Bail Ins – Government of Austria Declares there will be No Bail Out of Failing Banks

“Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.

“I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people.” Reginald McKenna, as Chairman of the Midland Bank, addressing stockholders in 1924.

“A creditor is worse than a slave owner; for the master owns only the person but the creditor owns your dignity and can command it.”   Victor Hugo

 Austria and Bank Bail Ins

This is significant. First, Austria’s banks are the most stable in the EU.   An Austrian bank, Hypo Group Alpe Hadria, also known as the Heta Asset Resolution, is insolvent and the Government’s Austrian Financial Market Authority says it will not bail them out. Rather the depositors must do so. It will take some time but this seems to be the first “Bail In” Domino that is falling. Ironically, it was an Austrian bank in the 30s that failed that caused the European depression. If so, expect many more to fail during the next 12 months. Also remember, a failing derivative will accelerate the process. The Austrian government announced:

The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta – or “bailed in” – under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden.[1]

The creditors will be forced to bail them out. Read, “creditors” as depositors. This is the standard Bail In trick used and tested in Cyprus, Spain, UK and MF Global in North America.

The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta – or “bailed in” – under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden.[2]

Thus, the stage is now set to roll the dominos. This may be the first but many will follow. Apparently, an outside audit of the bank discovered a 7.61 billion Euro hole which is an $8.51 billion hole.   Of course, this was just one week after the bank management said that, “The bank was in good health”.

In 1931, an Austrian bank, the Creditanstalt, failed under similar circumstances and it set off a domino effect on other banks in Europe that led to the global financial crises which fed the Great Depression.

According to the government, the inflation of the Swiss Franc caused real estate investments in shopping centers in South Europe to fall dramatically. This caused insolvency.

To those who are investors, it is time to “Batten Down the Hatches”. This is a warning to go to hard assets, cash and rare metals. You have time but a year is not much time. When the crash, subsequent deflation then hyperinflation hits, you will not have time to act.

[1] Tyler Durden, “Spectacular Developments” In Austria: Bail-In Arrives After €7.6 Billion Bad Bank Capital Hole “Discovered”, Rumor Mill News, Hobie Link, 01 March 2015

[2] Ibid

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