In January we wrote how the largest ponzi scheme ever hit 200 million Chinese “investors” who may have lost everything to an online financial company. Now we read the largest ever bank fraud was just discovered in India. Normally, I would not write about a measly 2 – 3 billion dollars disappearing in a world where trillions were spent to bailout western banks who were part and parcel in causing the financial crisis.
But this time I will make an exception. Not because the Indian government recently handed over (with no strings attached) 32 billion dollars to the banks to shore up their capital situation – typical. No, because the Indian government (along the banks) recently forced the Indian people out of cash and into the banking system lock, stock and barrel.
Yes, they banished all but the smallest money bills and made billions of illiterate Indians get a credit card and bank account in an effort to create an all electronic-banking society. What happens when the electricity goes out as if often does in India is beside the point.
Indians were opted into a banking system that lacks controls and appears overrun with corruption. A banking system with 10% non-performing loans that will need bailing out… or will it be bailing in.
So now if the banking system fails, the government can simply bail-in the banks by taking a cut out of everyone’s bank account just like Europe plans to do. There is a reason why Indians love their gold.
Banks – heads they win, tails you lose.