The low interest rate resulted in the PIIGS countries having a to high debt-to-GDP ratio now.

The miss pricing of the interest rate on bonds for some European countries by the capital markets is one of the causes of the Euro crisis where we are in today.

Part.1

http://www.youtube.com/watch?v=T3CDGh4cXU0

Part.2

http://www.youtube.com/watch?v=VBmOEI7Ob9M

Part.3

http://www.youtube.com/watch?v=JB4wefzZLNc

Part.3

http://www.youtube.com/watch?v=XU6c1lIEkuQ

Read original article…

The DAILY SHEEPLE says:

“March and April 2013 may go down in history as the tipping point for the western financial system.

We have already seen:

• Lehman Brothers and many other financial firms collapse.

• $700 Billion in TARP funds arranged by banking insiders for banking insiders at the expense of US taxpayers.

• Over $16 Trillion in bailouts, guarantees, swaps, and loans created by the Fed and given to various banks, nations, and other insiders.

• MFGlobal took “segregated” customer funds, the exchange provided no compensation to customers, and yet no criminal indictments have been issued.

• Global derivatives total $700 Trillion to well over $1,000 Trillion, depending on who is counting. Some are “toxic waste.”

• Many European bailouts and “fixes.”

• Spain, Italy, Slovenia, and perhaps France in trouble.

• US official debt approaching $17 Trillion with unfunded liabilities many times larger.

• The Federal Reserve creating $85 Billion per month (over $115,000,000 per hour) to support banks and the US government.

So what other disasters could occur? In a word, Cyprus!

• Not because the EU and Cyprus took Russian money.

• Not because several banks will close.

• Not because some deposits will be confiscated and/or frozen.

The DAILY SHEEPLE continues,  “In my opinion, the sign that a tipping point has occurred in the financial system is the real story:

• The veil of banker honesty has been lifted. The EU/IMF/ECB will do whatever is necessary to support the banks, even if it means they will confiscate (tax, steal, bail-in) customer deposits.

• Customer deposits are NOT assets held in the bank for safe-keeping, but are liabilities of the bank and are not guaranteed to be made whole.

• Billions of dollars were removed prior to the Cyprus freeze, so insiders clearly knew in advance of the ordinary depositors (see below). There is no “level playing field” when billions of dollars/euros are in play.

• According to Jeroen Dijsselbloem, Dutch finance minister and Euro Group President, this is “the template for any future bank bailouts.” In other words, your deposits are considerably less safe than you thought. Your bank could fail, and your deposits might be used to compensate for derivative losses or other losses that the bank incurred.

• The FDIC in the US, as well as England, Canada, and New Zealand, has announced similar policies, agreements, and plans to confiscate deposits in the case of an emergency. Is this a sign that an emergency is not only possible but probable and imminent?

• Confidence in the banking and financial system has been seriously damaged, perhaps irreversibly.”

“Following are a few quotes from respected commentators:

Jim Sinclair:

If the fools that have attacked Cyprus persist then it is the start of an avalanche that will destroy confidence in fiat currency, the fractional reserve system and central banks. What are the central bankers terrified of? My answer is the mountain of old OTC derivative coming home to roost.” Link.

Tyler Durden:

“With every passing day, it becomes clearer and clearer the Cyprus deposit confiscation “news” was the most unsurprising outcome for the nation’s financial system and was known by virtually everyone on the ground days and weeks in advance: first it was disclosed that Russians had been pulling their money, then it was suggested the president himself had made sure some €21 million of his family’s money was parked safely in London, then we showed a massive surge in Cyprus deposit outflows in February, and now the latest news is that a list of 132 companies and individuals has emerged who withdrew their €-denominated deposits in the two weeks from March 1 to March 15, among which the previously noted company Loutsios & Sons which is alleged to have ties with the current Cypriot president Anastasiadis.” Link.

Peter Cooper: 

“Depositors in the beleaguered Bank of Cyprus are now facing losses of 60 per cent on deposits over 100,000 euros as the Cyprus Government seems to have woken up to the fact that this is its last chance to steal money off these mainly foreign depositors. It’s an absolute travesty and a red letter day for European Union banks…

“Money in EU bank accounts is clearly now up for grabs by any government that recapitalizes its banking sector. Moreover, the Cyprus precedent is going to cause a run on the weaker banks that will make this sort of recapitalization inevitable. Standby for a systemic banking crisis in the EU…

“What the EU has done in Cyprus is the modern equivalent of the failure of the Credit Anstaldt in 1931 that brought on the Great Depression with thousands of banking failures around the world.” Link.

Jim Sinclair:

“I believe Cyprus is the defining moment whereby the physical market for gold overtakes the paper market for gold as the arbiter of price. When that occurred in 1979 the price of gold began its move to seek its maximum valuation.” Link.

Julian DW Phillips:

“When it was announced [in Cyprus] that both large and small depositors were to have a percentage of their deposits seized, it was not the amount that horrified the world but the discovery that you do not own your own bank deposits… Most investors worldwide are of the belief that when you deposit your money in a bank, it simply has safe-keeping of that money. The realization that you have lent the bank your money and are an “Unsecured Creditor” of the bank is an unpleasant revelation.” Link.

Michael Snyder:

“What you are about to see absolutely amazed me when I first saw it. The Canadian government is actually proposing that what just happened in Cyprus should be used as a blueprint for future bank failures up in Canada.

The following comes from pages 144 and 145 of “Economic Action Plan 2013″ which you can find right here. Apparently the goal is to find a way to rescue “systemically important banks” without the use of taxpayer funds…”

“In addition, branches of the two largest banks in Cyprus were kept open in Moscow and London even after all of the banks in Cyprus itself were shut down. So wealthy Russians and wealthy Brits have been able to take all of their money out of those banks while the people of Cyprus have been unable to…”

“The global elite are fundamentally changing the game. From now on, no bank account on earth will ever be able to be considered “100% safe” again. This is going to create an atmosphere of fear and panic, and no financial system can operate normally when you destroy the confidence that people have in it.

Confidence is a funny thing – it can take decades to build, but it can be destroyed in a single moment.” Link.

Ellen Brown:

“Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.” Link.

Richard Russell:

“I’ve been asked to name one future situation of which I’m most certain. My answer is this – I believe the surest situation (change) in America’s future is a decline, even a drastic decline, in our standard of living. We’ve spent it; we’ve spent what we didn’t have. And somewhere ahead, probably much sooner than we think, will come payback time. And it won’t be pretty.” Link.

Summary

• Bank deposits are neither safe nor sacred. What you think is true might be false and costly.

• More financial disasters are inevitable and imminent. Your standard of living is likely to decline.

• Insiders – the political and financial elite – will benefit at the expense of the other 99%. (Nothing new here.)

• Governments, agencies, and bankers are preparing for more confiscations. Plan on it! It’s going to end badly!

• Buy gold and silver and remove it from the banking system. Silver and gold purchases – domestic and offshore storage.

• The next few years will be very problematic for citizens of Europe and the United States. Preparation is essential.”

Delivered by The Daily Sheeple

What do you think? Best to be prepared in either case, yeah?

Remember: “First come, first served”
Like the Billionaires dumping stocks – get it out of the banks now and invest in something tangible. Plant a garden, put solar on your roof, buy a new mattress – you may not want to leave those 401ks and mutual funds just sitting there because they may not be there when you need them most.

CLICK HERE to Order your LIVING TRUST. 

In the recent Deal Book article Lessons on Being a Success on Wall St., and Being a Casualty by Susanne Craig, the writer shares the insights she gained from her interview with one-time power executive Sallie Krawcheck. I use the term one-time in that after rising to the top of major financial institutions Citigroup and Bank of America, Krawcheck found herself in the unemployment line.

Now for those familiar with the financial markets, and in particular the colossal collapse of venerable Wall Street firms such as Lehman Brothers and its impact on the economy as a whole, Kawcheck’s demise would not seem out of the ordinary. In fact, given the attitude of the general populace towards the blatant greed of these institutions, one might be hard pressed to find anyone who would feel sympathy for a senior executive in the financial industry losing their job. After all, how many people lost their life savings?

This of course is a fair consideration. However, if one looks beyond the justified feelings of indignation and frustration with Wall Street, you will find that during a crisis situation, financial institutions tend to throw female executives to the wolves. Disagree? I’d like you to consider the following; in the above article, Craig highlighted the fact that beside Krawcheck, there were many female casualties of the financial meltdown including the former co-president of Morgan Stanley – Zoe Cruz, Lehman Brothers – Erin Callan and JP Morgan Chase senior executive – Ina Drew.

