Baltic Dry Index. 930 +07
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"I
am an optimist. It does not seem too much use being anything else."
Winston S. Churchill.
It’s last chance Friday for Cyprus, the snake bit
Eurozone, Germany, and every hapless Euroserf trapped in the ill-advised,
unloved one size fits all, fiat European Monetary Union. Stay long physical
precious metals. Absolutely anything can happen across the coming weekend, from
Cyprus exiting the Germanic run euro, to Germany finally seeing sense that in
the larger scheme of things, wrecking the European banking system over a tiny 17
billion euro Cyprus bailout doesn’t make any sense. True the damage to the
European banking system is already done. When push comes to shove, European
deposit guarantees are worthless, and in an era of zero interest rates, why
should anyone hold very much of their money in a European bank account. If it’s
all at risk of being used to bailout derivatives gambling reckless European banksters,
why not put it into stocks, gold, IPOs, land, China, and at least get some
upside to the European banksters downside. Germany has led the Eurozone into a
mad dash thrust into Russia to sieze a mere 5.8 billion euro. It will fare no
better than 1941.
The next time a crisis starts to hits in any continental European nation large
or small, self-interest dictates getting one’s money out of a European bank as
fast as possible, long before the banksters unexpectedly declare a bank holiday,
and and a money stealing “bail-in” to bail-out the failing banksters. A more
idiotic European shambles it’s harder to imagine. If this is German leadership,
turn over the keys to Silvio Berlusconi. We might as well have some fun as
Europe crashes and burns.
Below, two very different views of what just happened
in the wreckage of Europe and why.
It’s morally wrong to let a sucker keep his money.
W. C. Fields. EU Finance Minister.
Cyprus – oh the irony!?
By Ben Davies, on 19 March 13
----What
this should reaffirm to you all is how the handling of the crisis has only
succeeded in heightening the risks associated with this current monetary
order. The excessive amounts of debt have continued to grow and are
clearly not sustainable. Policymakers have resorted to draconian methods of
expropriating private sector assets (households, pension funds and corporates)
either by excessive explicit ‘taxation’ and/or stealth taxation administered by
a policy of negative real rates to help reduce the fixed real burden of debts.
It also
reinforces our long-held views that when push comes to shove policymakers (the
State) will escalate oppressive tactics against their electorate in a bid to
maintain their status quo and that of their fiat currency system.
Of most
importance is the adherence to retrospective changes of law and different rules
for different people and countries. Insolvencies are generally well-defined in
law. The first is to equity, then subordinated debt, then deposits and senior
bonds together. The creditor structure has been up-ended and more than
merely tweaked over the last few years. I suspect with levels of
ignorance high amongst populations they haven’t quite woken up to the reality
that the state is not in fact here for your protection as it once was and that
we all need to take on self-reliance and a heightened sense of responsibility
for ourselves. Some notable rule changes of late are subtle but growing in
number:
- The ECB, holders of Athens-law and foreign law Greek debt all received different treatment
- The Dutch didn’t restructure SNS Reaal paper, they confiscated it
- The Irish banned lawsuits against the ultimate wind-down of Anglo Irish
- Portuguese private pensions were confiscated
The list
is long but you get the idea. Rule-changes are getting ‘regressively’
more creative and sinister. As a friend pointed out to me, this as if the
“football referee has gone from being a quasi-neutral arbiter, to pulling off
his black shirt to reveal a Manchester United one underneath and awarding
himself a series of penalties.”
