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Pop Quiz Answer: Presenting Countries "X" And "Y"

Tyler Durden's picture




 

In our pop quiz article earlier today, we asked the question of which two countries - notable among the uber-wealthy Russian oligarch class - are approaching the same ratio of financial assets to GDP as seen in both Cyprus and Iceland, and which has been blamed for the recent onslaught against Cypriot savers.

We were not surprised to note that the vast majority of readers figured out that one country, noted as X, was Switzerland, where as we have discussed over the years, just two banks, UBS and Credit Suisse alone have three times more assets than the total Swiss GDP. The top 10 Swiss banks with total assets as reported by Bloomberg are shown on the chart below:

This implies that, as has been known for decades, Switzerland is one mega-banked country, and it should come as no surprise to anyone that the vast majority of bank liabilities are in the form of deposits.

Are Swiss deposits as a fraction of total liabilities as high as in Cyprus? The full, accurate breakdown is not very clear, especially since many banks are rather "loose" with how they define their liabilities out of legacy deposit secrecy concerns. However, it is accurate to say that when it comes to funding, the Swiss financial system does have a preponderance of deposits on the right side of the balance sheet.

Does that make deposit tax levy in the country that was formerly synonymous with bank secrecy, and where having a bank account used to be a symbol of wealth and success, feasible? Absolutely. Does it mean it will actually happen? We have no idea. But then again nobody had any idea a week ago that Cyprus would shock its depositors on Saturday with news that up to 9.9% of their savings would be expropriated.

What would make a Swiss bank tax levy it more likely is if, following ongoing exposure of tax evasion in Switzerland or for any other reason, depositors decided to pull their money out of banks in bulk, forcing a funding collapse and a vicious financial system contractionary cycle, which might then force the local government to follow through with a Cypriot type act. It certainly would not be unprecedented: it was only several months ago that various Swiss banks implemented negative deposit rates. All a deposit tax levy would do would be to collapse the ongoing "taxation" from negative rates in a one-time event.

Finally, with Russian oligarchs a key source of marginal funding of Swiss deposit accounts in the past several years, should the witch hunt against Russian wealth escalate beyond merely the Eurozone, due to political pressure or otherwise, it would make this particular class of Swiss bank clients especially vulnerable to an unwelcome, and unexpected (but long ago predicted) tax on their wealth.

So much for country X Switzerland.

Moving to country Y, we were surprised to see only two readers suggest, correctly, that it was Singapore, with a total financial asset to GDP rate of 7.7x.

Although, in retrospect, it is perhaps not all that surprising, and it means that Singapore is doing a great job of preserving the fact that it is now the defacto target of the world's uber wealthy depositors, who no longer have faith in the Swiss banking system, mostly due to the loss of banking secrecy which for centuries made Switzerland the preferred target of accrued wealth from around the world. In other words, Singapore is doing precisely what its depositors want it to do - stay off everyone's radar as much as possible.

Below, again from Bloomberg, is a breakdown of the top Singapore banks by assets. Here, even more so, it becomes obvious just how concentrated the assets are among the top 5 banks, which collectively have nearly 7x more assets than the host nation's GDP.

We fully expect the asset-to-GDP ratio of Singapore's financial system to soar in the coming months, as more ultra-wealthy "private clients" from around the world reallocate their savings from Switzerland, certainly from the Europe's periphery, and now - even from Europe's core in the aftermath of Cyprus, and into Singapore very much under the radar banks and financial institutions.

And while the Swiss confiscation risk is certainly out there, it is anyone's guess if, when and under what conditions even the last bastion of savers, Singapore, will proceed with blatant wealth expropriation. If that happens, it is just as unclear where in the world, if anywhere, there will be a safe place for inert capital, one which is not invested in assorted risky assets (or is buried underground).

Which perhaps has been be the goal all along - after all the one thing the Keynesians in the world are suffering from (and are constantly shocked by) is the record low velocity of money. What better way to boost said velocity, and monetary circulation, than by making depositors themselves doubt the sanctity of their cash held in a bank.... Any bank, anywhere in the world.

 

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Wed, 03/20/2013 - 16:39 | 3353908 SeverinSlade
SeverinSlade's picture

Listen to Simon Black though and store your gold and safe and sound in Singapore.

Prefer to hold some gold and a clip full of lead in my hand instead.

Wed, 03/20/2013 - 16:43 | 3353927 redpill
redpill's picture

If dey gotz so much money how come they called Singa Po'

Wed, 03/20/2013 - 16:52 | 3353960 AlaricBalth
AlaricBalth's picture

I was wrong. 0%
Fill in the blank was never my forte'.
I always did better on essay questions.
;-)

Wed, 03/20/2013 - 16:59 | 3353996 WayBehind
WayBehind's picture

And the winner is .... helicopter Ben

Wed, 03/20/2013 - 17:03 | 3354007 toys for tits
toys for tits's picture

Maybe we now know why the Swiss were allocating their customer's gold accounts.

Wed, 03/20/2013 - 17:33 | 3354146 Pegasus Muse
Pegasus Muse's picture

In other Swiss news looks like the people have collected enough signatures to force repatriation of Swiss Gold.

==========

The UDC has filed its initiative to preserve the gold reserves

UDC wants to preserve the gold reserves of the National Bank (SNB) in the current context of currency instability. It filed its initiative "Save gold for Switzerland", equipped with 105'279 signatures. The initials must now be controlled by the Federal Chancellery.

The initiative focuses on three claims. She asked the SNB to halt its sales of gold, repatriate all the gold stored Switzerland abroad and stockpiling gold for at least 20% of its assets. The current context of currency instability makes such a compulsory measure, officials said the SVP in a statement.

Maintain the stock of 1040 tons of gold from the SNB is required to ensure the stability of the Swiss franc. This helps protect private savings and the level of wages, annuities and pensions, say initiators.

United States singled out

Nearly half of the gold reserves of the NBS are deposited abroad, with the largest share in the United States. National Councillor Lukas Reimann (UDC / AG), member of the initiative committee, fears that the state of indebtedness which are in the United States do pose a threat to Swiss gold placed at the U.S. Federal Reserve.

