US stocks got ramped pretty hard in the first quarter of 2013, with the Dow up 11% and the S&P tagging along with a 10% gain.
In more normal economic times, those first quarter returns would equate into a rather solid year of gains, but in the "new normal" of Fed pumping of $85 billion monthly into the economy, through treasury and MBS purchases (both probably losing investments), it's just more of the same: profits for Wall Street traders and bankers, crumbs for the American public.
Stocks struggled right from the opening bell and traded in fairly narrow ranges on the major indices, with the NASDAQ being the hardest hit, oddly, since the NAZ is home to some of the more speculative darlings which Wall Street loves to pump (and dump).
So, the Dow and S&P set all-time highs at the close of the first quarter, but cascading headlong into earnings season, some investors are apparently not so sure those levels can be maintained.
Now that Cyprus is out of the headlines but not out of the memories of bank depositors worldwide, there's reason to believe the skeptics are correct, especially if one was to read the scathing op-ed by former congressman and budget director under Ronald Reagan, David Stockman, which appeared glaringly in Easter Sunday's New York Times, an oddity for the newspaper so beloved by liberals and adherents of Obama-nomics.
The opinion piece, aptly titled, "Sundown in America" detailed a litany of statistics and trends that protray America as a failing economy headed by a flailing Federal Reserve, which has embarked upon, in Stockman's words, "a radical, uncharted spree of money printing."
It's a must-read for anyone who doesn't believe the stats trotted out by the usual bullish analysts and government mouthpieces, because it debunks the myths surrounding unemployment figures, growth projections, the sustainability of enormous government deficits and the inevitable end-game of a bond market bubble of massive proportions.
For those who wish to remain soothed by willful ignorance (99% of the population), skip it and just go shopping, cell phone in hand, of course, believing that everything is under control and those problems we hear about in other countries simply can't happen here, because we're America, damn it.
However, those who believe what their own eyes see and their own ears hear, might want to ponder the long-term ramifications of more than a decade of easy money, electronically printed into existence by the Federal Reserve and dutifully sucked up by the thieving class of politicians and bankers that have profited handsomely while the rest of the country suffered and continues to wallow in a slow-to-no-growth environment.
Additionally, the one statistic of note today was the March reading of the ISM index, which fell to a ten-month low of 51.3 on a forecast of 54.0, after positing a splendid 54.2 in February. One of the more closely-watched numbers on Wall Street delivered what may be the first of many blows to confidence of market gain continuity this week.
Whatever the case, the double whammy of Stockton's searing indictment of US fiscal and monetary policies and a poor reading on manufacturing, was net negative for equities today.
Beyond that, volume fell to it's lowest level of the year and the advance-decline line was the worst in weeks, prompting concerns that those who were eating well in the first quarter may become the meal in the second three months of the year.
Dow 14,572.85, -5.69 (0.04%)
NASDAQ 3,239.17, -28.35 (0.87%)
S&P 500 1,562.17, -7.02 (0.45%)
NYSE Composite 9,057.65, -49.39 (0.54%)
NASDAQ Volume 1,446,869,375
NYSE Volume 3,019,881,750
Combined NYSE & NASDAQ Advance - Decline: 1900-4482
Combined NYSE & NASDAQ New highs - New lows: 357-60
WTI crude oil: 97.07, -0.16
Gold: 1,600.90, +5.20
Silver: 27.94, -0.379
Monday, April 1, 2013
Thursday, March 28, 2013
Cyprus Banks Re-Open; S&P Makes New All-Time High
Not certain which of these two historic events will eventually bear more weight, but the banks in Cyprus opened at noon (Cyprus time) on Thursday after being shuttered for more than two weeks and the S&P made an all-time closing high.
For investors, the S&P event is a watershed moment, capping a long bull run of just over four years that began at 666 on the index and now closes nearly 100 points better.
For the citizens of Cyprus, the events of the past two weeks and the reopening of the banks today will have great weight, but in the opposite direction. Now that the banking situation in the Mediterranean island nation are more or less "normalized" - with uninsured depositors (over 100,000 euros) likely to lose 40% or more of their deposits - and the country headed directly into a depression, the contagion, for now, limited, though anybody with large deposits in any European bank has to be walking on eggshells presently.
The limits for Cypriots are stiff: withdrawals from banks are limited to 300 euros per day; checks cannot be cashed, only deposited; leaving the island with more than 3000 euros is outlawed. Welcome to the Cyprus debt prison and hotel. Payrolls are exempt from limits as the banking officials want to see money circulating to some degree, though people will be surely more frugal in their spending habits.