More
Cyprus and the reality of banking: deposit haircuts are both inevitable and the right thing to do
By Detlev Schlichter, on 20 March 13
I, too, was shocked Monday morning. Not so much by the news that depositors
at Cypriot banks would face a haircut, or a ‘levy’ or a ‘tax’, on their
deposits as a contribution to yet another Eurozone bailout package funded by taxpayers
in other counties but by the reaction in the press.Here was, according to the majority of the international commentariat, yet another example of the ineptitude or outright meanspiritedness of the Eurozone policy elite, another example of imposing needless and counterproductive hardship and brutal ‘austerity’ on innocent citizens in small and troubled countries. The Daily Telegraph on its front page spoke in usual hyperbole of a ‘EU raid on savings’ and, naturally, of another ‘threat to the recovery’. What agitated most commentators was that the ‘sanctity’ of deposit insurance had been carelessly violated as even deposits of less than €100,000 were, at first at least, supposed to be subjected to a reduced haircut as well. Those types of deposits are supposed to enjoy a ‘guarantee’ that magically shields them from the harsh reality of bankrupt banks and bankrupt states.
Undermining this ‘guarantee’ could have wide-reaching consequences beyond tiny Cyprus as it has the potential to undermine the trust in banking systems in Greece, Spain and Portugal.
I agree that this move is risky. The international banking system is highly levered and in large parts has been teetering on the brink of disaster for many years. Anything that affects depositors can have grave consequences. But given the state of affairs, any meaningful attempt to deal with the banking systems’ problems must inevitably entail risks. The questions are the following: are the right type of risks being taken?
And what would the alternative be?
More
Below, this morning’s state of confusion covering Europe. Accomplishing a total defeat in frigid Moscow, Cyprus’ finance minister is returning to sunny warm Cyprus to chill out. What will be, will be.
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."William F. Rickenbacker
March 22, 2013, 2:12 a.m. EDT
Cyprus likely to go ahead with deposit tax
SYDNEY (MarketWatch) — Cyprus is facing a difficult
choice between levying an unpopular tax on bank deposits or defaulting on its
debt — and the tax route now looks more likely as the nation stares down a
deadline to meet its lenders’ demands.
Cyprus
last Saturday shocked markets by announcing a one-off levy on Cypriot bank
accounts to raise 5.8 billion euros ($7.5 billion) to shore up its finances in
exchange for a €10 billion bailout from its institutional lenders, the European
Central Bank (ECB), the International Monetary Fund and the European Commission
— collectively known as the Troika.
But
in yet another extraordinary development, the country’s parliament on Tuesday
refused to pass legislation to support the bank-deposit tax, even after some
exemptions for smaller accounts were proposed.
That
provoked a threat from the ECB that it would cut off emergency lending to banks
in Cyprus, with effect from next Monday night.
Aside
from the ECB, Russia also represented a potential source of finance for Cyprus,
having lent the country €2.5 billion two years ago. However, Bloomberg reported
Friday that Cyprus’s Finance Minister Michael Sarris, who had been in Russia
for talks, was on his way back to Nicosia without an agreement to extend the loan
or revise the terms.
----
The
government of Cyprus is now trying to come up with an alternative plan, more
palatable to parliament, before the ECB’s deadline.
On
Thursday, reports emerged that Cyprus Popular Bank PCL — also known as Laiki
Bank — will be split into a “good bank” and “bad bank” to avoid bankruptcy
under a revised proposal.
Bank
deposits totaling €100,000 or less, would also be protected, according to
Cyprus central-bank Gov. Panicos Demetriades. Still, that implies that deposits
of more than €100,000 would be subject to a deposit tax.
----
Weighing a deposit-tax against an
euro-zone exit, Brown Brothers Harriman global currency strategist Marc
Chandler said: “We think Cypriots’ lives will be made significantly worse on an
exit. Small depositors will not simply see 6.5% of their savings taken, but
will lose much of savings.”
“The
banking system will collapse and the means to recapitalizing it are not
obvious,” said Chandler of Cyprus potentially leaving the euro zone.
Meanwhile,
Dutch Finance Minister Jeroen Dijsselbloem, chair of the Eurogroup of euro-zone
finance ministers, said Thursday that “there is of course a different way to do
the levy, and we’re very open to a more fair approach to the way the levy is
structured,” according to a Reuters report.
In a
statement Thursday, the Eurogroup said it “stands ready to discuss with the
Cypriot authorities a draft new proposal, which it expects the Cyprus
authorities to present as rapidly as possible.”
