Cyprus Update - The Calm Before the Storm - One Europe?

I am sure you are aware of the events unfolding in Cyprus, at least if you follow the financial news and the internet.

The vote in the Cyprus Parliament has been postponed until Tuesday, most likely because the votes were not there to pass a resolution that was acceptable to the EU.

The bank holiday has been extended to Thursday, and it is doubtful they will reopen until the Parliament has sorted out a plan of action.  The shutting of the banks while the politicians wrangle over the details of the confiscation is not designed to heighten confidence.

As you may recall, the President of Cyprus, Nicos Anastasiades, a member of the conservative Democratic Rally (DISY) party, was elected in February of this year with about 58% of the vote. He is known as a blunt, chain-smoking 'strong man' with strong ties to the right wing politicians of Europe. Indeed, these connections and his promise of a solution favorable to Cyprus were strong factors in his recent electoral victory.

The extenuanting factors here are that Cyprus is viewed as a bellwether for Italy and Spain. There are many who would dispute this, and point to the particularities of the size and structure of the Cyprus banking sector. But there is a widespread perception that the heavy hand of Germany is running the EU these days, and prior pledges and principles cannot be trusted if the central rulers of the EU are willing to confiscate the insured deposits of private citizens, no matter how they try to rationalize it.

I tend to view this as the overall progress in the foregone drama of an inherently unstable European Union that has fallen into a financial plutocracy. Any actions they take now are merely delaying the inevitable. And the consequences for the global financial sector are profound.

The EU and the Fed may be able to paper over the problems and achieve an uneasy stability that could last a year or two, but without profound changes to the European financial arrangements that include transfer payments, a single currency spanning such diverse national economies is inherently unstable.  It is the child of the overreach of bureaucratic arrogance and economic fairy tales.

This *could* be a rather clever move to force at least a portion of Europe into a single political government of twelve or fifteen members, but I hate to give the plutocrats that much credit for planning. 

I know there is and has been talk for quite some time of dividing the world into five or six major spheres of political influence, including North America and a few South American client states, Europe, Russia, China, and Japan.  The particularities of southeast Asia and the Pacific are very much in play, along with the status of various economic colonies in the Third World including Africa.  India and Australia are major outliers.  The UK has been particularly troubled by its relatively minor role, and aspires to be the financial center and interface to the world for the rest of Europe.

Whether any of this happens or not is very much open to question.  But the establishment of a 'new order' in the world has quite a few globally powerful adherents who are willing to work for this in the long term.  It should be remembered that the fashions of 'centralization and decentralization' of power have their swings, seemingly like a natural ebb and flow over time,  quite similar to what we often see in the corporate world.

SP 500 Futures - 'Tax On Deposits' Triggers Tremors in La La Land

"News of the tax triggered a run on cashpoints in Cyprus over the weekend. Monday is a bank holiday and measures need to be approved before banks reopen on Tuesday.

Cypriot President Nicos Anastasiades, a conservative elected just three weeks ago, said the tax on deposits was an alternative to a disorderly bankruptcy.

In a televised address, he said it was painful but "will eventually stabilize the economy and lead it to recovery."

Savers who lost money would be compensated by shares in commercial banks, with equity returns guaranteed by future revenues expected from natural gas discoveries, Anastasiades said.

Reuters, Cyprus Works On Tax Levy Deal To Get Bailout Approved

The futures are down 16+ points this evening, most likely on jitters over bank instability in the eurozone.

According to one of my friends, Dennis Gartman sent out the following:

"By now I suspect that most of you have heard the news from Cyrpus over the weekend, but just in case you’ve not the Cypriot government has chosen to confiscate money from any and all accounts at any and all banks in Cyprus to pay for its banking problems...

This is astounding, and the decision was… if not fully decided in Brussels… was approved by Brussels and Berlin and Paris et al. This is unlike anything I’ve heard in my 40+ years of being in the market. This is HUGE news; this is massively bearish news for the EUR; this is massively bullish news for gold and this is THE MOST IMPORTANT BUSINESS NEWS OF THE YEAR THUS FAR. Please believe me on this; this is Europe’s “Lehman” moment.

I shall be around all day tomorrow trying to figure out what has happened here and why, but if the EUR… which closed on Friday at 1.307… does not open below 1.2900 and then continue lower, and if gold, which closed on Friday at $1590/oz does not open above $1625 and head higher I will be truly, truly stunned."