The Dow closed at another record high and ends the quarter (Markets are closed Friday) up 11%, marking the best quarterly returns since 1998. The S&P was right behind, clocking a 10% return for the quarter.
As the market has shown throughout the four-year bull run, news doesn't matter; it's all good on Wall Street. The Chicago Purchasing Managers' Index fell to 52.4 in March, down sharply from the 56.8 reported in February.
Initial jobless claims also cam in worse than expected, rising to 357K, up from 341K in the prior week.
Monday is the start of a new month and a new quarter, as well as being April Fool's Day, which begs the question: who will be the fools, those who exited on the record high today or those looking to squeeze more gains out of the long-running bull market?
The highs on the S&P are nominal ones, slightly above levels hit in 2000 and 2007, more commonly known as a triple top.
It's never a good idea to buy high, because you're likely to end up selling lower, but it's really tough to bet against Ben Bernanke and the Fed printing presses churning out $85 billion a month in free money. The sprinters are far ahead at the moment, but investing is more of a marathon. And, don't forget, this rally has been built not only on quickly depreciating greenbacks but on horrifyingly low volume. Additionally, the advance-Decline line has been exhibiting much less breadth than one would normally associate with a raging bull.
Pick your poison, but don't keep all your eggs in one basket.
Happy Easter!
Dow 14,578.54, +52.38 (0.36%)
NASDAQ 3,267.52, +11.00 (0.34%)
S&P 500 1,569.19, +6.34 (0.41%)
NYSE Composite 9,106.83, +36.38 (0.40%)
NASDAQ Volume 1,555,418,875.00
NYSE Volume 3,481,085,250
Combined NYSE & NASDAQ Advance - Decline: 3865-2537
Combined NYSE & NASDAQ New highs - New lows: 557-32
WTI crude oil: 97.23, +0.65
Gold: 1,594.80, -11.40
Silver: 28.32, -0.289
For investors, the S&P event is a watershed moment, capping a long bull run of just over four years that began at 666 on the index and now closes nearly 100 points better.
For the citizens of Cyprus, the events of the past two weeks and the reopening of the banks today will have great weight, but in the opposite direction. Now that the banking situation in the Mediterranean island nation are more or less "normalized" - with uninsured depositors (over 100,000 euros) likely to lose 40% or more of their deposits - and the country headed directly into a depression, the contagion, for now, limited, though anybody with large deposits in any European bank has to be walking on eggshells presently.
The limits for Cypriots are stiff: withdrawals from banks are limited to 300 euros per day; checks cannot be cashed, only deposited; leaving the island with more than 3000 euros is outlawed. Welcome to the Cyprus debt prison and hotel. Payrolls are exempt from limits as the banking officials want to see money circulating to some degree, though people will be surely more frugal in their spending habits.
The Dow closed at another record high and ends the quarter (Markets are closed Friday) up 11%, marking the best quarterly returns since 1998. The S&P was right behind, clocking a 10% return for the quarter.
As the market has shown throughout the four-year bull run, news doesn't matter; it's all good on Wall Street. The Chicago Purchasing Managers' Index fell to 52.4 in March, down sharply from the 56.8 reported in February.
Initial jobless claims also cam in worse than expected, rising to 357K, up from 341K in the prior week.
Monday is the start of a new month and a new quarter, as well as being April Fool's Day, which begs the question: who will be the fools, those who exited on the record high today or those looking to squeeze more gains out of the long-running bull market?
The highs on the S&P are nominal ones, slightly above levels hit in 2000 and 2007, more commonly known as a triple top.
It's never a good idea to buy high, because you're likely to end up selling lower, but it's really tough to bet against Ben Bernanke and the Fed printing presses churning out $85 billion a month in free money. The sprinters are far ahead at the moment, but investing is more of a marathon. And, don't forget, this rally has been built not only on quickly depreciating greenbacks but on horrifyingly low volume. Additionally, the advance-Decline line has been exhibiting much less breadth than one would normally associate with a raging bull.
Pick your poison, but don't keep all your eggs in one basket.
Happy Easter!
