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Iceland, Cyprus... And These Two Countries?
Overnight, Reuters published an article highlighting something we noted first over three years ago: the unreasonably large size of a local financial sector as represented by its total assets compared to the host nation's GDP.
Specifically, Reuters alleges that "Cyprus' troubles stem from its exposure to Greece and the huge losses its two largest banks, Bank of Cyprus and Marfin Popular, had to stomach when euro zone leaders agreed in late 2011 to write down the value of private-sector holdings of Greek government bonds. In total, Cyprus requires 17 billion euros, nearly equivalent to its economy's annual output, to rescue its banks and deal with the government's own bills. Relatively small in the context of the Greek and Irish EU-IMF bailouts, at 240 billion euros and 67.5 billion euros apiece, for an island of just 1 million people it is a huge burden and speaks volumes about how large and unwieldy its banking sector had become."
More importantly, Reuters points out the similarities between Cyprus and Iceland in one key metric: total financial assets to the underlying GDP: "The [Cyprus] banking sector is now roughly eight times the size of the economy compared to 10 times for Iceland and over four times for Ireland before their crises. Banks in both countries used cheap funding to gorge on speculative investments." The issue for Cyprus of course was the composition of the liabilities matching these assets, which were mostly in deposit form, which was the alleged reason why the Eurogroup decided to proceed with deposit haircuts in order to shrink the overall financial balance sheet: arguably there were no other liabilities it could haircut. And yes, Cyprus is very comparable to Iceland in that regard. That much is known.
What may not be known is that it is specifically the fact that the underlying economy was tiny by comparison, i.e., small, relatively inert, non-aggressive government, in both Iceland and Cyprus that made them a depositor's safe haven... until of course confiscation day.
What is certainly not known, at least for now, is that slowly but surely financial markets and more importantly depositors, will start looking at all countries that have a very high ratio of financial assets, and thus deposits, to host GDP, as an indicator of where the "Cyprus Virus" may strike next.
Which is why we present readers with a pop quiz: the chart below show the ratio of total financial assets to host nation GDP. The tragic cases of Cyprus and Iceland are well-known, as per Reuters, and highlighted on the chart. We urge readers to guess what the supposedly very stable countries X and Y are on the chart, whose total financial system assets to GDP are approaching those of Cyprus, especially since depositors in their banking systems may be due for a very unpleasant surprise next if indeed Iceland and now Cyprus are the case studies.
Hint: Russian billionaire oligarchs are quite familiar with both X and Y.
We will provide the answer shortly after Bernanke's press conference today in which he will once again reaffirm he will monetize US debt as long as the US runs a $1+ trillion budget deficit, i.e., forever.
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They should be talking
Larry Motherfucking Fink is buying all 4 of them
Oh I get it now...the more money you have in the Bank the more likely you are to go Bankrupt. Ah...simple mathematics.
Man's doomed struggle against entropy would be laughable if I wasn't caught up in the middle of it.
Ahhhhhhhhhhhhhhhh, a Korgypsian! Off with his head!
well, one must be the US, since Tyler is withholding releasing the answer to after Bernanke's presentation presumably in order to knock Bernanke's hypocrisy... as to the other, I'll guess it is the the US' little buddy, Canada....
to avoid haircuts, we must inflate the value of the assets.
call it "mark-to-liabilities"
Essentially we need to grow more hair, so when the haircut is applied it comes out to 'the same' as before the hair started growing
Paul Krugman having a beard is therefore somewhat appropriate?
That is not a beard on Krugman, it is actually just all the pubic hairs that have accumulated on his face after his repeated teabaggings of Bernanke.
Cyprus banks, in fact any bank, has no business holding international debt and derivatives on their balance sheets. None. BWTFDIK.
It looks like Cyprus is fixing that.
England and USA
UK and Switzerland would be my guess.
Ditto that (UK and US).
Cyprus, Ireland, Iceland, Greece (kind of), and the UK ... can anyone guess what they have in common?
Hint: A high sand to land ratio.
Yemen
Ximbabwe
...that was easy...
