Archive - Mar 24, 2013

Tyler Durden's picture

What A Difference A Week Makes For Cyprus' Schrodinger Deposits





Following the Eurogroup press conference, the Cypriot Finance Minister Michael Sarris is currently explaining how:

  • *SARRIS SAYS TONIGHT IS GOOD NIGHT FOR CYPRUS, EURO ZONE and
  • *SARRIS SAYS UNCERTAINTY ON CYPRUS ECONOMY HAS ENDED    :BOCY CY

Having avoided the "disastrous exit" from the Euro. Should we believe him? Earlier in the week he exclaimed:

  • *SARRIS SAYS NOTHING WILL HAPPEN TO SAVINGS IN CYPRUS

And tonight we are told Bank of Cyprus uninsured 'savers' will face 40% haircuts and Laiki uninsured 'savers' as much as 100% (or total wipeout). It seems the lessons of Juncker are well studied in all the European Nations.

 

williambanzai7's picture

NaPoLeON BLoWNaPaRTe...





So you are a large corporate with local accounts in Italy or Spain, does today's solution tickle you pink? Pass the scotch tape...

 

Tyler Durden's picture

Eurogroup Press Conference - Live Webcast (And Full Eurogroup Statement)





It's 2:30am, do you know where your deposits are? Tune in to see the Eurogroup explain how this is in the best interest of the Cypriot people, how the 'deal' illustrates the solidarity of the European people, and how the worst of the crisis is now behind us.

*EU COMMISSION SAYS NO CYPRUS PARLIAMENT VOTE NEEDED: SCHAEUBLE
*SCHAEUBLE SAYS TROIKA TO CONTACT RUSSIAN GOVT ON DEAL :BOCY CY

 

Tyler Durden's picture

"In The Best Interests Of The People..."





The European Union finance ministers have just agreed to the terms of the Cyprus-Troika deal (which we fear could mean 100% haircts for the uninsured Laiki depositors as unsecured claims in a Chapter-7-style liquidation). With democracy now a complete farce since not even Parliament will be allowed to vote on deposit confiscation as part of a financial sector bankruptcy deal, here is the island nation's president explaining what just happened:

*ANASTASIADES SAYS AID DEAL IN BEST INTEREST OF CYPRIOT PEOPLE

 

Tyler Durden's picture

"Cyprus Is The Homage Europe Pays For The Denial Of A Systemic Crisis"





Three months ago, Yanis Varoufakis explained Europe's bogus growth pact and the papering over the cracks that was being done by the IMF and ECB, "The idea here is that, yet again, the Eurogroup-ECB-IMF alliance is not ready, politically, to reveal the truth to its various constituencies." He was, obviously, correct. This weekend, in a brief BBC Radio interview (below), as Cyprus erupts and brings the European circus back into town, Varoufakis exclaims, "every bailout agreement, beginning with Greece’s in May 2010, seems less logical and more toxic than the previous one." In three minutes, the Greek economist illustrates how the leaders are laying waste to the supposed pillars upon which the European Union was founded.

 

Tyler Durden's picture

Rampapalooza As Cyprus-Troika Reach Deal (Updates)





UPDATE: It appears the 'deal' to default/restructure the banks has been designed to bypass the need for parliamentary votes, since it is theoretically not a tax.

While we have little color on what kind of carnage the President of Cyprus had to accept to his fellow countrymen, the news is that :

*CYPRUS, TROIKA REACH AGREEMENT IN PRINCIPLE, EU OFFICIAL SAYS

The terms, unsurprisingly what zee Germans wanted, are i) Laiki to be wound down; ii) Bank of Cyprus to survive but with deposit haircuts, and iii) deal would see secured deposits in Laiki moved to Bank of Cyprus. In other words, a deal far worse then the original on proposed by the Eurogroup last week - when the banks still existed. The key appears to be the 'saving' of the insured depositors (crucial to avoid a pan-European bank run) and the crushing of the 'whale' depositors. S&P 500 futures and EUR are surging, Gold is dropping modestly. We await final confirmation of the final terms of the final deal once the Cypriot people wake up (and don't forget the ECB 'standard of living' rules). The Cypriot Parliament still has to vote for this - and not one of them voted for it last week.

