Just noticed in the Weekend Australian.
The article mentions the infamous Financial Stability Board and the use
of "Loss Absorption".
On page 25 then continued on Page 35 and article in which the term
"Loss Absorption" is used in association with "Bail In".
There are low key comments that its usage may cause a run on other banks.
They would have to be kidding, wouldn't they ?
I think a gallop may be more likely.

That such an important procedure as seizing customer deposits does
not get BIG headlines in the media, rather it gets page 25, has to tell you a story itself.

That's just reality raising its ugly head again, Bazz.

>>That such an important procedure as seizing customer deposits does not get BIG headlines in the media, rather it gets page 25, has to tell you a story itself.<<

The reason is of course that it is not a "story" at all.

We seem collectively to have persuaded ourselves that money can somehow be "safe". It cannot. Period.

There are no guarantees, and never have been any guarantees, that the money you deposit with a bank is secure, and that you can remove it any time you like because it will still be there. Banks have been losing their customers' cash for centuries. There are countless stories throughout history of banks failing. In the US, seventy banks failed every year of the 1920s. Nine thousand failed during the 1930s. Around $140 billion of depositors' money disappeared in that time. Only in recent years, with artificial constructs such as the FDIC, has there been an effort to protect depositors funds from bank failure.

If you have any understanding whatsoever of the role of Banks in the economy, you will realise that this is the only way it can realistically work. Your money is at risk when you put it in a bank, there can be no alternative to this fact.

Unless you can suggest one, of course. There will be many people eager to hear how you can pull off such a trick.

(Incidentally, keeping your cash under your bed is not such a great idea either. Think Weimar Germany's hyperinflation. Or more recently, Argentina's.)

So what is the answer then?

When a person tries to be prepared for their
old age and is putting money away for their
retirement - where are we supposed to put that
money to ensure that we're provided for in our
old age if not in banks? Buying property is not
always an option and investments are risky again.

Pericles, this is different.
Previously they would have used other classes of assets first and then
may have touched the cash depositors.
Previously the bond holders would have suffered along with depositors.
However, and these are the changes that have been under discussion at
the last few G20s. Now they take, ah la Cyprus, the depositors money
to pay out the bond holders. Even the shareholders have priority over
depositor.
The depositor is the first resort.

Foxy,
Well as I have said before land is the ultimate holding.
There maybe others, gold has always been a fundamental, but you cannot eat it.
The Chinese are stocking up on copper the last I heard.
I agree property is only useful as a shelter. In that sort of scenario
its value would plummet as no one would be able to borrow to buy it.
Same with shares. Food production, buying & selling must continue.
Find a niche there.

I am guessing, I likewise have no real idea.
Start digging up your backyard. Ah err hummm I don't have one now !

Not different at all, Bazz.

>>Pericles, this is different. Previously they would have used other classes of assets first and then may have touched the cash depositors<<

Where do you think the money in the bank comes from? Surely you have heard of the fractional reserve process, whereby your deposit is not a contract for safe-keeping, but effectively a loan to the Bank. They invest your money, and the money they create from keeping yours as a "fractional reserve", and keep the economy moving along. So if you give the bond-holders a haircut first, the cost of money (yield) will rapidly rise, and you will effectively be accelerating the bankruptcy of the whole box and dice.

Don't like it? Tough. That's the way it is, and will stay until someone comes up with a better way that does not drive us all down the gurgler at the same time.

Maybe you can suggest how it can be done?

Dear Bazz,

Thanks for that.

Excellent advice.

My husband and I are thinking about buying
some land or an apartment on the Gold Coast
as an investment - but we've still got a bit
more to save up. Actually who am I kidding -
quite a lot. But its a goal that I'm squirreling
away for. ;-)