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When Will Deposit Haircuts Take Place In Other European Countries?

Tyler Durden's picture




 

When all is said and done, what happened in Cyprus over the past two weeks, is nothing but the culmination of re-marking the "assets" in the country's financial system (which as noted previously, were a preponderance of worthless Greek bonds and countless other non-performing loans), long priced at assorted "myth" levels, to a long overdue reality.

As a result of delaying resolving the mismatch between non-performing assets and liabilities for years, the resolution was one which saw some €16 billion of the total asset base impaired, which in turn necessitated the impairment of billions of deposits: the primary liability funding the Cypriot financial system.

Furthermore, as a result of the "Freudian Slip" by the Eurogroup's new head earlier this week, we know that Cyprus will be the template for all future bank resolutions, which seek to avoid a democratic popular vote of depositor self-impairment (a vote which is now known will never actually pass) and proceed to restructuring the banking sector a la carte, by liquidating bad banks and impairing liabilities to the point where the balance sheet is once again viable (however briefly).

The bottom line is that at its core, it is all simply a bad-debt problem, and the more the bad debt, the greater the ultimate liability impairments become, including deposits. Which means that the real question in Europe is: how much impairment capacity is there in the various European nations before deposits have to be haircut? Thanks to Credit Suisse we now know the answer.

The chart below shows the liability breakdown for various Eurozone nations, of which the key line item is the Total Deposits, and which in Europe comprises the bulk of bank funding. It becomes obvious why Cyprus had no choice but to crush depositors: they make up a whopping 84% of all liabilities (the highest in Europe and matched only by Greece), so assuming all other liabilities are liquidated, there still would be impairments if the total bad assets (assuming all bank assets are loans which in Europe, unlike the US, is more or less the case) pushed above 16% which in Cyprus they did.

So applying some simple balance sheet equality math, one can quickly calculate how much of a "Bad-Debt Impairment" assorted European financial systems can withstand before they too have no choice but to follow in Cyprus' footsteps and begin crushing depositors, who in bankruptcy court are known by a different, less friendly term: General Unsecured Claims.

The resulting chart is below:

Not surprisingly, in first place is Cyprus which underwent precisely the deposit haircut exercise that would have befallen Greece as well (at the same bad debt capacity), if only Greece had an easily expendable, for political reasons, deposit class - Russian Oligarchs. However, as more and more bad-debt accumulates within the system, the ability to provide a liquidity buffer, instead of resolving what is fundamentally a solvency issue, evaporates, and soon Greece, then Belgium, the Slovenia, then Spain, then Portugal, and so on, will have to address which, as Cyprus clearly demonstrated, is a solvency problem, not liquidity!

When will such days of reckoning happen? Ask the Cypriots: they had no idea they would wake up one day with virtually all of their deposits over €100,000 wiped out. Point being - nobody knows, or more specifically, fundamentally this is a political decision, usually one which is taken ahead of elections (i.e., those in Germany this September), and which has nothing to do with actual finances.

The reality however is that all of Europe's banks have a soaring bad-asset overhang, and sooner or later it will have to be resolved.

It is now common knowledge that such resolution will not take place via additional liquidity injections, but through impairment of the various liability classes as per the reverse waterfall of seniority: first equity, then capital and reserves then junior debt, and finally, senior debt and deposits (with secured senior debt last).

The lesson here is: do your homework, and know your bank. If one's deposits are in a bank that has, or is rumored to have, many bad loans, then pull your money and either put it in a safe bank, put it offshore, or just keep it under the mattress.

Because what happened in Cyprus is now, despite all promises to the contrary, the template for what will happen to all the countries to the right of Cyprus on the chart above.

It's only a matter of "when."

 

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Thu, 03/28/2013 - 12:17 | 3385645 NoDebt
NoDebt's picture

I try to put myself in the shoes of a small/mid sized business owner who's probably got somewhere between a million to multiple millions in the bank just to cover payroll, buying inventory...... you know, money you need to run a business.  Obviously over deposit insurance limits.