Be prepared; Monday is going to be violent"

I had a couple of email messages after a post about the sacredness of trust in money and banking earlier today.  They implied that I had a misplaced sympathy for the crooked Russians, and the little people of Cyprus.

That post was not intended to be a moral message, although morality is certainly involved.  It is more of a practical matter. 

When your money system is based on trust, it is critically important to maintain appearances.  Simply reaching out and confiscating the insured savings of depositors is very bad form, especially when everyone knows you are doing it to support a rigged system that is run for the benefit of a fortunate few.

The sophisticates are fairly used to discussing the darker corners of injustice of the system in their own circles.  And they have become comfortable with it, as they are in viewing the victims of their greed as 'takers.'  I am sure that this played some part in the expedient decision to support the Eurocrony corporatist zone by simply stealing depositors' money, and deriding them as either crooks or hapless fools who 'must contribute.' 

 But what the cynical plutocrats do not realize is that most people still believe in the system, in rules and justice.  And it is this belief that sustains a system based on promises and guarantees and trust.

I am fairly certain that the financiers and central bankers will wish to shut down any incipient panic in the Euro banks. After all, the entire global reserve currency system is a confidence game.

Buying the SP futures and selling more paper gold and silver might do the trick.  And their talking heads will carry the message that this is much ado about nothing, and merely another buying opportunity.

They certainly have dipped into that bag of tricks many, many times in the recent past.  And personally I will be stunned if they do not make a determined effort to do it again.

With Regard to the Cyprus Bank Deposit Confiscations: Is Nothing Sacred?

Customer funds were long considered 'sacred' at brokerage firms, and were segregated from the proprietary operations of the company. And they were stolen at MF Global, and no one has been punished.

Bank deposits, protected by insurance and the guarantees of the government, were long considered 'sacred' at financial institutions. And they are being stolen in Cyprus as a matter of convenience to the crony capitalists in Europe, who are loathe to force the banks to take their losses.  And so they impose them on the people.

And this is what was done, and is still being done, in the US and the UK as well.  It is merely being done in a different form.

The Parliament of Cyprus will vote on this plan on Monday.

There are always various ways, and people, who will be willing to justify such theft. The banks were taking dirty Russian money, the people are lazy spendthrifts. This is always how it goes when the oligarchs steal to finance their gambling losses.  And in their insular arrogance they always go too far, provoke a reaction, and then act surprised.

As I wrote a few weeks ago:

Politicians from both sides of the aisle will swear pious oaths to protect and foster the well being of the middle class. They will say that their policies and proposals are all designed for its betterment. And yet the state of the middle class continues to dwindle into despair and disrepair. Why is this?

It is not because of the predominance of a right or left ideology, of taxation and deficits and austerity. It is not because of the re-emergence of a perversion of the gospel, in the predestination of prosperity. We have seen all this before. It is not because in our comfort we have lost the sense of the imperative of common cause.

It is because of the overwhelming corruption of power, and of the cynical amorality of thoroughly modern political managers who worship power and personal wealth as ends unto themselves. They distract the people with artificially divisive social issues and crises, while robbing them blind.

It is driven by the allure of the cartels, monopolies, and monied interests, and their corrupt political bargains. It is a child of the subornation of perjury on a massive scale. It is the unscrupulous servility to power of those who have sworn to uphold and protect the law. What is truth? Whatever suits us, whatever we say it is, by whoever has the power and the craft to define 'we.' It is not the triumph of evil so much as the absence of any sense of the good, of honor, honesty, and of simple common decency.

And it is marked by the daily subverting of the law as a matter of convenience and comfort to the insatiable few, and the cravenness of their enablers, driven by personal ambition, ignorance, and fear. It is the will to power, the elevation of the ascendant self and the system that supports it, above all else. Greed is good. Whatever works. And the enemy is all that is not the self, but that which is the other.

And where there is nothing sacred, the people perish.

Protect yourselves.  And do not look only to your wealth, but also to what is lasting.

"For what does it profit a man to gain the whole world, and lose his soul?"

Gold Daily and Silver Weekly Charts - Shoving Paper Around the Plate

The hedge funds are on top of these precious metal markets and do not wish to let them up for air.

Gold is in one of those long consolidations we have seen in this bull market.  When it is ready to move again it is going to break out.

And it may take no prisoners from the bear camp when it does.