Archive - Mar 23, 2013
A DRaGHi IN THe HeaDLiGHTS...
Submitted by williambanzai7 on 03/23/2013 22:38 -0500WARNING: BANZAI7 SUNDAY AM FOOD AND BEVERAGE WARNING IN EFFECT...
Cyprus-Troika Talks "Delicate" But Schaeuble "Won't Be Blackmailed"
Submitted by Tyler Durden on 03/23/2013 19:37 -0500
Some late news indicates that the 'deal' is further away than many hoped (or rumored) earlier in the day. Welt am Sonntag reports that German FinMin Schaeuble exclaimed "I won't allow myself to be blackmailed," adding his responsibility to the stability of the Euro. Simply put, he adds Cyprus must respect the rules, insistent that, "Cyprus is a hard road to go either way; but that is not the result of European stubbornness, but a business model that no longer works." With that as background, Cyprus President Anastasiades will be meeting with the IMF's Christine Lagarde tomorrow morning with talks at a "delicate point," with his spokesperson admitting the situation is "very difficult." The disinformation-to-total-confusion train pushes on forward; beggars can be choosers and 'demanders' won't be blackmailed.
What If Cyprus Left The Euro
Submitted by Tyler Durden on 03/23/2013 18:17 -0500
As we recently discussed, many euroskeptics are pushing Cypriot lawmakers to default, devalue, and decouple from the Euro - understanding that the short-term pain of such a move will lead to much more sustainable gains afterwards. But BofAML raises the question of what damage (and required response) would occur in the remainder of the European Union should Cyprus leave (or be pushed ). Unlike some EU leaders suggestions, BofAML suggests the contagion and growth impacts could last a decade; but it is the policy reaction of the ECB that is most crucial to understand and how it may rapidly lead to a German decision on debt mutualization (or not) that should be most concerning.
Why Cyprus Matters (And The ECB Knows It)
Submitted by Tyler Durden on 03/23/2013 17:21 -0500
Many have asked why the bondholders have not been tagged in the Cyprus fiasco. That answer is simple. Most of Cyprus's bonds are pledged as collateral at the ECB or in the Target2 financing program. Then one may also ask why the bonds of the two large Cypriot banks are not being hit. The answer is the same; most are held as collateral at the ECB or Target2. In both cases, remember uncounted liabilities, the government of Cyprus has guaranteed the debt. Consequently if the two Cyprus banks default it is of small matter as the sovereign has guaranteed the debt. However if the country defaults and leaves the European Union then it will matter and matter significantly as the tiny country of Cyprus would wipe out the entire equity capital of the European Central Bank. While it is not a matter of public record it is estimated that Cyprus has guaranteed about $11.6 billion of collateral at the ECB.
Is China Heading For Its Own Arab Spring? Pt 2
Submitted by Phoenix Capital Research on 03/23/2013 17:17 -0500
China’s Government knows it's on thin ice and so is doing three things to try to mollify the Chinese population:
- Launching a very public campaign to crack down on corruption (to mollify the populace).
- Taking steps to tame inflation (slowing financial speculation and importing massive quantities of commodities to attempt to control prices).
- Curbing its stimulus efforts.
How The Only Market That Is Open Reacted To Today's News & Rumors
Submitted by Tyler Durden on 03/23/2013 16:33 -0500![]()
There are no regulated financial markets open today; no BIS-buffered FX market, no Fed-spoon-fed US equity market, no BoJ-jawboned Nikkei 225, and no ECB-sponsored Spanish bond market to judge today's news and rumors. But there is one 'market' open - a market that prices in the belief (or lack thereof) in the status quo to a lesser or greater extent. Illiquid as it may be, today's Bitcoin prices (and volume) says a lot about the headlines of the day...
Cyprus Debate Cancelled, "Not Within Touching Distance" Of A Deal
Submitted by Tyler Durden on 03/23/2013 16:09 -0500The situation in Europe remains fluid. 'Rumors' circulate from 'anonymous' sources but seemingly confirming what 'news' we do have from Olli Rehn that there is no deal; Xinhua reports that the Cypriot Parliament has cancelled the debate over the deposit levy for today (following daylong negotiations with the Troika). Further to the 'no deal' meme, ekathimerini is reporting, via another senior Cypriot official,
- *CYPRUS, TROIKA NOT CLOSE TO DEAL, CYPRUS NEWS AGENCY REPORTS
“We are not in touching distance of an agreement,” the official, who preferred to remain anonymous, commented adding that the impasse was a result of the “inflexible” stance of the IMF - "Every half hour, new demands are made." Further comments indicate the 'low levy' on the rest of Cyprus-based bank deposits has been abandoned - implying a potential 25% haircut for Bank of Cyprus deposits.
Michael Pettis Asks "When Do We Call It A Solvency Crisis?"