Once again, one may reasonably point to the fact that the reason these women lost their jobs is due to the market crash. To a certain extent this may be true. However it is the manner in which their careers imploded that stands out.

According to Krawcheck, when faced with a crisis, male CEO’s will invariably turn to those people with whom they are familiar and feel most comfortable. In the case of Wall Street, this means that men will turn to other men instead of women during a period of upheaval and uncertainty. There is nothing inherently wrong with this because it is natural during times of trouble that we all turn to those with whom we feel most comfortable and most confident. The problem is that women have only recently begun to scale the heights of corporate leadership and as a result are not strategically placed to play the role of trusted CEO confidante or go to person – at least not as much as we thought or would like.

Now we can rail at the moon and bemoan the fact that this is an unjust situation, or we can learn from these setbacks and take positive action.

For example, women need to become better at networking. We need to identify those individuals with whom we can connect who can serve as sponsors and mentors. And yes I disagree with Krawcheck in this regard and her position that we need sponsors as opposed to mentors. We need both. In fact, Harvey McKay’s book on networking reminds me of the best advice I can give to clients: Dig Your Well Before You Are Thirsty.

Women also have to learn to brand themselves better, which includes not waiting until all of our proverbial ducks are lined-up before having the confidence to step-up and stand out. A recent purchasing industry poll found that women believe that they need to have all of the prerequisite skill sets before going for a position, while their male counterparts feel that having some of the required skill sets are enough to get the position now, and that they can learn the rest on the job. I call this the perfect star alignment syndrome that undermines our value and therefore our confidence to properly brand and promote ourselves.

While my new book The Future of You! Creating Your Enduring Brand takes an overall genderless view of branding, there are many references to successful female executives and business owners who have adeptly weathered similar storms to that of Krawcheck and have come out on top.

The key is to avoid dwelling on the apparent unfairness of situations such as what is happening on Wall Street and focus on those things that empower women to not only rise in the corporate ranks, but to also establish their creditability as go to people that can deliver when the chips are down!

30

If you only were a student earlier… cuantos dinero you could have made on Bear Stearns! Me gusta! When MBIA and Ambac hit the urinal, you could’ve gotten some of those pesos. The Pan-European Sovereign Debt Crisis… you could’ve got your money out of the bank (and still can) before I stole it. You would’ve known to short the market prior to Lehman’s.

It plays to stay in the game if you know its a game. You just got to know the signs. Ask yourselves, ‘how can ‘I’ get into the missionary position’. It’s not by hiding su dinero in your fondio!

Stand up straight, you have a grande calabasa on your neck. We luchadors fight for gold AND blood. Gold meaning temporal control through finance, y blood meaning energy in all its presentaciones. No slaying the luchador in this realm compadres. What appears as my death and your death is nada but me and you going back into the corner for a breather.

Callate!  I sensed someone reading this suddenly feel shame. Que? Suddenly, you want to remedy the fight that you’ve enabled for cien anos?

Ah… the dreams of slaves.

Viva El Luchador

“Eat or be Eaten”

You could’ve made so much money

Even though it won an Academy Award this year for best visual effects for “Life of Pi,” the visual effects company Rhythm & Hues filed for bankruptcy.

Despite these high profile filings, the American Bankruptcy Institute recently reported that commercial Chapter 11 bankruptcies actually fell a whopping 36 percent from January 2012 to January 2013, from 749 to 479.

Although the decrease in bankruptcy filings may be partly a result of the slowly improving economy, it’s also due to the fact that companies are increasingly looking to alternatives to filing bankruptcy. It’s no longer assumed to be the leading default option for companies in financial distress.

In my work as the Turnaround Authority, I generally discourage my clients from declaring bankruptcy. While bankruptcy does offer several tools that may not otherwise be available, such as the ability to sell assets free and clear of liens and claims, and the ability to accept and reject contracts, I want companies to carefully consider the downsides to bankruptcy before making that move. Here are just a few I want them to consider.

It results in loss of control. While the client may still be running the daily operations, he is no longer in control of the major decisions. The judge approves all major decisions.

It’s expensive. High attorney fees can actually result in businesses being forced to liquidate to pay all the fees. Fees in excess of $1 million dollars are not uncommon. Companies have paid in excess of $1,000 an hour during a bankruptcy reorganization.

In addition to paying for its own lawyers and financial advisors, the company has to pay those of the creditors’ committee and the secured lenders.

The law firm Weil, Gotshal & Manges was lead counsel for the Lehman Brothers bankruptcy, raking in $389 million in fees and expenses in 3 ½ years. But that wasn’t all of it. The total paid out to all of the firms on Lehman’s tab? More than $1.4 billion.

An interim CEO or Chief Restructuring Officer, like me, may be brought in to handle the process, which adds another layer of costs.

It harms the company’s reputation and may discourage future investments. Just a rumor about the impending filing of Chapter 11 bankruptcy by American Airlines parent company AMR caused the shares of stock to plummet by a third and 67 million frequent flyer members fretted over what would happen to their miles.

Owners and stockholders may lose a great deal of money. The bankruptcy court determines the order in which creditors are paid back, with secured creditors first in line. Stockholders are always at the back of the line and generally need to invest additional funds into the restructured entity in order to maintain equity in the new company.

The actions of the firm’s leadership are closely examined and may lead to criminal charges. After Enron filed for bankruptcy, dozens of its executives were subsequently charged with criminal acts that included insider trading, money laundering and fraud.

I tell this story in my new book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOS’ Mistakes.” I was brought in as an interim CEO for a company that had filed for Chapter 11. On its books was $50 million of inventory at a plant in Ireland. I decided to go take a look. Turns out the plant was actually a vacant lot, but had been claimed as inventory to inflate the value of the company so it could qualify for a larger loan than it would have.

Few companies emerge intact. Less than 10 percent of companies filing for bankruptcy protection emerge as they were when they filed. Generally, assets, divisions, or the entire company are sold to provide the funds to work out a Plan of Reorganization.

Bankruptcy is a viable and helpful alternative for some companies. I’ve worked with many over the years and was successful in bringing them out of bankruptcy.  But it’s difficult and takes time and money. It’s not the best tool for every company and alternatives should be carefully considered.

Just a year and a half before, in March 2007, I saw the problem in its infancy: the Subprime mortgage market.  Working for a company that traded in Mortgage Backed Securities myself, and involved in financial forecasting — seeing companies like Argent Mortgage, Accredited Home Lenders and BNC Mortgage (heh, oddly enough, owned by Lehman) shutting their doors and no longer funding loans — and almost immediately after, declaring bankruptcy, I knew something was going on.  Between the 2 and 3 year Adjustable Rate Mortgages now maturing on many of those products, and other bad qualifications that underwriters and Account Executives pushed on Loan officers, particularly those nascent to the profession and didn’t know any better; I saw first hand the beginnings of the crisis, and where it was heading.

Fast forward to March 17, 2012.  Three and a half years after the largest bankruptcy in human history…  I was listening to the man who oversaw the effective autopsy of Lehman, the signal to myself and the rest of the world that a financial collapse was all but here — and I had a chance to hear his story, in person, for the first time.  It was incredible.

The financial collapse cost me a lot, personally — both in my net worth, and for awhile, my sense of self-worth.  It took me a long time to recover from having to trade my corner office and glass desk for a security officer’s uniform and a Ford Focus with an amber light on the top of it.  Listening, and then getting a chance to talk briefly to, one of my heroes in business and law — a man who, to me, was a man who’s ethics were infallible — was an incredible experience.

“Are ethics in business a contradiction in terms?” I find myself asking a lot.  Everything from Enron to Lehman to the collapse of New Century Financial tested my view on ethics in business.

That’s one reason I’m grateful for my time at the EMU College of Business, and a couple of instructors in particular.  Everything from “Ethos Week” to Ethics classes I’ve taken has given me a renewed sense of optimism in the future of business.  I figure, if all of the money spent on things like Ethos Week, and Ethics classes, and all the things people find inconvenient save us from even ONE financial disaster in some way or another… is it worth it?

Related articles

• Ethics – the 5th rock from the sun? (ethicaltravelphotography.wordpress.com)
• Unraveling the Ethical Dilemma (Part 1) (ethicsbythebook.wordpress.com)
• Measure (and Reward) Ethical Behavior (csuitementor.wordpress.com)
• Measure (and Reward) Ethical Behavior (inc.com)
• Ethical issues in businesses (expertscolumn.com)
• Accounting Fraud: Thornburg Mortgage (waldrondesign.wordpress.com)
• Rutgers Institute for Ethical Leadership Awarded $2.6 million from Prudential (sacbee.com)

(Reuters) – A federal judge on Wednesday said JPMorgan Chase & Co (JPM.N) must face a lawsuit by a pension plan that accused it of mismanaging its money by investing in Lehman Brothers Holdings Inc notes before that bank filed for bankruptcy in 2008.

