# "If Europe Should Fail.." All US Banks Would Close



## BillS (May 30, 2011)

Before It's News

Action yesterday across markets was bearish and set alarm bells ringing - in particular the action in the PM sector, where the Head-and-Shoulders bottom pattern that we have observed in PM sector stock indices appears to be aborting. If it does abort it will probably mean that the broad market will go into the tank, and that is precisely what we we can expect to happen if Europe should fail.

It has to be said that up until now we - and most of the rest of the world - have blithely assumed that, confronted with catastrophe, European leaders will overcome their differences and solve Europe's problems by printing up a few trillion euros to paper over the cracks, US style, and keep the show on the road for a year or two longer, but it is now becoming increasingly apparent that the scale of the problems is so gargantuan that there may be no credible or workable solution. The sad fact of the matter is that the bungling, discordant self-serving buffoons who run Europe may well have left it too late. If Europe should fail - and the markets look set to pass judgement on it next week, after a weekend of crucial meetings, then the consequences will be unthinkable, yet think about them we must.

If Europe should fail this is what we can expect to happen - European banks will crash and burn and take down major US banks, which are already walking wounded basket cases anyway. We are likely to see a lengthy unscheduled "bank holiday" - banks will slam their doors and if your money is still inside their vaults then you are out of luck. Major disruptions in supply and distribution of food and fuel in particular will trigger general panic, and riots and mob violence will spread rapidly - what we have seen on TV happening in Greece will suddenly happen on the streets of the US and many other countries. Stockmarkets will crash in a manner that will make 2008 seem like a "walk in the park". Virtually every asset class and investment will crater - especially commodities, stocks and Real Estate. The euro will be vaporized. The tidal wave of funds liberated by this mass panic are going to have to go somewhere and normally we would expect them to go into the US dollar and Treasuries, but with US banks failing even this cannot be relied upon. The one surefire investment category that will shine - provided that is that the markets or brokerage houses etc involved with these transactions don't themselves fail - is "misfortune securities", meaning bear ETFs and Puts.

The gravity of this crisis is such that we are not simply talking about protecting investments and making opportunistic gains out of the mayhem that will ensue, if Europe should fail, we are talking survival issues as well, as due to the interconnected nature of the global economy things could become very ugly, very fast across a broad front. If you want to learn what life is like when banks suddenly slam their doors, then you should read up on the Argentinian crisis of the early noughties. The middle class suddenly found themselves disconnected from their savings, and as many of them lost their jobs at about the same time, they became instantly destitute, and forced to swap their possessions for food. Crime soared and people who had been used to living relatively cushy lives suddenly found themselves living on the edge in a law-of-the jungle nightmare. If Europe should fail this is what may quickly become reality not just in Europe but in the acutely fragile and vulnerable US and many other other countries as well. Other undesirable consequences will be unemployment rising to incredible unprecedented levels, so that students leaving college will have almost ZERO chance of finding work. The travel industry, much of which is non-essential, will be devastated with airlines slashing flights and going bust and hotels suffering extremely low occupancy rates.

With things rapidly coming to a head in Europe, this catastrophic chain of events could be set in motion as early as next week. So stop and think about this for a moment - WHAT WILL YOU DO, AND WHAT SITUATION WILL YOU FIND YOURSELF IN, IF BANKS SLAM THEIR DOORS WITHIN THE NEXT COUPLE OF WEEKS? - are you starting to see what I am driving at? Good, then here is what you do. You go down to the bank either today (Thursday) or tomorrow - we have the luxury of another day - and draw out a stash of cash - sufficient to keep you and your family in food and essentials for at least a month and preferably more like 3 months. When you stroll into the bank it will feel surreal, everything will appear normal and people will be standing in short lines and chatting and smiling etc, and you may find yourself thinking "That Maund's lost it - he's completely off his rocker", but if the danger I have described should become reality then you are going to be mighty glad you visited the bank this week, instead of turning up in a couple of weeks to find the doors shut and a huge crowd of desperate people outside hurling rocks at the windows. If this danger does not become reality, and there is a miracle solution to Europe's problems and everything returns to "normal", then you have lost nothing and you can stroll down to the bank again and pay the funds back into your account in a few weeks time, once you are convinced it is safe to do so. No-one will think you are crazy because of course you don't have to tell anyone why you are drawing out the money.

What would be the effect on the Precious Metals sector, if Europe should fail? - sadly it will crater along with the rest of the market and we saw early evidence of that with the "shot across the bows" yesterday when the sector fell heavily on a broad market retreat. Now, we don't know for sure that Europe will fail, but the situation is very precarious and it looks like a 50:50 chance at this point that this dire scenario will prevail, or at least a 30:70 chance that it will. The danger is sufficiently great that we need to be aware of it ahead of time, so that we don't get caught out and go into blind panic along with the mob. What you do about this will depend on your own personal situation and investment orientation. There are various ways to handle it - you can pull in close stops on PM investments, which is recommended, hedge with bear ETFs and/or options, and the more aggressive and opportunistic amongst you can set yourselves up to make a fortune in options if the markets crater, accepting fully the risk of losing your stake if the crisis is averted or at least postponed significantly.