He cites as examples the recently expressed refusal by U.S. authorities at Germany, who asked to inspect the vaults of the Federal Reserve when its gold stocks are stored.

(Ats / 20.03.2013 14:00)

http://www.romandie.com/news/n/L_UDC_a_depose_son_initiative_pour_preser...

Wed, 03/20/2013 - 17:36 | 3354175 Ratscam
Ratscam's picture

the advantage of a direct democracy.
At least poeple still have some influence over the countless lobbyists

Wed, 03/20/2013 - 23:32 | 3355585 boogerbently
boogerbently's picture

Why don't they just steal the REST of my Soc. Sec.??

Wed, 03/20/2013 - 17:52 | 3354265 Muppet Pimp
Muppet Pimp's picture

Behold the holy grail of behavioral economics.  This method treads a bit lighter on the proletariat debt serfs as it forces the holders of capital to stimulate something rather than just having governments pile up more debt (much of which is simply siphoned off by the same global elite class) to be paid off by your kids and grandkids in a very cruel form of indentured servitude. Call it what it really is, taxation without representation (the generation paying it back had no say in how it was spent).

But you will never hear a democrat admit as much, it is their grandest secret that they are in fact destroying the very ones they claim to want to help (and laughing all the way to the bank).

Wed, 03/20/2013 - 18:06 | 3354332 swissaustrian
swissaustrian's picture

I am part of this effort.

Here's my more accurate take (orginally posted here: http://www.pmbug.com/forum/f2/switzerland-referendum-prohibition-gold-sa... )

Switzerland has a system of direct democracy. The people can demand a referendum on all new federal laws. Changes of the federal constitution are always subject to a referendum. The Swiss constitution offers the institution of a "constitutional initiative". If a certain number of people sign a petition to change the constitution, then a nationwide referendum will be held.
Recently, the Swiss Peoples Party (SVP), mainly a neocon collectivist party, has launched a constitutional initiative to ban gold sales by the Swiss central bank (SNB), to require the SNB to hold at least 20% of it´s assets in gold, and to store all Swiss gold in Switzerland. This is obviously a great idea. I´m actively trying to get signatures right now, although I´m not a member of this party and I think most of their positions are terrible. I´m confident that we´ll get enough signatures (100000 reuired by march 2013) to have a referendum. Most political parties will not support our cause, but the Swiss people have prooven that they´re voting against their politicains if they think a certain cause is just.
The icing on the cake is that - if passed - the initiative could cost us our IMF membership, because it effectively means instituting a partial gold standard (20% of the SNB assests in gold, all the time) which is prohibited for IMF members.

Official text of the initiative

Quote :

Federal popular initiative 'Save our Swiss Gold (gold initiative)'
I

The Federal Constitution1 is amended as follows:

Article 99 (new) Gold reserves of the Swiss National Bank

1 The gold reserves of the Swiss National Bank are not for sale.

2 The gold reserves of the Swiss National Bank must be stored in Switzerland.

3 The Swiss National Bank has to keep their assets to a large extent in gold. The gold content shall be not less than twenty percent.

Wed, 03/20/2013 - 19:47 | 3354721 Tijuana Donkey Show
Tijuana Donkey Show's picture

Plus they have hot blondes! Gold on gold baby.

Wed, 03/20/2013 - 20:23 | 3354817 imaginalis
imaginalis's picture

you must think they drive Volvos too

Wed, 03/20/2013 - 21:16 | 3355020 ronaldawg
ronaldawg's picture

I dunno about hot blondes - I know a lot of hot swiss brunettes that speak French - so visual evidence please.

Thu, 03/21/2013 - 03:27 | 3355987 hooligan2009
Thu, 03/21/2013 - 03:36 | 3355996 swiss chick
swiss chick's picture

That would be Sweden...

Wed, 03/20/2013 - 17:51 | 3354264 YHC-FTSE
YHC-FTSE's picture

"I was wrong. 0%."

Ditto. I chose France & UK BAH! 

Wed, 03/20/2013 - 18:33 | 3354445 Pseudo Anonym
Pseudo Anonym's picture

frankly, i bet on the carribean trio cayman, bahamas, bermuda.  like, what do these three islands produce other than shell corporations and bank accounts?

Wed, 03/20/2013 - 17:24 | 3354121 CriticalUser
CriticalUser's picture

Uhmm, I looked onto the annual report of Malacca Trust ("no. 1" in asset value for Singapore), and the value of their assets is 1007B... indonesian roupies! Not Singaporean dollars! 1007B IDR = 80M€, peanuts.

Thu, 03/21/2013 - 00:01 | 3355671 laomei
laomei's picture

Do you expect people to bother with those tiny details?  News does the same exact thing when talking about those corrupt government officials in China.  Billion RMB automagically becomes billion USD because it just sounds better, captures headlines and journalism is a complete joke.

Thu, 03/21/2013 - 21:22 | 3360106 13thWarrior
13thWarrior's picture

That explains why I never heard of it.

Wed, 03/20/2013 - 17:45 | 3354227 slaughterer
slaughterer's picture

Swiss bank deposits are like Swiss watches.

Wed, 03/20/2013 - 17:46 | 3354233 slaughterer
slaughterer's picture

Swiss bank deposits are like Swiss watches.  Everybody wants to buy a reprpoduction Singapore Swiss watch instead. 

Wed, 03/20/2013 - 18:23 | 3354398 laomei
laomei's picture

More like, the fakes are just as good as the original, but cost a whole lot less and only an expert might care.  But in the end, it's just a watch either way and as long as it works who the fuck cares.

Wed, 03/20/2013 - 18:52 | 3354532 swissaustrian
swissaustrian's picture

There's a whole industry in north-western Switzerland built on watch buying tourism from Asia. They're channelling in buses of Chinese to spend thousands of CHFs at watch stores. I've been told that many of them are buying multiple watches, because tarrifs are making these watches more expensive in China.