U.S. District Judge Katherine Forrest in Manhattan denied JPMorgan’s bid to dismiss the 2009 lawsuit by the Operating Engineers Pension Trust of Pasadena, California.

Whenever I have to make a tough decision, I meditate on Zen and the Art of Motorcycle Maintenance.  There’s a lot to think about in that book, but specifically, I focus on the description of the amoeba.

“An amoeba, placed on a plate of water with a drip of dilute sulfuric acid placed nearby, will pull away from the acid(I think). If it could speak the amoeba, without knowing anything about sulfuric acid, could say, ‘This environment has poor quality.’”

My decision-making hinges on the quality my decision will put me in. Right now, the quality of the banking system is in line with sulfuric acid. Money has always been the standard for acquiring wealth. Having money equaled being wealthy. What if all that money disappeared? What if its value became next to nothing? A man with a laying chicken could suddenly be better suited to feed his family than a man with a handful of cash. A man who has his wealth stored in a tangible asset, under his direct control, can survive the shenanigans of bankers and governments while retaining his purchasing power. The question we all must answer is, “What has value?” The Federal Reserve is on course to devalue our currency day by day. Our wealth stored in U.S. currency is being diluted. It might be good to only put a practical amount of wealth in that vehicle.

However, cash is only practical if you can get at it! Don’t bet against human behavior. All it takes is a good scare from mainstream media and a run on the banks could leave you without cash. Sure, you’re money is there, but you can’t have it right now. Or, perhaps it will just disappear all together? Sound crazy? I heard a guy from Lehman Brothers say that once. However, there’s nothing paranoid about the truth. Here is a quote from my gold guru, Jim Sinclair. I encourage everyone to read the entire article on King World News.

“However, if that brokerage firm or bank goes broke, what are the parameters that say that the amounts above the guarantee [in the United States that's from the  FDIC] will in fact be made whole? . . . Up to now everybody has been made whole.  Up to now every dollar in banks has been returned through QE [Quantitative Easing], bailouts, and through TARP.  So, the most important thing regarding what’s taken place here is that large bank deposits are in limbo as to whether or not above the minimums that money will be returned.  In Cyprus, the answer is in one bank no, it’s not being returned.  The other banks, possibly.”

Lehman Brothers Auction at Christies, London, August 2010 (photograph by Linda Nylind/Guardian Newspapers)

Christie’s announce the auction of Lehman Brothers: Artwork and Ephemera which will take place at South Kensington on 29 September 2010 offering artworks and selected items of interest which once adorned the walls and offices of the British and European arms of the former banking powerhouse Lehman Brothers.

From the press release published in August 2010, under the direction of the administrators of the broke investment bank, once the fourth largest in the world, artefacts including the sign which had adorned the entrance to their offices in London’s Canary Wharf (image above) and also the contents of the art collection which included works by Gary Hume, Lucien Freud and the photograph, New York Mercantile Exchange 1991, by Andreas Gursky, were to be auctioned at market.

New York Mercantile Exchange 1991 by Andreas Gursky

The timing of the auction was also significant, coinciding with the second anniversary of when the company went into administration. Citing the experience of the dismantlement of Enron, one of the administrators observes:

The brothers Lehman collected artwork which adorned their offices since the 19th century. Over the subsequent years, of course, as the business expanded and the leadership changed, so did their corporate taste in art. We are excited to be working with Christies to offer the art collection owned by the companies in Administration. The auction date was selected to approximately coincide with the second anniversary of the Administrations. We think that there are many people around the world who would like to acquire some art with a Lehman connection, and we have therefore timed the sale to ensure that potential buyers can view and bid efficiently online. As with the Enron auction, some seven years ago, when we had bids from 43 countries, we expect internet bidding to be fast and furious – having the capacity to cope with a large volume of global bidding was one of the key reasons why we chose Christie’s.

Recognised as one of the central pillars of the global market and subsequent architects of the global economic collapse, and mindful of the Gursky image, Lehman Brothers would appear to have been returned to the simultaneous site of its making and undoing.

Cyprus was, for many years, an idyllic island – originally settled by Mycenaean Greeks around 4,000 years ago. Known for its beauty and its beaches, it became a tax haven before 2004 when it joined the European Union. Its economy benefitted enormously – Cyprus did, indeed, go to the Ball.

The Sisters turn Ugly

Yet Cyprus is now being rejected by its two ugly sisters – the EU and Russia, who have conspired with Cyprus throughout the last ten or so years by enabling illicit money to flow into the country. Cyprus has benefitted from its relationships with the EU and Russia but those sisters are now turning ugly.

Isaac Newton was an alchemist but even he could not transmogrify base elements into gold. Modern counterparts are far more able to magically transform base elements into gold on a massive scale that would amaze even the alchemists of the seventeenth and eighteenth centuries. Now that money is digitized, base elements (the profits made from illicit activities) can be changed in seconds within banks situated in secret jurisdictions.

The essence of the problems in Cyprus is that a vacation destination, home to many hard-working and energetic people, has been itself transmogrified into an offshore banking centre that is many times the size of the rest of the economy. That the part of Cyprus within the European Union is close to bankruptcy is astonishing enough to many.  Even more astonishing is the evidence that is mounting about a small country enriched in the short-term by a Faustian sale of its soul to Russian criminals.

Cyprus is an island with around 1 million people and a GDP of around $24 billion. Some years ago, the government of Cyprus decided (or was persuaded) that attracting huge sums of digitized money from wherever it could get it would increase their income. So, through increased secrecy laws, a multitude of double-taxation agreements with other countries and low tax rates in Cyprus, it created itself as a tax haven. Russians, for many years with interests in the country, flocked to Cyprus – preceded by their money. Cyprus became a home of money laundering as well as a tourist destination. The combination has been very powerful.

The banking crisis

When the sub-prime crisis hit in 2007/8, Cyprus was enjoying substantial growth. However, it had followed the high interest rates in Greece and invested in Greek banks. When they failed so famously (requiring massive “haircuts” from those investing in them), Cyprus – massively over-extended in them – suffered badly.

While its two ugly sisters worked out a way to enable Cyprus to be the beneficiary of illicit hot money for many years, one ugly sister (the EU) rebels at the thought of such mismanagement leading to a call on it to prop it up. While the EU is full of tax havens – from the City of London to Luxembourg to Austria – the political will of members of the EU such as Germany to continue to prop up Cyprus is vanishing fast. Hard-working German taxpayers, already riled by the needs of Greece, the political anarchy in Italy and the mass youth unemployment in Spain, have been further spooked by the machinations of discredited politicians in Cyprus – already in hock to the Russian mafia on a grand scale. This is why they demanded a contribution from Cypriots that resulted in the mass demonstrations in Nicosia and elsewhere as the middle classes were confronted by the fact that their insured deposits in Cypriot banks were not, after all, insured against the EU.

Where’s the Fairy Godmother?

Cyprus now realizes that its pact with the devil (Russian mafia) and its focus on becoming a secretive, tax haven has turned sour. To remain in the EU, it needs to save its banks. To save its banks, it needs to raise significant sums from its people (in terms of further tax revenue or long-term bond issues) and also from other, overseas, depositors. The latter are mainly Russians – and much of that money is illicit. The mere thought of taxing the Russian mafia is enough to make the story of Cinderella into a horror film – that might make the new wave of horror films based on fairy tales (such as Hansel and Gretel – Witch Hunters) look insipid by comparison.

There appears to be no Fairy Godmother who will let Cinders go to the Ball. It seems to be the case that Cyprus is between the rock and the hard place – between two ugly sisters: one that has plied it with funny money for years, the other that has conspired with it to do so and stayed quiet until now.

Greece has suffered five years of depression. The problems for Cyprus are only just beginning but whereas Greece’s problems remain its own, Cyprus is in much more danger – it is in hock to a mafia-ridden nation and appears to have few friends within the EU who are willing to turn it around. For its people, this could be a disaster – economically and also in terms of the way of life for its citizens. The EU allowed this situation to develop – it should not be blind to the plight of its smallest member. It is enough that fear has been struck into the citizens of Cyprus and to those in Italy, Greece, Spain and maybe France, who now know that bank deposits are not theirs any longer. Bank runs come from times like this.