Let's hope Europe doesn't fail - but be ready if it does.

First posted on Clive Maund at 7.30 am EDT on 20th October 11.

Footnote posted a day later on 21st - there isn't much that suprises me these days, but I have received some news from a subscriber, Bob, in the US, that has left me dumbfounded, and disappointed I must say as I was looking forward to being responsible for causing a run on the banks. Here is what he told me -

"Clive, in your post "If Europe Should Fail" you have recommended your subscribers "draw out a stash of cash". I have been attempting to do this with my local bank for over a week and this is what I have learned. The only "cash" the banks have at their facilities is the bare minimum for making change, cashing paychecks, etc. More than 99% of their so called cash "assets" is electronic money and not "cash" money. They are generally happy to transfer this electronic money elsewhere but if you want the real thing, "cash", the bank will, in most cases, either deny your request or put you off for, in some instances, more than a week. Many of my contacts across the US are reporting having the same problems I am having getting any significant amount of cash out of their local banks."

The meaning of this is clear - TAKE WHAT YOU CAN WHILE YOU CAN.


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## VUnder (Sep 1, 2011)

Very good BillS, I read every bit of it and appreciate you taking the time to put this up.

Very informative.


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## The_Blob (Dec 24, 2008)

BillS said:


> Before It's News
> 
> "Clive, in your post "If Europe Should Fail" you have recommended your subscribers "draw out a stash of cash". I have been attempting to do this with my local bank for over a week and this is what I have learned. The only "cash" the banks have at their facilities is the bare minimum for making change, cashing paychecks, etc. More than 99% of their so called cash "assets" is electronic money and not "cash" money. They are generally happy to transfer this electronic money elsewhere but if you want the real thing, "cash", the bank will, in most cases, either deny your request or put you off for, in some instances, more than a week. Many of my contacts across the US are reporting having the same problems I am having getting any significant amount of cash out of their local banks."


just HOW MUCH are they trying to withdraw at once?


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## partdeux (Aug 3, 2011)

I think the US will backstop the Euro failure.

BOA moving their derivative risk to the FDIC insured side is pretty scary. This indicates to me the system is closer to failing then I thought...
Bank of America Deathwatch: Moves Risky Derivatives from Holding Company to Taxpayer-Backstopped Depository « naked capitalism


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## Immolatus (Feb 20, 2011)

Interesting comment at the bottom, and one of the things that was most relevant to me, because I was already aware fo the problems and effects that most of us assume is coming.

"What would be the effect on the Precious Metals sector, if Europe should fail? - sadly it will crater along with the rest of the market and we saw early evidence of that with the "shot across the bows" yesterday when the sector fell heavily on a broad market retreat. "

WRONG! 

Not when all major countries are stockpiling gold and silver. China, Russia, India, and many others have made huge investments to ward off this kind of scenario. When fiat currencies fail, nothing will matter but precious metals."

Theres 3 major factors involved, which will be the bigger influence?
1) The obvious drop in demand stemming from a global economic crash, both in physical and paper pm's
2) The just as obvious spike in demand stemming from a global currency crash
3) Since gold is priced in dollars, if the dollar is crashing then gold has only one way to go.

It will be interesting to see, but I can only see the ultimate 'flight to safety' driving the prices through the roof.

MORE:
That infernal PD is somehow always beating my posts, but I had ZH open but read and responded to this before I went there, and 3 of the articles today are all about the Euro.









I thought that graphic was a great summation, but here are the articles.

http://www.zerohedge.com/news/europe-goes-full-bailout-retard-efsf-rescue-capital-be-officially-double-counted

http://www.zerohedge.com/news/summarizing-sheer-chaos-europe-9-meetings-5-days

And the one with the graphic:
Guest Post: The European Financial Crisis In One Graphic: The Dominoes Of Debt | ZeroHedge

:gaah::gaah::gaah::gaah:


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## prairie (Jun 11, 2011)

I wonder if someone can answer a question for me. Say the banks close and they are not giving out cash. O.k. I have enough cash pulled out. I have several automatic withdrawals come out of my account each month for things like the mortgage and utilities. What would happen with that? Would electronic withdrawals still happen?


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## partdeux (Aug 3, 2011)

prairie said:


> I wonder if someone can answer a question for me. Say the banks close and they are not giving out cash. O.k. I have enough cash pulled out. I have several automatic withdrawals come out of my account each month for things like the mortgage and utilities. What would happen with that? Would electronic withdrawals still happen?