Dow 14,578.54, +52.38 (0.36%)
NASDAQ 3,267.52, +11.00 (0.34%)
S&P 500 1,569.19, +6.34 (0.41%)
NYSE Composite 9,106.83, +36.38 (0.40%)
NASDAQ Volume 1,555,418,875.00
NYSE Volume 3,481,085,250
Combined NYSE & NASDAQ Advance - Decline: 3865-2537
Combined NYSE & NASDAQ New highs - New lows: 557-32
WTI crude oil: 97.23, +0.65
Gold: 1,594.80, -11.40
Silver: 28.32, -0.289
Wednesday, March 27, 2013
Income Inequality Killing America, or, Is It Already Dead?
Once again, just so we all get it straight: stock markets are not necessarily reflective of the underlying economy. That point was driven home with a lead hammer today, when European and US stocks fell out of bed and into an early dive only to rally the rest of the day and finish close to unchanged (US stocks, at least).
Most European bourses were down hard in the early going, but rallied into the close. Reasons for the swan song for stocks were the ongoing crisis in Cyprus and instability in Italy, which has been operating without a government for months and appears to be ready to do so for many months more.
As for why stocks regained some of the losses throughout the various trading sessions, the acronym, BTD, would suffice, as in "Buy the Dip," which has become shorthand for day-trading insiders making money while there's still some not being confiscated in a bank reorganization.
Meanwhile, Cyprus (where the local stock market has been tanking for four years, down 96%, so we should have seen this coming) prepares for a decade or longer of depression as planes flew euros in from the continent to shore up the banks and ATMs, which will open tomorrow. The rules, however, have changed. Cheques cannot be cashed, only deposited; the limit on daily withdrawals is 300 euros, and not more than 3000 euros can leave the island on one's person. Thus has the troika enslaved and imprisoned the million of so residents of the once-beautiful Mediterranean island.
But, unless one is still convinced that what is happening in Cyprus and, to a lesser extent, along the southern periphery of Europe can't happen in the United States, there are certainly enough examples of debt-slavery, capital destruction and other assorted miseries that come with a declining economy to convince most of the "recovery" die-hards that the US is more likely mired in a recession (and has been since 2008) than experiencing a recovery.
All one has to do to verify this condition is open one's eyes to what's going on in one's own town or city, as Jim Quinn eloquently lays out in his essay titled Available. Empty strip malls, for sale and lease signs everywhere, shuttered storefronts and vacant commercial developments are just the tip of the iceberg Quinn sees heading directly toward the USS Titanic, ending in the complete blow-up of the Federal Reserve's balance sheet. It's a great read.
This article by David Cay Johnston, details the extent of wealth inequality in America over the past 50 years - how it has grown, improving the lives of those in the top 10% and the top 1%, while impoverishing just about everybody else.
According to Johnston's article - published in January - the average gain in annual income since 1966 for the bottom 90% in America was an astonishingly-small $59. Read that again. FIFTY-NINE DOLLARS. Now, consider how much taxes and inflation have eroded disposable income and spending power and one begins to see clearly how America's "wealth curve" is distorted - toward the rich.
Here's an example comment that sends the point home:
Now it becomes clear as to why the stock markets continue to rise to record levels as the general economy crumbles into ruins. The top 10% of Americans own 50% of the stock market. They're living in a parallel universe, one in which their profits are earned by plundering the lower, middle and even the upper-middle classes.
So-called "conservative" commentators might say statements like that spark class warfare, but that's what the upper class has been engaged in for many years. They've waged an economic war on the rest of America, thanks to short-sighted tax policies that heavily favor the rich. How can anyone find anything "conservative" about promoting distortions in income that threaten the American way of life?
Here's a must-see video on the topic.
Wealth Inequality in America (this video has gone viral over the past month)
That should be enough for today. In case you want to keep believing mainstream television media instead of what you can see with your own two eyes, then remain in your deluded non-reality of willful ignorance. The rest of us must begin to move on, outside the debt-servitude structure imposed upon us by government at all levels and into something that's more sustainable and self-reliant.
Stocks, bonds, bank deposits? Keep 'em. What the truly enlightened are now stocking up on are gold (silver), guns and grub (seeds, gardens).
Dow 14,526.16, -33.49 (0.23%)
NASDAQ 3,256.52, +4.04 (0.12%)
S&P 500 1,562.85, -0.92 (0.06%)
NYSE Compos... 9,070.44, -13.27 (0.15%)
NASDAQ Volume 1,418,889,500.00 (light)
NYSE Volume 3,180,277,250 (lighter)
Combined NYSE & NASDAQ Advance - Decline: 3294-3059
Combined NYSE & NASDAQ New highs - New lows: 330-48
WTI crude oil: 96.58, +0.24
Gold: 1,606.20, +10.50
Silver: 28.61, -0.067
Most European bourses were down hard in the early going, but rallied into the close. Reasons for the swan song for stocks were the ongoing crisis in Cyprus and instability in Italy, which has been operating without a government for months and appears to be ready to do so for many months more.
