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Lesson 1: Greece; Lesson 2: Cyprus - Pay Attention

Tyler Durden's picture




 

Submitted by Mark J. Grant, author of Out of the Box,

Lest We Forget
 
The main issue is not Cyprus. Cyprus just happens to be the nation where the confiscation is to be enacted. Cyprus is the scapegoat. The European Union, the ECB and the IMF are the villains. Cyprus is the mostly unwilling recipient. What has taken place in Cyprus is far less important than the larger issue which is a forfeiture of private property being demanded by the nations on the Continent and by an international organization headquartered in Washington D.C. That would be in America.
 
"The leading banker in Amsterdam is now the pastry chef in our kitchen."
 
                                  -Casablanca
 
In the case of the Greek default the country was told by the same organizations to retroactively change the covenants of their bond indenture. They did this. In the case of Cyprus, Europe has told this small nation to seize a portion of all of the bank accounts in the country so as to partially fund its debt. In both cases neither Greece nor Cyprus made the decisions; they were made by the European Union and forced upon the host countries by the threat of capital to be provided or not.
 
(AP) "Jean-Claude Juncker, head of the Eurogroup meeting of Eurozone finance ministers, has vowed that a Greek default was not an option and would be avoided even after Athens' admission that it would miss its deficit-reduction targets raised questions about whether it would receive its next bailout loan."
 
                                 -October 3, 2011
 
Right up until the day it happened the President of Cyprus claimed it would never happen. Then, faced with bankruptcy, the fellow folded. I do not take a position here upon his actions, he has been in office for three weeks, but I do take a position upon the tyranny of the governmental bodies in question; they have demanded and forced the forfeiture of private property for their own betterment. I state with authority; if they can do it in Greece and then again in Cyprus they can do it anywhere and under any guise they like. They can wield the army of their pen, of their money, as an effective armament on the battlefield, to change what they like, when they like, all for the good of the State.
 
"Every collectivist revolution rides in on a Trojan horse of ‘emergency’. It was the tactic of Lenin, Hitler, and Mussolini. In the collectivist sweep over a dozen minor countries of Europe, it was the cry of men striving to get on horseback. And ‘emergency’ became the justification of the subsequent steps. This technique of creating emergency is the greatest achievement that demagoguery attains."
 
                            -Herbert Hoover
 
Deposit Insurance at a bank, any bank in Europe, is now meaningless. A bond indenture, any clause, any paragraph, any promise or assurance; now meaningless. The notion of private property, land, cash, house; now meaningless. The European Union will take what they want as they deem it necessary and the IMF will follow along. The question has been asked, during the last few days, why the bond holders of Cyprus were not tagged along with the bank deposits. I can answer the question. Virtually all of the Cyprus sovereign debt is governed under British law and so the EU did not pursue this course.
 
I recall the movie, Casablanca, where the Germans stood up to sing their National Anthem and the French responded with the "Marseilles." It is too bad that the French have forgotten how to sing this song but then, apparently, all of the nations in the EU have forgotten how to sing their own songs.
 
Greece came first. Lesson one and "shame on you." Cyprus comes second and now "shame on me." What will come next? What will you tell your partners or your shareholders when they say, "You should have known." You will have no excuse! The Europeans will take what they want and when they want it and to have money invested there now only has one excuse; masochism. Neither you nor I have any idea of what they might do next. When a government changes an indenture retroactively as a condition of funding and then demands that private property be seized as a condition of funding then this government, the European Union, will stop at nothing, find no boundary or fence, to halt its ambitions.
 
When Lesson three comes, and it will, I will not be kind. I will say; "I told you so!"

 

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Mon, 03/18/2013 - 08:19 | 3341753 fonzannoon
fonzannoon's picture

So buy treasuries, right Mark?

Mon, 03/18/2013 - 08:25 | 3341771 Pladizow
Pladizow's picture

Hedge with a securitized Cyprus Carnival Cruise bond!

Mon, 03/18/2013 - 08:43 | 3341839 toys for tits
toys for tits's picture

 

 

Nah, it's not so bad. The EU has finally figured out how to get retail into the stock market (at least for shitty banks). (sarc.)