Whoever junked me… when the banks reopens on Tuesday; pull out $100 and by yourself a sense of humor…
You are a scream! As you may or may not know, 30% of the population does not have a sense of humor. These people find their way into bureaucratic jobs and spend most of their free time shopping for laxatives and alcohol.
Since biz news has become almost irrelevant, I find myself wandering the streets of ZH for puddles of humor… some of the guys (gals) here are great! I guess the prodigious almighty Tyler leads the bunch with his own brand of dark and sarcastically sanguine style…
…the irony that “doomers” are the funniest people…
The Krug was on the board again.. he got a real spanking yesterday. He's pissed we all just don't get it and kneel to his superior 'intellect'....
"Hint: Russian billionaire oligarchs are quite familiar with both X and Y"
With that in mind, I'll say the UK is one of them and the second one is from these 3: France, Italy or Spain
I'll go with UK and SPain.
Oh, wait it says very stable - hmm...
It's Switzerland and UK.
nah. cayman, bahamas, bermuda in that order; bermuda is a bonus for next time
Turdizstan and Deadpan
@FukiSam ... Hm. 55 ups and no downs. I didn't down you because I understand the point you are trying to make, but I disagree. Your attitude is unnecessarily nihilistic.
There is a rose bush growing on a wall of a monastary in France that is thought to be 1000 years old. The rose is still there as is the monastary.
Sure, it may be a nuisance, but the fact is that one can remove all the weeds (every. single. one.) from one's row of carrots, if one is determined to do so. Yeah, you may have to do it all over again in another month or two, and certainly again next year, but ...
it. can. be. done.
Entropy is simply a natural force that can, in most necessary and reasonable circumstances, be overcome.
It is said that water is an architect's worse enemy.
And yet, here I sit. Dry and warm under a roof that is over one hundred and ten years old. (And by the looks of it, it might last as long as that rose on the monastary in France.)
All the poor savers should have been investing in stawks instead, in particular the Wall Street related ones, they are proven to be much safer and give much higher returns... look at how the DJIA index just has upward direction!!
The interest seekers are damned to be doomed.
/s
You know what I've noticed? Nobody panics when things go "According To Plan." Even if the plan is horrifying! If, tomorrow, I tell the press that, like, a gang banger will get shot, or a truckload of soldiers will be blown up, nobody panics, because it's all "part of the plan". But when I say that one little old mayor will die, well then everyone loses their minds! Introduce a little anarchy. Upset the established order, and everything becomes chaos. I'm an agent of chaos. Oh, and you know the thing about chaos? It's fair!
--- The Joker
http://wallstreetfool.com/2013/03/20/the-russians-are-coming-comrades-ti...
Now we're talking.
:}
http://www.youtube.com/watch?v=5iwf20t9J1k
Kind of begs the question as to why the Russians don't invest in their own country and instead trust the money to untrustworthy banks that will just piss away the money on the next thing that Thomas Stolper recommends.
The Russians are run by the mafia (KGB) and they have no more interest in their country's welfare than the nahbobs running the US.
As long as we're doing quizzes n all(whilst waiting for the next shoe to drop o'er East!)....
there's a couple of 'regular contributors\street solicitors' here on the Hedge today whose attempts to capitalize on the Cyrus imbrogolio are pretty pathetically transparent...and sure indication of just how much their reach exceeds their grasp of the relevant topics of interest to the readership.
Their histrionic choice of headline(s) tells it all...and displays a very suspect 'best before' date for both individuals.
Clerk to aisle 9! Bring the mop n pail!
Your condescending opinions are greatly appreciated. I'm sure you're smarter than me and just about everybody here on ZeroHedge. I'm a Trader and YES, capitalizing on opportunities is ingrained in my DNA. So, I'm sorry if I offended you in any way, shape, or form, but from your response, you clearly look like a Follower and not a Leader. So Keep Following, because if it weren't for muppets like you, the Goldmans' and Stanleys' of the world would've been bankrupt long ago.
P.S: I've been a loyal ZeroHedger longer than your underdeveloped mind can fathom.
"Don't follow leaders..."