How does he decide where it's safe to bank, given he's not a banking or financial guru?  The method mentioned in the article ("and know your bank. If one's deposits are in a bank that has, or is rumored to have, many bad loans, then pull your money") seems a little less than reliable.  I don't know any bankers that would say their bank is anything but "rock solid" right up until the instant they go bust.  They also don't put a sign out front that says how many NPL's they have on their books.

I suppose you could put your money into a Money Market instead of a deposit at a bank, but then you're buying a SECURITY and you're trading one risk for another one.

I guess I worry about the effects of issues like this on the REAL economy too much.  I need to stop thinking that way.  Obviously, we have no need for a "real" economy any more.

Thu, 03/28/2013 - 12:19 | 3385658 UTICA CLUB XX PURE
UTICA CLUB XX PURE's picture

Buy a shovel and start your free deposits using PVC pipe safe deposit boxes: http://www.youtube.com/watch?v=xGuFFkzWWTU

Thu, 03/28/2013 - 12:32 | 3385715 RSBriggs
RSBriggs's picture

You spamming those $200 pieces of PVC pipe again?  Suggestion, buy a shovel, some PVC glue, some PVC pipe, and two end caps and just make your own.  For a fuck of a lot less...

Thu, 03/28/2013 - 13:19 | 3385868 SemperFord
SemperFord's picture

I prefer old ammo cans. They will last for decades in most conditions, found one while running on the beach a couple of weeks ago...waited for it to come ahore and it was perfect inside.

Thu, 03/28/2013 - 14:34 | 3386113 dreadnaught
dreadnaught's picture

DIY Cost....less than $20...?     Ya gotta be kidding... a $200 PVC safe costing maybe $5 to make at wholesale-or $20 retail and your 10 year old could put it together

Thu, 03/28/2013 - 14:40 | 3386138 blu
blu's picture

It's another example of "financial innovation". The financial sector is now 40% of the US GDP, I'm told, so we should all buy one of these as a partriotic duty.

Thu, 03/28/2013 - 12:22 | 3385670 americanspirit
americanspirit's picture

So, it sounds like 'giving someone a haircut' isn't the same thing as stealing their money. I guess if I figure out how to give you a haircut with a computer then I'm good to go and there's nothing anyone can do about it. Sheep shearing is looking awfully profitable.

Thu, 03/28/2013 - 12:24 | 3385681 Paracelsus
Paracelsus's picture

Agreed,the reports of out-of-towners buying real estate in California and elsewhere is an example of people looking for a bolthole,not really as an investment.But this is preventing price discovery,or mark to market,which is the only way it will recover. Jobs growth won't be happening any time soon. Oddly enough this flight to safety usually means sales of T-Bills rise,which would be an opportunity for the Chinese to unwind their massive position in these (probably valueless) assets and go further into PM's. Risk needs to be repriced and not with derivatives or rehypothecation. Back to standard balance sheets and no more bailouts.

Also,there needs to be criminal trials,with harsh penalties for fraud if there is ever confidence is to be restored to the system.

Thu, 03/28/2013 - 12:48 | 3385761 SAT 800
SAT 800's picture

Harsh penalties actually work; since none of these people have a heroic, devil may care, "Ican do the time" professional criminal mentality; they do the crime because they're sure they're not going to suffer for it. As far as I can see, what John Corzine did was simple theft, so maybe that should have some harsh penalties associated with it too; as well as fraud; if we keep going like this we'll end up with a whole justice system, with actual written laws and trials, and everything. As former Justice Black never tires of pointing out, "hundreds of people" were indicted and convicted in the Savings and Loan BS. in the 80's; so we've really "evolved" a lot since then. I'm absolutely sure it would have been impossible to simple transfer clients account money to your business account to cover the business losses in 1985, for instance. Obama and Erick the place holder make quite a team.