Wed, 03/20/2013 - 20:24 | 3354822 imaginalis
imaginalis's picture

You will care if you dive with it to 30M under water

Wed, 03/20/2013 - 23:56 | 3355659 laomei
laomei's picture

And the number of people who dive 30m under water?  Sorry, there are already dive watches out there which are far more useful.  Buy a fake and don't dive 30m underwater with it.  So difficult to remember, and even if you do, it's just a fake and cheap to replace anyways.

Wed, 03/20/2013 - 21:13 | 3355011 orez65
orez65's picture

Don't need a watch anymore, cell phone does the job.

Wed, 03/20/2013 - 23:58 | 3355664 laomei
laomei's picture

So fucking true.

Wed, 03/20/2013 - 16:38 | 3353911 Zer0head
Zer0head's picture

I think it's time to review Singapore's human rights record

Wed, 03/20/2013 - 16:47 | 3353945 max2205
max2205's picture

Coin toss. Who do you trust? Muslims or Christians?

Wed, 03/20/2013 - 17:16 | 3354065 Buckaroo Banzai
Buckaroo Banzai's picture

Child, please. Christians are people, and have all the normal problems associated with basic human nature that everyone else has.

Muslims on the other hand, are a duplicitous, bloodthirsty people with a diabolical political system that masquerades as a religion. When it comes to violence, dehumanization, and economic and social failure, their track record is nearly perfect

 

Wed, 03/20/2013 - 17:32 | 3354157 thatthingcanfly
thatthingcanfly's picture

You left out Islam's establishment of child molestation as "normal," or, more accurately, "divinely-inspired," as the pedophile-prophet Mohammad demonstrated with his youngest "wife," Aisha, who was 7 when he "married" her, and 9 when he first raped her.

We allow these people to immigrate here.

And build Mosques.

And vote.

 

Wed, 03/20/2013 - 17:47 | 3354237 LongBallsShortBrains
LongBallsShortBrains's picture

If you mean fucktard bleeding heart liberal communist cocksuckers when you say "we" , then you are correct.

But "allow" is a typo. Try encourage and pay.

Wed, 03/20/2013 - 17:53 | 3354272 thatthingcanfly
thatthingcanfly's picture

I was pulling punches. Forgot this was fight club. Sorry. Won't happen again.

Wed, 03/20/2013 - 19:49 | 3354723 thatthingcanfly
thatthingcanfly's picture

Gross misrepresentation. You should be ashamed.

Pedophiila is ensconced in Islam theology. It is not ensonced in Christian theology. Any argument to the contrary must combat 2000 years of Christian tradition and 1600 years of Muslim tradition, simultaneously.

Good luck with that.

 

I'll trust my 5 year old child within the hands of any Catholic Cardinal before leaving her in the hands of... anyone else.

And I'm a protestant!

Thu, 03/21/2013 - 03:26 | 3355984 hooligan2009
hooligan2009's picture

hey..i didn't mention scout leaders, who have just about as much right to molest kids as catholic or moslem priests!

Thu, 03/21/2013 - 06:22 | 3356101 thatthingcanfly
thatthingcanfly's picture

...which is to say: zero.

Was there a point to this?

Wed, 03/20/2013 - 17:52 | 3354268 Diogenes
Diogenes's picture

A religion that tells you to murder your own children and call it honor killing doesn't come from God it comes from the devil.

Thu, 03/21/2013 - 06:40 | 3356115 e-recep
e-recep's picture

god, devil or any other deity do not exist and all religions are made-up. enough with fairy tales already. i am here for reality and people talk about their hallucinations.

Thu, 03/21/2013 - 10:34 | 3356964 tarsubil
tarsubil's picture

God is reality. You cannot deny one and have the other.

Thu, 03/21/2013 - 10:35 | 3356973 tarsubil
tarsubil's picture

So basically, you're saying Christians are people and Muslims are people. I totally agree.

Wed, 03/20/2013 - 18:20 | 3354091 hooligan2009
hooligan2009's picture

hmmm..i know i don't trust any hindus or mormons..i do trust some of each of your choices

as in distrust most those we know the least

Wed, 03/20/2013 - 21:19 | 3355029 ronaldawg
ronaldawg's picture

Yeah and that "Mormons are the chosen people" really went to shit when Romney lost the election.  I mean they should have been able to do their underwear magic eh?

Thu, 03/21/2013 - 03:25 | 3355982 hooligan2009
hooligan2009's picture

that's twice you said that..and i listened very carefully too

Thu, 03/21/2013 - 15:55 | 3355030 ronaldawg
ronaldawg's picture

DUPLICATE REMOVED.

Wed, 03/20/2013 - 17:19 | 3354086 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Human rights? As compared to America's human rights record? Now that's a funny one...100's of thousands of (dead) Iraqi citizens might have a different point of view.

And at least in Singapore there's still a chance that criminals will be prosecuted, unlike the too big to jail BS

Wed, 03/20/2013 - 18:06 | 3354335 AynRandFan
AynRandFan's picture

I guess we oughta feel bad about all those nazis we killed too.

Wed, 03/20/2013 - 18:57 | 3354413 MisterMousePotato
MisterMousePotato's picture

Fuck you to hell, you miserable piece of shit.

http://3.bp.blogspot.com/-KG2ncktL1z4/T22xwVPXcNI/AAAAAAAAAL0/jKg-D9B4Vr...

(Little Nazi at link.)

Thu, 03/21/2013 - 10:01 | 3356764 hapless
hapless's picture

You're just pissed 'cause your boy was dragged off to the Hague.

Wed, 03/20/2013 - 21:20 | 3355037 ronaldawg
ronaldawg's picture

Collateral damage is a biatch!

Wed, 03/20/2013 - 21:20 | 3355038 ronaldawg
ronaldawg's picture

Collateral damage is a biatch!

Wed, 03/20/2013 - 18:28 | 3354163 Cyrano de Bivouac
Cyrano de Bivouac's picture

Yes, maybe there are some rebel groups in Singapore to aid as well.

