Your withdrawals: frozen!

Paolo Cabrelli | 31 Oct 2020 The worst in four centuries… Dear Reader,   My chief investment strategist has something urgent to show you…   It doesn't make for easy reading – but I beg you to have a look.   Because, right now, nothing is off the table.     Across the channel, Macron has put France into lockdown…   Here, as infections surge to almost 100,000 people a day, Boris Johnson is being urged to introduce a firebreak across England.   The papers warn of a change of strategy…   Despite the fact that business leaders warn a second lockdown would wreak devastating economic carnage.   No wonder the FTSE has just hit a six month low – part of a sea of red for stocks that swept across Europe and the US.   This is not good news.   Relatively few people working today will recall the "financial repression" the UK saw from 1945 until the late 70s. According to a study in The Article:   "Interest rates and bond yields were pegged, borrowing costs were controlled, institutions were forced to buy government debt at yields below inflation, and controls were used extensively including over capital movements abroad… Indeed, financial repression is, in effect, a subtle type of debt restructuring."   So consider this…   In the last financial crisis, public sector debt was pushed up to 75% of GDP.   Now it stands at just over 100% of GDP.   That ratio is now the highest ever recorded in peacetime in over four centuries.    I mention this because…   When extreme events hit society – like Covid-19 - financial extremes tend to follow.   Like the freezing of withdrawals…   Using some of your savings to bail out the banks…   And turning your savings into bank shares.   If you think none of that can happen to you…   Then you do not know your history.   And you could be under-estimating the government's power to control your money.   After all, did you know there's law that gives them the legal right to take at least some of your savings?   That they can to keep the banking system afloat? If you think this law is up for debate it isn't.   It was passed over 10 years ago – after the last extreme financial crisis hit.   Caution is required.   Like I say, let my colleague show you exactly what is at stake here. ​ Best,   Paolo Cabrelli Publisher, Southbank Investment Research

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