… Congratulations Cyprus savers – you were just betrayed by both your politicians, and by Europe – sorry, but you are the “creeping impairments” in the game known as European bankruptcy. And so is anywhere between 6.75% and 9.9% of your money, which you were foolish enough to keep with your banks (where at least you were compensated with a savings yield of… 0%).
More importantly, as of this morning Europe has finally grasped that there is a 6.75% to 9.9% premium to holding physical cash in your mattress rather than having it stored with your local friendly insolvent bank.
Luckily Cyprus is so “small” what just happened there will never happen anywhere else: after all in Europe nobody has ever heard of “setting an example”. Or so the thinking among Europe’s unthinking political elite goes.
Finance: The Cypriot Confiscation is Terrifying. Posted by Ann Barnhardt – March 16, AD 2013 9:27 PM MST
Yes, it is every bit as bad as it sounds, and worse. Word is that the initial plan was for a 40% (!!!!) levy confiscation of Cypriot bank accounts. They settled for a MERE 6.75% and 9.9% dual-layered compromise.
Yeah, you all need to do what I have been doing for the last several months and live within spitting distance of being overdrawn in your bank accounts. In other words, keep the BARE MINIMUM in the bank and feed your account just enough to cover the bills. As soon as money comes in, get it the heck out of there.
Looks like the IRS may prove to be the least of my worries with regards to levying bank accounts!
This has the potential to spark bank runs in other Southern European nations MERELY BECAUSE OF THE FACT THAT IT ACTUALLY HAS HAPPENED. Pray the Greeks, Italians, Spaniards and Portuguese are all watching talent shows or soccer and don’t notice. But if it does, if you have watched my eight-part economic presentation on YouTube, then you understand that we will blow sky-high as the big banks and their tens of trillions of dollars in repos and reverse repos and credit default swaps, many-to-most of which are written on European sovereign debt, blow.
… UPDATE: I agree with various commentators that this is almost certainly a test-run by Brussels to see what the reaction of the Cypriots is. If no one is hanging from light poles by sunset on Tuesday, they will likely move on to Greece and the other Southern European economies, satisfied that the people have been sufficiently conditioned to roll over. Tiny Cyprus, an ISLAND mind you, makes the perfect test lab.
I anticipate that the light poles will remain undecorated. There is no fight left in the men of former Western Civilization; only indifference punctuated by self-loathing. Say goodnight, Gracie.
The Eurovision Song Contest doesn’t get a lot of attention in the United States, but on the Continent it’s long been seen as the perfect Euro-metaphor.
Years before the euro came along, it was the prototype pan-European institution, and predicated on the same assumptions. Eurovision took the national cultures that produced Mozart, Vivaldi and Debussy, and in return gave us “Boom-Bang-A-Bang” (winner, 1969), “Ding-Ding-A-Dong” (winner, 1975) and “Diggi-Loo-Diggi-Ley” (winner, 1984).
The euro took the mark, the lira and the franc, and merged them to create the “Boom-Bang-A-Bang” of currencies.
How will it all end? One recalls the 1990 Eurovision finals in Zagreb: “Yugoslavia is very much like an orchestra,” cooed the hostess, Helga Vlahovi?. “The string section and the wood section all sit together.”
Shortly thereafter, the wood section began ethnically cleansing the dressing rooms, while the string section rampaged through the brass section pillaging their instruments and severing their genitals. Indeed, the charming Miss Vlahovic herself was forced into a sudden career shift and spent the next few years as Croatian TV’s head of “war information” programming. Continue reading →
If Raoul Pal was some doomsday spouting windbag, writing in all caps, arbitrarily pasting together disparate charts to create 200 page slideshows, it would be easy to ignore him. He isn’t. The founder of Global Macro Investor “previously co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul came to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe… Raoul Pal retired from managing client money in 2004 at the age of 36 and now lives on the Valencian coast of Spain, from where he writes.” It is his writing we are concerned about, and specifically his latest presentation, which is, for lack of a better word, the most disturbing and scary forecast of the future of the world we have ever seen….
“…According to Mitchell (who is a senior fellow at the Cato Institute), some wealthy Europeans are preparing for a level of chaos in their respective countries worthy of the title, “apocalyptic.” In Mitchell’s words:
About a year ago, I spoke at a conference in Europe that attracted a lot of very rich people from all over the continent, as well as a lot of people who manage money for high-net-worth individuals.
What made this conference remarkable was not the presentations, though they were generally quite interesting. The stunning part of the conference was learning — as part of casual conversation during breaks, meals, and other socializing time — how many rich people are planning for the eventual collapse of European society.
Not stagnation. Not gradual decline. Collapse.
As in riots, social disarray, plundering, and chaos. A non-trivial number of these people think the rioting in places such as Greece and England is just the tip of the iceberg, and they have plans — if bad things begin to happen — to escape to jurisdictions ranging from Australia to Costa Rica (several of them remarked that they no longer see the U.S. as a good long-run refuge)…”
EU OFFICIAL SAYS DEAL REACHED ON GREEK DEBT-CUTTING PLAN: AP
‘PRIVATE CREDITORS TO TAKE 50% CUT ON GREEK BONDS, AP SAYS
EU official, who wished to remain anonymous, tells Bloomberg that euro-area leaders are set to approve accord for 50% writedown on Greek bonds
If true, this means that Portugal, Ireland, Spain and Italy will promptly commence sabotaging their economies (just like Greece) simply to get the same debt Blue Light special as Greece. It also means that, at least according to Barclays, we have a CDS credit event, although we are certain that Europe would never announce this deal unless ISDA (complete determinations committee list here) was onboard, and corrupt as always. In addition, Greece was unable to generate a 90% acceptance for a 21% haircut tender offer. And we are somehow supposed to believe they can do it with 50%? Lastly, as a reminder, on September 14, Moody’s put SocGen, BNP and Credit Agricole on downgrade review. This will be the trigger..”
“… In an interview with IMF advisor Robert Shapiro, the bailout expert has pretty much said what, once again, is on everyone’s mind: “If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected. All those banks are counterparties to every significant bank in the United States, and in Britain, and in Japan, and around the world. This would be a crisis that would be in my view more serrious than the crisis in 2008…. What we don’t know the state of credit default swaps held by banks against sovereign debt and against European banks, nor do we know the state of CDS held by British banks, nor are we certain of how certain the exposure of British banks is to the Ireland sovereign debt problems.” Read it and weep.