Financial topics

[Reality Check]

The news from Cyprus is very interesting.

This is how "unintended consequences" and politicians caught in lies and broken promises can unexpectedly, and suddenly trigger an inevitable collapse that is built into the fundamentals.

In a nut shell European politicians promised to save the bank depositors in Cyprus,
then they announced they were going to give wealthy Billionaires from Russia, and other "wealthy" depositors, a modest haircut of 9.9%,
then at the last minute they announced they were going to give even the poorest, of the poor, depositor a haircut equal to 68% ( 2/3rds ) of what they demanded of billionaires.

Thus the bank runs start, and the banks promptly run out of cash so all remaining depositors appear to lose 100% of their money,
since they can not get 90%, or 100%, or even 5% of their money out when they try to withdraw it.
Creating fear and distrust of banks and politicians all over Europe.

A classic lose-lose-lose situation.

Europe will have to come up with at least 90% of the deposits of record in Cyprus, almost immediately, to recover any pretense of credibility,
but by breaking their promise to do 100%,
and then making it appear that everyone was going to lose 100% instead during the bank run,
they destroyed credibility in both the banking system of Europe and the government(s) of Europe.

All because they got greedy and went after the money of the poor and middle class when claiming it was the Russian billionaires they were after.

Once a liar amd a thief, always a liar and a thief. The Generation X politicians can not help it. It is in their nature.

Classic.

[Higgenbotham]

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[Higgenbotham]

There have been 3 times in the past 6 years that the S&P 500 made a new 52 week high on less than 1500 advancing NYSE issues on a 3 hour moving average basis.

Those times were:
July 16, 2007
April 15, 2010
March 11, 2013

In the first 2 cases, the S&P 500 made a slightly higher high and then collapsed.
The slightly higher high has been made, almost exactly as it occurred in July 2007.

I'm not making a prediction, just observing that the beast is slowly losing its grip at a logical time, price and ending pattern.

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[jcsok]

Further reading of the Cyprus fiasco: 1) Germany apparently wanted 40% "tax" on depositors; Is this an attempt by Germany to force a breakup of the Euro? 2) In the folly of all follies, Greece is expected to send 5-8 billion euros to fund the cash run on Cyprus banks. 3) Why are not the bondholders forced to eat the loss?

If the euro breaks up, Germany may be cutting its losses by not continuing to finance the continued spiral of the various nations.
If the bondholders were forced to eat the loss, the banks would probably be below the covenants of capital to maintain the banks, forcing liquidation, because the Cypriot government probably can't nationalize the banks.
As RC posted above, this thought process of the Gen Xers is idiotic, but much blame has to be placed on the boomers, who I believe are in control, er... I mean out of control of the entire financial situation.

[aedens]

Cyprus to the Russians as Bahamas to the U.S. interest carry shell accounts. Idiots in ECB got the natives involved for trial balloon. Trial run and you bet
the White House says plausible denial will be sacrosanct for half.

As warned: Public market destruction: another bifrucation and select asset stripping ongoing. "Successful" (surviving) companies will continue to buy back stock until they effectively go private. The rest will go to zero for stripping. The public float will be a fraction of what it is today. ZIRP is causing the public equity market to select pick equity, now over eight percent of the market and growing. It will continue to exist as an asset class so it will trade at a discount (risk premium). It will be available, and a vehicle to build and maintain wealth, just not you. Private equity will be the only real equity and there will be a velvet rope. You are not invited, and for the always obtuse way thinking you have been noted.

[gerald]

getting more interesting ---

Mainland China's First Default Raises Specter Of China's Credit Bubble Collapse

http://www.zerohedge.com/news/2013-03-1 ... e-collapse

"The move opens the way for Suntech noteholders to sue the company in the U.S., where its shares and bonds trade."

[shoshin]

seen on Twitter, the cource of all humor...

'Congress is kicking the development of urgently needed new metaphors down the road. "

[shoshin]

The only function of economic forecasting is to make astrology look respectable. -John Kenneth Galbraith

before you start gloating, this applies to 99% of what I read on this site....

[aedens]

The only function of economic forecasting is to make astrology look respectable. -John Kenneth Galbraith

before you start gloating, this applies to 99% of what I read on this site....

I agree and thirty years ago Benny and the Inkjets told the saver they will be destroyed just as the Keynesian's stated and are by the most effective
theft and unparalleled fatal deceit.
The IMF "FED" and ECB learned well that moral hazard for socialist theft is alchemy of the High Priests for the Theft for Fun Idiots we just seen.
http://fraser.stlouisfed.org/docs/meltzer/bernon83.pdf
I define the cost of credit intermediation (CCI) as being the cost of channeling funds from the ultimate savers/lenders into the hands of good borrowers. The CCI includes screening, monitoring, and accounting costs, as well as the expected losses inflicted by bad borrowers. Banks presumably choose operating procedures that minimize the CCI. This is done by developing expertise at evaluating potential borrowers; establishing long-term relationships with customers; and offering loan conditions that encourage potential borrowers to self-select in a favorable way.

We seen it and used solar, lunar, warts on toads just as accurate to the lies, theft and Scientific fun like the FED just as Newton did to chide the Powers that be with humor to express the absurdity, insensitivity, paradox, and cruelty of the so called modern world. Also we made the call. It's there....

[gerald]

if true -- and for your amusement --

Today legendary trader Jim Sinclair told King World News that all hell
is breaking loose after the Cyprus catastrophe. Sinclair, who’s
father was business partners with another legendary trader, Jesse
Livermore, had this to say in this extraordinary and exclusive KWN
interview:

Eric King: “Jim, your comments over the weekend on King World News
regarding the Cyprus disaster have electrified the world. But it also
seems to have frightened a great many people.”

Sinclair: “Well, it should have frightened many of the players
involved, and served as a wake-up call. There was a great
miscalculation made with regards to Cyprus, and the situation has
quickly turned into a catastrophe. There was no real understanding of
the entities that were behind the Russian corporations which have
money in Cyprus, and the effect of what is in reality the confiscation
of Russian ex-KGB money.

http://kingworldnews.com/kingworldnews/ ... rophe.html

this could get interesting