the dollar vigilante blog
Capital & Travel Controls and Preparing for Chaos in Europe
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It looks like it is going to be another hot summer in Europe. We really should change our logo for the time being.
The current liquidity crisis in the southern periphery of the Eurozone continues to spread. There are already quiet electronic bank runs in progress in Greece and Spain. On Monday, a bank "holiday" was announced in Italy.
Then, in something we have not seen reported anywhere else, we received contact from a reader, Pierre J., who told us that bank branches are limiting withdrawals now almost everywhere in France. According to Pierre, they are requesting five days notice to withdraw 2000 euro. He supplied the following photo taken at Caisse d'Epargne:
A year ago the banks asked for 48 hours notice to withdraw 1500 euro. Now, they are asking for more than double the time just to get together a few thousand euros.
Some branches, according to Pierre, such as Caisse d'Epargne don't even deliver any cash in the afternoon now. And, others, such as BRED have a 500 euro withdrawal limit as this photo taken in Paris yesterday shows:
Pierre also stated that it was even bad a few months ago. Four months ago his publisher went to the SocGen paris 8e district to withdraw 1000 euros. They harassed her asking "Why do you want this money?"
According to Pierre, the French mainstream propaganda media are almost totally silent on this.
Then, another TDV subscriber, Shaun G., wrote in from his French summer holiday yesterday stating, "In Paris, I took the train to Versailles yesterday and it was full of French military with serious machine guns. The locals said “this is not normal” in French."
He then followed up today with the following:
"More guys with assault rifles yesterday at Gare de Lyon, more shocked looking Frenchman. Two days, lots of intimidating looking guns both days. If there is rioting this summer, looks like the government thinks it'll happen in Paris and they are scared. Should be an interesting summer."
We have not seen mention of any of the above in the mainstream media. No surprise.
CAPITAL AND PEOPLE CONTROLS
"European finance officials have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing euro zone capital controls as a worst-case scenario should Athens decide to leave the euro."
The ATM withdrawal limits is already a fait accompli in the South and the government is already showing what it is willing do to innocent people caught up in the web of another state caused chaotic collapse... limiting the flow of both capital and people.
Ahead of Greek elections on June 17, at least one trading house is shutting down completely for the day. OANDA fxTrade announced the following:
"Due to the extreme volatility some market analysts foresee could result in the coming days, OANDA fxTrade will not accept any trading activity from 6:00 AM EDT until approximately 3:00 PM EDT, on Sunday, June 17, 2012. OANDA believes the convergence of a major market event during off-market hours represents a potential trading risk and has taken this rare step to protect traders from excessive rate fluctuations."
A lot of this may be squelched after the Greek elections on June 17th, however. It appears there is no strong commitment from any of the leading parties to default on the debt and leave the euro. Instead, it will likely lead to some sort of bailout. That is almost always the way politicians choose when confronted with the following two choices:
A) Default on the debt resulting in massive non-free market, fascist bank failures and the majority of the populace losing their savings in the process... leading to chaos in the streets and the calling for heads
B) Print money to bail itself out or get bailed out causing the garbage can to get kicked further down the road and hopefully not reaching a hyperinflationary collapse until the politicians and bankers of the day are long gone and the blame can be put on someone else.
They always choose B. The only tricky thing this time is that Greece can't print its own money... but the incentives are still all the same. A Greek default would lead to a Spanish default, Italian default and so on eventually causing all of the things in B to occur everywhere in the short term. And so, kick the can. After all, as the morose and ridiculous Keynes once said, "in the long run we are all dead."
A much, much more intelligent man, Ludwig von Mises, stated something more adequate to the situation:
"The valuation of a monetary unit depends not on the wealth of a country, but rather on the relationship between the quantity of, and demand for, money. Thus, even the richest country can have a bad currency and the poorest a good one."
More bailouts means more currency. And more supply of currency means it will have less value and that is the road most likely for the euro until it eventually reaches its intrynsic value.
However, with this many moving parts anything can and will happen and it is prudent to do what we already have done here at TDV and be mostly in hard assets - geopolitically diversified to protect against political theft risk - and look to get through The End Of The Monetary System As We Know It (TEOTMSAWKI) with most of our assets in tact... and we wouldn't recommend living in any of the major European or US cities for the next few years either if you can help it.
Those currently not in Europe should be watching with eyes wide open at how this plays out. Limited bank machine withdrawals or bank holidays, capital controls and even travel controls will soon be coming to the US and other western countries so take this opportunity to learn and prepare for this inevitability.
Statists always like to say that a world with no violent rulers would be one of chaos. As much of Europe burns to the ground in the coming years, remember that its cause all stems from the state.