WASHINGTON – The questionable practice of “bail-ins” begun by Cyprus a year ago to keep banks solvent is beginning to spread to other nations, and holders of large deposits are starting to see their balances plunge literally overnight.
A “bail-in,” as opposed to a bailout that countries especially in Europe have been seeking from the International Monetary Fund and the European Union, is a recognition that such outside monetary injections won’t be forthcoming.
What’s a bail-in?
Essentially it is a grab of a percentage of a depositor’s account as a way to hold additional money in reserve to help banks balance sheets meet the government’s reserve demands. Put another way, this is a new method of taking private sector wealth as fashioned after the Cyrus fiasco this spring.
A recent article in American Banker spells it out saying the era of the bank bail-in is upon us. The Wall Street Journal reported that the banks most likely to give you and IOU in exchange for your hard earned cash are Wells Fargo, JP Morgan Chase and Citigroup. In reality any bank that received a government bailout is a candidate to look to YOU for THEIR bail-in!
Have you heard of the FDIC-BOE plan that many banks are supporting?
Under the plan big banks would get our (your) money and we (you) would get bank shares. That is, you would get bank shares in an institution that is basically insolvent or it wouldn’t be raiding your account to begin with! We wouldn’t be left empty handed. No, no…we’d get the bank’s IOUs otherwise known as converted bank equity shares. Converted!
Do you like that term? What it means is the FDIC under Obama has allowed your cash to be stolen (such an unpleasant term) or converted (see, isn’t that better!) for their use!
Remember that business Obama said that you didn’t build by yourself? Well, those same fine people believe that whatever is theirs is theirs and whatever is yours is also theirs!
In all their wisdom, they believe because the taxpayer bailouts were so unpopular that stealing from small business owners and smaller bank “shareholders” with no voice in Washington, will be less egregious! The acts that are already in motion now would deliver clear title to the banks of depositor funds.
Buried within the Dodd-Frank bill is a provision that makes bail-ins legal!
Plans are under way for our global economy, plans that include global banking allowing access to your accounts. Was the so-called Cyprus Experiment a prelude to the launch of a global trend of bank deposit confiscation? Only the most naive could think otherwise.
Why is it so important to know what is happening in other countries, Canada for instance? Private pension funds were just raided by the government in Poland, and a bail-in is being organized for one of the largest banks in Italy. As recently pointed out in Time to Run from the Banks, now that bail-ins are becoming globally acceptable, no bank account and no pension fund will ever be 100% safe again.
What is means for us is that the governments of the world are eying our money as part of the solution to any future failures of major banks outside the U.S. There is one final consideration, the worst part, as it were. Your hard earned money may be used, or “bailed-in” in the future to help bailout the banks/countries whose practices have caused the upheavals in Spain, Greece, Ireland, Portugal.
Remember Lehman Brothers that was too big to fail? Nuff said…
One comment about this video. This woman isn’t a financial expert, but she does possess more common sense than those (fill in your own adjective ending with er here) in Washington. Her voice helps get through to the important points about bail-ins.
Self storage investment sales surged in 2012 to reach $2.1 billion—the largest volume since 2007 and well above the $1.5 billion in sales the industry has averaged over the last five years.
Last week, the stock market proved yet again, how perilous it can be for certain investors.
Ben Bernanke made a comment in passing stating later this year the Fed’s continued monthly asset purchasing of $85 billion in bonds would likely wind down. The tepid economy is expanding strongly enough for the central bank to slow the pace of its bond-buying stimulus.
Opps! Obviously, this was not a radical or unexpected statement meant to spook Wall Street, but it did. CNN Money called it the worst day of the year for the DOW and the S&P 500. The market dropped over 500 points on a passing Bernanke comment!
Which brings us to the rather unsexy investment of self-storage. It may not have the cache of other investment, but plain and slightly boring consistently bringing in green is plenty sexy to me!
A recent article in National Real Estate Investor detailed, “The self storage industry is posting returns that are whetting investor appetites for the property type.” “We’re seeing more investors at a time when there is less product,” adds R. Christian Sonne, executive managing director of Cushman & Wakefield’s self storage industry group in Irvine, Calif.
The challenge is magnified by the fact that more than 80 percent of the nearly 51,000 self storage facilities in the U.S. are dominated by mom and pop owners. What that means to us is opportunity. Yes, bigger players are getting into the action, which is all the more reason to consider this sector as part of your investment strategy.