Wed, 03/20/2013 - 21:16 | 3355018 orez65
orez65's picture

How about US human rights?

After passage of the Military Defense Authorization Act we don't have any.

Wed, 03/20/2013 - 16:39 | 3353917 IamtheREALmario
IamtheREALmario's picture

Singapore used to be a great manufacturing country... "Switzerland by 1999" was an old saying to indicate the standard of living they aspired to. Now the country is just a hollow bunch of greedy bankers.

Wed, 03/20/2013 - 16:48 | 3353948 OliverTwist
OliverTwist's picture

"Now the country is just a hollow bunch of greedy bankers." ....

Not exactly ... don't forget about Nestlé!

“Good Food, Good Life”,

;)

 

 

 

Wed, 03/20/2013 - 16:52 | 3353969 PontifexMaximus
PontifexMaximus's picture

Roche, Novartis, SGS, Syngenta, Giveaudan, Schindler , Swatch.....etc.

Wed, 03/20/2013 - 16:56 | 3353981 OliverTwist
OliverTwist's picture

The Crème de la Crème of humanity!

Wed, 03/20/2013 - 17:03 | 3354006 PontifexMaximus
PontifexMaximus's picture

Noblesse oblige!

Wed, 03/20/2013 - 17:14 | 3354058 pappacass
pappacass's picture

Check out the second article from the top.

http://armstrongeconomics.com/armstrong_economics_blog/

(Disclaimer: I'm not too sure yet how to rate this guy and his wonderful wacky computer!)

Wed, 03/20/2013 - 17:38 | 3354179 bank guy in Brussels
bank guy in Brussels's picture

Martin Armstrong is an interesting guy, whose economic forecasting ability was coveted by the US government and then they went after him when he wouldn't co-operate

Crooked US federal judges jailed Armstrong for many years on 'contempt of court' for refusing to 'co-operate' (no charges, no jury, no trial, no conviction, just the US judge's personal malice and unlimited power)

They only agreed to terminate his imprisonment after extorting Armstrong to plead guilty, and 'agreeing' to several years more in US prison but with an end date ... his choice was either stay in till death under 'contempt of court' or plead guilty

They tried to kill him in prison, bashed his head and teeth in

Eventually they let Armstrong out, but he is not the same man now, poor guy

Another political victim of the USA

Wed, 03/20/2013 - 17:44 | 3354223 trader1
trader1's picture

really?  

Wed, 03/20/2013 - 18:22 | 3354395 pappacass
pappacass's picture

Yeah thats kinda heavy.

Wed, 03/20/2013 - 17:02 | 3354004 TheFourthStooge-ing
TheFourthStooge-ing's picture

...and Sandoz (absorbed into Novartis in the 1990s), where Albert Hofmann first synthesized LSD.

Wed, 03/20/2013 - 17:47 | 3354239 trader1
trader1's picture

i work at one of those companies.  :-)

Wed, 03/20/2013 - 16:53 | 3353972 PontifexMaximus
PontifexMaximus's picture

Not mentioning Trafigura, Vitol, Xstrata......

Wed, 03/20/2013 - 17:45 | 3354229 trader1
trader1's picture

those are just commodity bankers...

Wed, 03/20/2013 - 18:09 | 3354346 swissaustrian
swissaustrian's picture

The financial sector employs around 6% of the working population and contributes ca. 10% to Switzerland's economic performance.

Wed, 03/20/2013 - 17:06 | 3354022 PontifexMaximus
PontifexMaximus's picture

Ever heard about Rolex? Un vero terrone farà sacrifici x portarla!

Wed, 03/20/2013 - 17:38 | 3354191 OliverTwist
OliverTwist's picture

Ciao Maximus!

Come va in Italia?
Quando parte la rivoluzione?
Fammelo sapere che scendo e mi unisco a voi!

Wed, 03/20/2013 - 18:11 | 3354353 MsCreant
MsCreant's picture

Hi Oliver.

Wed, 03/20/2013 - 18:48 | 3354515 PontifexMaximus
PontifexMaximus's picture

Habeamus papam, ma purtroppo ci manca la cupola ....ancora. Speriamo in bene! Spero che Beppe makes my day, Mario in Angelaland will do the rest, cansapevole, che non siamo e saremo in grado di fare un c......

Wed, 03/20/2013 - 16:42 | 3353921 MsCreant
MsCreant's picture

All banking is Ponzi is what I get out of this post. The more dense the Ponzi, the harder it will fall. If you are not dependent on this crap, you are not as vulnerable.

Flee all areas heavily dependent on banking!!!

Wed, 03/20/2013 - 16:43 | 3353926 Dr. Richard Head
Dr. Richard Head's picture

The wait for the fall is driving me fucking insane.

Wed, 03/20/2013 - 16:57 | 3353985 Unprepared
Unprepared's picture

Com'on now, we are hardly out of winter and you want us to endure that fooking weather again?

Wed, 03/20/2013 - 16:58 | 3353994 Cdad
Cdad's picture

The part that is driving the entire ZH brotherhood insane is the wait...but more so the utterly ridiculous notions of how all of this shall be fixed, entirely devoid of math, law, geopolitical consideration...and absolutely devoid of any common sense.  The "best and brightest" banking tools are literally slobbering on themselves trying to explain away simple things like how €16 billion in bailout cash does not insure €130 billion in withdrawals...once the front doors of Cyprian banks are opened.

Sheer stupidity. Who the f*ck are these people...and why aren't they wearing hockey helmets when they appear on television? 

Wed, 03/20/2013 - 18:05 | 3354331 Telemakhos
Telemakhos's picture

To be fair to the banking tools, not all of the Cypriot deposits are eligible for immediate withdrawal. Cyprus offered a lot of high-yield, fixed term accounts that cannot be withdrawn before maturity. They only need to cover immediate liabilities and pray that they can meet later needs later—kicking the can in the finest European tradition.

Wed, 03/20/2013 - 18:18 | 3354377 verum quod lies
verum quod lies's picture

What are the odds that one or more large Russian accounts will be closed and all funds transfered by the time the doors open for business again?