You flatter me sir.
I can fathom that you've been around here for quite some time, but dust builds up in corners and what of it?
I have no idea what you're on about, as I have not directed any barb your way, and having read your rather lame diatribe against an imagined provocation, very much doubt I would take the time to bother doing so, no matter the circumstance. Please lead yourself to a quiet corner and try to calm yourself down.
Well, the final words I waste on you are as follows:
At least I'm trying to contribute something in my own small way; I get it if you don't like my style or method. But thats the beauty of Free Will. No ones asking you to click on the links me or any other ZeroHedgers post, let alone spend your brain cells (whatever's left of them) on composing sophisticated and well researched (on Dictionary.com) Shakespearian responses, while in the process exposing your own insecurities to the world to laugh at.
"It has been said that something as small as the flutter of a butterfly's wing can ultimately cause a typhoon halfway around the world."
--- Butterfly Effect, Chaos Theory.
PEACE OUT !!!
Maybe it's been a bad day on the 'trading floor'? I have no idea what's bit you, or why you imagined I had any interest in 'your posts' let alone urge to comment upon one, but in all sincerity I urge you to stop embarrassing yourself further here...whoever you are. Perhaps a hobby would help?
Well, at least some of us do actually TRADE; unlike divorced college professors moonlighting as Traders. You remind me of John Nash from A Beautiful Mind; you've probably created an imaginary life for yourself in which you pretend to be a Trader, trading Monopoly Money. Good for you.
People with self-esteem issues who are an embarassment themselves, tend to perceive others in the same vein.
My new hobby is butchering Muppets. Anyone interested in signing up? First 14 days are FREE.
You're kinduv an embarrassment. Good luck with that.
That coming from an ass clown named Tsukato? You seem like the kind of guy who'd suck a bag of dicks for a dollar. How much does a bowl of rice cost in Japan, given the current exchange rate of USD/JPY at 95.50.
If it isn't Switzerland and the UK, it must be Enron and, mf global?
Mexico and Guatemala?
California and Illinois?
Heckle and Jekyll?
The fed and the ecb?
Snoopy and Woodstock?
Bourbon and coke?
Cyprus situation explained by Quentin Tarentino and Guy Ritchie
http://www.youtube.com/watch?v=neQ-VyQAa9s&feature=youtu.be
"What are the US and UK?"
I'll take, "Failures in Central Banking" for $800, Alex.
UK and Switzerland. US banking system while large is offset by an equally large GDP.
Russian billionaires tend to avoid the USA and UK for fear of being recognized from their days working for the KGB. What is the statute of limitations for espionage?
Spain?
Germany?
We wouldn't do anything to them no. In the UK we might poison the odd one, but mostly we let them buy football teams...
I doubt it's Spain given one of the hints in the article:
"what the supposedly very stable countries X and Y"
Maybe substitute Switzerland for Spain?
"US banking system while large is offset by an equally large GDP." You are correct. And a large portion of the GDP is generated by.....Banking!!!! It's like a perpetual motion machine...only it spits out money!!! Nirvana has been realized.
The US has green shoots and Unicorns.
Skittles too.
pods
Skittles are banned....high fructose corn syrup....
Green shoots, unicorns, and skittles?
Russian Billionaires prefer real things like gold coins, mini giraffes, and caviar.
WTF
That was actually a commercial, but for what, I don't remember. Perhaps satellite TV?
Whatever it is, it's freakin' hilarious.
He should buy the chick a sense of humor.
yep. DirecTV
That chick is going to sit on the giraffe.
Lucky giraffe. I am sure that it is already on YouTube. Do you know the search terms using the cyrillic alphabet? Or did you see it live in Macau?
Rule 34, baby.
"Opulence, I has it!"
New updated version coming soon revised to "Opulence, I had it!"
"Vengence --- I will have it."
and the giraffe will complain not
My one-eyed giraffe definitely wouldn't complain.
It might get sick and throw up though.
You left out the bitchez....oh wait, they're not real.
sorry to burst the bubble, my curiosity got the better of me.....worth reading though....
http://www.sportsbybrooks.com/secrets-of-russian-guy-mini-giraffe-ad-rev...
