CYPRUS AFTERMATH
Blogger strikes again with this paragraph glad to almost be done with it I can't get the left justify to work, my apologies for the poor aesthetics.
This is something I rarely do but I am going to do it tonight, I told you so! I mentioned that it was more important to determine how the FED would react to the situation over seas than whether or not it had any larger economic consequences or not. We have to keep in mind this is not the normal free market we are all used to having. This market is completely controlled by the US Fed and it's minions. They are always going to stay in front of any crisis they see developing and today was certainly no different. You can see when you look at this market from this perspective today was a non-event completely.
There has been a lot of talk about how this situation in Cyprus is not a big deal because of all the illegal tax dodgers that supposedly have money in the banks there. I am going to assume that everyone who makes that point has names of specific account holders and how much illegal money they have there. Otherwise that is nothing more than conjecture. It may well be right but consider this, what if half the account holders are criminals which would be an astounding percentage. That would still leave half the customers who woke up to a smothering tax. I am going to also assume that anyone making those points would also be fine if they woke up tomorrow morning and either 7% or 10% of their money in their bank accounts had been arbitrarily confiscated. If you are ok with taking a hit like that than you are right to make those points. However, I doubt very seriously virtually anyone would be willing to take that hit. It seems the vote has failed so the tax for the moment is dead but the problem is still there.
"Don't worry this can never happen here in the US." Really? There are prior instances of bank holidays ( not presidents birthday's ). There have been days where banks have been closed to slow down runs on them in this country. I am not predicting anything. What I am saying is that never say never. We had periods where our own government confiscated Gold has everyone forgotten that already?
The point to be made here is that it things get bad enough all bets are going to be off. We are already seeing liberties being attacked like never before, is it really such a stretch to imagine our government just taking money out of your bank accounts? There has been talk already of forcing portions of retirement plans into government bonds, folks the ground work is being layed for all sorts of sinister things that could follow. It is also possible everything will be completely fine and there is nothing to worry about. I just know I am going to put a plan in place and nobody is going to know what it is other than my wife. It is not a panic plan by any stretch. It is essentially the equivalent of a stop loss on the situation.
One other thing, in a situation like this, do you really think Gold is worth anything? If we get to a point where money is just taken by the government they are also going to take anything else they think might be of value. If by chance Gold happens to be that asset they will take it to. They already have once before for god sakes!
Enough on this now back to the markets. I am struggling to find really good setups this week so far to trade from. The Grains seem to be somewhat in between. The metals are a mess pattern wise to me. I also see nothing in the Currencies other than the Dollar Index is in the zone for a potential double top with COT selling. I don't see a daily trade in that market.
The Bond market has gotten itself back up into a potential sell zone area but my short term indicators are pretty bullish right at the moment.
I have been recording videos for my web site and I think I have some good things if the darn thing is ever done. At this point I have almost stopped asking. I think the problem has been that the people we are using do web sites for big companies with huge budgets and are squeezing us in during the odd spaces of time they have in between big projects. As a result we are getting good quality but poor response time. Oh well I guess I deserve it so it is what it is.
Let's stay patient, when I lose my patience I lose my money generally.
4 comments:
Love ya, Chris, but you need to get out more. Specifically, to Europe. More specifically, re Cyprus, to eastern Europe. Talk to people. Find out what is common knowledge--which, true, could be wrong, but the same could be said about much of what you or I believe about our government or wealthy class or whatever here at home. You think half of the big accounts in Cyprus being from criminals and the like is unbelievably high? As people will smilingly tell you over there, Americans can be so naive. This is precisely what Cyprus set itself up to be: the Caymans for the East's, um, 'suddenly rich'. There's roughly 65-70 billion euros deposited in Cyprus banks, and half of it is from foreign depositors (from the former Soviet bloc), and all of those depositors fall in the >100,000 euro category. There have not been that many of what we would call legitimate fortunes made in the old bloc to account for the Cyprus deposits, much less the billions and billions more flowing into any area of 'investment' in nearby countries where said area is very loosely overseen, with what we would think were pretty low standards regarding the source of dough. It is what it is, whether you or I or anyone likes the precedent or not. But to your point, we had 'bank holidays' during the Great Depression so it's not like the precedent hasn't already been set here, anyway. Personally, I don't know how else to stop bank runs that would basically destroy a chunk of the financial infrastructure. At least it buys a little time to try and calm things down and keep people from panicking, even backtrack like the Cyprus govt. is doing now.
I don't know if this proposed tax is right or wrong, or if there is a better way to raise the money, though my guess is that there probably is, at least for part of it. But I don't really think that we can impose our ideological thinking, based on the economic environment we were brought up in and live in, on a situation taking place in a reality vastly different from ours. The principle you fight for may not actually be a principle in another context, or may be a belief and not a principle...but now I'm getting Jesuitical.
I will say that if I have 5 million euros that I got by selling drugs or stolen cars or women into prostitution in Scandinavia and Western Europe--or even from a legit business I founded where I didn't pay off officials for favorable treatment--I would be pissed off if somebody took 500k of it. I'd have to go out and buy a few cases of great champagne and a pound of the finest caviar to drown my anger. Maybe have a couple five or ten thousand-euro suits made by my tailor to protest my maltreatment. And see if anyone I know could get me a tax haven account somewhere I should have put my money in the first place if I was smarter. Or cleaner.
John good points
My point is still that unless it is 100% illegal money, in a situation like this the governments are outright re-writing their own laws in mid stream and screwing some innocent people. I don't want this to be a lightning rod in here I was simply making the point that if all Americans think this can't happen here they are being naive. Will it? Who knows, my point was get a plan, the world is on the verge of some serious problems. Let's all hope they don't come about.
But why would you trust a tiny country to "guarantee" your deposits where the banking sector is such a huge % of the GDP of the entire country, and who has been investing your funds into Greek Bonds? It is idiotic to put money in a banking system like that, unless there are other reasons (or you are a resident).
It is clear from the few comments so far that it is apparently ok for the local innocent people to have money stolen from them like what almost happened here.
It is very surprising to me but it also plays into what I said in a post the other day. Nobody cares about someone else getting screwed it is only when it happens to them that it matters.
Be careful what you ask for, time to move on from this discussion.
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