Mon, 03/18/2013 - 08:59 | 3341879 Paul Bogdanich
Paul Bogdanich's picture

In all previous Empires printing money was the final stage before collapse.  Also in all previous Empires the solution to the fiscal imbalance involved revenue, taxes and property.  There is no way to correct these problems while respecting the stolen fortunes.  The only real choice is whether to implement the solutions voluntarilly before social unrest and possibly totalarian government or after.  These people that are all taken aback by this are either ignorant, or advocates of doing things by force after social unrest.  If they do in fact know what they are talking about and are being deliberate impediments then hopefully they are also members of an easily identifiable  religous ethnic or class minority so the force can be used on them instead of others.  Happens every time though. 

Mon, 03/18/2013 - 09:19 | 3341990 Thomas
Thomas's picture

Kevin Phillips' "American Theocracy" came out years ago (2006), but I am guessing it still reads fresh today. He descibes in lurid detail the financialization of the economy before the empire collapses.

Mon, 03/18/2013 - 09:21 | 3342005 Newtons Lawyer
Newtons Lawyer's picture

At least we know it can't happen here in the USSA.  GM you say?  I'm sure that was a one time event.  The rule of law applies here.....until it doesn't.

Mon, 03/18/2013 - 09:29 | 3342027 negative rates
negative rates's picture

Lesson #3, You smokeum peace pipe? Oh, so that's your problem.

Mon, 03/18/2013 - 08:26 | 3341777 eigenvalue
eigenvalue's picture

Bingo! Only treasuries can save you in a financial crisis. Other so-called safe haven assets like gold and silver can only break your heart.  Silver can't stay above $29. Safe haven? My arse.

Mon, 03/18/2013 - 08:29 | 3341789 dick cheneys ghost
dick cheneys ghost's picture

I bought some debt instruments, but I lost them in a tragic boating accident. What should I do?

Mon, 03/18/2013 - 14:07 | 3343422 Peter Pan
Peter Pan's picture

Buy some more and lose that as well.

Mon, 03/18/2013 - 08:38 | 3341823 CheapBastard
CheapBastard's picture

If you don't hold it, you don't own it.

Possession (and mobility of it) is 10/10ths the law.

Mon, 03/18/2013 - 08:54 | 3341875 toys for tits
toys for tits's picture

 

 

We all used to laugh at Mr. T and the rappers.  Maybe they had the right idea after all - at least with gold.

http://www.threadbombing.com/data/media/2/mr-t-gold-chains-sparkling.gif

Mon, 03/18/2013 - 09:04 | 3341926 LawsofPhysics
LawsofPhysics's picture

An once is an ounce is an ounce.  Tell me, what is the counterparty risk on my ounces?  You really think you can come and take it from me?  LMFAO!  Funny thing is, people are always willing to exchange the value of their labor for those ounces.  I paid a plumber last summer in silver, let's see you try that with treasuries.  Too fucking funny.

Mon, 03/18/2013 - 08:36 | 3341815 AUD
AUD's picture

Mark J. Grant beats himself off with US Treasuries.

Mon, 03/18/2013 - 08:22 | 3341760 LawsofPhysics
LawsofPhysics's picture

Counterparty risk anyone?  Good thing an ounce is an ounce is an ounce.  Gold and lead, one insuring the safety of the other.

Mon, 03/18/2013 - 08:24 | 3341768 HoofHearted
HoofHearted's picture

Don't forget silver...and copper jackets for the lead.

Mon, 03/18/2013 - 08:48 | 3341857 Kirk2NCC1701
Kirk2NCC1701's picture

Whatever. We aim to please.

Mon, 03/18/2013 - 08:33 | 3341807 Archduke
Archduke's picture

totally off topic, but did you know gold is atcually worth less than cash as far as EuroNext is considered?

for SDR deferred settlement, 20 % cash or govt tresuries collateral is needed vs 25 % in gold or other bonds.

 

Mon, 03/18/2013 - 08:24 | 3341767 Master Chef
Master Chef's picture

Better get more gold... and of course its cousin.