Allowing Cyprus to be so wayward for so long is bad enough – to allow it to go completely off the rails and into the clutches of a mafia state would be too far.  Cyprus needs a short-term remedy and a long-term plan to get it away from the drug of tax havens. The EU has to turn from Ugly Sister into the Fairy Godmother (and stay the course) or this may well be a Lehman moment that will not easily be forgotten.

European officials are openly admitting that the two largest banks in Cyprus are “insolvent“, and it is now being reported that Cyprus Popular Bank only has “enough liquidity to cover the next few hours“.  Of course all banks in Cyprus are officially closed until Tuesday at the earliest, but there have been long lines at ATMs all over Cyprus as people scramble to get whatever money they can out of the banks.  Unfortunately, some ATMs appear to be “malfunctioning” and others appear to have already run out of cash.  You can see some photos of huge lines at one ATM in Cyprus right here.  Some businesses are now even refusing to take credit card payments.  This is creating an atmosphere of panic on the streets of Cyprus.  Meanwhile, the EU is holding a gun to the head of the Cyprus financial system.  Either Cyprus meets EU demands by Monday, or liquidity for the banks will be totally cut off and Cyprus will be forced out of the euro.  It is being reported that European officials believe that the “economy is going to tank in Cyprus no matter what“, and that it would be okay to let the financial system of Cyprus crash and burn if politicians in Cyprus are not willing to do what they have been ordered to do.  Apparently European officials are very confident that the situation in Cyprus can be contained and that it will not spread to other European nations.

Unfortunately, European officials are losing sight of the bigger picture.  If the largest banks in Cyprus are allowed to fail, it will be another “Lehman Brothers moment“.  The faith that people have in banks all over Europe will be called into question, and everyone will be wondering what major European banks will be allowed to fail next.

Meanwhile, European officials have already completely shattered confidence in deposit insurance at this point.  Everyone now knows that when there is a major bank failure that depositors will be expected to share in the pain.  Expect to see “bank jogs” all over southern Europe over the coming weeks.

The banks in Cyprus had been scheduled to reopen on Tuesday, but very few people expect that to actually happen at this point.  In fact, Bloomberg is reporting that EU officials are actually thinking about shutting down the two biggest banks in Cyprus and freezing their assets…

Finance ministers for the 17 euro countries are considering a plan to shutter the two biggest banks in Cyprus and freeze the assets of uninsured depositors, said the four officials, who asked not to be named because the talks are ongoing. The ministers are holding a teleconference tonight.

Cyprus Popular Bank Pcl (CPB) and the Bank of Cyprus Plc would be split to create a so-called bad bank, one of the officials said. Insured deposits — below the European Union ceiling of 100,000 euros ($129,000) — would go into a so-called good bank and not sustain any losses, while uninsured deposits would go into the bad bank and be frozen until assets could be sold, said the four officials.

Losses to unsecured creditors, including uninsured depositors, could reach 40 percent under the plan, which has support from the International Monetary Fund and the European Central Bank. The proposal, a version of which was rejected last week, is considered a better option than taxing insured deposits or allowing Cypriot banks to collapse in a disorderly fashion if they lose access to ECB aid, the officials said.

Such a scenario would be an utter disaster.

How would you feel if you woke up someday and 40 percent of your life savings was suddenly gone?

According to Greek newspaper Kathimerini, European officials are also openly discussing the possibility of a Cyprus exit from the eurozone if a suitable bailout agreement is not worked out…

The possibility of Cyprus exiting the eurozone was discussed during teleconference involving technocrats from the Euro Working Group on Wednesday, Kathimerini understands.

A reliable source told Kathimerini that the technical implications of a euro exit, as well as the adoption of capital controls were debated by the Euro Working Group officials during the teleconference.

As I mentioned above, European officials seemed resigned to the fact that there will be an economic collapse in Cyprus “no matter what”, and so letting Cyprus leave the euro would not make that much of a difference.  Either way, the banks are going to have to be “reorganized” and capital controls will be imposed…

In detailed notes of the call seen by Reuters, the group’s chair Austria’s Thomas Wieser said: “The economy is going to tank in Cyprus no matter what. Restrictions on capital will probably be imposed.”

Never before have we seen European officials impose such a harsh ultimatum with such a short deadline.  It is almost as if they want to boot Cyprus out of the euro.  The following comes from a recent CNBC report…

In stark twin warnings on Thursday, the European Central Bank said it would cut off liquidity to Cypriot banks and a senior EU official made clear to Reuters that the bloc was ready to see the bankrupt island banished from the euro in the belief it could then contain damage to the wider European economy.

And European officials are even publicly talking about the possibility that Cyprus will soon need to start using “their own currency”…

In Brussels, a senior European Union official told Reuters that an ECB withdrawal would mean Cyprus’s biggest banks being wound up, wiping out the large deposits it has sought to protect, and probably forcing the country to abandon the euro.

“If the financial sector collapses, then they simply have to face a very significant devaluation and faced with that situation, they would have no other way but to start having their own currency,” the EU official said.

This is absolutely shocking.  Everyone always thought that Greece would be the first to leave the euro, but now it looks like it might be Cyprus.

However, there is still a chance that Cyprus may find a way to comply with EU demands.  Politicians in Cyprus are frantically searching for a way to raise the needed cash without raiding private bank accounts.  The following is what CNN is saying about the latest efforts…

Leaders of Cyprus’ political parties agreed Thursday to create an “investment solidarity fund,” which would issue bonds backed by state and church assets.

The plan was due to be discussed by the Cypriot government and parliament on Thursday evening, but few details were available and it was not clear how much the fund would be worth.

According to Reuters, other proposals have been under consideration as well…

The government said a “Plan B” was in the works.

Officials said it could include: an option to nationalize pension funds of semi-government corporations, which hold between 2 billion and 3 billion euros; issuing an emergency bond linked to future natural gas revenues; and possibly reviving the levy on bank deposits, though at a lower level than originally planned and maybe excluding savers with less than 100,000 euros.

At this point it is unclear whether any of those proposals will turn out to be acceptable to European officials.

In fact, the tone of European officials has noticeably changed from previous bailout efforts.  They now seem much more willing to play hardball.  For example, just check out what German Finance Minister Wolfgang Schaeuble is saying about the situation in Cyprus…

German finance minister Wolfgang Schaeuble told the ZDF public broadcaster on Tuesday night (19 March) he “took note with regret” of the Cypriot parliament’s rejection of the bailout deal, but insisted that the terms will stay the same.

Asked if the eurozone was willing to let Cyprus go bust, he answered: “Well, we are much more stable in the eurozone – we took measures to protect ourselves from the risks of contagion … but I don’t want to have any of this.”

He added: “It is a serious situation, but this cannot lead to a decision that makes absolutely no sense, to rescue a business model that has failed. Cyprus has a banking sector that is totally oversized and this made Cyprus insolvent. And nobody outside Cyprus is to blame for it.”

Schaeuble knows that the EU is holding all of the cards and that Cyprus is doomed without their help…

“The Cypriot state cannot fund itself on the markets. Its two largest banks are insolvent and are being kept afloat with emergency funding from the ECB, but only on the condition that there will be a long-term rescue programme. If this condition is no longer met, Cyprus will no longer be solvent and this is something Cypriot decision makers must know”

But the truth is that the EU can’t really afford to allow major banks to fail or for a single member to leave the eurozone.  If either of those things happen, the confidence game that has been holding the European financial system together will begin to rapidly evaporate.

If the EU thinks that they can abandon Cyprus without the crisis spreading to the rest of southern Europe they are just being delusional.