As for why stocks regained some of the losses throughout the various trading sessions, the acronym, BTD, would suffice, as in "Buy the Dip," which has become shorthand for day-trading insiders making money while there's still some not being confiscated in a bank reorganization.
Meanwhile, Cyprus (where the local stock market has been tanking for four years, down 96%, so we should have seen this coming) prepares for a decade or longer of depression as planes flew euros in from the continent to shore up the banks and ATMs, which will open tomorrow. The rules, however, have changed. Cheques cannot be cashed, only deposited; the limit on daily withdrawals is 300 euros, and not more than 3000 euros can leave the island on one's person. Thus has the troika enslaved and imprisoned the million of so residents of the once-beautiful Mediterranean island.
But, unless one is still convinced that what is happening in Cyprus and, to a lesser extent, along the southern periphery of Europe can't happen in the United States, there are certainly enough examples of debt-slavery, capital destruction and other assorted miseries that come with a declining economy to convince most of the "recovery" die-hards that the US is more likely mired in a recession (and has been since 2008) than experiencing a recovery.
All one has to do to verify this condition is open one's eyes to what's going on in one's own town or city, as Jim Quinn eloquently lays out in his essay titled Available. Empty strip malls, for sale and lease signs everywhere, shuttered storefronts and vacant commercial developments are just the tip of the iceberg Quinn sees heading directly toward the USS Titanic, ending in the complete blow-up of the Federal Reserve's balance sheet. It's a great read.
This article by David Cay Johnston, details the extent of wealth inequality in America over the past 50 years - how it has grown, improving the lives of those in the top 10% and the top 1%, while impoverishing just about everybody else.
According to Johnston's article - published in January - the average gain in annual income since 1966 for the bottom 90% in America was an astonishingly-small $59. Read that again. FIFTY-NINE DOLLARS. Now, consider how much taxes and inflation have eroded disposable income and spending power and one begins to see clearly how America's "wealth curve" is distorted - toward the rich.
Here's an example comment that sends the point home:
I wish my father were still alive to see this. I always used to tell him that it was easier to make a good living back in his peak earning years - 1955-1975 - than mine - 1985-2005 - but he never wanted to believe that the America he fought for in WWII was any different now than then.
He stubbornly stuck to his preferred line of reasoning, all the while watching single-earner households evolve into double-earner debt traps, inflation, stagflation, recession, government regulation and bungling, even as it got harder and harder for him to make decent money in his later years.
Now I know why my general acceptance of prices has been stuck somewhere around a 1974 level, when a new car cost $3500-6000, a two bedroom apartment was $400 and a steak dinner ran about $6-8. Because my income has been stuck there thanks to inflation. Back in 1975, I was making about $350 a week and had plenty of money left over after regular expenses. Guess what? I'm making a little more than that now - about $500 - but it's a struggle to get by. Taxes went way up since then, along with gas, food, rent and just about everything else.
Now, greed and loopholes may be great for the .001%, but inflation has truly wrecked our middle class and society.
And the wreckage continues.
Now it becomes clear as to why the stock markets continue to rise to record levels as the general economy crumbles into ruins. The top 10% of Americans own 50% of the stock market. They're living in a parallel universe, one in which their profits are earned by plundering the lower, middle and even the upper-middle classes.
So-called "conservative" commentators might say statements like that spark class warfare, but that's what the upper class has been engaged in for many years. They've waged an economic war on the rest of America, thanks to short-sighted tax policies that heavily favor the rich. How can anyone find anything "conservative" about promoting distortions in income that threaten the American way of life?
Here's a must-see video on the topic.
Wealth Inequality in America (this video has gone viral over the past month)
That should be enough for today. In case you want to keep believing mainstream television media instead of what you can see with your own two eyes, then remain in your deluded non-reality of willful ignorance. The rest of us must begin to move on, outside the debt-servitude structure imposed upon us by government at all levels and into something that's more sustainable and self-reliant.
Stocks, bonds, bank deposits? Keep 'em. What the truly enlightened are now stocking up on are gold (silver), guns and grub (seeds, gardens).