Mon, 03/18/2013 - 08:26 | 3341775 TooBearish
TooBearish's picture

More like ECB following the IMF

Mon, 03/18/2013 - 08:28 | 3341779 Ghordius
Ghordius's picture

this ties back to what I'm often writing about: there is an Anglo-American tradition & custom based on Common Law principles that requests and requires the whole world to act according to some (often badly defined) "covenants"

fine for me, but I do have to note that this is the whole basis of "world empire" (or NWO, as some like to say)

Cyprus's parliament has not decided yet, and here in the article it's already a victim. I ask: is it a sovereign nation or not? Does it have the right to make it's own laws or not? And of course to face the consequences of those decisions?

one of Cyprus's former decision was to let their banking system grow way above their real economy. Iceland did the same, btw

Mon, 03/18/2013 - 08:35 | 3341813 eigenvalue
eigenvalue's picture

Do you think Cyprus has an alternative to the "wealth tax"? The Greek PSI disembowelled the banks in Cyprus. Savers might get nothing if the banks collapsed. Something is better than nothing.

Mon, 03/18/2013 - 08:47 | 3341848 Anasteus
Anasteus's picture

Of course, it has; at worst it can leave the Eurozone. The devil is, as usual, in details; what is 'better'? Is it better to continue dreaming with full stomach until you get enslaved entirely, or to finally wake up and bear the consequences of the existing way of life? The answer is up to people.

Mon, 03/18/2013 - 09:03 | 3341914 Ghordius
Ghordius's picture

A Cypriot population that is aware of the fact that they are at several empire's frontiers - not the first time in the history of Aphrodite's Island - not only since the Egyptian Empire of Ramses, before written history

The religious leaders of Cyprus are asking for leaving the eurozone. I personally doubt the people will want to

Mon, 03/18/2013 - 09:05 | 3341927 cifo
cifo's picture

Not everybody can be Switzerland.

Mon, 03/18/2013 - 11:16 | 3342567 NoTTD
NoTTD's picture

Or Iceland.

Mon, 03/18/2013 - 11:33 | 3342679 A Nanny Moose
A Nanny Moose's picture

They might have been better off calling it a "tax" on the banks. Same people would pay, but would feel better about it.

Where do these people find their marketing teams? Sheesh!

Mon, 03/18/2013 - 08:48 | 3341855 Archduke
Archduke's picture

a banking sector that ballooned in full profligagcy off offshored loot, private wealth retirees, etc..

though unlike Iceland, I wouldn't say cypriots were victims here.  they gleefully ate the cake.

 

before we start throwing stones at confiscation, let us remember that the UK, France, the US

have not abolished income tax - And that is pure confiscation.  Capital must be recouped,

redistributed and put to work.  This, on the other hand, is mandatory investment, redeemed

into bonds, which backed by the cypriot oil and gas discoveries, are going to be money good.

one could do much worse in terms of expropriation.

 

I applaud the measure.  we need to do more of it, say to the vatican and the orthodox church.

but I agree the measure is not very progressive and targets the wrong seniorage tranches.

euro banks should get a haircut first. then bond holders, then wealthy magnates, and then only

lastly then depositors.

 

 

 

 

Mon, 03/18/2013 - 09:04 | 3341921 Sean7k
Sean7k's picture

Coercion is coercion. Theft is theft. Free people are not required to participate in a financial amalgam. The problem with saying you should go after the banks and bondholders as a justification for theft is this: they never have to pay. They are the ones that escape the brunt of any confiscation. You hope to sweeten the message, but your message is a lie.

If the law can be trampled and then skewered through retroactivation, it is nothing more than a convenience for the confiscation of wealth.

 

Mon, 03/18/2013 - 10:00 | 3342172 smacker
smacker's picture

 

 

The only proper way in situations like this is DEFAULT. And in the case of Cyprus, Greece, Spain, Italy, Portugal et al is to quit the Eurozone and bring this pantomime farce to an end.

But as we know that doesn't suit the political filth in those countries and in Germany and Brussels because it puts their beloved euro currency and EUSSR project at risk. So they've chosen to expropriate private savings to pay off their debts. Commies and fascists...every last one of them.