Wed, 03/20/2013 - 17:07 | 3354017 SMG
SMG's picture

It's coming, might be another 2-3 years, but it's close.   Till then why not enjoy life,  spend time with your family, have a good meal,  do some hiking.  Why let this stuff bother you, as long as you're prepared (Guns, silver, land, food, water, medicine) why let it ruin today?

Wed, 03/20/2013 - 17:21 | 3354098 SimplePrinciple
SimplePrinciple's picture

Being prepared means staying alert and paying attention when things happen.  Things are happening.

Wed, 03/20/2013 - 17:27 | 3354136 SMG
SMG's picture

I agree.  Just saying you can't let it consume you, and should enjoy today as much as you can while remaining vigilant.   With the magic money machine and control of everything financial, they (The Oligarchs) can keep things going a while longer.

Wed, 03/20/2013 - 17:48 | 3354250 trader1
trader1's picture

stop waiting in vain, because the fall will not happen as you expect.

Wed, 03/20/2013 - 17:10 | 3354047 barliman
barliman's picture

On the plus side, Singapore does not really have an "elected" goverment - it is more in the way of a benign despot situation.

On the negative side,  Singapore does not really have an "elected" goverment - it is more in the way of a benign despot situation.

Wherever you go, there is going to be someone whose palm you will need to grease if you want to be "a fully insured depositor".

Wed, 03/20/2013 - 17:32 | 3354160 Sokhmate
Sokhmate's picture

Fractional reserve = Usury.

Wed, 03/20/2013 - 18:54 | 3354537 swissaustrian
swissaustrian's picture

Negative real interest rates = inverted usury against savers

Wed, 03/20/2013 - 17:57 | 3354291 trader1
trader1's picture

wrong.  just flee all areas where there is no opportunity to live directly off potable water, the land and/or its animals.  

 

Thu, 03/21/2013 - 04:54 | 3356063 e-recep
e-recep's picture

Hong Kong comes to my mind, as well. It's a fucking huge financial hub for its size.

Wed, 03/20/2013 - 16:42 | 3353924 A Lunatic
A Lunatic's picture

Let's see should I trust Bank A or Bank B with all of my precoius 1's and 0's   *OR*     should I trade in my 1's and 0's for physical PM's...................Hmmmmm.........

Wed, 03/20/2013 - 17:37 | 3354177 defencev
defencev's picture

Let's see should I trust Bank A or Bank B with all of my precoius 1's and 0's

 

As a lunatic, you should stick to your "precoius" 1' and 0's (that is probably the best characterization of Ponzi scheme called bitcoins I have ever seen).

Your "Tyler" strikes me more and more as an absolute moron. The reason for safety of banking in Singapore is the booming economy of the region. Leading Singaporean banks (like OCBC or DBS ) are considered the best in the world: they hold very

reasonable assets (not Greek bonds), do not pay huge interests on deposits and charge fees on offshore accounts. The government in Singapore insure only 25000 SGD per customer and does not insure foreign currency accounts at all. I can imagine that banks hold some local sovereign bonds but those considered to be among the best available. The local laws assure that bank CEOs are personally responsible for deposit funds if gambled away by bankers (and therefore it never happened with local banks. The known incident which happened in Singapore was with UK bank).

As long as these conditions are in place, I have no worries in keeping my money in this jurisdiction (and then the ratio assets of banks  to country GDP is totally irrelevant cause Sing. gov. is not suppose to bail out banks anyway).

 

Thu, 03/21/2013 - 21:25 | 3360112 13thWarrior
Wed, 03/20/2013 - 16:44 | 3353932 Lost Wages
Lost Wages's picture

Message from Central Planners: Spend everything. Save nothing.

If you even have change in your pocket, that is unproductive. Spend it as soon as you get it and every penny too.

Wed, 03/20/2013 - 17:13 | 3354056 barliman
barliman's picture

 

Your sunny outlook has clouded your judgment ...

This is ALL about reflating a credit bubble. Those Central Planners are insisting you spend MOAR than you have.

Wed, 03/20/2013 - 17:22 | 3354105 jimmytorpedo
jimmytorpedo's picture

I'm really surprised some crafty central banker hasn't come up with expiry dates for fiat yet. I proposed it in 1989 after eating too much mushroom pizza.

It was only momentary insanity.

These dorks never came down from their pizza party.

Wed, 03/20/2013 - 17:58 | 3354294 Diogenes
Diogenes's picture

That advice is so 1930s. Update it to the fifties: buy now pay later. Update to the eighties:Spend it and stick someone else with the bill. Update to today: try and duck out the door before you get stuck with the bill.

Wed, 03/20/2013 - 16:44 | 3353935 frenchie
frenchie's picture

Malaka Trust :)

Wed, 03/20/2013 - 16:57 | 3353986 Kirk2NCC1701
Kirk2NCC1701's picture

Yeah, I laughed at that too. If you're Greek, you can't trust a bank with that name. Imagine a British bank, called Wankers Trust. LOL.

Wed, 03/20/2013 - 16:44 | 3353937 OptionNinjaNYC
OptionNinjaNYC's picture

When is Stopler initiating a trade on CHF?

 

http://wallstreetfool.com/

Wed, 03/20/2013 - 16:45 | 3353939 hooligan2009
hooligan2009's picture

great work..

now for luxembourg, leichtenstein, hong kong, macao, bahamas, bermuda, cayman islands, or european cities like frankfurt, london, edinburgh, 

DELAWARE, and other US/Canadian states or cities like New York, Chicago, Toronto

all banks operate on a principal basis...so does berkshire (its their money)

fund managers operare on an agency basis (its not their money)

a collapse of any bank in a concentrated local geographic reason will have a devastating impact on the local region...for the global economy...not so much

of course, people like Larry Fink by name Fink by nature dont care about Cyprus, as it does not affect their salary. 