Dow 14,526.16, -33.49 (0.23%)
NASDAQ 3,256.52, +4.04 (0.12%)
S&P 500 1,562.85, -0.92 (0.06%)
NYSE Compos... 9,070.44, -13.27 (0.15%)
NASDAQ Volume 1,418,889,500.00 (light)
NYSE Volume 3,180,277,250 (lighter)
Combined NYSE & NASDAQ Advance - Decline: 3294-3059
Combined NYSE & NASDAQ New highs - New lows: 330-48
WTI crude oil: 96.58, +0.24
Gold: 1,606.20, +10.50
Silver: 28.61, -0.067
Tuesday, March 26, 2013
Dow Sets Another New High; S&P Within Two Points as Europe Burns
OK, since things are getting pretty weird out there in financial-bizarro-land, today's post will not include the usual market post-mortems, but instead some witty vitriol from the comments of a few choice financial blogs.
Banks in Cyprus are scheduled to open on Thursday, so plan on the bank runs starting then. Meanwhile, US markets don't seem to care that Europe is becoming a more dangerous place for money, with Cyprus-like "bail-ins" rumored to be written into law. In other words, the bank can take your money if they made some bad investments or need to shore up their balance sheets. Nice!
Note: the editor or idiot-in-chief takes no responsibility for the accuracy or validity or truthiness of any of the following. Bunga-bunga.
Going long German bank vault builders.
With all the money that's going to be sloshing around Germany, could this foment another Weimar moment?
Ve have all de monies. Ve are rich! You vant milk? 500 euros. Danka.
Ok, OK, I'm getting this image here, that money leaves all periphery banks, sooooooo... what about all that Basel III (I think that's the one), that the banks are supposed to have X percentage of tier one capital? Uh, is that why the Eu said, well, move those requirements back a few years.
OK. Then these banks, without sufficient capital in them when the bank runs begin, go under... hard. Bank holidays across all of Southern Europe. Capital controls: only able to withdraw 30 Eu per day, something like that. (there's great potential for black markets, i.e., I'll write you a check, Guido, you cash it and give me the money. I'll give you XX euros.)
So, massive bank runs, governments shitting their pants, bond yields heading to zero, the US 10-year goes below 1%, the 30 down below 2%, and I can move out of the foreclosed home I inherited and buy some squishy new place at something like 2.25% on a 30-year loan. Sounds like a plan to me, unless my friends at Bank of America forget to proceed on that foreclosure, like they have for the past 3 years.
One nice feature of this nearly-100-year-old home, it's huge, with lots of places to hide cash and shiny things. No mortgage and - I love this part - the bank, being that they foreclosed, are responsible for the ridiculous NY state real property taxes. They've already ponied up over $15k, and that's on an $81K home. They were even so good as to pay the interest on the back taxes, and, twice a year, I get a letter from the govt. that the taxes have been paid, even though I never get a bill any more, that goes directly to the bank. Man, those guys at the bank sure are smart.
Life can't really get much better, or, maybe a real depression will end up making my extended pre-retirement even better!!!! (Four exclamation marks in honor of the Mogambo Guru.)
Party on. Bund-a, bund-a!
OT: Just for the laughs, Fannie Mae just listed this beauty for $3000 in Rochester, NY (my homie townie).
Just look at the pics and read the description. LMAO
Current Keiser Report after the stats.
Dow 14,559.65, +111.90 (0.77%)
NASDAQ 3,252.48, +17.18 (0.53%)
S&P 500 1,563.77, +12.08 (0.78%)
NYSE Composite 9,083.71, +60.75 (0.67%)
NASDAQ Volume 1,421,957,375
NYSE Volume 3,114,387,000
Combined NYSE & NASDAQ Advance - Decline: 4165-2247
Combined NYSE & NASDAQ New highs - New lows: 392-34
WTI crude oil: 96.34, +1.53
Gold: 1,595.70, -8.80
Silver: 28.68, -0.136
Banks in Cyprus are scheduled to open on Thursday, so plan on the bank runs starting then. Meanwhile, US markets don't seem to care that Europe is becoming a more dangerous place for money, with Cyprus-like "bail-ins" rumored to be written into law. In other words, the bank can take your money if they made some bad investments or need to shore up their balance sheets. Nice!
Note: the editor or idiot-in-chief takes no responsibility for the accuracy or validity or truthiness of any of the following. Bunga-bunga.
Going long German bank vault builders.
With all the money that's going to be sloshing around Germany, could this foment another Weimar moment?