Thu, 03/28/2013 - 23:51 | 3387750 MeelionDollerBogus
MeelionDollerBogus's picture

Criminal trials, harsh penalties – NO MORE BAILOUTS!!

I also want a pony.

Thu, 03/28/2013 - 12:25 | 3385685 Rip van Wrinkle
Rip van Wrinkle's picture

"....then pull your money and either put it in a safe bank, put it offshore, or just keep it under the mattress"

 

The mattress it is, then.

Thu, 03/28/2013 - 13:00 | 3385795 SAT 800
SAT 800's picture

In Europe they have private banks; which means they have no public ownership; no stock has been inssued. They're all over Austria, for instance; and even tho. Austria is a Euro country; andy of these small family owned private banks will open a custodial account for you to keep Canadian Currency; or Gold or Silver; or whatever for a very small storage charge. In the case of the gold and Silver; they can always arrange to sell some; usually in Geneva, at market prices, and transmit currency to you. By talking to the head of the Bank, who will be a member of the family that runs it; you can find out a lot about what they find convenient before you open an account. Most of these banks have records indicating that they didn't lose client's funds during WW!! or WW!; which is remarkable if you think about it. It is possible to run a bank on a sane basis; like any other business. The typical owner of a bank like this would have an upper middle class income, like a licensed welder, for instance; but nothing amazing; they're psychology is that they belong to the local country club; they have one older Mercedes, and they're respected in their town; they don't want to be criminals, and they don't want to steal your money. Although Austria is part of the new world system that requires the Govt. to help track down and report on US citizens; many individual bankers realize this is merely the Gestapo all over again; and they just don;t get around to turning in the information to the Austrian Govt. The Austrian Govt. is always willing to tell the Americans to go fuck themselves; Or, in this case, simply we don't hold any information relevant to your request. They didn't try very hard to get it, either.

Thu, 03/28/2013 - 12:25 | 3385686 AynRandFan
AynRandFan's picture

Funny how the "people" of Cyprus aren't paying for the mistakes of their banks, only the "depositors" are being targeted.  Cash where someone can grab it is never a good idea, especially when that someone is from the government.  I'm telling my clients more and more to divvy up their assets into LLC's or S-corps, get depreciable income property, and keep cash in a safe if it's not earning anything.

Thu, 03/28/2013 - 12:42 | 3385749 couvrot
couvrot's picture

Let US be honest here. How many people have 100.000 Euros or Dollars in the bank?. how many US citizens have $100,000 in the bank, knowing that the average net worth in the US is les than that?

Thu, 03/28/2013 - 13:34 | 3385925 Ckierst1
Ckierst1's picture

Of course not, we have nice safe, secure pretax retirement accounts, don't we?

Thu, 03/28/2013 - 18:24 | 3387032 theprofromdover
theprofromdover's picture

The bigger problem is for businesses, down to quite small turnover. Their cashflow requirements wouldn't be able to withstand an immediate 40% haircut.

Thu, 03/28/2013 - 12:47 | 3385760 resurger
resurger's picture

Well,

I have done my fucking homework, Basel III says that Government Bonds have zero haircut, ZERO!

They can not lie ... Basel III, the ECB should be regulating banks ...

Troloooooooooololololo

Thu, 03/28/2013 - 12:49 | 3385765 sosoome
sosoome's picture

When?

As soon as the dung pile gets higher than their boot tops.

 

Thu, 03/28/2013 - 12:50 | 3385768 Oligarch
Oligarch's picture

There is no such thing as a safe bank. You should not use their vaults or safe deposit boxes either. 

Thu, 03/28/2013 - 13:04 | 3385812 SAT 800
SAT 800's picture

You've been conditioned by living in the US, which feels a lot like Nazi Germany; because it is a lot like Nazi Germany; there are many, many, banks in other countries; particularly smaller banks that have not stock issue; that are family owned; that are very, very, safe.