More
Cyprus bail-out: live
Cypriot finance minister Michalis Sarris left Moscow on Friday without securing a deal, after vowing to stay in Russia for as long as it takes.
By Denise
Roland 7:52AM GMT 22 Mar 2013
• Laiki Bank UK customers unprotected by FSA• Cypriot finance minister leaves Russia without deal
• Cyprus overhauls two biggest banks to stave off collapse
• Eurogroup pushes Cyprus to submit rescue plan quickly
• S&P downgrades Cyprus to CCC, outlook negative
• 'Open talk' in eurozone of Cyprus leaving the single currency
Latest
07.52 It's worth noting that while the Cypriot government have come up with an alternative plan, there are still two major hurdles to jump before we arrive at anything reaching a solution.
First, it needs to win support in the Cypriot parilament, in which President Nicos Anastasiades' party does not have an outright majority at 20 seats in a house of 56 members.
Second, the IMF, EU and ECB, Cyprus' troika of lenders, must approve the deal. So far the lenders have towed a hard line, insisting they will not accept any deal which deepens Cyprus' debt. They see some form of bank levy as inevitable.
07.41 It looks like Russia is a closed
door for Cyprus now. Speaking to reporters Anton Siluanov, Russian
finance minister said:
The talks
have ended as far as the Russian side is concerned.
07.30 It has emerged that British
savers could be hit by bank restructures in Cyprus. Laiki Bank,
which has three UK branches - one in Birmingham and three in London - is not
covered by the FSA compensation scheme, unlike Bank of Cyprus. This is due
to a technicality - whereas the Bank of Cyprus UK is a fully blown subsidiary,
Laiki's British presence is via branches of the main, Cyprus-based bank. This
means British savers in Laiki will get the same deal as their Cypriot
counterparts - meaning any deposits more than €100,000 could take a
devastating hit of as much as 40pc.
Morehttp://www.telegraph.co.uk/finance/debt-crisis-live/9947568/Cyprus-bailout-live.html
American fraud broke the fiat system last decade, but serial European incompetence since 2010 will get the blame for the final bankruptcy of what was left of the zombie Great Nixonian Error of fiat money. With no one left believing in bank deposit guarantees, banking systems everywhere is now open to sudden unexpected bank runs at the slightest rumour of trouble. Below, Europe’s going down, and everyone knows it.
“I think we are not able to get the support that we wanted to
get,” Sarris said in an interview after checking out of the Lotte Hotel in
downtown Moscow. “But we must go back home because things are getting serious.”
Eurozone downturn deepens as output slips
The eurozone's economic downturn has deepened for the second month running, a business survey revealed, with the prospect of further deterioration as Cyprus fights to stave off collapse.
Markit's flash composite purchasing managers' index, which tracks services and manufacturing activity, fell to 46.5 in March from February's 47.9.But with many survey responses having been received before news broke of Cyprus' €10bn bailout deal, survey compiler Markit said the picture could be even worse in a couple of weeks' time.
Cyprus has pushed the eurozone into fresh turmoil, with its parliament voting overwhelmingly on Tuesday to reject the terms of the bailout deal, raising the risk of default and a bank crash.
"Events that hit business confidence can have a very rapid effect on the data and so there is good reason to believe that responses we collect this week will on average be more negative," said Chris Williamson, Markit's chief economist.
"It's really quite disappointing. Given the deterioration in the political and financial market outlook there is really little hope from what we see that there is going to be a turnaround in the second quarter, and in fact more likely an increased weakening."
In March,
both manufacturing and services output suffered declines according to the flash
survey, with March's PMI fall the steepest experienced in four months.
Companies
reported that new business levels were dropping and employment fell for the
fifteenth successive month.
----Germany's composite PMI fell in March, although it held above the 50 line for the fourth month, suggesting some strength in Europe's largest economy. But in France, the bloc's second-biggest economy, it sank to a four-year low.
