Stop G-20 endorsement of Bail-in genocide

The following article from the current EIR demonstrates that the upcoming G-20 meeting in Moscow (Sept. 5-6) is intended by the London/Wall Street mafia to get world leaders to sign-on to global genocide, in the form of the "Bail-in" process (the "Cyprus model"), to simply steal depositors funds to pay the derivatives   liabilities of the failing banks. Even the Russian financial oligarchy, despite Putin's overt opposition to this insanity, are pushing the Bail-in, despite the fact that the entire European and US banking system is set to collapse as soon as Bernanke stops, or even slows down, the massive Quantitative Easing money printing at the US Federal Reserve (or even if he continues it!). 

     Members and non-members of the G-20 must be alerted to this scheme and crush it.       Mike Billington

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Putin's G20 Paradox: Summit Prepares to Endorse Bail-In

by Rachel Douglas[PDF version of this article]

Aug. 19—The annual Group of 20 (G20)[1] summit will convene in St. Petersburg, Russia on Sept. 5-6. The heads of state and government meeting would be a perfect opportunity to shift the international economic agenda in a healthy direction: against the City of London policy of pre-arranging "bail-in" of the next megabanks to face collapse because of derivatives and other speculative operations, and in favor of Glass-Steagall banking separation, which would protect the real economy and the population against the murderous fallout from that next, inevitable collapse of the financial-sector gamblers' wagers.

After all, the world has been able to see bail-in in action since last March in Cyprus, when deposits in failing banks were seized or frozen on orders from the Troika (the European Commission, the European Central Bank, and the International Monetary Fund).[2] What's more, individuals and businesses from this year's host country for the G20 summit took a direct hit in the Cyprus confiscations, because of extensive Russian use of the Cypriot banking system as an offshore tax haven.

Russian President Vladimir Putin himself spoke out dramatically against the financial oligarchy's worldwide bail-in policy, during the June 20-21 St. Petersburg International Economic Forum (SPIEF). During the question and answer session after his SPIEF keynote speech, Putin was joined onstage by German Chancellor Angela Merkel, who at one point complained that Putin sometimes "talks too loud." Then, after Merkel gave a long and intricate, but not very substantial, reply to a question about too-big-to-fail banks, Putin demanded the microphone and said,

"Madame Federal Chancellor has said that she doesn't know how the banks will be recapitalized. She also said that I sometimes talk too loud. So, let me say this in a whisper: [slowly and sotto voce] 'I hope it won't be at the expense of their customers!' "

Putin's disclaimer notwithstanding, Russian Finance Minister Anton Siluanov joined his 19 counterparts at a July 19-20 meeting of G20 finance ministers in Moscow, in signing a joint statement that fully endorsed the Financial Stability Board (FSB) guidelines on bail-in procedures. Paragraph 22 of the statement announced: "The FSB will report to the St. Petersburg Summit [in September] on the progress made and next steps towards addressing the 'too big to fail' issue. We strongly support the work to establish robust resolution regimes and resolution plans consistent with the scope and substance of the FSB's Key Attributes of Effective Resolution for any financial institution that could be systemically important beyond the banking sector, and look forward to pilot assessments by the FSB, IMF and World Bank using the Key Attributes' assessment methodology. We will undertake any legislative and other steps needed to enable authorities to resolve financial institutions in an effective manner, including in a cross-border context."

The FSB's "Key Attributes"[3] are the framework of the bail-in policy, which is defined explicitly in Key Attributes, 3.5.ii, as including conversion of "all or part of unsecured or uninsured creditor claims" into equity in the entity undergoing "resolution." These shareholders, then, take the hit for the failed bank, thus "bailing-in," as opposed to "bail-out" with government funds. The financial oligarchy's propaganda says that this will protect taxpayers. But the inability of national deposit insurance funds to cover eligible bank deposits in the event of failure[4] means that the pool of involuntary contributors to bail-in is de facto enlarged to include all depositors—a set of people and businesses that greatly overlaps taxpayers. Such a scheme was tested in the case of Spain's Bankia bank.[5] As reported in this issue of EIR, Switzerland's banking regulator, FINMA, places all uninsured depositors on the chopping block, under that country's already-adopted bail-in regime.