Thu, 03/28/2013 - 12:50 | 3385772 ghandi
ghandi's picture

What difference does it make to the dead, the orphans, and the homeless, whether the mad destruction is wrought under the name of totalitarianism or the holy name of liberty and democracy?

Thu, 03/28/2013 - 12:51 | 3385774 Temporalist
Temporalist's picture
Vladimir Putin orders Black Sea military exercises

President Vladimir Putin ordered the launch of large-scale military exercises in the Black Sea on Thursday, projecting Russian power towards Europe and the Middle East in a move that may vex its neighbours.

http://www.telegraph.co.uk/news/worldnews/europe/russia/9959723/Vladimir...

Thu, 03/28/2013 - 12:52 | 3385778 Tao 4 the Show
Tao 4 the Show's picture

We interrupt this reality for a brief fantasy break:

Notice Belgium's illustrious position on the chart. Could anything be more appealing than the the barber paying a visit to the Eurocrat's bank accounts? Might we catch them front running the event?

And now, suck it up, back to reality...

Thu, 03/28/2013 - 12:57 | 3385792 Kirk2NCC1701
Kirk2NCC1701's picture

WTF happened to Slovene? Only last year they had Debt/GDP around 38%. Way lower than the rest.
Don't tell me, the gullible Shmucks bought into CDS Crap?

Thu, 03/28/2013 - 13:05 | 3385798 JR
JR's picture

The European Central Bank and the European Union sank Cyprus.

When Cypriot president Demetris Christofias (at the time the European Union’s only Communist head of state - elected in 2008) was forced to agree with EU leaders on a 75 per cent write down on Cyprus's considerable holdings in Greek bonds in 2012, he failed to secure access to European funds for Cypriot banks, opening the door for the EU, ECB and IMF bankers, in a grave act of continued financial terrorism, to seize the private property of Cypriot bank depositors.

Europeans Planted Seeds of Crisis in Cyprus | NY Times | March 26, 2013

Excerpt:

The path that led to Cyprus’s current crisis leads back, at least in part, to a fateful decision made 17 months ago by the same guardians of financial discipline that now demand that Cyprus shape up.

That decision was sealed in Brussels in secretive emergency sessions in the dead of night in late October 2011. That was when the European Union, then struggling to contain a debt crisis in Greece, effectively planted a time bomb that would blow a big hole in Cyprus’s banking system — and set off a chain reaction of unintended and ever escalating ugly consequences.

“It was 3 o’clock in the morning,” recalled Kikis Kazamias, Cyprus’s finance minister at the time. “I was not happy. Nobody was happy, but what could we do?”

He was in Brussels as European leaders and the International Monetary Fund engineered a 50 percent write-down of Greek government bonds. This meant that those holding the bonds would lose at least half the money they thought they had. Eventual losses came close to 75 percent of the bonds’ face value.

For Cypriot banks, particularly Laiki Bank, at the center of the current storm, these conclusions foretold a disaster: Altogether, they lost more than four billion euros, a huge amount in a country with a gross domestic product of just 18 billion euros. Laiki, also known as Cyprus Popular Bank, alone took a hit of 2.3 billion euros, according to its 2011 annual report.

“I cannot remember that European policy makers have seen anything coming throughout the euro crisis,” said Paul de Grauwe, a professor at the London School of Economics and a former adviser at the European Commission. “The general rule is that they do not see problems coming.”

Charles H. Dallara, the lead representative for the banking industry who negotiated with European officials in 2011 in a bid to keep the losses imposed on Greek bonds as low as possible, said the writing was on the wall.

It was “very clear that the effect of the Greek deal on Cypriot banks would be severe,” said Mr. Dallara, the former managing director of the Institute of International Finance, the banks' lobbying group. “But there were elections coming up, and the tendency in Brussels is to let these things drift. So nothing was done.”

As well as hitting Cyprus over its banks’ holdings of Greek bonds, the European Union also abruptly raised the amount of capital all European banks needed to hold in order to be considered solvent. This move, too, had good intentions — making sure that banks had a cushion to fall back on. But it helped drain confidence, the most important asset in banking.