Fuck me. Next your going to tell us that gold coins are tungsten and the caviar is really a mix of squid ink, apple pectin, sea urchin extract, oyster, scallop and a gum derived from kelp.
At least we know that Ukranian hookers' tits are real.
In Ukraine, the tits get a hooker.
Gawd :))))) I've not seen this posted for ages,need to dig out a old cd .... Yay !! Ben S :))))))
thanks man.
+1 Those are what came to my mind as well.
I'm guessing Luxembourg and Ireland.
Luxembourg because it is considered a tax haven and has no tax on interest from offshore bank accounts. And it has a relatively small GDP of about USD 59 Billion.
Austria and Switzerland is the answer. The UK has has a larger proportion but it is a G8 government and therefore the British pound is a reserve currency. That means the UK, as the USA can print all needed bank bail-out money.
Sounds like a good guess to me.
Switzerland is also a reserve currencey, and they are currently printing a lot too
Switzerland was 12x+ in 2007.
agreed, too large for the numbers in the chart given.
And this is before the UK givernments new scheme to increase leverage in housing market-
http://www.zerohedge.com/news/2013-03-20/uk-discloses-home-purchase-subs...
George Osbourne hopes he can pass 10x before we implode, that way the whole country can be in the Guiness Book of Records.
It's France and the UK.
My money is on Tonga and Tuvalu.
Black Dutch Republic and Translyvania
blue is Switzerland
orange could be Lichtenstein, but looking at the wording of the question I feel more comfortable with the UK
Which is falsely bolstered by it's fraudulent banking system.
Agree with Stackers, UK and Switzerland.
The UK has to be one, Farage was very keen on telling the cypriots to keep their enormous banking system going. As much as I like Farage , he knows that the only industry britain has is there financial sector and they will protect it to the death.
And death it will be. There is absolutely no recognition by the vast majority in the UK that we are heading to bankruptcy and tyranny. Absolutely none.
There is absolutely no recognition by the vast majority in the UK that we're heading toward bankruptcy and tyranny.
There is absolutely no recognition by the vast majority in the UK that we're bankrupt and living under tyranny.
Fixed it for you.
I took Farage's comments to mean that since "Cyprus is a bank with a country attached" (I would attribute that but can't remember), the countryfolk may want to consider saving their only industry. Not to protect the industry to the death but to save their own lives while they rationally get onto more productive industries and a reality-based financial sector.
Cost to Russians (some of whom are very well-connected) of Cyprus bail-in: $31,000,000,000. Watching the look on the faces of IMF banksters when Big Bad Boris kicks the door in: Priceless.
Madame Lagarde tried to be Natasha.
Do all the Cypriot's get their knee caps broken also?
I will make a guess, Switzerland and Luxemburg?
I say Click and Clack.
I always thought they were running a junk (bond) racket. :>)
"Doan lissanna my bruddah"
One of these days those guys are gonna laugh themselves TO DEATH!
And don't drive like MY brother!
Singapore, Bahama
Lots of plausible answers here. Could one of them be the Cayman Islands?
Perhaps one of the Baltic states like Latvia?
I think that you deserve at least a 'bravo' for being the only one to have mentioned Singapore.
"Clap clap clap"
Japan and UK
The FIRE (Financial, Insurance and Real Estate) sector is too large. These are the rent seekers, or vampire squid if you prefer, that add costs where none existed before their existence. These are the unproductive, moneyed interests that suck the productive wealth from the rest of society.
ETA: Swiss and UK
LU, CH, US ??
oops forgot UK
Ireland & Australia
Tyler..personal question...how do you keep this up? For years you've been this paul revere and for years these bastards defy every truth, every logic, every fact...how do you keep going? My head wants to explode.
Hence the legend, TYLER is an algo that reached self-conscience and went rogue.
And to answer the question: Lux and Switz
He was turned to steel
In the great magnetic field
When he travelled time
For the future of mankind
Now the time is here
For Iron Man to spread fear
Vengeance from the grave
Kills the people he once saved
Heavy boots of lead
Fills his victims full of dread
Running as fast as they can
Iron Man lives again!