At least there are a few politicians in Europe that understand what is happening.  Nigel Farage, a very outspoken member of the European Parliament, is telling people to get their money out of banks in southern Europe as quickly as they can.  He is warning that a great collapse of the European financial system is coming and that people need to get prepared for it…

Source:  http://theeconomiccollapseblog.com/archives/mass-panic-in-cyprus-the-banks-are-collapsing-and-atms-are-running-out-of-money

European officials are openly admitting that the two largest banks in Cyprus are “insolvent“, and it is now being reported that Cyprus Popular Bank only has “enough liquidity to cover the next few hours“. Of course all banks in Cyprus are officially closed until Tuesday at the earliest, but there have been long lines at ATMs all over Cyprus as people scramble to get whatever money they can out of the banks. Unfortunately, some ATMs appear to be “malfunctioning” and others appear to have already run out of cash. You can see some photos of huge lines at one ATM in Cyprus right here. Some businesses are now even refusing to take credit card payments. This is creating an atmosphere of panic on the streets of Cyprus. Meanwhile, the EU is holding a gun to the head of the Cyprus financial system. Either Cyprus meets EU demands by Monday, or liquidity for the banks will be totally cut off and Cyprus will be forced out of the euro. It is being reported that European officials believe that the “economy is going to tank in Cyprus no matter what“, and that it would be okay to let the financial system of Cyprus crash and burn if politicians in Cyprus are not willing to do what they have been ordered to do. Apparently European officials are very confident that the situation in Cyprus can be contained and that it will not spread to other European nations.
Unfortunately, European officials are losing sight of the bigger picture. If the largest banks in Cyprus are allowed to fail, it will be another “Lehman Brothers moment“. The faith that people have in banks all over Europe will be called into question, and everyone will be wondering what major European banks will be allowed to fail next.
WHAT THE BANKS GOT UP TOO…THEY WHERE UNPROFITABLE ,IRRESPONSIBLE AND CRIMINAL
The reason why the banks are going bust in simple terms is:
The banks traded in complex derivatives products between themselves, in what is termed as the over the counter market. The exposure to the Securitized debt packages was further exaggerated by the use of leverage of in many cases more than 30X the banks assets against valuations based on complex models that inflated the packages values during the boom times which allowed huge profits and bonuses to be banked (Fraud?). However the critical point is in the final link in a long chain of sliced and diced debt packages was the US housing market.

http://www.marketoracle.co.uk/Article6498.html

A LESSON FOR THE BANKERS.
FREE MARKET CAPITALISM EXPLAINED
1.Availability of credit allows money to flow between savers and borrowers.
2.Resources and funds are allocated to various projects or investments during a boom phase.
3.Eventually borrowing becomes excessive and leads to malinvestment,
4.At this stage, adherence to free market theory would allow for an efficient cleansing period and a healthy recovery period. How? Irresponsible and unprofitable businesses fail. Bad debts get liquidated. Excess resources go on sale, flow into more stable ventures and pool together with more profitable resources controlled by healthy corporations or entities

http://www.marketoracle.co.uk/Article6497.html

NEWSFLASH , UK ,EU AND USA BANKS FOUND TO BE UNPROFITABLE AND IRRESPONSIBLE .
THEREFORE YOU GET ASSET STRIPPED AND REPLACED BY RESPONSIBLE AND PROFITABLE BUSINESS MODELS!!
NO BAILOUT ,ARREST CRIMINAL BANKERS AND POLITIONS.

THE PEOPLE ARE NOT LEGALLY OR MORALLY RESPONSIBLE FOR THIS DEBT.
THE DEBT IS ODIOUS
In international law, odious debt, also known as illegitimate debt, is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.

http://en.wikipedia.org/wiki/Odious_debt

In November 2008, Ecuador became the first country to undertake an examination of the legitimacy and structure of its foreign debt. An independent debt audit commissioned by the government of Ecuador documented hundreds of allegations of irregularity, illegality, and illegitimacy in contracts of debt to predatory international lenders. The loans, according to the report, violated Ecuador’s domestic laws, US Securities and Exchange Commission regulations, and general principles of international law. Ecuador’s use of legitimacy as a legal argument for defaulting set a major precedent; indeed, the formation of a debt auditing commission sets a precedent.

http://www.projectcensored.org/top-stories/articles/10-ecuador-declares-foreign-debt-illegitimate/

IF THE DEBT IS ILLEGAL THEN ,THEY ARE NOT RESPONSIBLE FOR IT.
ITS THIER GOVERNMENT(ELECTED DICTATORS) THAT IS SELLING THEM INTO DEBT SLAVERY!!!
Greek demonstrators say “Plutocracy should pay for the crisis”
Thousands of Greeks have taken to the streets to show their rejection of the government’s proposed austerity measures, which are supposed to right the country’s flailing economy.
So they’re wondering how the country managed to amount 300 billion euros of debt – what was that money spent on? Certainly not, they say, on public services or roads. The protestors have the impression that politicians robbed the country blind. With the former government, there was a corruption scandal every two months. So talk of wasted money is still rife. The former health minister ordered 16 million doses of the H1N1 flu vaccine, but only 400,000 were needed in the end.
I saw the slogan ‘plutocracy should pay for the crisis’ – which pretty much sums up the feelings of the protestors.”

http://observers.france24.com/en/content/20100224-greek-demonstrators-say-plutocracy-should-pay-crisis-austerity-plan

THE REAL SOLUTION
LET THE BANKS FALL

ARREST THE BANKERS AND THINGS WILL IMPROVE
AS ICELAND SHOWS US
Iceland: Int’l Arrest Warrant Against Top Bank Official
by Lowana Veal (reykjavik)Wednesday, May 12, 2010
Inter Press Service
Vigorously pursuing those allegedly responsible for Iceland’s 2008 financial crisis, investigators have got issued an international arrest warrant against Sigurdur Einarsson, chairman of the board of governors of the failed Kaupthing Bank.
An Interpol notice on Tuesday said Einarsson was wanted on charges of counterfeiting, forgery and fraud.
Einarsson, who lives in London, was said to be reluctant to come to Reykjavik for fear of being arrested and Icelandic authorities have refused to offer any assurances.

http://www.globalissues.org/news/2010/05/12/5564

Yet another day of Iceland banking arrests
Posted on11 May 2010.
Ingolfur Helgason, the former Director of Kaupthing Iceland, and Steingrimur Karason, former CEO of the bank’s risk management department, were both arrested today upon arriving back in Iceland. They went straight to interrogation with the Special Prosecutor and are being held in police cells.

http://www.icenews.is/index.php/2010/05/11/yet-another-day-of-iceland-banking-arrests/

Bankers jailed, sued as Iceland seeks culprits for crisis
Since Iceland’s three largest banks — Kaupthing, Landsbanki and Glitnir — collapsed in late 2008, their former executives and owners have largely been living untroubled lives abroad.
But the publication last month of a parliamentary inquiry into the island nation’s profound financial and economic crisis signaled a turning of the tide, laying much of the blame for the downfall on the former bank heads who had taken “inappropriate loans from the banks” they worked for.
On Wednesday, the administrators of Glitnir’s liquidation announced they had filed a two-billion-dollar (1.6-billion-euro) lawsuit in a New York court against former large shareholders and executives for alleged fraud.

http://www.breitbart.com/article.php?id=CNG.4090f16a5abf84c5a5adff0665cbc792.3a1&show_article=1

http://cuthulan.wordpress.com/2010/05/14/bailout-faltering-banker-arrests-beginning/