“The bar suddenly got higher,” said Fiona Mullen, director of Sapienta Economics, a Nicosia-based consulting firm. “It was a sign of how the E.U. keeps moving the goal posts.”

http://www.nytimes.com/2013/03/27/world/europe/europeans-planted-seeds-of-crisis-in-cyprus.html?pagewanted=2&_r=1&hp&pagewanted=all&

Thu, 03/28/2013 - 13:09 | 3385826 SAT 800
SAT 800's picture

Jesus. Who would want to be a part of this "system". Come on people; back to the Francs, and Lira, and etc. enough of the comedy routine. Yes, everyone will get upset, or even temporarily crazed; but then you can settle down and do some business.

Thu, 03/28/2013 - 13:14 | 3385846 Super Broccoli
Super Broccoli's picture

Belgium is 3rd ! great ! please tell me i'm finaly going to be allowed to kill flemishes !

Thu, 03/28/2013 - 13:21 | 3385870 Son of Loki
Son of Loki's picture

HAIRCUTS....FREE!

 

Coming soon to a bank near you !

Thu, 03/28/2013 - 14:19 | 3386068 Big Ben
Big Ben's picture

Not free. They could cost you your savings.

Thu, 03/28/2013 - 13:29 | 3385875 steve from virginia
steve from virginia's picture

 

 

@ZH says:

 

"What happened in Cyprus over the past two weeks, is nothing but the ... re-marking the "assets" ... to a long overdue reality."

 

Edited for purposes of clarity. Assets have indeed been remarked and there is more remarking to be done for the same and similar 'assets'. All of them are worthless, some moreso than others.

 

Because some of the assets are derivatives of outright, purposeful capital extinguishment these 'assets' have negative worth. Capital, here, is not money, it is non-renewable resources, without which no economy of ANY kind can operate. Destruction of capital is permanent and non-remediable. When the English run out of fuel to heat their homes, what will be the alternative? The securities of English fuel-waste enterprises have NOW undermined all other parts of the English economy! The English simply don't understand what has already happened and the inevitable consequences. Asset repricing on finance markets is the least of it.

 

Leaving out the 'stringent conservation' argument for later, the managers of capital-destroying firms must be held accountable: their instruments marked to zero, themselves bankrupted along with all investors and any associated criminals imprisoned. Instead of being financed, capital wasting enterprises must not be allowed to form. Along side the bank depositor's due diligence, it is the business investor who must scrutinize the energy consequences of his speculations.

 

The financing of energy waste must end ... because it's ending on its own right now. Business is a way for the irresponsible and short-sighted to bore holes in the bottom of the lifeboats on the Titanic. Things are going to get a lot uglier until folks wake up.

 

 

 

Thu, 03/28/2013 - 23:49 | 3387741 MeelionDollerBogus
MeelionDollerBogus's picture

Indeed, the only sensible energy-extraction regime is pricing such that you estimate a good % increase in energy acquisition to what’s been spend (burned, consumed), what resources you need to get that, add the real expected future price of all those resources to use (metals, labor, etc.) and make that your price today to sell/extract gas, oil, produce electricity & so on. That way you match future expected difficulty of extraction & searching for deposits.

Thu, 03/28/2013 - 13:27 | 3385892 Sandmann
Sandmann's picture

I think Tyler you should start including the UK in all these Charts. Either it is totally unaffected by what happens in the EuroZone or it is not. If there is any impact and the UK is not rock-solid it should be included as a comparator.

Personally, i think the UK is a future Portugal in terms of living standards and most definitely a Cyprus in terms of banking

Thu, 03/28/2013 - 13:43 | 3385944 Tango in the Blight
Tango in the Blight's picture

The Dutch prime minister Rutte is now on TV in his weekly interview and he confirms that bail-ins *may* be used in future crises.

