via CBC - Proposed Bail-In Regime 2013 Budget

CBC has a very good article on the bail-in regime, but does not clarify exactly what that might mean for depositors. They do not differentiate and make only vague references.

http://www.cbc.ca/news/politics/story/2013/04/02/f-rfa-macdonald-canada-cyprus-banks.html

The budget was unusually vague about exactly what that might mean going forward, that we are left to our own devices to come up with some perspective.

For instance, the conservatives made it easier for junior mining companies to dilute their shares for exploration, but raised taxes on developing miners. No policy would make it easier for a company to fail, and yet this was touted as a jobs budget.

So I have to assume that, considering the negative carry in almost all of the publicly held float in GBN.V shares, and large negative carries in every major gold producer, that there is significant risk held against the banking sector, and that the 2013 budget addresses this by allowing banks a bail-in.

Banks would expropriate anyone exposed to covered bonds with an annuity based on an equity swap, should this cause liability for the banks. People would have knowingly bought into these bonds based on gold mining equity swaps,(where the equity swap is the liability to buy back the shares) certain that the miner would fail.

The budget was singularily vague about what was intended, but I am fairly satisfied that what was intended was to write off this type of bond, by incurring losses on the bond holder. Annuities are uninsured, and were the kind made whole by Canadian taxpayers after the ABCP bailout.

But would they be able to snatch the shares from your account, essentially settling the equity swap, instead of exposing their larger customers to losses? Or would they be able to do it on both ends, and none the wiser?

I have no answer. If they did something like steal people's shares from their brokerage accounts, this would destroy financial markets for good. A bank would expose themselves to failure if they did that. Equity markets are selling off since Cyprot banks took their depositor's money. They say 'depositors' but that might be euphemistic for any sort of holding within a bank.

A comparison of what are insured and uninsured deposits in the U.S.(should be the same):

http://www.cnbc.com/id/48927083

-F6