The dollar, like any fiat currency, is a medium of exchange, not a store of wealth!
Most of us were shocked this weekend to learn that the European Union has decided to fund the bailout of Cyprus by confiscating the assets of ordinary bank account holders. If you are wondering if that could happen here, the answer is, ” you betcha it could.” In fact, there are some who say it already has happened here.
What will happen in Cyprus the theft of 10% of the assets from responsible savers to the benefit irresponsible banks. As always, it is the small depositors getting screwed. Bank bondholders and other banks and large institutions will be made whole, again.
Boy, that sounds familiar. Isn’t that what has happened in the U.S. during the past five years, bailouts and all?
Let’s not forget it wasn’t that long ago when bank CD rates were around 4% or higher. Now with the Fed’s constant interest rate manipulation, CD rates remain at a paltry 0% and 1%.
Banks borrow at near-zero from their depositors and from the Fed, then turn around and invest in Treasuries or mortgage-backed securities earning 2%, 3%, or more. What a country! The big banks have been using the free money interest rate spread to reclaim their solvency.
If you are a saver, a person intent on putting your money to work, your pre-2008 annual interest rates have already been confiscated by the Fed’s policies.
What has Cyprus got to do with investing in commercial real estate? Unless you see dramatic changes happening in the way the big banks, the Fed, and this administration operates, the bank account grab in Cyprus is as good a reason as any presented in many a day to consider completely foregoing banks!
Commercial real estate isn’t the only place to put your money to work, but in today’s economy it is one of the most secure and profitible, when invested with people who know what they are doing.
Whether we admit it or not, the U.S. has been operating with a fiat currency for many years. Invest fiat currency in a bank account, CD, government Bond, and all you get is money paper money worth less than the day it was invested!
Does anyone believe there’s enough gold in Fort Knox to keep up with Bernanke’s papering spree? Of course not! There are many who believe the gold in Fort Knox is long gone. Let us not forget that the last president to actually see the gold was Dwight Eisenhower!
Know when the last audit was conducted on the gold? Me neither, and that tells you everything you need to know on why it is so important for you to depend on yourself to put your money to work and not the government!
According to the National Real Estate Investor investor sentiment for multifamily investments is reaching record heights. Low interest rates and jobs offset fiscal cliff concerns as multifamily fundamentals remain strong for 2013.
The latest results from the NREI/Marcus & Millichap Investor Sentiment Survey show that investor confidence is not only surging forward, but investors also are preparing to accelerate their commercial real estate buying in the coming months.
Marcus & Millichap ranks the 2013 market outlook for Atlanta:
■ 2013 NAI Rank: 35, Up 2 Places. Atlanta’s average job and rent growth
were offset by expectations for the strongest vacancy improvement this year.
■ Employment Forecast: Local employers will expand payrolls by 47,700 positions
in 2013, increasing employment by 2 percent and marking the strongest pace of hiring since early 2007.
■ Construction Forecast: Construction will pick up this year as builders complete
2,600 units. Meanwhile, developers have approximately 18,000 units in
the planning pipeline.
■ Vacancy Forecast: High demand for rental units due to strong job growth
will contribute to a 90-basis point drop in vacancy to 6.0 percent, slowing
slightly from the 100-basis point decrease last year.
■ Rent Forecast: This year, asking rents will rise 2.9 percent to $884 per month
while effective rents tick up 3.6 percent to $808 per month.
■ Investment Forecast: Increased access to financing, due primarily to improving
operations, will draw out-of-state and local investors from the sidelines.
As value-add deals become limited through 2013, many of these investors
will focus on lower-tier complexes in prime locations.
A source in Montana said the feds are hoping to turn 401 (k) and social security funds into federally administered bonds, thereby dumping even more privately-held dollars into the D.C. money pit. Another source thinks that such a fund may be used to bail out Obama’s union pets, namely the failed pension plans of big labor throughout the United States. …the Western Center for Journalism
Watching the fiscal cliff fiasco that was finally addressed by Obama and the Congress on the last day of 2012, I have but one question to pose. Are you really going to wait for Congress to do the right thing and take positive steps to reduce the $16 trillion deficit?