Are you a pessimist or an optimist?


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## BillS (May 30, 2011)

prairie said:


> I wonder if someone can answer a question for me. Say the banks close and they are not giving out cash. O.k. I have enough cash pulled out. I have several automatic withdrawals come out of my account each month for things like the mortgage and utilities. What would happen with that? Would electronic withdrawals still happen?


No, I'm sure the automatic withdrawals wouldn't work. That's because banks like Bank of America would collapse. They wouldn't have any money.

I'm sure at some point the Fed would step in and print whatever money was necessary. I don't know how long that would take or what damage would already be done to the economy. There could be a period of time when businesses couldn't operate or pay their employees. And you'd have people who wouldn't have access to their money. They wouldn't be able to buy groceries or gasoline. Maybe they could use credit cards for that. Or may the credit card companies panic and freeze everyone's credit line.


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## Immolatus (Feb 20, 2011)

prairie said:


> I wonder if someone can answer a question for me. Say the banks close and they are not giving out cash. O.k. I have enough cash pulled out. I have several automatic withdrawals come out of my account each month for things like the mortgage and utilities. What would happen with that? Would electronic withdrawals still happen?


Thats a pretty simple answer.
No. 
Hmm... I guess it depends. I had this whole thing written out and I saw a flaw in my logic. My local bank was taken over (bought out, it didnt fold) by Capital One, and everything was pretty seamless. BUT, that was in a perfect scenario, not one where my bank was going under, taken over by the FDIC, then the 'good' assets (your bank account) sold off.
I guess in theory, if its just your bank then maybe it may still function. If its some widespread event (hey wait, isnt that happening now?) where lots of banks are folding at once (!) then no.
I would guess not.
You could look at the list of banks, and call one who took over another, and call them. ?


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## JayJay (Nov 23, 2010)

prairie said:


> I wonder if someone can answer a question for me. Say the banks close and they are not giving out cash. O.k. I have enough cash pulled out. I have several automatic withdrawals come out of my account each month for things like the mortgage and utilities. What would happen with that? Would electronic withdrawals still happen?


Not only that-what about the S.S. check dh gets??? At first, it 
was postal delivered and dh was made to direct deposit about 3 months ago--I didn't like it then and like it less now.

That's my prepping stash money!


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## VUnder (Sep 1, 2011)

You may possibly lose that last check. When our money is put in, I take it right out. If you can't buy gold, buy copper. But, if you keep your money out, when this all goes down, they can wait in line, and you can be doing something else, because you will be more prepared, because you are a prepper. This is, in essence, what it is all about.


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## FunnyFarm (Oct 26, 2011)

Howdy all,
I'm new here... but not so new to these types of discussions.I always hear worries about this bank and that bank, the world's economy is going to collapse etc etc... As i see it this is all probably for the best. Stocks currently do not represent the "real" value of anything...Our money's value has no intrinsic value of its own beyond what government's say it's worth. Even the value of our homes are not based on anything real...We've set ourselves up here.As I see it We need to see this economic system we've created for what it is and use the tools its given us to escape its grasp...
If as many believe the whole system goes into the crapper... What's left that has real value? Well our cash is inflated and deflated at the whims of regulators...stocks do much the same thing. So what is left with real value?
Has anyone in the history of man ever existed without this economic system?
Of course we have...and if we have been basing our existence on things that can never lose there value when and if it all takes a dive won't matter not one bit.
Our Effort and knowledge ALWAYS has value. Carpentry skills,farming or animal husbandry skills,fishing skills,blacksmiths, tinkering, i see no need to list every type of craft here but i think most can see the point here.Why do we need government regulators to appoint a value to our efforts? Why not just do what always worked before and trade efforts for efforts as local as possible... the best thing we all can do is to climb out of the rabbit hole and let this fantasy society has built for us fall.
thx,
John


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## Sourdough (May 22, 2010)

LOOK: Start to get wrapped around the idea that it was over in the Fall of 2008. This is just the dying quivers. Stop waiting for "IT" to happen, "IT" already happened.


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## Jimmy24 (Apr 20, 2011)

Sourdough said:


> LOOK: Start to get wrapped around the idea that it was over in the Fall of 2008. This is just the dying quivers. Stop waiting for "IT" to happen, "IT" already happened.


What I been thinking all along to tell you the truth....

Jimmy


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## SageAdvicefarmgirl (Jun 23, 2011)

FunnyFarm said:


> Howdy all,
> I'm new here... but not so new to these types of discussions.I always hear worries about this bank and that bank, the world's economy is going to collapse etc etc... As i see it this is all probably for the best. Stocks currently do not represent the "real" value of anything...Our money's value has no intrinsic value of its own beyond what government's say it's worth. Even the value of our homes are not based on anything real...We've set ourselves up here.As I see it We need to see this economic system we've created for what it is and use the tools its given us to escape its grasp...
> If as many believe the whole system goes into the crapper... What's left that has real value? Well our cash is inflated and deflated at the whims of regulators...stocks do much the same thing. So what is left with real value?
> Has anyone in the history of man ever existed without this economic system?
> ...


