopped there ?

      • Specifics, please.  This is like the BS that W “kidnapped dozens of/hundreds of/countless” people and threw them in GITMO or worse.
        Specifics.  Name some.  Provide some support for your dark hints.

    • “There isn’t a big database in the hills of Virginia with everyone’s financial information in it”
      Oh, I wouldn’t bet on that, Reston used to have some very nice data centers in some very nice bunkers.   Not sure if they were shared with spy agencies before or not.  At the time that pervasive level of government intrusion hadn’t occurred to me except in crazy movies about government takeovers.

    • http://www.myfico.com/crediteducation/inyourreport.aspx
      What’s in your credit report;
       

      Identifying Information.
      Your name, address, Social Security number, date of birth and employment information are used to identify you. These factors are not used in credit scoring. Updates to this information come from information you supply to lenders.
      Trade Lines.
      These are your credit accounts. Lenders report on each account you have established with them. They report the type of account (bankcard, auto loan, mortgage, etc), the date you opened the account, your credit limit or loan amount, the account balance and your payment history.
      Credit Inquiries.
      When you apply for a loan, you authorize your lender to ask for a copy of your credit report. This is how inquiries appear on your credit report. The inquiries section contains a list of everyone who accessed your credit report within the last two years. The report you see lists both “voluntary” inquiries, spurred by your own requests for credit, and “involuntary” inquires, such as when lenders order your report so as to make you a pre-approved credit offer in the mail.
      Public Record and Collection Items


      All in one convenient package. Between this, the information the gov’t. already has, and Google, they know pretty much everything including the color of your underwear if any).

      • Yes, people should consider the fact that they can reliably tie you to you with the last 4 digits of a credit card number, and your zip code.
        Contemplate the data and the search engine.

  • If you want civil liberties zealously guarded, elect the GOP. It’s the only way the Dems and media will pay attention.
     
    As for a Cyrprus moment here: if that happens, if they take even a sliver of my 401k – I can only speak for myself, but I promise a swift and unpleasant response.

  • Regarding Cyprus, after learning more information, I am not so sure its quite so bad, with some caveats:
    The banks are funded mainly by depositors not bonds. Thus the depositors should be hit with haircuts. The 100k protected limit should be kept though, because that’s the law.
    The banks paid a high interest rtate, so people putting a million euros there should have been aware that it was a risky investment.
    My biggest caveat would be if there were some banks that are not in trouble, and they also are getting hit with the tax. If every bank is in trouble, then the tax makes more sense as simply the haircut the large depositors would take in a bankruptcy, but it does have unfortunate effects of being done sort of “outside” the law.

    • *shareholders of course should be wiped out first. Then bond-holders, and then depositors. I am also unaware if these steps are being taken or not.

      • Didn’t appear that way, the original reports said they were hair cutting ALL the depositors once they resolved themselves to the fact that the ‘RICH’ weren’t going to be able to fund it alone.

    • It’s okay if you assume your bank is actually an ‘investment’ like buying stock in GM.    Why do I think most of the little people who dropped their money into those banks didn’t see it that way.
       
       

      • Because they have deposit insurance?
        And this is why those under 100k should not be touched.
         
        p.s. If you belong to a credit union, you really are in investor, but many people don’t know that.

        • I don’t think they’re seeing it that way man, I really don’t.  And they won’t when this is over.   They’ll follow the first person that offers them free lunch.
           
          If they are aware of it at all, they think someone has covered their deposits one for one without considering how that happens (or that they might not actually get one for one in return….)
           
          So much is divorced now from cause/effect – people aren’t reading those detailed documents they receive, any more than people read those detailed mortgage documents they signed when the evil banks allowed them to take out mortgages they couldn’t possible sustain.  They listened to the 50,000 foot blurb the bank person gave them about and didn’t bother with taking a look at the ground first hand.  They bought sandy property in Arizona and fancied they were going to have a beach.
           
          Much the same as the Occupiers think wealth magically appears to be distributed to THEM.

          • Yes, I totally agree that they won’t see it that way. At first I didn’t either and its not even my money.
            Also, the reporting has been bad. There may be other reasons why this is a very bad idea even for above 100k. Like if the money flees.

  • Based upon the latest reports of people raiding their 401ks to pay for ongoing expenses, won’t be too much longer and this source will dry up.

    • Raiding to pay for expenses, or to get the money out and into our hands before: 1) The looters devise a scheme to grab it; 2) Inflation devalues it?  I’m seriously considering pulling out now and converting to harder assets.

      • You know, you’ll get that brief deep breath period which they will engineer so their buddies can loot their own accounts before they take the plunge and start confiscating the prole’s accounts.
         
        The only question I have is the tax penalty for taking the money going to amount to more or less than the cost of the hard goods in the future economy if I wait.

  • Meanwhile that…@!%#! Harry Reid walks on the bodies of 7 dead Marines to move the progressive agenda forward.

  • “The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams, a…”
     
    Now that is a laugh out loud moment. The government thieves(Social Security, Freddy & Fanny, etc.) want to protect us from the private sector thieves. This is a turf war, not a rescue. Vinny the gov’t. financial watchdog wants to move in on protect us from Rocco, the neighborhood loan shark banker. For a price, of course.

  • “about $3.5 trillion of that was in 401(k) plans.”
     
    Now I know Jimmy Hoffa is dead, otherwise he and the real mob would have moved in on this pension fund a long time ago.