Are you a small business owner, investor, or one of those nasty “rich” people Obama wants to punish by making sure they “pay their fair share of taxes” as he redistributes the country’s wealth? If so, the only prudent thing to do is to take steps to protect what you’ve earned and saved. Make no mistake, since everything is on the table, your future and that of your family are at stake.
At the end of 2010, there was an estimated 17.5 trillion dollars in United States retirement assets, including 3.1 trillion in 401k’s and 4.7 trillion in IRA’s. The idea that those who thrive on money and power would permit such an alluring trove to go untapped is laughable.
A 2010 administration report on the Middle Class cites Vice President Joe Biden, who “floated [an] idea called Guaranteed Retirement Accounts’ (GRAs).” Of course, Big Labor is clearly behind these proposed GRAs, which would include a “bailout of critically under-funded, union pension plans through retirement security options.”
The math is easy. We’re sitting on $16 trillion in debt, with $4 trillion added last night. How long do you think the $17.5 trillion in United States retirement assets is safe?
(Mon Dec 3, 2012) The Internal Revenue Service has released new rules for investment income taxes on capital gains and dividends earned by high-income individuals that passed Congress as part of the 2010healthcare reform law.
The 3.8 percent surtax on investment income, meant to help pay for healthcare, goes into effect in 2013. It is the first surtax to be applied to capital gains and dividend income.
The tax affects only individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.
The 159 pages of rules spell out when the tax applies to trusts and annuities, as well as to individual securities traders.
Released late on Friday, the new regulations include a 0.9 percent healthcare tax on wages for high-income individuals.
Both sets of rules will be published on Wednesday in the Federal Register.
The proposed rules are effective starting January 1. Before making the rules final, the IRS will take public comments and hold hearings in April.
Together, the two taxes are estimated to raise $317.7 billion over 10 years, according to a Joint Committee on Taxation analysis released in June.
To illustrate when the tax applies, the IRS offered an example of a taxpayer filing as a single individual who makes $180,000 in wage income plus $90,000 from investment income. The individual’s modified adjusted gross income is $270,000.
The 3.8 percent tax applies to the $70,000, and the individual would pay $2,660 in surtaxes, the IRS said.
The IRS plans to release a new form for taxpayers to fill out for this tax when filing 2013 returns.
The new rules leave some questions unanswered, tax experts said. It was unclear how rental income will be treated under the new rules, said Michael Grace, managing director at Milbank, Tweed, Hadley & McCloy LLP law firm in Washington.
“The proposed regulations surely will increase tax compliance burdens for individuals,” said Grace, a former IRS official. “There’s clearly some drafting left to be done.”
You see, not taxing you now, but allowing you to save your money, growing it in investments over time, then taxing you later, is “costing government” now. You’re cutting into their spending by saving your money, and they can’t have that. From: an ebb and flow
If this doesn’t scare the hell out of you, I don’t know what it will take. According to Townhall.com, 401k, and IRA owners are first on the Democrats’ radar and may see their plans taken away.
“House Democrats are planning on eliminating those tax breaks and converting the private plans to government-controlled retirement accounts, where they will be at risk for insolvency.”
My advice, you’d better start looking for ways to protect the saving in your IRA or 401k if you’re lucky enough to still have one.
Unlike the rest of the economy, purchases of multifamily units are brisk indeed. Part of the reason for the continued demands include Gen Xer’s moving back home with parent to save money during the recession.
Other reasons for the continued demand for apartments besides the foreclosure debacle include, Baby Boomers wanting to downsize, a lack of new construction inventory coupled with the hesitancy on the part of developers to risk their capital in these uncertain times.
THE NEAR FUTURE
Apartment fundamentals do not face a cliff, given the rise in new completions. Construction activity has been so depressed over the last two years that even new units coming on line only represent a return to recent average inventory growth rates.
However, that does not mean that apartment vacancies will continue to crater more than 100 basis points per year, since current levels are already so tight. Reis projects vacancies to remain in the low 4 percentages through 2015, not much lower than its current 4.6 percent. Landlords recognize this, and have shifted their focus from improving occupancy to raising rents to meet revenue goals.
As such, apartment investors are likely to do well in the foreseeable future. Certain transactions with going-in cap rates below 3 percent will encounter significant exit challenges if and when interest rates rise, but market participants with realistic expectations will find it difficult to pick a sector with prospects as sound as multifamily.