Mon, 03/18/2013 - 09:14 | 3341932 AlaricBalth
AlaricBalth's picture

Yesterday the following was reported by discovercyprus.com:
"The frenzy of withdrawals was triggered by savers likely thinking that by reducing their bank balance they would reduce their taxable amount.
However understandable, it was probably an exercise in futility, because the taxable amount will apply retroactively, from the moment the deal was struck in Brussels."

After reading the Cyprus Constitution, I believe there may be multiple constitutional issues with "wealth tax". The most glaring issue is in reference to the retroactive nature of this tax.

According to Article 24, Section 3 of the Cyprus Constitution:
No tax, duty or rate of any kind whatsoever shall be imposed with retrospective effect: Provided that any import duty may be imposed as from the date of the introduction of the relevant Bill.

A retrospective law is one that is to take effect, in point of time, before it was passed. Article 24, Section 3 clearly nullifies any ex post facto provision of the Cyrus "wealth tax".

Secondly, there may be a breech of the Cyprus Constitution equal protection clause. Article 28, Sections 1 and 2 state the following:
1. All persons are equal before the law, the administration and justice and are entitled to equal protection thereof and treatment thereby.
2. Every person shall enjoy all the rights and liberties provided for in this Constitution without any direct or indirect discrimination against any person on the ground of his community, race, religion, language, sex, political
or other convictions, national or social descent, birth, colour, wealth, social class, or on any ground whatsoever, unless there is express provision to the contrary in this Constitution.

In my opinion, the proposed "wealth tax" discriminates against Cyprus citizens who, unfortunately, have bank accounts. The tax does not attempt to confiscate funds from those citizens who were astute enough to pull their money out of the banking system prior to the tax proposal. It is a tax that impacts only those citizens with money in the system. It could be argued that the equal protection clause should apply in this case.

Mon, 03/18/2013 - 09:15 | 3341971 LawsofPhysics
LawsofPhysics's picture

In short, when fraud is the status quo, possession is the law.  How are they going to "tax" what they can't find or what does not exist?  Morons.

Mon, 03/18/2013 - 10:05 | 3342194 Archduke
Archduke's picture

not so -would you rather run after fiat paper or digital credit?
or rather go after the hard resources of oil and gas concessions?

let the money up and run.

Mon, 03/18/2013 - 09:40 | 3342068 smacker
smacker's picture

Reading that extract of the Cypriot constitution --

In deciding when expropriation can take effect and calculating on what bank account balance it can be applied to, the relevant date is the one that the legal authority for this criminal theft is approved by the Cypriot Parliament (ie the date the law is passed), not the date last week when Cypriot political elites bent over and allowed the EU/IMF to shaft them bareback.

That being so, it helps to understand why banks are closed today/tomorrow/until further notice: to prevent account holders from withdrawing funds to minimise their loss from State theft. Any attempt by the Cypriot Gubbermint to apply the theft retrospectively would seem to be a clear violation of the constitution.

Mon, 03/18/2013 - 09:52 | 3342126 AlaricBalth
AlaricBalth's picture

Thanks smacker. That is what I thought as well.
Here is a link to the Cyprus Constitution.
http://www.servat.unibe.ch/icl/cy00000_.html

Mon, 03/18/2013 - 08:28 | 3341785 Inthemix96
Inthemix96's picture

People have forgotten the value and virtues of claw hammers.

A claw hammer is a very useful tool, it can knock nails into wood, and it can pull nails out of wood, it has a multiple functionality about itself that a central banker hasnt.

Claw hammers are also notoriously difficult to remove when firmly imbedded into a human skull.

Yes indeed, should someone try and scam me and mine, they will find out how useful a claw hammer can be.

Mon, 03/18/2013 - 08:53 | 3341868 Dugald
Dugald's picture

 

A wood saw is better and has longer reach.......

Mon, 03/18/2013 - 09:25 | 3342016 Imminent Crucible
Imminent Crucible's picture

I could fend off Ollie Rehn with my chain saw for a long time. Just sayin'

Mon, 03/18/2013 - 11:18 | 3342585 NoTTD
NoTTD's picture

I use a five pound driver with the extra long "blacksmith" handle.