Bankers' Dictatorship

In the same month as Putin delivered his anti-bail-in remark at the SPIEF, Russian Central Bank deputy head Mikhail Sukhov told a banking conference, also held in St. Petersburg, that the Central Bank fully supports bail-in. "Major creditors" need to be docked in order to "save" problem banks, said Sukhov. The Russian economic weekly Expert took note of his speech, reporting on it June 7 under the headline "Creditors to Replace the State." According to Expert, Sukhov "stressed that the Central Bank will be able to impose a special supervisory regime.... Conversion of debt into equity, Sukhov believes, will create 'a kind of buffer, so that state funds will not serve as the source for dealing with financial problems.'... Essentially the Bank of Russia is proposing to use the scheme that European authorities have proposed to their lending institutions, whereby the state and taxpayers will become the financial rescuers only of last resort for troubled banks. The EU project is being discussed by the various national parliaments. Mikhail Sukhov noted this fact, commenting that the international community is now moving to prevent the use of state funds for resolving banks' financial problems."
Sukhov is one of Russia's three ex officio representatives to the FSB, the institution under whose auspices the bail-in policy has been developed for global application.
Another Russian emissary to the FSB, Deputy Finance Minister Sergei Storchak, has likewise contradicted statements by leading Russian officials, in order to promote the FSB's G20 agenda of bail-in. By contrast, on April 13, the daily Izvestia publicized a letter addressed to Putin by Deputy Prime Minister Dmitri Rogozin, who urged that the Strategic Defense of the Earth be placed high on the agenda of the G20 summit in September. According to Izvestia, Rogozin stated:

"The scale of the task of neutralizing the asteroid threat requires the concentration of global intellectual resources and the scientific potential of Russia, the United States, and other countries.... Such a program of cooperation will increase trust between the nations and at the same time create the conditions for ending the confrontation over the missile defense program."

Storchak, however, speaking to the FinMarket news service on June 11, said that the G20 agenda had "expanded too much" already, and that the only notable success of the Russian G20 chairmanship to date had been "solving the problem of government rescues of 'too big to fail' banks"—through endorsing the bail-in policy. In September, Storchak promised, the G20 leaders would issue a "special announcement," saying that

"the problem of 'too big to fail' has been solved, once and for all.... We hope that in St. Petersburg the leaders will close the book on this problem, seconding their [finance] ministers' agreement that this problem has been solved. And that was the key problem from the standpoint of the 2008-2009 crisis."

Who are these deputy ministers of finance or deputy Central Bank chairmen, who freely override the agenda proposals and policy heads of state or deputy prime ministers? In the case of Russia, the phenomenon is well known. Fifteen years ago, on Aug. 17, 1998, the events known as "the default" took place. The scheme of issuing increasingly short-term government bonds for the benefit and amusement of international speculators, a scheme foisted upon Russia by the band of London-trained radical free-marketeers who had seized power there in 1991-92, came to a crashing halt. In the wake of Russia's freezing of its government securities market in GKOs (short term bonds) and OFZs (other federal loan paper), the ruble was devalued by two-thirds. Attempts to install a foreign Currency Board dictatorship were beaten back, and the Yevgeni Primakov-Yuri Maslyukov government, formed in September 1998, undertook emergency actions to revive the economy.
Putin, coming to power in 1999-2000, inherited not only the beginnings of a recovery launched under Primakov, but also a large and ramified network of financial officials, who had become deeply embedded in Russian institutions during the 1990s, and did not leave office.[6] They are still there, in the person of Storchak, Sukhov, and many others, to this day. In June of this year, Putin appointed one of them, long-time Deputy Central Bank Chairman Alexei Ulyukayev, as minister of economics. One of the calling cards of this circle is the claim that they alone have the experience with international financial institutions, necessary for navigating in the current global crisis.
Such London-trained functionaries are the mechanism through which a bankers' dictatorship is imposed. The same practice crops up in many countries, not only Russia. A recent investigation of an ongoing plot to sneak bail-in legislation through the Australian parliament identified at least 11 executives of Australian financial regulatory agencies, who have, either simultaneously or just prior, chaired or served on committees of the FSB and its superior organization, the Bank for International Settlements (BIS).[7]

Likewise noteworthy, amid an intense drive by the BIS, FSB, and the Bank of England to make the EU as a whole, and France and Germany foremost among individual European nations, adopt bail-in (as France has now done, through the Banking Reform Law passed on July 18), is the recent appointment of Jon Cunliffe as deputy governor of the Bank of England. Cunliffe, currently the U.K.'s permanent representative to the EU, has been closely involved in negotiations towards an EU banking union, Bloomberg reported July 26. For four years ending in 2011, he had been an advisor to the British government on European affairs and international finance. Mark Carney, the Canadian veteran of Goldman Sachs who has chaired the FSB since 2011 and now, as of July 1, heads the Bank of England, was quoted by Bloomberg about Cunliffe: "He brings an important European and international perspective. That will be vital in ensuring that the Bank of England can shape both the U.K. and international financial systems" (emphasis added).

What Is the G20?

It is one thing for City of London and Wall Street agents to be inserted into national governments, individually