Is Your Money Safe?

We saw it happen in Cyprus, too. The government there (working with the big banks) changed the terms of the deal – suddenly and, for depositors, catastrophically.

It gave big depositors – with over $100,000 in the bank – a haircut and a shave equal to nearly half their money. Why?

The Cypriot banks had bought Greek government debt. The fall in value of those bonds (the Greeks couldn’t pay then, either) left the banks on the edge of bankruptcy.

The loss was very real. Who ended up paying for it?

The banks that made the bad investments? The government that regulated the banks and forced them to buy government bonds?

Nope. The depositors! Innocent, but perhaps naïve, the depositors got scalped.

And now, Greek depositors – the smart ones, at least – are taking precautions. They yanked out €3 billion ($3.4 billion) this week – or about one-quarter of all deposits for the year.

In the U.S., the FDIC guarantees individual deposits at member banks up to $250,000.

How good is that guarantee?

In a pinch, all sorts of things that you took for granted suddenly have question marks behind them.

What’s the bank’s collateral really worth? How much does the bank have in reserves? How much does the FDIC have? How long will I have to wait to get my money? What will it be worth then? What will I do in the meantime?

You may want to take precautions too.

….read more from Bill Bonner on Markets, Europe & Greece HERE