Ve have all de monies. Ve are rich! You vant milk? 500 euros. Danka.
Ok, OK, I'm getting this image here, that money leaves all periphery banks, sooooooo... what about all that Basel III (I think that's the one), that the banks are supposed to have X percentage of tier one capital? Uh, is that why the Eu said, well, move those requirements back a few years.
OK. Then these banks, without sufficient capital in them when the bank runs begin, go under... hard. Bank holidays across all of Southern Europe. Capital controls: only able to withdraw 30 Eu per day, something like that. (there's great potential for black markets, i.e., I'll write you a check, Guido, you cash it and give me the money. I'll give you XX euros.)
So, massive bank runs, governments shitting their pants, bond yields heading to zero, the US 10-year goes below 1%, the 30 down below 2%, and I can move out of the foreclosed home I inherited and buy some squishy new place at something like 2.25% on a 30-year loan. Sounds like a plan to me, unless my friends at Bank of America forget to proceed on that foreclosure, like they have for the past 3 years.
One nice feature of this nearly-100-year-old home, it's huge, with lots of places to hide cash and shiny things. No mortgage and - I love this part - the bank, being that they foreclosed, are responsible for the ridiculous NY state real property taxes. They've already ponied up over $15k, and that's on an $81K home. They were even so good as to pay the interest on the back taxes, and, twice a year, I get a letter from the govt. that the taxes have been paid, even though I never get a bill any more, that goes directly to the bank. Man, those guys at the bank sure are smart.
Life can't really get much better, or, maybe a real depression will end up making my extended pre-retirement even better!!!! (Four exclamation marks in honor of the Mogambo Guru.)
Party on. Bund-a, bund-a!
OT: Just for the laughs, Fannie Mae just listed this beauty for $3000 in Rochester, NY (my homie townie).
Just look at the pics and read the description. LMAO
Current Keiser Report after the stats.
Dow 14,559.65, +111.90 (0.77%)
NASDAQ 3,252.48, +17.18 (0.53%)
S&P 500 1,563.77, +12.08 (0.78%)
NYSE Composite 9,083.71, +60.75 (0.67%)
NASDAQ Volume 1,421,957,375
NYSE Volume 3,114,387,000
Combined NYSE & NASDAQ Advance - Decline: 4165-2247
Combined NYSE & NASDAQ New highs - New lows: 392-34
WTI crude oil: 96.34, +1.53
Gold: 1,595.70, -8.80
Silver: 28.68, -0.136
Monday, March 25, 2013
Hurrah! Boo! Cyprus is Saved! Cyprus is Doomed!
There are so many angles to the story of what happened to Cyprus over the past week or so that it boggles the mind to consider just a few of the long-term ramifications, but, clearly, the deal struck late, late Sunday evening by the ECB, IMF and the European Commission, deferred to by the president of Cyprus - who really didn't have much say and actually threatened to resign (he should have) - was a game changer in more ways than one.
First, the deal.
Instead of making everybody pay, which was the original plan foisted upon the Cypriot parliament and summarily dismissed in a unanimous vote, the brain trust that is the ECB worked out a plan that would fold up one insolvent bank - Laiki - and reorganize another (Bank of Cyprus), impose capital control limiting withdrawals to 100 euros, and force depositors with over 100,000 euros - because there are so few bond holders - to pay down the bank's debt, with a levy of up to 40% on those deposits.
OK? Stay with me here. Because the plan is not a bailout, but a reorganization, the parliament of Cyprus will not have to vote on it. There. All fixed.
Except that mush of the money that's going to be "levied" in the "reorganization" is Russian money, laundered or otherwise, and the Russians are not very happy, even though Angela Merkel is. Hmmm... Russians unhappy, Germans happy. That doesn't sound familiar, does it?
Further, banks in Cyprus are supposed to open tomorrow, but probably won't, and even when they do, the flight of capital will be intense, even at the absurdly tiny levels of 100 euros a day. This story is still very, very fluid and has a multitude of effects on all of Europe and the rest of the world, so, stay tuned.
As far as the markets were concerned, news of a "solution" to the Cyprus problem was greeted with hallelujahs and buying, with the futures of US indices all heading skyward and the Euro ramping up against the dollar.
Stocks in the US (and Europe) opened higher, leveled off until, until, Dutch Finance Minister and recently-appointed head of the ECB, Jeroen Dijsselblom, went on the record to say that the Cyprus solution may well be a "template" for other troubled banks in the Eurozone.
