Archive for 2013

The Rape Of Cyprus By The European Union & The IMF

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Mark J. Grant, author of Out of the Box,

I have been watching articles pour forth about Cyprus all weekend. I am almost as aggravated with the majority of them as I am with what took place. People are dancing around the edges while the propaganda machines of Europe are churning out the usual bunk.
 
Let’s get some things straight and look what has happened directly in the face. There was no tax on the bank accounts in Cyprus. There still is no tax; the Cyprus Parliament has not passed it and will not vote on it until tomorrow so whatever action takes place it is retroactive. Next, this was not enacted by Cyprus. The people from Nicosia did not go to the Summit and ask to have the bank accounts in their country minimized to help pay the bills. Far from it; the nations of Europe, Germany, France, the Netherlands and the rest, demanded that this take place, a “fait accompli,” the President of Cyprus said and Europe annexes Cyprus. Let’s be quite clear; the European Union has confiscated the private property of the citizens in Cyprus without debate, legislation or Parliamentary agreement.
 
A bank account is not a bond or a stock or any sort of investment. This seems to be lost on many people. A bank account is the private property of a citizen or a corporation and does not belong to the government or at least that was the supposition up until now in Europe.
 
Next there is deposit insurance in Europe. Every country has its own version but it is there. It guaranteed the bank accounts of citizens up to one hundred thousand Euros. So much for the meaning of any guarantee in Cyprus or any other country in Europe. Null and Void! If the European Union can dismantle deposit insurance in Cyprus they can damn well do it in whatever country they please and at any time.
 
Here’s the description of the Cypriot government deposit insurance plan:

“Participation in the DPS is compulsory for all banks authorized by the Central Bank of Cyprus, i.e. banks incorporated in the Republic of Cyprus, including their branches in other countries, and the Cyprus branches of foreign banks, incorporated outside the Republic of Cyprus or


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Wall Street: $474 Million, Detroit: 0

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

The more time passes, the more skeletons emerge from the closet.  So what’s the punishment for an industry that has literally destroyed countless communities across the American landscape?  Trillions in taxpayer bailouts and even more control over our government.  They say “it would’ve been much worse without the bailouts.”  Tell that to Detroit.  From Bloomberg:

The only winners in the financial crisis that brought Detroit to the brink of state takeover are Wall Street bankers who reaped more than $474 million from a city too poor to keep street lights working.

 

The city started borrowing to plug budget holes in 2005 under former Mayor Kwame Kilpatrick, who was convicted this week on corruption charges. That year, it issued $1.4 billion in securities to fund pension payments. Last year, it added $129.5 million in debt, 9.3 percent of its general-fund budget, in part to repay loans taken to service other bonds.

 

“We have no lights, no buses, poor streets and now we’re paying millions of dollars a year on our debt,” said David Sole, a retired municipal worker and advocate for Moratorium Now Coalition, a Detroit group that fights foreclosures and evictions. “The banks said they need to be paid first. But there is no money.”

 

The debt sales cost Detroit $474 million, including underwriting expenses, bond-insurance premiums and fees for wrong-way bets on swaps, according to data compiled by Bloomberg. That almost equals the city’s 2013 budget for police and fire protection. 

 

Municipal borrowers from the Metropolitan Water District of Southern California to Harvard University in Cambridge, Massachusetts, have paid billions to banks to end interest-rate swaps that didn’t protect them.  

 

As banks were collecting fees from bonds, some targeted city homeowners with subprime loans that led to foreclosures, depressing real-estate values and tax revenue, Sole said. 

 

Last year, Detroit’s water and sewer utility borrowed to pay more than $300 million to unwind swaps.

The only thing that has recovered is Wall Street’s parasitic business model.  They will never stop until they destroy the entire country.

Full article here.





NEOFEUDALISMUS: Nein Nein Nein!

Courtesy of ZeroHedge. View original post here.

Submitted by williambanzai7.

DR STRANGE SCHAEUBLE

Nothing a little lederhosen can’t solve…

Collaboration w/@blumaberlin

.
CLOUD NEIN!