ARREST THE CRIMINAL BANKERS AND POLITIONS THAT TRIED TO SELL YOU AS DEBTOR SLAVES TO IRRESPONSIBLE AND CRIMINAL BANKERS
PRINT YOUR OWN MONEY
Meanwhile, European officials have already completely shattered confidence in deposit insurance at this point. Everyone now knows that when there is a major bank failure that depositors will be expected to share in the pain. Expect to see “bank jogs” all over southern Europe over the coming weeks.
The banks in Cyprus had been scheduled to reopen on Tuesday, but very few people expect that to actually happen at this point. In fact,Bloomberg is reporting that EU officials are actually thinking about shutting down the two biggest banks in Cyprus and freezing their assets…
Finance ministers for the 17 euro countries are considering a plan to shutter the two biggest banks in Cyprus and freeze the assets of uninsured depositors, said the four officials, who asked not to be named because the talks are ongoing. The ministers are holding a teleconference tonight.
Cyprus Popular Bank Pcl (CPB) and the Bank of Cyprus Plc would be split to create a so-called bad bank, one of the officials said. Insured deposits — below the European Union ceiling of 100,000 euros ($129,000) — would go into a so-called good bank and not sustain any losses, while uninsured deposits would go into the bad bank and be frozen until assets could be sold, said the four officials.
Losses to unsecured creditors, including uninsured depositors, could reach 40 percent under the plan, which has support from the International Monetary Fund and the European Central Bank. The proposal, a version of which was rejected last week, is considered a better option than taxing insured deposits or allowing Cypriot banks to collapse in a disorderly fashion if they lose access to ECB aid, the officials said.
Such a scenario would be an utter disaster.
How would you feel if you woke up someday and 40 percent of your life savings was suddenly gone?
According to Greek newspaper Kathimerini, European officials are also openly discussing the possibility of a Cyprus exit from the eurozone if a suitable bailout agreement is not worked out…
The possibility of Cyprus exiting the eurozone was discussed during teleconference involving technocrats from the Euro Working Group on Wednesday, Kathimerini understands.
A reliable source told Kathimerini that the technical implications of a euro exit, as well as the adoption of capital controls were debated by the Euro Working Group officials during the teleconference.
As I mentioned above, European officials seemed resigned to the fact that there will be an economic collapse in Cyprus “no matter what”, and so letting Cyprus leave the euro would not make that much of a difference. Either way, the banks are going to have to be “reorganized” and capital controls will be imposed…
In detailed notes of the call seen by Reuters, the group’s chair Austria’s Thomas Wieser said: “The economy is going to tank in Cyprus no matter what. Restrictions on capital will probably be imposed.”
Never before have we seen European officials impose such a harsh ultimatum with such a short deadline. It is almost as if they want to boot Cyprus out of the euro. The following comes from a recent CNBCreport…
In stark twin warnings on Thursday, the European Central Bank said it would cut off liquidity to Cypriot banks and a senior EU official made clear to Reuters that the bloc was ready to see the bankrupt island banished from the euro in the belief it could then contain damage to the wider European economy.
And European officials are even publicly talking about the possibility that Cyprus will soon need to start using “their own currency”…
In Brussels, a senior European Union official told Reuters that an ECB withdrawal would mean Cyprus’s biggest banks being wound up, wiping out the large deposits it has sought to protect, and probably forcing the country to abandon the euro.
“If the financial sector collapses, then they simply have to face a very significant devaluation and faced with that situation, they would have no other way but to start having their own currency,” the EU official said.
This is absolutely shocking. Everyone always thought that Greece would be the first to leave the euro, but now it looks like it might be Cyprus.
However, there is still a chance that Cyprus may find a way to comply with EU demands. Politicians in Cyprus are frantically searching for a way to raise the needed cash without raiding private bank accounts. The following is what CNN is saying about the latest efforts…
Leaders of Cyprus’ political parties agreed Thursday to create an “investment solidarity fund,” which would issue bonds backed by state and church assets.
The plan was due to be discussed by the Cypriot government and parliament on Thursday evening, but few details were available and it was not clear how much the fund would be worth.
IF ONLY THE CHURCH WAS SO GENEROUS WHEN IT CAME TO THE POOR AND NEEDY
According to Reuters, other proposals have been under consideration as well…
The government said a “Plan B” was in the works.
Officials said it could include: an option to nationalize pension funds of semi-government corporations, which hold between 2 billion and 3 billion euros; issuing an emergency bond linked to future natural gas revenues; and possibly reviving the levy on bank deposits, though at a lower level than originally planned and maybe excluding savers with less than 100,000 euros.
At this point it is unclear whether any of those proposals will turn out to be acceptable to European officials.
In fact, the tone of European officials has noticeably changed from previous bailout efforts. They now seem much more willing to play hardball. For example, just check out what German Finance Minister Wolfgang Schaeuble is saying about the situation in Cyprus…
German finance minister Wolfgang Schaeuble told the ZDF public broadcaster on Tuesday night (19 March) he “took note with regret” of the Cypriot parliament’s rejection of the bailout deal, but insisted that the terms will stay the same.
Asked if the eurozone was willing to let Cyprus go bust, he answered: “Well, we are much more stable in the eurozone – we took measures to protect ourselves from the risks of contagion … but I don’t want to have any of this.”
He added: “It is a serious situation, but this cannot lead to a decision that makes absolutely no sense, to rescue a business model that has failed. Cyprus has a banking sector that is totally oversized and this made Cyprus insolvent. And nobody outside Cyprus is to blame for it.”
Schaeuble knows that the EU is holding all of the cards and that Cyprus is doomed without their help…
“The Cypriot state cannot fund itself on the markets. Its two largest banks are insolvent and are being kept afloat with emergency funding from the ECB, but only on the condition that there will be a long-term rescue programme. If this condition is no longer met, Cyprus will no longer be solvent and this is something Cypriot decision makers must know”
But the truth is that the EU can’t really afford to allow major banks to fail or for a single member to leave the eurozone. If either of those things happen, the confidence game that has been holding the European financial system together will begin to rapidly evaporate.
If the EU thinks that they can abandon Cyprus without the crisis spreading to the rest of southern Europe they are just being delusional.
At least there are a few politicians in Europe that understand what is happening. Nigel Farage, a very outspoken member of the European Parliament, is telling people to get their money out of banks in southern Europe as quickly as they can. He is warning that a great collapse of the European financial system is coming and that people need to get prepared for it…

So what do you think?

Do you believe that we are on the verge of a major financial collapse in Europe?

Please feel free to post a comment with your thoughts below…

http://investmentwatchblog.com/mass-panic-in-cyprus-the-banks-are-collapsing-and-atms-are-running-out-of-money/

RESIST THE BANKER BAILOUT
WE THE PEOPLE HAVE BEEN HERE BEFORE AND WE HAVE WON
ARGENTINA DEFAULTED ON ITS DEBT IN 2001 ,ITS DOING BETTER THAN EVER TODAY
Even though Argentina defaulted on its debt, it is still around. Yes it did pay the price initially by being shut out of the global capital markets for years, but it did not vanish and only its foreign debt holders lost.

http://www.marketoracle.co.uk/Article19180.html

ARGENTINA’S SOLUTION DIRECT DEMOCRACY AND LIBERTARIAN IDEALS FREES THE ARGENTINE PEOPLE OF DEBT
After the non-violent collapse of the Argentinean government in 2001/2002, the social and economic organization of Argentina has undergone major changes, though how important these changes are remains to be seen. Worker occupations of factories and popular assemblies have both been seen functioning in Argentina, and both are the kind of action endorsed by anarchists: the first is a case of direct action and the latter a case of direct democracy. Approximately 200 “recovered” factories (fábricas recuperadas) are now self-managed and collectively owned by workers. In the large majority of them, pay is completely egalitarian; generally no professional managers are employed, or managers are collectively controlled in the other cases. These co-operatives have organised themselves into networks. Solidarity and support from external groups such as neighborhood assemblies and unemployed (piquetero) groups have often been important for the survival of these factories. Similar developments have taken place in Brazil and Uruguay.[6] In 2004, Avi Lewis and Naomi Klein (author of No Logo) released the documentary The Take, which is about these events.
WE HAVE BEEN HERE BEFORE , PLEASE TAKE ANDREW JACKSONS ADVICE!
“Never take counsel of your fears.”
The Jacksonians opposed government granted monopolies to banks, especially the national bank, which was a central bank known as the Second Bank of the United States. Jackson fought to end the government monopoly to the Bank and got great opposition from Nicholas Biddle, the bank chairman. Biddle first dismissed Jackson efforts, but as the initiative gained popular support, he got more concerned. There was an attempt to murder Jackson at that time but the pistols failed. Jackson would later claim that he had proof the bankers were behind this attempt. Jackson was able to gain popular support because the Bank money manipulations and inflation had created a big recession, and it had inflated land prices, benefiting big land owners and stopping economical development. In a last attempt to stop Jackson, Biddle burst the bubble his inflationary policies had created, and brought about a deflationary correction. This put pressure on Jackson, but after a year of recession, the economy was clean by the deflationary correction, and the Bank was out of “ammunition”. Jackson had won the battle. The Bank continued his operations as a state bank, but had to close years after. Once retired, everytime Jackson was asked what was his biggest achievement as president he answered: “I killed the Bank”.

http://en.wikipedia.org/wiki/Jacksonian_democracy

ANDREW JACKSON was the ONE president that CLEARED AMERICAN DEBT ,when faced with financial ruin How did he manage it?

“The Bank is trying to kill me, but I shall kill it!”

ANDREW JACKSONS VIEW OF THE BANKS….NO BAILOUT.

“You are a nest of vipers and thieves, and by the grace of the almighty God, I will root you out!”

ANDREW JACKSON’S VIEW ON CORPORATIONS

Corporations have neither bodies to kick nor souls to damn.

ANDREW JACKSONS VIEW ON THE BRIGHTEST AND THE BEST

Hemans gallows ought to be the fate of all such ambitious men who would involve their country in civil wars, and all the evils in its train that they might reign & ride on its whirlwinds & direct the Storm– The free people of these United States have spoken, and consigned these wicked demagogues to their proper doom.

NO BAILOUT ,ARREST CRIMINAL BANKERS AND POLITIONS.

“All government, of course, is against liberty. The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. Most people want security in this world, not liberty.”
“Whether the mask is labeled Fascism, Democracy, or Dictatorship or the Proletariat, our great adversary remains the Apparatus-the bureaucracy, the police, the military…. No matter what the circumstances, the worst betrayal will always be to subordinate ourselves to this Apparatus, and to trample underfoot, in its service, all human values in ourselves and in others.”– The French worker philosopher Simone Weil,1945

“The most dangerous man to any government is the man who is able to think things out… without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable. It doesn’t take a majority to make a rebellion; it takes only a few determined leaders and a sound cause.”