Uh-oh. markets tanked. The Dow, which was up 51 points, went negative by 128. European bourses revered. The EUR/USD FX pair went negative in a big way. Impairment of depositor money (government-sanctioned theft) is not what rich people want to hear. Never mind the poor and not-so-poor with deposits of under 100,000 euros, which are guaranteed by the bankrupt ECB, it's the rich people's money that's going to bail out banks in the future Europe.
Ouchie! But, that's what should happen. Insolvent banks should be wound down first by smacking the junior and then senior bond holders and, if that's not enough to cover the debts, uninsured depositors pony up the balance.
So, that's Cyprus, the future of Europe and the global financial system all rolled up into 12 or 14 neat paragraphs. If you've got over 100,000 euros in any bank these days, you are either as nuts as our Federal Reserve chairman or a big business that needs that amount of capital to meet payroll, expenses, etc. For those, there is no alternative (well, there is, but what business really wants to keep that much cash lying around?).
For people with less than 100,000 euros or the equivalent in dollars (about $129,000 right now), how much do you want to risk in any bank, any bank which could be closed indefinitely in case of a financial crisis or emeeeeeeergency, with no access to your funds until the "officials" deem the situation resolved?
Let's just say that the answer for most people would be, "not much."
Well, that just raises another fearsome looking ugly head in the form of capital controls (you can only take out "so much" today) or, outright loss. The answer is bank runs of the kind not seen since the Great Depression, when, remember, banks were closed for weeks and longer and some never reopened. IT CAN HAPPEN HERE because it already did.
So, where do you put all that extra cash of yours, lucky you? Most Americans have sums of money in "investments" which are just promises and based upon given market levels which change from day to day. Trust. It's a fun term.
Others have money in banks. Best advice is, if you must keep your dough in a bank, spread it around. A better solution would be to invest (you have enough money, right?) in a very heavy safe, a good alarm system, a coule of good firearms and maybe a couple of alert, healthy guard dogs. Yeah. Old school, like medieval days, which is to where the world is headed. Maybe a moat filled with crocodiles, drawbridge and turrets should be the new home design for the 2020s?
You laugh. Don't. Money in banks, as proven by the bizarre and brazen moves of the psychopathic leaders of the ECB, IMF and EU. is not as safe as you'd like to think. Ask anyone who lived through the Great Depression. Most people kept more money stuffed into their mattresses than in their local banks, and, with good reason. The banks failed and their money was gone. Poof!
The choice is yours, dear readers, play the game of chicken with the elites, who have no taste nor mercy for the likes of you and yours, or take action. keep in banks only what you need, because, when you think of it, the FDIC insures deposits of up to $250,000 in the US. That went up from $50,000 prior to the crash in 2008. Why? Because people smart enough to understand what was going on were taking their money out and the government and the banks would really have gone bust in a huge way had there been real banks runs like in the 1930s.
Without looking it up, the FDIC budget is something along the lines of $50 billion. The amount of deposits in US banks is on the order of $14 TRILLION. Do the math.
That's it for today. We're all Cypriots now.
Dow 14,447.75, -64.28 (0.44%)
NASDAQ 3,235.30, -9.70 (0.30%)
S&P 500 1,551.69, -5.20 (0.33%)
NYSE Composite 9,022.95, -42.85 (0.47%)
NASDAQ Volume 1,665,435,625
NYSE Volume 3,539,278,250
Combined NYSE & NASDAQ Advance - Decline: 2714-3624
Combined NYSE & NASDAQ New highs - New lows: 489-49 (straining)
WTI crude oil: 94.81, +1.10
Gold: 1,604.50, -1.60
Silver: 28.82, +0.117
First, the deal.
Instead of making everybody pay, which was the original plan foisted upon the Cypriot parliament and summarily dismissed in a unanimous vote, the brain trust that is the ECB worked out a plan that would fold up one insolvent bank - Laiki - and reorganize another (Bank of Cyprus), impose capital control limiting withdrawals to 100 euros, and force depositors with over 100,000 euros - because there are so few bond holders - to pay down the bank's debt, with a levy of up to 40% on those deposits.
OK? Stay with me here. Because the plan is not a bailout, but a reorganization, the parliament of Cyprus will not have to vote on it. There. All fixed.
Except that mush of the money that's going to be "levied" in the "reorganization" is Russian money, laundered or otherwise, and the Russians are not very happy, even though Angela Merkel is. Hmmm... Russians unhappy, Germans happy. That doesn't sound familiar, does it?