Here comes the Euro Temptations
The source of the market gyrations
Everything’s fine
Then Wolfgang sings “NEIN”
Their new dance is “Manipulations”

The Limerick King

 

Livin’ it up at the Hotel 9…

.
HOTEL NEIN

 

.
CANARY IN THE FRAUDMINE
.

Dr Schaeuble’s Moment…

[Original work by Otto Dix]

SCHAEUBLE'S MOMENT
.

The dream of Europa…

[Original work by Hokusai]

DREAM OF EUROPA





Sell-Side Strategists Summarize Cypriot Tsunami

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The usually optimistic bunch of salubrious sell-side strategists are mixed in their perspective of the latest debacle to roll ashore from Europe. Most, if not quite all, expect short-term ‘nervousness’ and a few hardy Pollyannas remain though looking at the other end of the rainbow – once again because, drum roll please, “central banks will respond.” Adding to our summary yesterday, Bloomberg adds another 13 sell-side opinions (and Moody’s), it the diversity of response is perhaps best glimpsed with one who “does not expect savers to be fearful of a confiscation of their savings and spark a run on banks” for some whimsical reason and another states unequivocally, “No sensible foreign depositor would continue to keep money in a banking system that just took nearly 10% of his deposit without any notice.

Via Bloomberg,

 * Moody’s

Cyprus bailout negative for depositors across Europe; implication for sovereigns unclear; Cyprus has negative implications for EU banks creditors

May hurt bank ratings across Europe; shows EU will act to monetary Union

 * HSBC

Decision to impose levy could trigger market contagion

 * Nomura

Sees more downside risk for EUR/USD, EUR/CHF on Cyprus

Is buying 1.30 EUR put/USD call with 3-month tenor at Asia open to gain exposure to downside move; also cutting long EUR/CHF spot positions until there is greater clarity

 * Rabobank

Yield hunt may mean risk-off tone may be short-lived; in the contagion stakes, Cyprus has clear potential to “punch far above its weight”

 * Saxo Bank

Decision to impose level  “very good for gold” and safe-haven countries like Singapore and Switzerland and “economically more healthy” Scandinavian countries that don’t use the euro should also benefit

 * Citigroup

There is room to amend Cyprus agreement

 * AMP Capital Investors

Cyprus situation could “lead to some worries regarding renewed contagion across Europe”

Compared with banks in Italy, Spain and Ireland, “the risk of the same occurring is extremely low and close to zero, but we could go through a short period of nervousness until we see how the rest of Europe responds and the ECB responds”

 * Barclays

Decision to impose losses on Cypriot depositors is the latest sign of an “ominous trend” for bondholders

 * Brown Brothers Harriman

“We do not expect savers to be fearful of a confiscation of their savings and spark a…
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Where ‘Channel-Stuffed’ German Cars Go To Die

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With the collapse of Europe’s auto market, and the channel-stuffing that is rife in every car manufacturer in the world, it is no surprise that at the end of their brief lease periods, European cars (Audi in this case) are being led to this ‘graveyard’ in Germany (70 miles north of Munich). This car park of chaos is full of nearly-new cars meant for destruction so as never to enter the car market as a cheap alternative and to maintain a high-priced spare parts market. It seems the Keynesian profligacy or digging a hole to fill it in has progressed in the 21st century to building a car and crushing that car as the engine of growth for our economies.

The site can be found here…

 

(h/t H.M.H.)





Cyprus Bailout Math; Can Depositors Be Left Whole?

Courtesy of Mish.

Inquiring minds are wondering about the terms of the bailouts imposed upon citizens of Cyprus. I am one of them.

In Cyprus Details: Blackmail, Bulldozer Threats, Bank Holiday to Tuesday; Reflections on Arrogance and Idiocy, I made the claim that Cyprus depositors need not be liable for any of this.

Many people have emailed that much of the money in Cyrus accounts was via illegal inflows from Russia. OK, is that a reason to screw every Cyprus depositor, even the small accounts below the €100,000 deposit guarantee?