“(REPRESENTATIVE)Democracy is a form of government that cannot long survive,for as soon as the people(OFFICIALS) learn that they have a voice in the fiscal policies of the government, they will move to vote for themselves all the money in the treasury, and bankrupt the nation.” MARX

“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”

Thomas Jefferson

The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again . . . Take this great power away from them, and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.
- Sir Josiah Stamp, Director of the Bank of England, 1927

“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.” -Woodrow Wilson, after signing the Federal Reserve into existence

“Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve banks. The Federal Reserve Board, a Government board, has cheated the Government of the United States out of enough money to pay the national debt. The depredations and the iniquities of the Federal Reserve Board and the Federal reserve banks acting together have cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government. It has done this through defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board and through the corrupt practices of the moneyed vultures who control it.” – Rep. Louis T. McFadden, Chairman of the Committee on Banking and Currency. Congressional Record 12595-12603 (10 June 1932)

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.” – Alan Greenspan from an article written in 1966 entitled “Gold and Economic Freedom”

“Paper money eventually returns to its intrinsic value —- zero.” – Voltaire

“You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold.” – George Bernard Shaw

http://cuthulan.wordpress.com/2010/05/14/bailout-faltering-banker-arrests-beginning/

http://cuthulan.wordpress.com/2010/05/09/bank-corruption-and-fraudthe-who-the-how-and-the-why-and-the-simple-solution/

The Cypriot Parliament has voted against the bailout of their banks that includes insured depositors being taxed on their deposits. This may have saved a huge number of issues for the world, as one off taxes on deposits could have easily spooked depositors in other countries, creating runs on their banks.

The eurozone powers-that-be (mainly Germany) gave Cyprus a bailout and insisted that the depositors in Cyprus’s banks pay part of the tab — a startling condition that has never before been imposed on any major banking system since the start of the global financial crisis in 2008.

The deal did not touch the bondholders. Why the depositors? These are folks who had their money in the banks for safe-keeping.

When Cyprus’s banks reopen on Tuesday morning, every depositor will have some of his or her money seized. The current plan is that accounts under 100,000 euros will have 6.75% of the funds seized. Accounts over 100,000 euros will have 9.9% seized. And then the eurozone’s emergency lending facility and the International Monetary Fund will inject 10 billion euros into the banks to allow them to keep operating.

Cyprus’s government tried to explain this deal by observing that it was better than the alternative: Immediate bankruptcy and closure of the major banks. In that scenario, depositors would lose a lot more money. Businesses would go bankrupt. And tens of thousands of people would be instantly thrown out of work.

The impact of this tax was easy to predict. Depositors would withdraw their money.

Now, half of these depositors are said to be Russian oligarchs and other non-residents. And unless you happen to have the misfortune of having an account in a Cyprus bank, you may not care much whether these depositors have their money seized.

After all, that was the risk they took for storing their money in weak banks, right?

Well, yes, that was the risk they took.

But ever since the Great Depression wiped out a big percentage of the world’s banks, vaporizing the bank depositors’ savings in the process, banking system regulators have tried to do everything they can to protect bank depositors.

And they are smart to do so.

Because the moment depositors think that there is risk to their savings, they rush to banks to yank their money out.

That’s called a run on the bank.

And since no bank anywhere has enough cash on hand to pay off all its depositors at once, runs on the bank cause banks to go bust.

That’s what happened to hundreds of banks in the Great Depression.

And it’s what happened to Bear Stearns, Lehman Brothers, and other huge banks during the financial crisis (though, with Bear and Lehman, the folks who yanked their money out weren’t mom and pop depositors but other big financial institutions). It’s what threatened to bring the entire U.S. financial system to its knees. And it’s why the U.S. and European governments have been frantically bailing out banks ever since.

But now, thanks to the eurozone’s bizarre decision in Cyprus, the illusion that depositors don’t need to yank their money out of threatened banks because they’ll be protected has been shattered.

Shattering the perception that insured deposits are sacrosanct could create massive problems, and a massive downturn in the world economy.

So, you can see, this little decision to seize a little money from bank depositors in the little island of Cyprus could be a much bigger deal than you think.

It could conceivably precipitate a run on weak European banks.

And a run on weak European banks could hammer the European economy and then the economy of Europe’s trading partners. And it could cause global markets to crash.

So keep an eye on what’s going on over there in Cyprus.

It’s potentially much more important than it seems.

OK, Cyprus – what a God-awful mess… At this point, years into the European debt crisis, it’s hard to believe EU politicians can attain new heights of stupidity. Whenever politicians: i) do something on the cheap, ii) kick the can down the road, or iii) (perhaps the worst) enforce some obscure point of principle, haven’t we learned it comes back to bite you far more savagely & expensively?

I have to concede the US is pulling ahead of Europe – they’re much quicker to recognize failure & to learn from mistakes. The collapse of Lehman can be ascribed pretty much to one man (Paulson) & his pig-headed intention to prove a point. Oh boy, and what an expensive point it was… Of course, everybody ignored it, lessons were learned & the Greenspan/Bernanke put was accordingly (and infinitely?!) strengthened.

And now we have EU politicians deciding that soaking bank depositors is a good idea. And the fact this plan may include small insured depositors is pure insanity! You can hear their little minds working like rats in a trap: Cyprus is only 0.2% of EU GDP…so it’s irrelevant. And clearly they want to express their disdain for the unique nature of the Cypriot banking system (and the Russians, who apparently weren’t consulted at all). But I’m afraid size is irrelevant (as Greece proved) – they’ve created a political/monetary beast, the Euro, from which there’s no exit (at least notionally) & no turning back. And they delivered it into an increasingly fragile fiat money & banking world, held together purely by faith (and spit & baling twine).

Symbolism really matters in a world like that…

All traditional savers have left (now interest rates have vanished) is faith. Faith their deposit’s safe in a bank, particularly when it’s an insured deposit. Destroy that faith, and what’s left? I’m reminded of the housing boom, when people couldn’t be dissuaded from their blind belief house prices always rise…despite plenty of historical facts & figures to the contrary. And when it comes to bank deposits, there’s also a history of failures, confiscations, defaults, governments reneging on insurance/guarantees, etc. But a depositor’s faith can’t accommodate such heretical facts – just like the Euro, it’s become an all-or-nothing deal.

So which is more important for the EU: Hammering out a better deal the Cyprus parliament might actually vote to approve (and the people can live with), or sticking to their guns and seeing how fast Cyprus & its banking system melts down..?! Want to figure out the cost of that? Oh, I think not… And that’s the reason, just like in the US, there has to be an ultimate EU/ECB put.

OK, let’s turn from the macro to the micro: What does this mean for Argo, if anything?

First, let’s look briefly to Argo’s results. As I had expected, operating cashflow & investment gains on The Argo Fund (TAF) made a contribution – total year-end cash & investments increased to $23.6 million. I calculated Assets under Management (AUM) had increased to $313 mio, but also anticipated (say) a 5% increase across the board due to performance gains. To be prudent, I didn’t include this component, but that would have pushed AUM up to $328 mio.

Which was extraordinarily close to actual year-end AUM of $326.4 mio. Of course, that was a lucky guess to a fair extent – any distinct bias in subscriptions & redemptions would have thrown me off, and one would expect Argo funds to have less correlated (or ‘lumpy‘) returns vs. the market. [Note the Argo Distressed Credit Fund (ADCF) produced a stunning +28.1% return in the second half of 2012!] It also wasn’t clear to me if the new Argo Local Markets Fund (ALMF) was seeded internally or externally – it seemed safer to assume it was Argo funded, so I’m delighted to see that wasn’t the case. This confirms my long held belief, and my own experience, that manager seeding of funds is actually a low priority when it comes to client marketing & investing.

As of today, I would peg the following values for Argo (again, refer back to my last post):

Net Cash/Investments per share = $5.1 mio + $17.6 + $0.4 + $0.1 = $23.3 mio / 1.5104 = GBP 15.4 mio = GBP 22.9p per share

[The $0.1 mio above reflects a small new investment in the Argo Special Situations Fund LP (SSF). The $0.4 mio is a reduction from the $0.8 mio yr-end value of their Argo Real Estate Opportunities Fund (AREO:LN) stake, which reflects the current EUR 0.03 share price].

Intrinsic Value per share = $23.3 mio + $326.4 mio AUM * 3.75% = $35.5 mio / 1.5104 = GBP 23.5 mio = GBP 34.9p per share

[btw We can probably expect some YTD performance gains to make a further contribution to AUM in 2013, but let's save that up for a happy surprise].

