An orderly bank restructuring explained- a chance for Cyprus to change the game

Fear mongering and terror tactics have been used since the 2008 financial crisis as a means to extort endless amounts of money from world tax payers in support of ‘too big to fail’ banks. The threat which was initiated by the likes of Tim Geithner, Larry Summers, Hank Paulson, and the big bank CEO’s (who would lose a ton of their personal wealth, prestige and certainly their jobs in an orderly re-structuring of their insolvent institutions–entirely fitting since they were the ones who drove their companies into financial annihilation through excessive risk-taking and leverage) has consistently been that letting banks go bust would be a nuclear event to the world economy. This is completely false– a self-serving, immoral lie. Legal, long established, restructuring rules provide for an orderly reorganization of insolvent institutions where share holders and senior bond holders lose their capital investment as required (such is the risk of capitalism and investing) and most if not all deposit holders are saved completely harmless. In some cases, depending on the capital levels remaining in the bank after this process, some of the largest depositors may receive the bulk of their deposits with any shortfall being made up through an equity ownership in the new reorganized, debt-free, highly capitalized institution, which is then highly likely to prosper and return a handsome compensation for their initial forced investment. Presto–bad managers thrown out on their ear, bad debts written off, depositors made whole, stronger franchise reborn in the miracle of creative destruction.

CNBC’s Michelle Caruso-Cabrera reports Cyprus is desperately searching for a Plan B, as the struggling country must find billions of euros to secure a European Union bailout. Adam Lerrick, American Enterprise Institute, weighs in. Here is a direct video link.

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