I suggest not. I object to the entire scheme. First the bondholders should have been wiped out. If that was not enough then the deposits above the €100,000 deposit guarantee should have been hit. Then and only then should the average citizen been hit.

And guess what. The average Cyprus citizen would likely not have been hit. Instead, the EU mandated a “screw every citizen” policy to protect the senior bondholders.

Cyprus Bailout Math

What I wrote above was a guess, but an accurate one. Reader Jeff Baryshnik, Baryshnik Capital Management Inc., in Toronto provides some specifics in an email to me a few hours ago.

Hi Mish

I read with interest your article on the Cyprus bailout deal.  After a quick review of the most recent financial statements of the four publicly listed Cypriot banks as shown on their websites, it is notable that a simple alternative proposal could protect the country from bankruptcy and make its depositors whole.

By wiping out 100% of the equity, 100% of the bondholders, and 17% of the banks’ liability to central banks, the Cypriots could stabilize their banking system (based on the 5.8Bn EUR figure being discussed) without penalizing local savers. 

Instead of raising 5.8Bn EUR from depositors, it could raise 1.4Bn from combined market cap, 2.0Bn from bondholders and preferred shareholders, and 2.4Bn of the 14.3Bn in combined Central Bank loans (Cypriot and ECB) it has on its books. This assumes zero contribution from the Cypriot subsidiaries of foreign banks so it may be conservative. 

If the banking system is bankrupt, anything other than an Alice-in-Wonderland recovery system suggests that the order of liquidation is shareholders, preferred shareholders, debt holders, Central Bank creditors, and THEN depositors. If 10Bn or even


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Key Fiboancci level going to hit the Nikkei index hard, causing large decline?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The Nikkei has been very strong over the past 5 months, gaining more than most stock markets, anywhere in the world.  The rally of late, now has the index near the 50% Fibonacci level, of its large decline from 2007 to 2009.

If this white hot index is to take a breather, the 50% Fibonacci level could well be a place for one to start!

-

-





Cyprus: The World’s Biggest “Poker Game”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While this kind of ‘wealth tax’ has been predicted, as we noted yesterday, this stunning move in Cyprus is likely only the beginning of this process (which seems only stoppable by social unrest now). To get a sense of both what just happened and what its implications are, RBS has put toegther an excellent summary of everything you need to know about what the Europeans did, why they did it, what the short- and medium-term market reaction is likely to be, and the big picture of this “toxic policy error.” As RBS summarizes, “the deal to effectively haircut Cypriot deposits is an unprecedented move in the Euro crisis and highlights the limits of solidarity and the raw economics that somebody has to pay. It is also the most dangerous gambit that EMU leaders have made to date.” And so we await Europe’s open and what to expect as the rest of the PIIGSy Banks get plundered.

 

Authored by Harvinder Sian and Michael Michaelides of RBS,

Cyprus: the world’s biggest “poker game”

The deal to effectively haircut Cypriot deposits is an unprecedented move in the Euro crisis and highlights the limits of solidarity and the raw economics that somebody has to pay. It is also the most dangerous gambit that EMU leaders have made to date.

  • What did they do? Hit depositors.
  • Why did they do it? Politics, economics, and because they think they can get away with it.
  • Cyprus needs to vote on this and any delay of opening the banks on Tuesday is more risk-off.
  • Short term market reaction: Risk-off. The situation is fluid but watch politics, Cyprus bank runs risk, weak periphery banks impact and rating agencies. Worst case scenario? EMU exit talk. The Best case scenario? Germany is correct and the ECB bridges the time to when this is clear.
  • Big picture: This is toxic and a policy error.
  • Long bunds, sell the euro, sell periphery, Spain could underperform Italy, but nobody in the periphery wins.