900,000 people in one loca area don't matter to him, unless they break his knee caps in outrage that he thinks they just don't matter

Wed, 03/20/2013 - 16:51 | 3353962 Dr. Venkman
Dr. Venkman's picture

Wilmington, DE will not fare a US bank failure very well. We have enough crime as is. The skyline would improve, however; It mocks me everytime I drive into work.

Wed, 03/20/2013 - 16:46 | 3353941 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

I suspect you'll see a tsunami of money into Cyprus if they leave the EU under the condition the Russian black money also returns. I personaly believe the safest harbor will be where moral hazard is most likely to be enforced i.e. you don't fuck with the mob's money. That happens as long as the bank is paying protection money to the mob aka in Russian loans.

Wed, 03/20/2013 - 17:32 | 3354155 hound dog vigilante
hound dog vigilante's picture

"the safest harbor will be where moral hazard is most likely to be enforced i.e. you don't fuck with the mob's money"

This comment reminds me of Stephenson's Snow Crash, where geographic borders are long gone and 'citizens' associate (permanently or temporarily) with syndicates, which provide their own currency, services, security, sovereign locations, etc.  One of the primary syndicates described in the book is the 'mob' syndicate, an idea that seems all the more plausible given current events... yes, please, I'll associate with the group that KEEPS IT'S WORD.

This line of thinking certainly puts Russia into perspective... they may have lost the Cold War, but in the game of global chess Putin has been relentlessly paring & cornering the West...

Stephenson is an f'ing visionary.

Wed, 03/20/2013 - 20:01 | 3354713 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Yeah you know there is this little universal scientific law based on a formula called V=IR. It applies to the flow of anything including money. The key is to be able to map the financial system connections like a circuit and correctly define which entities are the resistors, capacitors/inductors, etc. You can infer their values from the other elements like the money supply, etc. That old saying about electricity will take the path of least resistance applies to more than just electricity. You don't need a PHD to understand that the systems work on the same principles and it is a simple case of mapping from one to the other to apply the specific math to understand what is going on.

Thu, 03/21/2013 - 00:37 | 3355750 StychoKiller
StychoKiller's picture

Regrettably, some systems can only be described via non-linear, multi-dimensional, differential equations.  V = I * R is much simpler.

Wed, 03/20/2013 - 16:47 | 3353943 Cdad
Cdad's picture

So....Russia is going to give Cyprus [rumor] € 5.6 billion to bail out its banks...which will be matched with €10 billion from the ECB...and then Russians will be able to withdraw €100 billion in deposits from the besieged banks?  Do I have the latest rumor correct?  And on top of that, the 1.1 million people actually living in Cyprus will also be able to get their savings deposits, too?

And as this post then goes on to point out, after the miracle of fractional Cyprian money occurs, the Russians will be able to safely deposit their €100 billion in  ________________________?

The global criminal banking cartel that has now been set loose on the world [once again]...needs remedial math lessons, as well as geopolitical monetary game theory lessons.

Wed, 03/20/2013 - 16:52 | 3353968 hooligan2009
hooligan2009's picture

exaccery right! follow the money

Wed, 03/20/2013 - 17:18 | 3354079 Bunga Bunga
Bunga Bunga's picture

Any rescue won't work without capital controls. Even if Russians gave 5.6 bln to Cyprus against collateral like natural gas claims, there would be a bank run the next morning. Once confidence is gone, it is gone and never comes back. The only way they can go even in a best case solution is to freeze the deposits for years like Argentina did.

Wed, 03/20/2013 - 16:49 | 3353954 not a twin
not a twin's picture

I guessed right, just didn't think to comment.  Can I get a contributor page for that?  Or maybe if I answer some other trivia question?

Wed, 03/20/2013 - 16:52 | 3353966 PAWNMAN
PAWNMAN's picture

Ponder this my friends... The Fed is unable to sop up the 3+ trillion of liquidity it created during the crisis and decides to go Cyprus. 9% haircut for depositors as a means to bring home the reserves. If we get any kind of spike in rates how else could it be achieved that quickly?

Wed, 03/20/2013 - 16:54 | 3353977 new game
new game's picture

401's

Wed, 03/20/2013 - 18:10 | 3354348 AynRandFan
AynRandFan's picture

Haircut on privately held treasuries, just like has been done in the case of Greek sovereign debt.

Wed, 03/20/2013 - 16:53 | 3353970 new game
new game's picture

wealthy people are making me very "uptight" as of late. and this taxation thing.

i would rather have wealth of the soul, peace of mind and be left alone to prosper as I see fit...

any good people out there hear me...

 

Wed, 03/20/2013 - 16:57 | 3353988 semperfi
semperfi's picture

live and let live

Wed, 03/20/2013 - 17:17 | 3354067 hooligan2009
hooligan2009's picture

like this you mean from Max Ehrmann in 1927?

Desiderata

 

Go placidly amidst the noise and haste, and remember what peace there may be in silence. As far as possible without surrender be on good terms with all persons. Speak your truth quietly and clearly; and listen to others, even the dull and the ignorant; they too have their story.

Avoid loud and aggressive persons, they are vexatious to the spirit. If you compare yourself with others, you may become vain and bitter; for always there will be greater and lesser persons than yourself.

Enjoy your achievements as well as your plans. Keep interested in your own career, however humble; it is a real possession in the changing fortunes of time.

Exercise caution in your business affairs; for the world is full of trickery. But let this not blind you to what virtue there is; many persons strive for high ideals; and everywhere life is full of heroism.

Be yourself. Especially, do not feign affection. Neither be cynical about love; for in the face of all aridity and disenchantment it is as perennial as the grass.

Take kindly the counsel of the years, gracefully surrendering the things of youth. Nurture strength of spirit to shield you in sudden misfortune. But do not distress yourself with dark imaginings. Many fears are born of fatigue and loneliness.

Beyond a wholesome discipline, be gentle with yourself. You are a child of the universe, no less than the trees and the stars; you have a right to be here.

And whether or not it is clear to you, no doubt the universe is unfolding as it should. Therefore be at peace with God, whatever you conceive Him to be, and whatever your labors and aspirations, in the noisy confusion of life keep peace with your soul. With all its shams, drudgery, and broken dreams, it is still a beautiful world. Be cheerful.