Thu, 03/28/2013 - 13:44 | 3385950 Tombstone
Tombstone's picture

As the world is sadly discovering, there is no cure for debt except more of it.  Go Benny...keep us all afloat.

Thu, 03/28/2013 - 13:54 | 3385981 optionsman
optionsman's picture

is there any estimate of the banks' held debt average duration aggregated to each country level? and other characteristics of that debt would also be helpful. given that 16% margin was indicated for Cyprus would it be fair to assume that for all listed countries we should expect approximately 16% less margin of safety? for example for Spain it is 15% now instead of original estimate of 31%. if that is roughly close to the actual situation then assuming an everage duration of 16 would result in necessity to confiscate deposits if debt held "market" yield rises less than 100bps. but then again, recognizing impairment is a totally different subject...

Thu, 03/28/2013 - 15:06 | 3386264 Black Markets
Black Markets's picture

What on earth are you dribbling on about?

Cypriot delinquencies and written off loans (mostly made to Greeks) exceeded 16% which precipitated the solvency crisis of their banks.

Their banks are insolvent.

This is not a liquidity crisis where they cannot convert their equity at market rates to meet capital demands, which is a historical "bank run", so there is little or nothing gained from seeking a lender of last resort.

These banks are bust. So are many more. So yes it makes sense to get your money out of the bust banking industry and away from these fraudsters who continue operating long beyond the threshold of impairing deposits (which should be illegal and punishable with death by hot poker).

Thu, 03/28/2013 - 14:14 | 3386052 debtor of last ...
debtor of last resort's picture

Business insider from 2011, top 19 countries to default

http://www.businessinsider.com/italy-countries-most-likely-to-default-20...

Thu, 03/28/2013 - 14:16 | 3386057 Big Ben
Big Ben's picture

The Troika did a really tricky thing in Cyprus. They managed to convey the impression that insured deposits would always be protected. They were able to do this because Cyprus was a small country. So the cost was not too great there.

But Spain is a much larger country. It's banks have suffered major losses in recent times and I suspect that if you did a "mark to some semblance of real value" accounting, lots of Spanish banks would show very negative net worth in that the claims of the depositors would far exceed the amount that the bank could collect from its remaining good loans. Suprisingly, it is perfectly possible to operate a bank in this condition. Every day, some people withdraw money and others deposit money and as long as these two roughly balance, no one suspects that the bank is really among the "walking dead". The problem happens when withdrawals start to exceed deposits. Even in this case it is possible to continue operating by selling off some of the remaining good loans and using some accounting magic to inflate the values of the remaining loans.

It is possible that what happened in Cyprus could ignite a slow-motion run on uninsured deposits in Spanish banks. The Spanish government is not in a position to make good the losses in the Spanish banks, so if the run becomes too severe, it would need help from the Troika in order to make good on uninsured deposits. But the Troika hasn't actually guaranteed that it will always step in to protect uninsured deposits. It has only given the impression that it will. But it has no legal obligation to do so, and in the case of Spain, the bill might be much too high.

Thu, 03/28/2013 - 15:09 | 3386278 Black Markets
Black Markets's picture

The Troika screwed up and turned a very bad situation into a category 4 cluster fuck. Don't claim they somehow planned this out come all along.

Thu, 03/28/2013 - 15:34 | 3386366 Debt Slave
Debt Slave's picture

Not at all. They just need to go back and recalibrate their sheeple stupidity meter.

Thu, 03/28/2013 - 14:18 | 3386065 monad
monad's picture

This is BS. This wasn't a haircut, it was attempted seizure of the assets of one banking cartel by another, using the EU as a willing sock puppet. Economic warfare. 

Thu, 03/28/2013 - 14:21 | 3386075 el Gallinazo
el Gallinazo's picture

Hmm.  Wonder why Austria wasn't included.  Heard their banks have lots of bad loans to the former eastern block and Italy.