Great post! Just what I was thinking as I posted a few minutes ago in the thread http://www.preparedsociety.com/forum/f2/storing-preparing-7347-new/!


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## The_Blob (Dec 24, 2008)

the only good thing to come from hyper inflation (if your bank is still open) will be that LOANS will be able to be repaid VERY easily by those holding precious metals (gold, platinum & silver)

yes, I list platinum, because it is almost as valuable($1600/oz) as gold ($1700/oz) currently

would you rather have a loaf of bread or the deed to your home free & clear?

I'll eat a little less to have that (relative) security, Hell, in that situation I would offer to buy my friends' (and as many others as I could) houses for them to live in under the aegis of my ownership of said property...

... yes, I'm a 'feudal bastard' and I make NO apologies for it

people want to laugh at us, but WHERE do they turn when :shtf:

of course I hope it doesn't get that bad, and my (god)kids have a better life than I, but we have to make it happen, they (and we) are not *entitled* to it


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## denniscarmichael (Nov 29, 2010)

When our banks slam their doors every major company in the country will also close their's. The riots will happen, and they will be everywhere. The government will call out the military and declare martial law to maintain their control over the infrastructure. The politicians will do everything to keep their power and save themselves and their families first. They will NOT tell us, until they are safe. And all government services will be shut down. Any monies that the government pays out will be stopped, especially social security since it was already being phased out anyway.
All utilities will continue to run, as long as they are automated, because the employees won't work for free. If they need fuel to operate, they will continue with what they have, and stop when they run out, because no fuel will be delivered. And there will be runs on gas stations.

Living in a hurricane zone, whenever there is a hurricane warning there is a run on gas stations, grocery stores, home improvement stores, department stores and outdoor recreational supply stores. This same thing will happen when the economy collapses, but on a much larger scale. Hoarding WILL happen. And people WILL do whatever it takes to get what they need or perceive that they need. People will die.

It will be like 1929, but a thousand times worse. People who lose everything will kill themselves, in droves. The murder rate will go out the roof. The police will not come to work, they will stay with their families to protect them. All of those laws that we all obey because of our fear of punishment will no longer be enforced and anarchy will ensue.

This will not be over quickly. Anyone living outside a militarily controlled zone will have issues with people seeking power over others. Feudal states will be set up. Supplies and weapons will be the most valuable things to have. Paper money will have no value but coins will, due to metal content. Barter will be our currency. Who, in the area you live in will have the strength (guns and ammo), vision and will power to control everything and everyone within 50 miles? Figure out who this is. If he's a good guy, then become his friend. I he isn't, then watch him like a hawk. And most of the time it will be the criminals who will take control.

The world we know will not return. The United States will break up into pieces that someone can control. New lines will be drawn. Small wars will happen as people try to expand their area of control to obtain more resources. Even slavery will return in some places. And in some places "Mad Max" will be real.

This is a very sad picture, and I hate to be a doomsayer. But I believe this is going to happen. And if we are not prepared for these things, we will not survive.


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## Clarice (Aug 19, 2010)

I don't think the reality of what can happen has hit everyone in the prepping society. I do think it will be soon. I believe also the government is getting somewhat ready to control the masses especially since you don't hear or see anything of the riots going on in Europe anymore and when Greece collapses all of the dominos will start tumbling down. One reason for the government to turn off our communications on Nov. 9, a test run????? If we can't communicate we can't organize.


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## Frugal_Farmers (Dec 13, 2010)

The birthplace of democracy (Greece) will also be the birthplace of the Global Economic Meltdown.


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## stand (Nov 15, 2011)

*if most banks fail, paper $ will be toilet tissue.*

Who is going to be stupid enough to accept TP for things of real value! I sure aint! I suggest, if you are REALLY worried, that you use credit to buy survival gear and gold coins. There is a trick that will let you have great credit, in 6 months, starting with nothing. It costs about 2k.


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## BillS (May 30, 2011)

stand said:


> Who is going to be stupid enough to accept TP for things of real value! I sure aint! I suggest, if you are REALLY worried, that you use credit to buy survival gear and gold coins. There is a trick that will let you have great credit, in 6 months, starting with nothing. It costs about 2k.


I wouldn't spend money to have good credit but I have used credit to buy some of our supplies. It's better to have supplies and bad credit than no supplies and good credit.


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## stand (Nov 15, 2011)

*It surely is better.*

Things are too likely to go too bad, far too soon, for 999 out of 1000 people. Their only realisitic approach is to use credit, cause they need a minimum of 10 worth of training and materials.


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