Strive to be happy.

 

Wed, 03/20/2013 - 18:02 | 3354316 trader1
trader1's picture

thanks for sharing words of wisdom.  :-)

Wed, 03/20/2013 - 16:53 | 3353971 Sigep0612
Sigep0612's picture

"I don't care if it's just a hang nail.  My tolerance for pain is really low.  Let's rip the bandage off really fast and get it over with."  -Bernake

Wed, 03/20/2013 - 16:55 | 3353980 Stoploss
Stoploss's picture

"What better way to boost said velocity, and monetary circulation, than by making depositors themselves doubt the sanctity of their cash held in a bank.... Any bank, anywhere in the world."

 

BINGO.   Velocity naturally increases due to supply shortage, but not too sure it would be enough.

That's why the scaring out of bank accounts, couple that with the fact that gold is being heavily repatriated, ( sold by the FED some say ), and the recipe for a currency bait an switch backed by gold.  There is absolutely no other reason to do this.

Wed, 03/20/2013 - 16:58 | 3353990 PAWNMAN
PAWNMAN's picture

There HAS to be manipulation in the Gold market. How else could you explain a down day today?

Wed, 03/20/2013 - 17:18 | 3354062 seek
seek's picture

Not just today -- seriously, the Cyprus situation is a bigger deal than the pre-crash activity in 2008, and gold skyrocketed after the margin calls and desperate for cash selling stopped in early September. There is no reason gold shouldn't have launched +$100 or more. With the news coming out here that Spain, New Zealand and Switzerland all have depositor haircuts baked into their emergency banking measures there should be a large flight out of banking... yet virtually nothing.

I have to imagine the Fed was actively reacting on gold from Sunday night onwards. Such small movements are inexplicable otherwise.

Late edit: Check out the COMEX inventory trend data -- http://www.bloomberg.com/quote/COMXGOLD:IND -- and ask yourself if it makes sense pricing is this low. (It sure as hell makes sense it's plunging at these prices, but it just shows that pricing and demand are not in sync, remotely.)

 

Wed, 03/20/2013 - 18:31 | 3354429 swissaustrian
swissaustrian's picture

LBMA forward rates have been at ultra low levels since we dropped below 1600. COT positioning is indicating a secular bottom. We'll get a spectacular short covering rally once we break 1625. Options expiry is on Monday. After that, the path higher is cleared.

Wed, 03/20/2013 - 17:29 | 3354143 Translational Lift
Translational Lift's picture

It's the new normal....they decide what the market is......That is until TSHTF.......then the real market returns.....

Thu, 03/21/2013 - 00:41 | 3355760 StychoKiller
StychoKiller's picture

Closing bank accounts (and depositing funds into the 1st bank of posturepedic), ain't necessarily gonna increase velocity.

Wed, 03/20/2013 - 17:04 | 3354012 Kirk2NCC1701
Kirk2NCC1701's picture

But I was half joking when I listed Singapore. Wow!

Well, if the Fed and The City wanted people to voluntary bring their untaxed cashish back home, or keep more from flowing out, what better way than this? Seriously.

Wed, 03/20/2013 - 17:09 | 3354035 Downtoolong
Downtoolong's picture

So the depositors in Switzerland and Singapore can join the club with all of the savers being victimized by ZIRP in America, aka, all those who have a big target placed on their wealth by central banks. 

Aint this fun.

Wed, 03/20/2013 - 18:25 | 3354404 Telemakhos
Telemakhos's picture

There might be a thesis in this: it's worth asking to what degree did the difference in interest rates from ZIRP (or NIRP in Helvetia) to Cyprus, which was paying up to 5% (higher than the usual European bank) serve as a predictor of instability, and what does this say about, say, Switzapore? I'm guessing that Swiss accounts are safe from levy simply because they are NIRPed, which is an indirect levy but, as a known quantity, still better than a surprise. Maybe it's worth asking what overstuffed banking economies are paying interest rates higher than their bloc-mates.

Wed, 03/20/2013 - 17:09 | 3354040 BurningFuld
BurningFuld's picture

Prediction....Cyprus soon to be using Ruble.

Wed, 03/20/2013 - 17:11 | 3354042 Melin
Melin's picture

re: velocity, what if they empty their bank accounts and fill their mattresses?

Wed, 03/20/2013 - 17:13 | 3354052 Lunch is for Wimps
Lunch is for Wimps's picture

I don't care of I'm wrong, this was a shit game anyway ;)

Wed, 03/20/2013 - 17:14 | 3354060 SubjectivObject
SubjectivObject's picture

Moar    PoP   Quizzles

Wed, 03/20/2013 - 17:18 | 3354076 DrunkenPleb
DrunkenPleb's picture

Maybe I'm ignorant of the SNB's official powers in this capacity, but I think the risk of confiscation through a tax in Switzerland has been grossly overstated here. While negative interest rates might have the same impact as a tax from a depositors perspective, they have very different legal channels, especially in Switzerland: as far as I am aware, the government couldn't impose that sort of a tax without a Volksinitiative. Do you really think the SVP is going to roll over and allow something like private wealth confiscation to take hold amongst the commoners? Hüere Verräckt!

Wed, 03/20/2013 - 17:44 | 3354220 PontifexMaximus
PontifexMaximus's picture

Das meched si meineid nie!

Wed, 03/20/2013 - 18:27 | 3354412 swissaustrian
swissaustrian's picture

The federal government does not have the legal competence to tax wealth, the cantons do. So, yes: they'd have to change the constitution.

However, it's more likely that the big banks would impose private "fees" on depositors, thereby cicumvening the "taxation" problem. I'm sure that the negative deposit "fee" would also only be imposed on foreign depositors as it's sole purpose is to stop inflows into the CHF. EUR deposits at Swiss banks would still be free of such a "fee" by the way...