Mon, 03/18/2013 - 08:29 | 3341786 pan
pan's picture

Plant that midnight garden bitchez!

 

Mon, 03/18/2013 - 08:30 | 3341790 Master Chef
Master Chef's picture

.. if you're not holding your own PMs, but trusting their safekeeping to an established institution, beware because that will get a haircut too.

Short back and sides? No, thanks just 9.9% off all round.

Mon, 03/18/2013 - 11:19 | 3342587 NoTTD
NoTTD's picture

Outstanding conclusion.

Mon, 03/18/2013 - 08:30 | 3341791 Freewheelin Franklin
Freewheelin Franklin's picture

Thank god the US can simply inflate away it's debt! Confiscation through inflation is soooooooo much better. People never realize how much money the government is actually taking. 

 

Mon, 03/18/2013 - 08:31 | 3341794 tarsubil
Mon, 03/18/2013 - 08:31 | 3341795 Chief Falling Knife
Chief Falling Knife's picture

Odds S&P closes green today?  Judging by the action in the last 5 hours, I'm sayin better than 50/50.  Full retard on full display?

Mon, 03/18/2013 - 08:32 | 3341799 Sean7k
Sean7k's picture

No one's private property has been safe for over one hundred years. Use taxes, income taxes, property taxes, no one can even own a house. We are no different than feudal serfs with plumbing and electricity. 

We fool ourselves and then act astonished when the State decides to clothe itself in its' full tyrannical glory. We NEVER had private property and never will as long as we remain the slaves of the State. 

Mark, save your shrill alarms for the ignorant masses.

Mon, 03/18/2013 - 08:32 | 3341803 G_T_A_44
G_T_A_44's picture

"Deposit Insurance at a bank, any bank in Europe, is now meaningless."

 

As well as that of the US, whereby the FDIC's $11BN appears to be quite a short-fall in insuring over $7TT in deposits, despite its LOC with Treasury of $500BN, eh?

Mon, 03/18/2013 - 08:33 | 3341805 Professor Fate
Professor Fate's picture

This should give Beppe Grillo another 20% of the vote.  Maybe even Bunga Bunga grabs a handful more of votes.  And I can't wait to hear the next Farage blast.

Fate the Magnificent

"Push the Button, Max"

Mon, 03/18/2013 - 08:36 | 3341817 Master Chef
Master Chef's picture

Yes Professor, where is Nigel Farage when we need him!

Mon, 03/18/2013 - 08:36 | 3341820 little buddy bu...
little buddy buys the dips's picture

"i told you so"?...that's it?

 

back into the box with you.

Mon, 03/18/2013 - 08:38 | 3341827 bigwavedave
bigwavedave's picture

I still want to know why this guys crap is not a "Guest Post"?

Mon, 03/18/2013 - 08:40 | 3341832 q99x2
q99x2's picture

Financial terroists. Banksters. Send them to California. We'll be sure to honor my contracts with them. Where do I sign.

Mon, 03/18/2013 - 08:41 | 3341833 benbushiii
benbushiii's picture

Everyone is shocked at what just occurred in Cyprus over the weekend; but is there really any difference in what the FED has done over the last 4 years, and what has just occurred in Cyprus?

 

Let’s look at the effects of each:

 

QE:

·        Low rates punish savers

·        Loss of purchasing power due to increased costs of goods

·        Costs of bailing out banks on the backs of the people

·        Costs of bailing out the country on the backs of the people, not the sovereigns or the banks

 

 

 

Cyprus:

·        Savers enjoyed higher rates, but now are punished

·        Loss of purchasing power due to confiscation

·        Costs of bailing out the banks on the backs of the people

Costs of bailing out the country on the backs of the people, not the sovereigns or the banks

Mon, 03/18/2013 - 08:41 | 3341834 BullionTweet
BullionTweet's picture

DON'T PISS-OFF PUTIN! It's a long road and you'll get yours no later than next fall. Cold winter ahead!

Mon, 03/18/2013 - 08:42 | 3341836 MrMorden
MrMorden's picture

I don't understand...why isn't Cyprus just minting a trillion Euro coin?!?