1. What did they do?

In the early hours of this weekend, the Troika decided to impose an effective haircut to both uninsured and even more interestingly insured (<€100k) Cypriot bank deposits. More precisely, the €10bn bank rescue in Cyprus will end up with a bail-in on junior bondholders…
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Stocks Zombie Like Upward Movement Stalled by Cyprus News

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

The almost zombie like daily creep up in markets is being stalled tonight by news out of tiny Cyprus this weekend.   Ironically the amounts being discussed are tiny – 10B euros of rescue funds which in the global finance picture is a gnat.  But the euro zone is trying to install some form of “discipline” rather than hand out money left and right, and it has some people trying to extrapolate what happens in Cyprus to a whole host of dominos.

We’ll see what the reaction is after the knee jerk move down – futures have been down in the 1% range upon re-opening tonight.

Via WSJ:

  • The euro zone took the unprecedented step of taking a bite out of depositors’ accounts in Cypriot banks to help pay for its bailout of the island’s financial system, a high-risk decision that could erode savers’ confidence across the currency bloc and add to popular anger over its handling of the crisis.
  • The decision to raise €5.8 billion ($7.6 billion) from taxes on depositors—including individuals with small amounts in their accounts—risks a political backlash for the newly elected center-right government on the Mediterranean island and a wider political fallout for the euro-zone leaders who are guiding the bloc’s crisis strategy.
  • A tax on depositors—6.75% on all deposits up to €100,000, and 9.9% above that level—was the only way out for the bloc’s finance ministers after Germany, the euro zone’s biggest economy, and the International Monetary Fund insisted that financial aid to Cyprus should be limited to €10 billion.
  • With the money due to have been withdrawn electronically from bank accounts over the weekend, politicians in Nicosia were discussing how they might adjust the levy to make it appear fairer. Monday is a public holiday on the island, when banks are closed, but European officials said contingency plans were being put in place to calm any turmoil in the country’s financial system when the banks eventually reopened.
  • European officials on Sunday emphasized that the levy was a one-time tax for Cyprus—based on the huge size of its banking system compared to the relatively puny size of the country’s economy—and wouldn’t be replicated elsewhere in the currency union. But the deal sends a signal to the rest of the euro zone that the bloc’s richer nations are increasingly


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Russia Sending Permanent Warship Fleet To Mediterranean: Is A Russian Naval Base In Cyprus Coming Next?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

That Russia has previously threatened, and followed through with, sending ships to the Mediterranean is nothing new. In the past, every such episode was related to the protection of what Putin considered vital geopolitical interests in the region: whether defending the Syrian port of Tartus, various crude and natural gas pipelines in the region threatened by NATO expansion in Turkey, or offsetting heightened US presence around Gaza and Israel (and of course Iran). Which is why with the legacy conflicts in the region dormant, and the only news of any relevance being the European intervention in Cyprus against Russian oligarch interests, it is surprising we learn today that the Russian Navy will dispatch a permanent fleet of five or six combat ships to the Mediterranean Sea, with frigates and cruisers making up the core of the fleet.

How far into the Mediterranean one wonders? It wouldn’t be too difficult to put two and two together and assume that with Cyprus just a few hundreds kilometers away from Syria, Lebanon, Gaza and Israel, Russia may have not only a new geopolitical target, namely the now pseudo-insolvent Russian protectorate of Cyprus, but a perfect alibi to be in the region as well, and more importantly, have a Plan B to the Syrian port of Tartus which is Russia’s only naval base in the region.

How soon until we read that Russia is willing to invest even more unguaranteed loans into the Cypriot financial system…. in exchange for one tiny little naval and/or military base?

From RT:

“Up to five or six ships must be on a permanent basis in the Mediterranean Sea. They should be controlled through the command of the Black Sea Fleet,” Russian TV channel Zvezda quoted Admiral Chirkov as saying.

 

Supply vessels will also be included in the permanent deployment to the Mediterranean.

 

The decision to send Russian ships to the Mediterranean’s waters was first announced on March 11 by Defense Minister Sergey Shoigu.

 

“I think that we have everything to create and maintain such a grouping. Certainly, this shows the positive dynamics of development of the Navy,” Shoigu told top officers of the Russian Armed Forces. By 2020, the Russian Navy will include eight missile submarines, 16


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