Wed, 03/20/2013 - 17:19 | 3354078 CriticalUser
CriticalUser's picture

Uhmm, I looked onto the annual report of Malacca Trust ("no. 1" in asset value for Singapore), and the value of their assets is 1007B... indonesian roupies! Not Singaporean dollars! 1007B IDR = 80M€, peanuts.

 

Wed, 03/20/2013 - 17:19 | 3354089 PontifexMaximus
PontifexMaximus's picture

By the way, lorries of Orell Füssli and De La Rue have been seen pulling up in Nicosia streets, ready to down load "precious paper stuff" for wednesday next week....

Wed, 03/20/2013 - 17:21 | 3354102 hooligan2009
hooligan2009's picture

make anote of their timetables and i will get the boys together!

Wed, 03/20/2013 - 17:21 | 3354101 Panafrican Funk...
Panafrican Funktron Robot's picture

That would be super fun if the Swiss decided to take 10% of deposits.  

Wed, 03/20/2013 - 18:22 | 3354397 swissaustrian
swissaustrian's picture

Difference to Cyprus would be that foreigners were the only ones to pay, because the purpose is to prevent capital from flowing into the CHF instead of preventing it from flowing out.

Wed, 03/20/2013 - 19:55 | 3354744 steve from virginia
steve from virginia's picture

 

 

 

Why would they peg their currency to the euro?

 

The reason why CHF is impaired is b/c of the peg.

Wed, 03/20/2013 - 17:26 | 3354132 Big Ben
Big Ben's picture

If banking assets are several times larger than GDP, deposit insurance isn't worth very much. It might protect you in the case of a minor bank failure. But if there is a systematic banking failure, the government would need to seriously inflate the currency in order to make good on the losses.

So if anyone is considering opening a bank account in one of those countries, it would probably be a very good idea to know who the bank is loaning to and what its risk exposure is. I think the Swiss banks are heavily invested in Euro denominated debt and the Swiss have made it perfectly clear that if the Euro goes "poof", the Swiss franc will also go "poof". It would interesting to see a listing of the investments of Malacca Trust and other Singapore banks. Cypriot banks bought a lot of Greek sovereign debt. That didn't work out too well.

There is an old saying: "There is no safe interest rate above 6%." (Some people make it 5% or 7%.) It means that if an investment is paying more than 6%, there is an element of risk hiding somewhere nearby. And that saying was coined in the pre-ZIRP days. Maybe now it should be changed to 1 or 2 percent.

Wed, 03/20/2013 - 19:05 | 3354582 negative rates
negative rates's picture

You sure you couldn't have been wrong about anything? Triple AAA disguised as aches and pains in the morning. The 1000 year old 10% usury rates dismantled by Carter in 1980, is what broke the bank today. That and too many neck line issues! 

Wed, 03/20/2013 - 17:42 | 3354209 PontifexMaximus
PontifexMaximus's picture

By the way, SNB figures in the stats are behind the curve, check www.snb.ch

Wed, 03/20/2013 - 18:31 | 3354428 desirdavenir
desirdavenir's picture

Luxemburg ? Anyone ?

Wed, 03/20/2013 - 20:38 | 3354865 Higgs
Higgs's picture

Malacca Trust is listed on SGX but reports in IDR, not SGD, so the total assets should be SGD 1,260 bln. Thus, the assets/GDP ratio is only around 3. Not quite as bad.

#justsayin

Wed, 03/20/2013 - 20:39 | 3354869 Cacete de Ouro
Cacete de Ouro's picture

JPM have a vault in that snooty FreeZone place at Singapore Airport. No fun in trying to lampoon that one. It sounds so obvious and public like 'nothing to see, move along'.
Hmmm, maybe there is a twist there somewhere? JPM always loves a god secret.....

Wed, 03/20/2013 - 20:55 | 3354939 Herkimer Jerkimer
Herkimer Jerkimer's picture

'

'

'

'

What I'd like to know, is what are the next 10 countries and how do they stand?

 

•?•
V-V

Wed, 03/20/2013 - 21:37 | 3355104 Cashcollateral
Cashcollateral's picture

I'm working in industry in Singpaore and I can say I don't think I've ever heard of Malacca trust before. The next three (DBS, UOB, OCBC) are the three major local banks, with DBS the largest as it is the government-owned/operated state bank.

Googling "Malacca Trust" gives some information on a Indonesia-HQ'd financial services company with a market cap of SGD 78mio. Perhaps a bit small for a company with a theoretical 1t in assets.

Going to call factor error on this one

http://seekingalpha.com/article/174722-top-three-singapore-banks-by-assets

Wed, 03/20/2013 - 21:37 | 3355106 Cashcollateral
Cashcollateral's picture

I'm working in industry in Singpaore and I can say I don't think I've ever heard of Malacca trust before. The next three (DBS, UOB, OCBC) are the three major local banks, with DBS the largest as it is the government-owned/operated state bank.

Googling "Malacca Trust" gives some information on a Indonesia-HQ'd financial services company with a market cap of SGD 78mio. Perhaps a bit small for a company with a theoretical 1t in assets.

Going to call factor error on this one

http://seekingalpha.com/article/174722-top-three-singapore-banks-by-assets

Wed, 03/20/2013 - 22:19 | 3355291 chindit13
chindit13's picture

It has already been pointed out, but Malacca Trust is Indonesian, and its balance sheet reported in Indonesian rupiah.  In dollar terms, it has about a billion dollars in assets (which would also fall under Indonesia, not Singapore).  Singapore then falls to more in line with the Netherlands and the UK in terms of bank assets/GDP.

Thu, 03/21/2013 - 00:31 | 3355732 rich_wicks
rich_wicks's picture

When I see pictures of charts, I trust them without question as to their accuracy, especially when there's no way to verify them, and there's no explanation as to where the data came from..

Thu, 03/21/2013 - 03:22 | 3355976 hooligan2009
hooligan2009's picture

welcome to fiat where nothing matters and nothing is real

Thu, 03/21/2013 - 05:45 | 3356078 champan250
champan250's picture

Singapore is a bit different, it is a city-state, so if you take the number of New York City, it might be worse than Singapore

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