Submitted by Tyler Durden on 03/23/2013 15:30 -0500
Up until just a week or so ago, the euro, the market seems to be telling us, has been saved, and peripheral Europe is widely seen as being out of the woods. Thanks to the ECB - who are willing to pump as much liquidity into the markets as it needs - it seems rising debt levels, greater political fragmentation, and a worsening economy somehow don't really matter and it is impolitic to sound pessimistic. But is peripheral Europe really suffering primarily from a liquidity crisis? It would help me feel a lot better if I could find even one case in history of a sovereign solvency crisis in which the authorities didn’t assure us for years that we were facing not a solvency crisis, but merely a short-term problem with liquidity. A sovereign solvency crisis always begins with many years of assurances from policymakers in both the creditor and the debtor nations that the problem can be resolved with time, confidence, and a just few more debt rollovers. The key point is that bankers are not stupid. They just could not formally acknowledge reality until they had built up sufficient capital through many years of high earnings – thanks in no small part to the help provided by the Fed in the form of distorted yield curves and free money – to recognize the losses without becoming insolvent.
On the Circus in Europe
Submitted by Bruce Krasting on 03/23/2013 15:16 -0500The clowns are the politicians and technocrats in Berlin and Brussels.
Unsecured Depositors Of The World, Unite... And Get The Hell Out Of These Countries
Submitted by Tyler Durden on 03/23/2013 14:39 -0500
Based on the most recent data, JPMorgan notes that the share of large or uninsured deposits is likely to be close to half of total deposits in the European Union. With deposits already flowing out of some of the peripheral EU nations (as we warned here), we thought it appropriate to point out just which nations have the largest share of uninsured deposits (and are not yet under the ECB's 'standard of living' capital controls). It seems - among many others - that despite France throwing in the towel on the 75% income tax, there is another good reason for the wealthy to leave...
Cyprus Deal... Or No Deal: "Anonymous" Rumor vs Euro Commission
Submitted by Tyler Durden on 03/23/2013 13:57 -0500The conflicting headlines continue to spew forth from the union of European nations. Reuters CYBC is reporting that Cyprus has agreed a 'deal' with EU/IMF lenders a 20% levy on deposits over EUR100,000 for Bank of Cyprus and a 4% levy on deposits of the same amount at other lenders (and the Cypriots have dropped plans to nationalize pension funds) citing a senior Cypriot official (who demanded anonymity). At the same time, EU Commissioner Olli Rehn emailed a statement saying that a 'deal' has yet to come forth:
- *REHN SAYS COMMISSION WORKING HARD TO FIND CYPRUS SOLUTION
- *REHN SAYS ONLY HARD CHOICES LEFT FOR CYPRUS
- *REHN SAYS `ESSENTIAL' CYPRUS SOLUTION REACHED ON SUNDAY NIGHT
So who does one believe? And with no market open to test this strawman, what will the decision-makers have to guide their choices? One thing is for sure:
- *REHN SAYS 'NO LONGER ANY OPTIMAL SOLUTIONS AVAILABLE'
- *REHN SAYS ONLY HARD CHOICES LEFT FOR CYPRUS
"A Brief History Of Money In Cyprus" As Gasoline "Runs" Are About To Be Unleashed
Submitted by Tyler Durden on 03/23/2013 13:23 -0500With money, or the lack thereof, a popular topic of discussion in Cyprus currently, we go straight to the source, the Central Bank of Cyprus, where in prose that can only be described as the definition of unintentionally prophetic irony, we read the following:The historical development of money in Cyprus has followed the sometimes stormy and turbulent course of the island’s political history. The various conquerors that ruled Cyprus throughout its history introduced their own monetary unit to the island. Hence, among other monetary units, the stater, the obol, Roman and Byzantine coins, the gross, the dinar, the cartzi, the para, the piastre and the pound have been used as the island’s currency. And now the Euro, although perhaps for not much longer.
If Cyprus Really Wants To Be The Next Iceland...
Submitted by Tyler Durden on 03/23/2013 13:01 -0500
Given Cyprus' contentious relationship with the Eurozone... Perhaps it will consider going the full monti and taking a page out of the full Iceland playbook
Russian Billionaire In Exile Boris Berezovsky Commits Suicide - The First Cyprus Casualty?
Submitted by Tyler Durden on 03/23/2013 12:07 -0500
Just your ordinary run of the mill Russian billionaire oligarch in exile who had so much money he was terminally depressed... or just the opposite, and the first tragic casualty of the Cyprus capital controls which are about to eviscerate a whole lot of Russian wealth (and ultraluxury Manhattan real estate prices)? From RT: “Just got a call from London. Boris [Abramovich] Berezovsky committed suicide. He was a difficult man. A move of disparity? Impossible to live poor? A strike of blows? I am afraid no one will get to know now,” the lawyer said on his social network page."
Microsoft Confesses
Submitted by testosteronepit on 03/23/2013 11:49 -0500Even your data and conversations on its encrypted services that you thought were secure aren’t; at least not from 46 governments around the world.