Mon, 03/18/2013 - 08:43 | 3341838 SheepDog-One
SheepDog-One's picture

People actually trusted broke banks and governments? I don't feel the least bit sorry for them.

Same will happen to the equity and bond bulls too sooner or later.

Mon, 03/18/2013 - 08:48 | 3341856 CheapBastard
CheapBastard's picture

"No one saw this coming," said the bankers....

Mon, 03/18/2013 - 08:50 | 3341859 Everybodys All ...
Everybodys All American's picture

Unbelievble that the market has not done a cliff dive. Then again.

Mon, 03/18/2013 - 08:52 | 3341865 Dr.Engineer
Dr.Engineer's picture

There is no longer a "rule of law."  That is the summary.  But what the powers that be do not realize is that the ruled have the choice to abide by that rule of law too.  Once the sheeple realize that the rule of law has become a convention, and they get really hungry, they will flip that convention on its head.

Welcome to the new dark ages team!

Mon, 03/18/2013 - 09:03 | 3341920 orangedrinkandchips
orangedrinkandchips's picture

NAZI party did just this lest we forget......Of course the 'undesirables' can leave Germany....especially the rich ones (and I am not just talking about Jews, but other stand-up people who didn't agree with the party).....They were let go...WITH 90% OF YOUR WEALTH HANDED OVER....

 

"your money or your life"

 

for real.

Mon, 03/18/2013 - 09:05 | 3341928 orangedrinkandchips
orangedrinkandchips's picture

And no, Cyrus is not a scapegoat.....IT'S A TRIAL BALLOON....SEE WHO IT GOES FOR THE REST OF THE WORLD....

 

 

Mon, 03/18/2013 - 09:12 | 3341952 Counterfiat
Counterfiat's picture

Gold still doesn't pay interest. 

Elementary elegant element, my dear whatsya done with my tokens of govt decreed iou's?.

Mon, 03/18/2013 - 09:36 | 3342047 DosZap
DosZap's picture
  • Gold still doesn't pay interest

Neither do BANKS

Mon, 03/18/2013 - 09:19 | 3341991 GreatUncle
GreatUncle's picture

It is the precedent that has been set from here on in that really has armed the fiscal nuke.

If any nation is observed to be financially distressed even a little bit, "may" need a bailout? pull all cash fast! Just what the banker did not order for financial stability to give them time to fudge some pretence of it all being fixed. The EU/IMF or any other nation will NO LONGER BE ABLE TO PREVENT BANK RUNS occuring now at any menton of financial difficulties. That is why I think they were stupid on this.

Take an example, some EU country red flags financial difficulty whoops there starts the bank run blowing the whole system apart. The EU now has to act faster and that means the capital controls will have to be implemented on all EU states now. Not tomorrow, when a bailout is rumoured and the bank run is immediately somebody gets a whiff of this. At that point if it is say Italy, Spain or some much larger country you just detonated the fiscal nuke as it is now armed and waiting.

Wait and see I think if not then the above applies to their future not just the ordinary person who has a far smaller amount in a bank. See those with power need banks to hold their wealth and no banks is no good for them hence all the bailouts to preserve banks.

OR JUST MAYBE THEY ARE NO LONGER PRETENDING THIS IS FIXED AND BLUNTLY EVERYBODY SHOULD PULL ALL EXCESS CAPITAL NOW TO SAVE YOURSELF 6% OR MORE. Maybe this is the point indirectly expressed in the article.

Mon, 03/18/2013 - 10:51 | 3342401 shovelhead
shovelhead's picture

Pumping money into insolvent banks is not saving them. They're dead.

It is postponing the inevitable collapse of said bank.

The 'pay now, die later' plan.

This vitamin deficiency is NOT going to be cured with a bite of Brussel sprouts.

Run Cyprus. Run and eat your peas.

Mon, 03/18/2013 - 12:52 | 3343068 JayKitsap
JayKitsap's picture

I would say the US Deposit Insurance is a myth also.

I recommend investing in Escorts, at least there is pleasure there while getting screwed.  

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