From Mark Grant, author of "Out of the Box"
The Understatement of Behaving Badly
When governments begin doing things that are extreme and outside of the normal patterns of behavior then it is not a stretch to say that they are in trouble. They are responding this way because they are in a critical and perhaps life threatening situation. They do not tell the truth about sovereign finances and cover up everything at the ECB but they must be looking at the real numbers and experiencing some sort of epileptic fit.
"Government is either organized benevolence or organized madness; its peculiar magnitude permits no shading."
First we had a retroactive change of a bond indenture in Greece. It was called a "one-off" event. Then we have the confiscation of depositor's money in Cyprus; every penny over one hundred thousand Euros. What is given in return is 37.5% of your money converted to shares in a bankrupt financial institution and I am sure the shares will be restricted in some fashion. It is being called a "one-off" event. I fear that something is widely amiss in Europe.
Next we have Monsieur Hollande in France calling for a 75% corporate tax rate for any salary over one million Euros. This is clearly a tax on the wealthy. "Do not succeed or the government will take your money" is the clear message.
What other "one-off" events may we now expect? A wealth tax on bond coupons perhaps in Europe? A wealth tax on dividends? If private property in a bank can be confiscated then they can take what they like and when they want it. In the case of "Eminent Domain" in the United States the property owner must be given "fair value." On the Continent the European Union has now sanctified, legally blessed, the seizure of private property and the "fair value" return of Zero. It is not just Cyprus you understand but the entire government of Europe that has just mandated the confiscation of bank accounts in one of their member countries and what is given in return to the depositors is some worthless piece of paper; worthless.
Then this morning we are given the newest news. The Communications Minister of Cyprus announced today that the deposits of the European Union in Cyprus over the one hundred thousand Euro mark would not be impacted. In other words, they will not be expropriated so that while every other depositor will lose their money; not the European Union. “This development secures the smooth flow of resources from EU funds to Cyprus, and the continuation of any projects underway,” he said and called it a "happy development."
"Though this be madness, yet there is a method in it."
When the Lunatics Have Taken Over the Asylum
I would say that you can now speculate in Europe. I would say that you can bet in a manner no different than a casino. Actually no; I would say it is worse. You can put your money down and then the dealer can say, "New Rules, Game Change; all the money on the table is required for the House and it is now mine."
If you had suspicions before; they have been confirmed. Anything, everything can and might be done and then justified by the unwillingness of the nations in Europe to pay for any more of a troubled country's difficulties. Whatever boundaries that existed have been breached. There is no Law, no fences and no limits. First Greece and now Cyprus and Pandora has raised the lid on her Box.