 

Tyler Durden's picture

It's Going To Be A Long Night (With Updates)





As liquidity started to come back into FX markets this evening, it is very clear that humans and algos are reacting to every headline, rumor, and bloviation from Europe. In the last two hours, as this chart of EURUSD shows, while the range is small, the reactions are telling. It does appear from the EUR ramps that no-news-is-good-news for now - though evidently, the facts behind that 'no news' paint a different picture. As S&P 500 futures just opened, so EURJPY was ramped 70 pips to hold the only policy tool the Fed has left at unch (for now).

 

Tyler Durden's picture

Meanwhile, Cash Exodus From Cyprus Surges Despite Bank Closures, Capital Controls





When Cyprus put its banks into lockdown last weekend until... well indefinitely, now that capital controls are established, the main reason was to halt all capital outflows from the henceforth liquidity starved island whose banks will only exist as long as the ECB provides an ever greater dose of liquidity to account for the collapse in deposit funding. Which is why it is surprising, make that shocking, that as Germany FAZ reports, in the past week there has been a surge in cash outflows from Cyprus, even as its financial system has been supposedly ringfenced from the world, which by the way is the only thing preventing the EUR17 billion bailout from soaring by orders of magnitude because should a liquidity leak be discovered, it is all over for the country's financial system.

 

Tyler Durden's picture

Guest Post: Stocks Priced in Real GDP





Since the 1990s, priced in Real GDP the Dow Jones Industrial Average (as well as the S&P500) has been far above their 20th-century norm. There is an unsurprising coincidence - as stock prices (and corporate profits) have soared above their historical norm, wage growth has been very stagnant. The economy has come to be tilted toward bankers, financiers, insurance brokers and away from wage-earners, manufacturers and artisans. Does that mean that as Hassett and Glassman projected in Dow 36,000, stock prices have climbed to a new plateau? Well, while it is impossible to say exactly what prices will do in future (nominal, or otherwise) the “new plateau” has been very much supported by the Federal Reserve, first by lowering rates and keeping them low. Some might take that as a sign that stocks aren’t going to get much cheaper, because the Fed won’t let them get much cheaper; but gravity is against the Fed. Will it be third-time unlucky for the Fed, hell-bent on wealth-effecting and financialising the US economy to prosperity?

 

Phoenix Capital Research's picture

The Importance of Owning Your Own Bullion





 

Quite a few articles have been written about the importance of owning Gold and other precious metals as a means of maintaining one’s wealth in the face of rampant money printing by the world’s Central Banks.

 
 

Tyler Durden's picture

Another Gold Shortage? Dutch ABN To Halt Physical Gold Delivery





Based on a letter to clients over the weekend, it appears ABN Amro is changing its precious metals custodian rules and "will no longer allow physical delivery." Have no fear, they reassuringly add, your account will be settled at the bid or offer price in the 'market' and "you need to do nothing" as "we have your investments in precious metals."

 

Tyler Durden's picture

Four Feckless Features Of A Post-Cyprus Europe





The calmness of the financial markets in the face of the deteriorating Cyprus crisis in the past week has been remarkable. Although Cyprus is tiny enough to be completely overlooked in most circumstances, its economy and banking system have characteristics similar to other, much larger, eurozone countries. Cyprus is certainly at the extreme end, but an over-leveraged banking system, with insufficient capital and reliance on foreign funding, is familiar territory in the eurozone. But while Cyprus is at an extreme, four of the features of the reported deal are setting unfortunate precedents for the future. If the reported deal is done to keep Cyprus inside the euro by Monday, we can expect to hear, very loudly, that this is a unique case, and that the unfortunate features of this settlement cannot be extrapolated to any other future circumstances. Let us hope not. If nothing else, it would certainly demonstrate that the eurozone still has much work to do before the crisis is fully under control.

 

Tyler Durden's picture

Switzerland Next: Swiss Banks Set To Foward Confidential Bank Client Data To U.S. Officials





The Cyprus deposit scramble contagion spreads as Reuters reports that "Swiss banks would be required to "motivate" remaining U.S. clients to come clean to U.S. tax officials. If they failed to do so, confidential bank data would be forwarded to U.S. officials. The initial shipment of data from those banks would not include client names but, based on the data, U.S. officials would be able to submit a judicial aid requests to get the names of alleged tax evaders."

 

Tyler Durden's picture

Is This Europe's Biggest Nightmare?





Just one Spiderman towel left in stock in Europe... how will they ever attract depositors back now...

 

 

CrownThomas's picture

Rothbard on Recessions





Here is a bit of sanity for everyone on this Sunday afternoon

 
Do NOT follow this link or you will be banned from the site!