Markit
said the latest PMI data suggested the eurozone economy would shrink 0.3pc in
the current quarter.
More
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar.
At the Comex silver depositories Thursday final figures were: Registered 42.55
Moz, Eligible 120.97 Moz, Total 163.52 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
While Europe faces
its make or break weekend, the Bank of Japan’s new Governor is lighting tie
touch paper to a new currency war, Forget the weasel words that Japan will abide
by the G20 ban on competitive devaluations. A competitive devaluation is
exactly what’s intended. Japan’s exporters are expected to take orders from
America, Germany, South Korea and Taiwan. Stay long physical precious metals
held outside of a EU bank. After stealing bank depositors hard earned money and
voiding deposit guarantees, EU and UK banks wouldn’t think twice about
converting their clients gold.
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
Bank of Japan vows 'all means available' to smash deflation
The Bank of Japan's new governor Haruhiko Kuroda vowed to deploy "all means available" to end two decades of stagnation and kick-start economic revival, but insisted that there would be no attempt to steal a march on trade competitors by driving down the yen.
"I will make an all-out effort to pull Japan's economy out of deflation," he said on his first day in office, promising to push through the revolutionary agenda of premier Shinzo Abe, which has that have set off a blistering 40pc rally on the Tokyo bourse since November."The BoJ must expand monetary stimulus both in terms of volume of assets it buys and type of assets it targets, and push down yields across the curve," he said.
Mr Kuroda is the spearhead of "Abenomics", a double-barrelled blast of monetary and fiscal stimulus modelled on the reflation policies that lifted Japan out of the Great Depression in the early 1930s.
He brushed aside criticism last week by his predecesor Masaaki Shirazawa that the extra money would leak into a financial bubble, saying the "spill-over effects" on assets were worth the risk to break out of fatalistic perma-slump.
The mere promise of action has already lifted animal spirits and given a life-line to struggling exporters, rescued by an 18pc fall in yen against the dollar and a 25pc against the euro. Mr Kuroda said the BoJ is targeting the domestic economy rather than trying to push down the yen, and would abide by the G20 ban on competitive devaluations.
Mr Abe
made no secret of his frustration with the BoJ last year, threatening to change
the bank's statute unless it embarked on a drastic change of course. He
brow-beat the old guard into agreeing to open-ended bond purchases and an
inflation target of 2pc within two years, aimed at breaking the deflationary
pyschology .
Mr
Shirakawa was more or less shunted out of the door, but issued a final warning
on his way out that quantitative easing cannot solve deep structural problems
and is like "punching air" if firms refuse to borrow.
"A
lack of cash isn't what's keeping companies from increasing capital
expenditure. If there was a single thing that could have cleared the fog and
solved all problems, Japan wouldn't have been in this situation for 15
years," he said.
The BoJ's
2pc target implies vast stimulus and a wash of extra money into global system.
There are already signs of a fresh "carry trade" as Japanese
investors chase yield abroad. Japan is still the world's biggest creditor with
$3.5 trillion of net assets overseas.
More
Another weekend,
and a dire one for the hapless Cypriots who thought that they had joined a
legitimate club called Euroland. Who on the island knew that they had joined a
mafia run club led by Chancellor Merkel and the
40 thieves. There is the very real prospect of a full on European
banking crisis next week. All Europeans including Brits, would be well advised
this Friday to secure enough personal/family cash to ride out next week, if a
spate of bank closures lies ahead. In fact, given the worthless EU bank deposit
guarantee, it’s probably time now to keep enough local cash to ride out a
month. Have a great weekend everyone.
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry Hazlitt
The monthly Coppock Indicators finished February:
DJIA: +111 Up. NASDAQ: +129 Up. SP500: +148 Up. All three indexes are giving the same signal since
January, up, but surprisingly February’s
move in all three was weak, suggesting that the indicators are topping
out. Will sequestration turn March into a
down month? So far so good.
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