Tyler, the algo has an imaginary double who is called, SkyNet. Should we be worried?
Not me, I'm long Cyberdyne Systems.
Because target practice, as it were at the endless arcade, with a fab accurate and powerful .... er ... weapon, and ballistic; is a definition of endless fun.
The gawker/onlooker crowd really needs to get in on the act, though, maybe impair the targets before they can pop up.
'Tyler..personal question...how do you keep this up?'
Multiple authors and Drudge-like article linking makes for a busy financial blog.
Greece and Malta
Obviously, it's the depositors' fault.
Yes, ha !
The depositors and the 'evil savers' ... creating the 'savings glut' around the globe, that the central banker apologists like to blame for the crisis
For a generation to come ahead now, 'savings' will involve metals & mattresses instead ... so the 'bank savings glut' won't be a problem anymore
UK will be one of them. Plenty of Oligarchs here
edit: and I'm going to have Belgium as my 2nd choice.
Slovenia... Banks distressed, need cashola
This is why I love Zero Hedge. So much great info.
Luxembourg`s exposure is twice that of Cyprus (515%), so I guess it is CH and UK.
Japan and US, like a mug.
UK and Switzerland. Imagine what would happen to London if Tony Blair had his way.
US and UK
Lichtenstein & Luxembourg
U.K. and Ireland?
When I was a kid I used to hate pop quizzes.
Now, I rather enjoy them...go figure.
Can't be the US. We've got a quarter quadrillion in financial "assets," aka derivatives. Or do those net out to, um, zero? <cough>
Isle of Mann
Bermuda
..or Switzerland
The Russian Bear is not going to take this haircut without a fight! They will just recoup the loss over a few years through their prices on natural gas and it will be Germany that eventually pay the loss through its natural gas.
The German should of known better than to cut a deal with the Russians on nat gas. I guess the Germans think that the Russian have forgot about WW2.
Which 'Germans', idiot?
We could be up for a surprise today. Let's see.
Luxembourg and the Cayman Islands...? Either way its bullish
X: USA
Y: Japan
Ben Bernanke and Carlos Slim........Oh wait.....
Friends, who has forgotten that Germany's been printing and readying "Deutchmarks" as the new European Currency?
European citizens withdraw all their Banks Savings....then Germany declares the Euro "worthless".
Game, Set and Match
Cyprus crisis deepens: Bailout rejected, banks may not reopen
http://worldnews.nbcnews.com/_news/2013/03/20/17384301-cyprus-crisis-dee...
Cypriot finance minister doesnt look happy exiting russian finance ministry..
The problem is including financial shuffling with GDP at all. What part of "Production" was lost in translation when factored Grossly and Domestically?
Lichtenstein and Luxembourg ????
Japan and Netherlands
UK and Lichtenstein
X. Germany
Y. France
or Greece and Ireland
Bernanke you stupid motherfucker, get Krugman's head out of your ass and beat down silver here so I can pick up some long-term PAAS calls cheap, you jackass!
Actually all the major banksters would qualify, if they were sovereigns. Does corrupt control over sovereigns count?
Maybe the answer to x is here: http://www.federalreserve.gov/releases/h8/current/.
North Korea and Iran.
Switzerland and Lativa
UK and Switzerland
Hint worked good for you :)
Switzerland and Italy
Latvia and Cayman Islands.
BTW, did anyone hear that Vladimir Putin and Steven Seagal open new sports complex in Moscow.
http://english.pravda.ru/news/sports/13-03-2013/124058-putin_seagal-0/
http://www.youtube.com/watch?v=UIabNqGnqn4 Good they BROKEred a deal.....
Why should we think the financial dimension of Cypriot institutions within political borders?? What matters is not the country but the currency zone (i.e. euro zone) because the risk is not national. The guarantee on deposits was never provided by the government of Cyprus, but by the ECB. Therefore, it is stupid to think that Cyprus is facing a run on banks. Its the Euro zone that is facing the run!