The share price has gained nicely in the past week, but underlying values have obviously increased also. At the current GBP 16.75p closing price, ARGO still trades at a huge 27% & 52% discount to these values (thereby offering 36% & 108% Upside Potential), respectively.

Now, of course, we have the question of a potential Cyprus bank deposit levy – a proposed 9.9% for deposits over EUR 100 K (or possibly 12.5%, to ‘pay‘ for a reduction/elimination of the levy for small depositors). Argo has Cyprus operations & bank a/cs, so what does this mean for the company & shareholders?

In my opinion, this should actually be an irrelevant question..! We’re talking about an investment manager who primarily focuses on (distressed) debt investments – who should be supremely qualified to evaluate the risk/reward of investing its own shareholders’ funds! The risks here were bloody obvious – while rare, there is plenty of historical precedent for bank depositors getting screwed. Easy for me to say today, perhaps – is this just Monday morning quarter-backing? No, it’s bloody not… Cyprus’ debt-GDP ratio, its bloated banking sector (vs. GDP), and the looming threat/promise of a bail-out have all been long telegraphed. Sure, a deposit levy may not have been expected, but bail-outs are never as expected – and why even make a bet on a situation so fraught with risk?

Which is actually the wrong question to ask, anyway… What reward are we even talking about here? Corporate cash is intended for operations & future investment – it’s not intended to be a source of speculation (as many companies & banks/brokers sued re auction rate securities losses have discovered). It’s also shareholders’ money – are you currently investing your spare funds in Cypriot banks?! [Of course, in general, this & other potential risks offer more compelling reasons for excess cash to be returned to shareholders]. Anyway, what on earth’s the reward for depositing the money in a Cypriot bank, versus say a TBTF bank in London? A few extra basis points?! The relative/absolute reward of a (better) bank deposit rate will never justify the risk of losing any portion of your principal, however small that risk might appear.

If you look back, Argo’s cash balance also appears to be quite steady, so the idea management could possibly get caught with significant cash-in-transit in Cyprus – let alone due to a deliberate investment policy – seems ludicrous. I think it’s only reasonable to assume this is NOT the case. Management would certainly have a difficult case to answer to shareholders if there are any actual losses to report.

That being said, rather than respond individually to emails, let me model a couple of scenarios to assess their potential impact:

Scenario A (Argo cash & cash portion of Argo’s investment in funds is NOT on deposit with Cypriot banks):   See figures above!

Scenario B (Argo cash & cash portion of Argo’s investment in funds IS on deposit with Cypriot banks):

For this & the following scenarios, my understanding is that TAF is generally fully invested (as you’d expect with most investment funds) – but let me assume 3% of the fund’s currently in cash. I’ll assume the same for SSF, and ignore AREO (since I’m already valuing it at the current share price). A 9.9% levy would imply:

Net Cash/Investments per share = $23.3 mio – ($5.1 mio + ($17.6 + $0.1) * 3%) * 9.9% = $22.7 mio / 1.5104 = GBP 15.0 mio = GBP 22.3p per share

Intrinsic Value per share = $23.3 mio – ($5.1 mio + ($17.6 + $0.1) * 3%) * 9.9% + $326.4 mio AUM * 3.75% = $35.0 mio / 1.5104 = GBP 23.1 mio = GBP 34.3p per share

Scenario C (Argo cash & cash portion of Argo’s investment in funds IS on deposit with Cypriot banks, AND levy is 12.5%):

Net Cash/Investments per share = GBP 22.2p per share

Intrinsic Value per share = GBP 34.2p per share

Scenario D (Argo cash & cash portion of Argo’s investment in funds IS on deposit with Cypriot banks, AND 100% of deposits are blocked):

Seems like some people want to imagine the v worst..! This scenario envisages no bailout deal – who knows what Cypriot deposits would be worth then?! Let’s just assume they become inaccessible & are considered worthless for accounting purposes. That would imply:

Net Cash/Investments per share = GBP 17.3p per share

Intrinsic Value per share = GBP 29.3p per share

Of course, in the real world, this scenario’s about as likely as the Fed discontinuing QE tomorrow! For similar reasons… If Cyprus calls the EU’s bluff, we shall immediately see it was just a bluff – the EU has to close a Cyprus deal, whatever the cost. Because that cost is far far cheaper than the horrific alternative, and investor & depositor faith in the Euro & the European banking system must be preserved at all costs.

OK, to sum up:   There was huge potential risk, and essentially no reward, if management invested corporate and/or fund cash in Cypriot banks – so, in all likelihood, I believe Scenario A is the obvious & logical strategy any prudent management would follow (i.e. Argo cash is invested with safe London banks). If Scenario B or C actually turn out to be true, cash/investments & intrinsic value per share values are only haircut by 2-3%. You can model for other scenarios, of course, i.e. higher deposit levies/losses & higher fund cash levels – but I don’t think they’ve been flagged, or are warranted.

Finally, Scenario D isn’t an alternative I believe can actually happen (and if it does, we’ll all be worrying about more than the value of ARGO shares…). Even in this v worst-case scenario, I believe Argo’s cash/investments per share would remain in excess of the current share price, and intrinsic value per share would still offer a highly attractive 75% Upside Potential.

I suspect news in the next few days from Cyprus & the EU will probably be more relevant to your entire portfolio & its prospects, rather than Argo. So far, the markets have remained relatively calm…

Amsterdam-Noir-Op 15 september 2008 ging Lehman Brothers misdaadgroep failliet en het meest opmerkelijke daaraan was dat dit kennelijk in regie met de Amerikaanse overheid kon gebeuren. Er werd een voorbeeld gesteld nadat eerder, in maart van dat jaar, het eveneens technisch failliete Bear Stearnsdoor de Fed in handen van een andere groot misdaadbank werd gedreven: J.P. Morgan. Die ruimte werd  hun ‘gabber in crime’ Lehman niet gegund.

Het faillissement van Lehman Brothers misdaadgroep wordt, terugkijkend, gezien als het moment waarop de misdaad-bankencrisis in volle omvang uitbrak. Het leidde ertoe dat kort daarna in een legendarische vergadering alle andere Amerikaanse groot misdaadbanken handgeschreven, tezamen op één A4-tje, enorme miljardenbedragen mochten noteren. En kregen, als noodzakelijke liquiditeitssteun. Misaadbanken die gewend waren overnight, letterlijk dagelijks dus, over en weer leningen te sluiten van vele miljarden, verdomden het al een tijdje – niemand vertrouwde nog de ander -  en dus moest de Fed bijspringen. De jaren erna zou het uitgroeien tot het voorbeeld van een geslaagde operatie waarbij de patiënt het leven liet. Aan het feestje op de beurs – dat sowieso niet op iets fundamenteels was gebaseerd – kwam een einde, het klapte overal in. De val van Lehman, maar vooral ook het bewust niet ingrijpen van de Amerikaanse overheid, wordt gezien als een forse blunder.

En dat is het bruggetje naar wat er dit weekend over Cyprus is beslist. Het is natuurlijk nog veel te vroeg om terug te kijken maar de voortekeningen zijn niet mals. Ook nu is er sprake van een kunstmatig hooggehouden beurs, wereldwijd. Het ene na het andere record komt op de borden, tegelijk met het ene na het andere bericht over economische krimp, oplopende werkloosheid, dalend consumentenvertrouwen en slechte vooruitzichten. In Europa was het semi-politicus en ECB-president Mario Draghi die, uitsluitend met woorden, een heuse rally inluidde. En van vrijdag op zaterdag bereikten, naar het zich laat aanzien, het groepje ministers van Financiën onder leiding van ‘onze’  ‘PvdB ( Partij voor de Bankiers) Hoertje Jeroen Dijsselbloem’ het waarschijnlijke tegendeel.  Als dit gepubliceerd is staan de beurzen in Azië zo’n twee procent in de min en de Amerikaanse futures, financiële instrumenten die indiceren hoe de Amerikaanse beurzen vanmiddag zullen openen, vertonen  net zo’n beeld. Als straks in Europa de handel begint zal het felrood zijn op de borden. We houden niet alleen onze adem in bij de verdere ontwikkelingen op  ‘Witwas centrale Cyprus’, het wordt ook interessant wat er vandaag in Spanje en Italië gebeurt, wordt dit een bankrun? Want Mario Draghi mag dan gedreigd hebben met zijn bazooka, daarvan blijken er meer in de omloop te zijn en er is er dit weekend waarschijnlijk met een in de voet geschoten.
Door Dr. Doom