Over time, both wealth in general and the control over it will move inexorably into the hands of the banks and the political leaders. As this unfolds, we shall see numerous trial balloons, such as this one by HSBC and others. (The Cyprus bail-in was a similar but more successful trial balloon.)
What is the significance of the IMF now endorsing as a fact that Spain is insolvent when it was easily discernable for some time? It may be a signal that “emergency measures” are becoming more imminent.
There should be no doubt that when the US government decides to implement capital controls or other restrictive measures, they will likely have the near-total support of the media and by extension the majority of the people.
The people of Cyprus had a very crude awakening to the issue of political risk on Saturday morning when they discovered their government and a bunch of EU bureaucrats conspired in secret to rob their savings accounts. It should serve as a wake up call for us all.
A couple of items in the news last week provided illustrations of political risk – i.e. the ability of governments to seize assets within their jurisdiction at the flip of a switch. It is the risk that you take by locating anything of value within any single jurisdiction, whether it’s your business, your savings, or yourself.