Further, banks in Cyprus are supposed to open tomorrow, but probably won't, and even when they do, the flight of capital will be intense, even at the absurdly tiny levels of 100 euros a day. This story is still very, very fluid and has a multitude of effects on all of Europe and the rest of the world, so, stay tuned.
As far as the markets were concerned, news of a "solution" to the Cyprus problem was greeted with hallelujahs and buying, with the futures of US indices all heading skyward and the Euro ramping up against the dollar.
Stocks in the US (and Europe) opened higher, leveled off until, until, Dutch Finance Minister and recently-appointed head of the ECB, Jeroen Dijsselblom, went on the record to say that the Cyprus solution may well be a "template" for other troubled banks in the Eurozone.
Uh-oh. markets tanked. The Dow, which was up 51 points, went negative by 128. European bourses revered. The EUR/USD FX pair went negative in a big way. Impairment of depositor money (government-sanctioned theft) is not what rich people want to hear. Never mind the poor and not-so-poor with deposits of under 100,000 euros, which are guaranteed by the bankrupt ECB, it's the rich people's money that's going to bail out banks in the future Europe.
Ouchie! But, that's what should happen. Insolvent banks should be wound down first by smacking the junior and then senior bond holders and, if that's not enough to cover the debts, uninsured depositors pony up the balance.
So, that's Cyprus, the future of Europe and the global financial system all rolled up into 12 or 14 neat paragraphs. If you've got over 100,000 euros in any bank these days, you are either as nuts as our Federal Reserve chairman or a big business that needs that amount of capital to meet payroll, expenses, etc. For those, there is no alternative (well, there is, but what business really wants to keep that much cash lying around?).
For people with less than 100,000 euros or the equivalent in dollars (about $129,000 right now), how much do you want to risk in any bank, any bank which could be closed indefinitely in case of a financial crisis or emeeeeeeergency, with no access to your funds until the "officials" deem the situation resolved?
Let's just say that the answer for most people would be, "not much."
Well, that just raises another fearsome looking ugly head in the form of capital controls (you can only take out "so much" today) or, outright loss. The answer is bank runs of the kind not seen since the Great Depression, when, remember, banks were closed for weeks and longer and some never reopened. IT CAN HAPPEN HERE because it already did.
So, where do you put all that extra cash of yours, lucky you? Most Americans have sums of money in "investments" which are just promises and based upon given market levels which change from day to day. Trust. It's a fun term.
Others have money in banks. Best advice is, if you must keep your dough in a bank, spread it around. A better solution would be to invest (you have enough money, right?) in a very heavy safe, a good alarm system, a coule of good firearms and maybe a couple of alert, healthy guard dogs. Yeah. Old school, like medieval days, which is to where the world is headed. Maybe a moat filled with crocodiles, drawbridge and turrets should be the new home design for the 2020s?
You laugh. Don't. Money in banks, as proven by the bizarre and brazen moves of the psychopathic leaders of the ECB, IMF and EU. is not as safe as you'd like to think. Ask anyone who lived through the Great Depression. Most people kept more money stuffed into their mattresses than in their local banks, and, with good reason. The banks failed and their money was gone. Poof!
The choice is yours, dear readers, play the game of chicken with the elites, who have no taste nor mercy for the likes of you and yours, or take action. keep in banks only what you need, because, when you think of it, the FDIC insures deposits of up to $250,000 in the US. That went up from $50,000 prior to the crash in 2008. Why? Because people smart enough to understand what was going on were taking their money out and the government and the banks would really have gone bust in a huge way had there been real banks runs like in the 1930s.
Without looking it up, the FDIC budget is something along the lines of $50 billion. The amount of deposits in US banks is on the order of $14 TRILLION. Do the math.
That's it for today. We're all Cypriots now.
Dow 14,447.75, -64.28 (0.44%)
NASDAQ 3,235.30, -9.70 (0.30%)
S&P 500 1,551.69, -5.20 (0.33%)
NYSE Composite 9,022.95, -42.85 (0.47%)
NASDAQ Volume 1,665,435,625
NYSE Volume 3,539,278,250
Combined NYSE & NASDAQ Advance - Decline: 2714-3624
Combined NYSE & NASDAQ New highs - New lows: 489-49 (straining)
WTI crude oil: 94.81, +1.10
Gold: 1,604.50, -1.60
Silver: 28.82, +0.117
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