March 23rd, 2013
With 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.
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
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."
Even your data and conversations on its encrypted services that you thought were secure aren’t; at least not from 46 governments around the world.
Texas Rep. Giovanni Capriglione has a bill in play that would move the state’s gold from New York (where its under the “safekeeping” of the ultra shady Federal Reserve) to a depository within the state of Texas itself. The reason this would be such a big deal if it happens, is because a lot of the gold bought and sold globally is not very likely not actually owned by those that “buy” it. From my perspective, pretty much the only countries that actually buy gold and bring it within their borders are China, Russia and Iran. Most other nations that claim they “bought” gold, most likely hold a certificate that states they have gold in London or New York. So in other words, they have no gold. It looks like Texas is wising up.
Forget Cyprus. A much bigger story in the coming weeks and months will be in Japan, where one of the greatest economic experiments in the modern era is about to begin.
Former Cyprus Central Bank Head And Senior Fed Economist: "The European Project Is Crashing To Earth"Submitted by Tyler Durden on 03/23/2013 11:21 -0400
Back in August 2011, one of the most prescient European (ex) central bankers, Cyprus' very own Athanasios Orphanides was optimistic, but with a caveat: "I am optimistic that with the right actions and effort by all we will pull through this," Orphanides told reporters after a meeting with Finance Minister Kikis Kazamias. They were Orphanides' first public comments since warning authorities in a July 18, 2011 letter that Cyprus ran the risk of requiring an EU bailout unless urgent action was taken to shore up its finances." Two years later, following endless dithering and pretense that just because the ECB has stabilized the markets, all is well, and "action was being taken" when none was, Cyprus is beyond the bailout stage - it is now quite literally on the verge of total collapse. This is also why Orphanides, who recently quit as Central Banker of Cyprus following a clash with the new communist government (and was replaced by a guy named Panicos), no longer is optimistic. "The European project is crashing to earth,” Athanasios Orphanides told the Financial Times in an interview. "This is a fundamental change in the dynamics of Europe towards disintegration and I don’t see how this can be reversed.”
Border controls? Capital Controls? And we’re talking about a union?
Cyprus Deposit Levy Vote Delayed, Will Go "Down To The Wire" As Up To 70% Deposit Tax Contemplated For SomeSubmitted by Tyler Durden on 03/23/2013 08:58 -0400
While GETCO's algos were poised to set off a buying tsunami yesterday the millisecond a flashing red headline hit Bloomberg with even the hint or suggestion that Cyprus is fixed, we said to sit back and relax because Cyprus "will get no resolution today, or tomorrow, and may at best be resolved on Sunday night following yet another coordinated global bailout, (although our money is on a last, last minute resolution some time on Monday when Cyprus is closed but the European markets are widely open)." As it turns out, we were right, following reports by major newswires that the vote on the deposit levy will only take place (if at all) on Sunday night, after the Eurozone finance ministers' meeting on Sunday. The reason for the delay? Deciding how to best bring the news to Russian, and other wealthy depositors, that not only will they not have access to their funds for a long, long time, the ultimate haircut on what they thought was safe, easily accessible cash as recently as a week ago, may be a stunning 70%!
Liar, Liar Banking System On Fire! Watch As I Spit Fact That Burns Down The Sham Formerly Know As The EU Banking SystemSubmitted by Reggie Middleton on 03/23/2013 08:21 -0400
Choice excerpts: "Have we forgotten what a bank is & what they are used for?" "The rules haven't been changed, they've been revealed!" Liar... Liar... Ass on Fire!!!
An overview of the technical condition of the major currencies. See why we anticipate a heavier US dollar in the week ahead.
There exists a super-Bernanke who proved also a super-Hollande, a gentleman who Japanese Prime Minister Shinzo Abe cannot compete with: his name is Robert Mugabe, the president of Zimbabwe. When he took power, he seized the farmlands of one social group to give them to another social group. Afterwards, in part because the new social group did not manage the farms that well, the economy took a turn for the worse. Therefore, the state issued some bonds to finance its spending and asked the central bank to issue some money to buy this government debt. But they printed big time and turned the printing press into something of a cosmic proportion. According to Professor Steve Hanke from John Hopkins, monthly inflation was 80 billion percent, so per year it is a 65 followed by 107 zeros. This is what we call Mugabenomics, the conjunction of (i) state-forced wealth transfer between two social groups along with (ii) the monetisation of the debt. As we shall see below, Mugabenomics, or at least its mild version implemented now in the Western hemisphere, has drastic consequences on the final episode of the global financial crisis.
With the Cypriot government still 'undecided' about what to 'take' and the European leaders very much 'decided' about what to 'give', the fact of the matter is, as JPMorgan explains in this excellent summary of the state of affairs in Europe, that because ELA funding facility is limited by the availability of collateral (and the haircuts applied to those by the central bank), and cutting the Cypriot banking system completely from ELA access is equivalent to cutting it from the Eurosystem making an exit from the euro a matter of time. This makes it inevitable that capital controls and a capital freeze will be imposed, in their view, but it is not only bank deposits that are at risk. A broader retrenchment in funding markets is possible given the confusion and inconsistency last weekend's decision created for investors relative to previous policy decisions. Add to this the move by Spain, which announced this week a tax or bank levy (probably 0.2%) to be imposed on bank deposits, without details on which deposits will be affected or timing, and the chance of sparking much broader deposit outflows across the union are rising quickly.
Cyprus is preparing for total financial collapse as the European Central Bank turns its back on the island after its parliament rejected a scheme to make Cypriot citizens pay a levy on savings deposits in return for a share in potential gas futures to fund a bailout. In the meantime, cashing in on the island’s major gas potential is more urgent than ever—but these are still very early days. In the end, it’s all about gas and the race to the finish line to develop massive Mediterranean discoveries. Cyprus has found itself right in the middle of this geopolitical game in which its gas potential is a tool in a showdown between Russia and the European Union. The EU favored the Cypriot bank deposit levy but it would have hit at the massive accounts of Russian oligarchs. Without the promise of Levant Basin gas, the EU wouldn’t have had the bravado for such a move because Russia holds too much power over Europe’s gas supply. The Greek Cypriot government believes it is sitting on an amazing 60 trillion cubic feet of gas, but these are early days - these aren’t proven reserves and commercial viability could be years away. In the best-case scenario, production could feasibly begin in five years. Exports are even further afield, with some analysts suggesting 2020 as a start date.
For those still with capital in the paper markets, Peak Prosperity's Chris Martenson believes there are dangerous risks re-building. In particular, he sees an unacceptably high and growing risk of a cascading series of corrections in the bond markets (corporate and sovereign), which would have a much greater impact on destroying wealth worldwide than any stock market crash could. The return of reckless practices like CDOs and overuse of derivatives indicates that we are far along the timeline in repeating a 2008-like contraction -- but worse. Despite today's heady elevated prices, it's time to get to the sidelines, and use your paper - while it still has the purchasing power it does - to park your wealth in hard assets.