Thu, 03/28/2013 - 14:40 | 3386146 Sandmann
Sandmann's picture

Austria is a basket case in itself....and corrupt

Thu, 03/28/2013 - 16:05 | 3386539 Trajan
Trajan's picture

who isn't?

Thu, 03/28/2013 - 14:38 | 3386136 americanspirit
americanspirit's picture

Since not too many people here in the good old USA have a lot of money in the bank these days the government wouldn't be able to steal that much using the Cyprus 'haircut' approach. But, how about all that home equity? All the government has to do is to impose a 100% tax on home equity and when that tax isn't paid, slap a lein on the property and then monetize those leins by selling them to JPM and da boyz. That could raise enough money to keep the government operating for at least another month or two.

Speaking of finding and confiscating your money, you do realize, don't you, that some day very soon you are going to have to report to your dentist to have those gold crowns removed and replaced with steel - the government gets the gold, with a small commission to the dentist.

Bank deposits are for small thinkers. Our man Obama is a leader with vision.

Thu, 03/28/2013 - 14:42 | 3386151 blu
blu's picture

"Our man Obama is a leader with vision."

Yeah, and you're giving him ideas. Whose side are you on anyway?

Thu, 03/28/2013 - 15:10 | 3386286 Black Markets
Black Markets's picture

^Tedious crock of shit.

Thu, 03/28/2013 - 14:44 | 3386162 MrNude
MrNude's picture

Haircut is just the sanitized codeword for Scalping, Comanche Indian style.  

Thu, 03/28/2013 - 15:29 | 3386348 Debt Slave
Debt Slave's picture

It's hard to believe that anyone still has any faith in this ridiculous monetary system.

Thu, 03/28/2013 - 15:35 | 3386370 MrSteve
MrSteve's picture

People commenting that there is a "shortage of US Treasuries" for euro-deposit collateral are grossly misinformed. There are all the treasuries you want if you bid a cent higher than the Fed or the primary dealers at the regular auctions. Every brokerage has more UST to sell you than you have money to buy. The only real shortage is in common sense. For good reason, bonds have been called certificates of guaranteed confiscation as no bond is paid off in purchasing power equal to the currency used at the time of its purchase.

Purchasing power parity is the real coin of the realm that is being manipulated by the central banks, just as it was in the 1920s and 1930s and then less blatantly, until now. Maintaining the integrity of the backing for the US dollar was the reason given for FDR's nationalization of gold, an important obscure point.

Recall when the tin-hat conspiracy was that China would sell all its USTs and crash the market? Well, what if the new doomsday fear is that euro-groaning banks have to sell their USTs for survival. Doubtless the Fed will just Ctr-P the necessary funds to close the deal but some fine day in hell, all that bogus accounting and off-book balances and kicked-cans of phony deals will show up on your doorstep and the eye-witnesses will see what Charles Dickens saw when when he looked down on the smoking Iron and Coal-Age Pittsburgh- "Hell with the lid off".

Think about looking around you five or ten years from now:....how many gold and silver coins will you wish you had bought? Today's 1963 US silver quarter is worth more than $5.00 FRN street value.

The EU is world's largest market block and when its consumers get metal fever after hearing from old coots recalling past currency swindles, the marginal demand for gold and silver will rise, possibly by a "lot".

Good luck!

 

 

Thu, 03/28/2013 - 16:02 | 3386523 MrBoompi
MrBoompi's picture

If you look at the outflow of depositor money from Cypress over the past couple of months, you can see some people were probably tipped off.  So if I could I would pay attention to the amount of money being withdrawn from banking accounts throughout the Eurozone.  Of course, now that TPTB know smart people might be looking, I'm sure they will find a way to hide or fudge the data.

Thu, 03/28/2013 - 16:20 | 3386605 Atlantis Consigliore
Atlantis Consigliore's picture

http://youtu.be/NrYJuDx_MT0  Charlie the Banker from MF Global,  Give me back my money,  how Vegas would handle itl. 

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