{"id":2960,"date":"2013-03-17T20:42:23","date_gmt":"2013-03-17T18:42:23","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=2960"},"modified":"2013-03-17T20:42:23","modified_gmt":"2013-03-17T18:42:23","slug":"chipriotas-o-idiotas","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/chipriotas-o-idiotas\/","title":{"rendered":"Cypriots or idiots"},"content":{"rendered":"

\"\"The rhyme is easy. But there is no animosity towards that nation, far from it, as what happened in Cyprus would be comparable to what has happened in the rest of the southern periphery of the Eurozone. The circumstances and the rhymes of a Greek, Italian, Spanish or Portuguese person are different, but the parallels are undeniable, and\u00a0idiots<\/a> (in the sense of someone who is conceited without good reason or who lacks education) can be found everywhere.<\/p>\n

The politically correct euphemisms used on the outskirts are varied, but essentially, what has already happened and what may happen in the future are one and the same:Spreading the losses and sharing the burden of insolvency arising from the excessive indebtedness of banks and governments<\/strong>. The non-payment or default on Greek sovereign debt has, until now, been referred to as\u00a0partial removal.<\/em> In Spain, they have used names such as\u00a0soft bailout, Sareb or preference shares<\/em> (as Guru Hucky rightly says in\u00a0this article<\/a><\/strong>). And in Cyprus, it has this time been named\u00a0special tax on deposits<\/em>. But the nature of the situation is the same: plugging holes in the accounts, the banking system and the state coffers with the people\u2019s money. Money belonging to savers and investors who have placed their trust in the promises, oaths and\u00a0words spoken by the baby Jesus<\/em> by the relevant authorities. Money is even confiscated from ordinary contributors and taxpayers who have not even made the mistake of making any voluntary contribution.<\/p>\n

Everyone: Devotees, the gullible and sceptics are all martyrs and potential victims<\/strong>a process of socialising public and banking debt, which can only be halted by the ECB cranking up its money-printing presses at full throttle (and even then, it would still amount to a widespread confiscation of the wealth of all Europeans through devaluation and future inflation). But everything seems to indicate that these electronic printing presses will not be used until the people are left without a single drop of liquidity. That is the strategy defined by the Vice-President of the European Commission, Olli Rehn, as we discussed in\u00a0\u201cWe will be the German market of the 2020s\u201d<\/strong><\/a>.<\/p>\n

This partial Cypriot \u2018corralito\u2019 is a clear statement of intent on the part of the Eurogroup, currently chaired by the Dutchman (Triple A\u2026)\u00a0Dijsselbloem<\/a>. Because the size of the bailout for the Cypriot economy is laughable compared to that of Italy or Spain. To give us an idea, European finance ministers have preferred to open the floodgates to capital controls in the Eurozone, rather than contribute a further 7,000 million to ensure Cyprus\u2019s sovereign debt did not default (a total of 17,000 was required, of which only 10,000 has been agreed to be bailed out). Let us remember that our banking bailout (the banking sector alone) has cost all Spanish citizens no less than 100,000 million, as Europe \u2013 led by the Netherlands and Germany \u2013 ultimately refused to accept the bailout using European funds. And to top it all off, Lagarde (IMF) has just warned that \u201cthe Spanish banking sector\u2019s recapitalisation needs could increase even further<\/em>\u201c, provided, of course, that property prices continue to fall and we do not once again distort their valuations. In other words, if the 7,000 from Cyprus do not leave Europe, just imagine what will happen as soon as the markets put pressure on the fragile balance in Spain or Italy (or France\u2026)<\/p>\n

The Eurogroup has therefore chosen to renege on the sacrosanct promises of bank deposit protection (a level of trust that will be difficult to restore) and the free movement of capital within the Eurozone, rather than contribute an almost negligible sum from the European Union\u2019s coffers. Furthermore, they could have authorised other alternative measures to plug that 7 billion shortfall, such as a partial write-off of Cyprus\u2019s debt to Greece, a reissue of sovereign debt guaranteed by the other countries or the ECB, an Irish-style bank bailout, and so on. But no. The decision taken was the least subtle and the most inflammatory, given that\u00a0The losses in the form of risk premiums for Italy, Portugal and Spain are likely to be far greater than those 7,000 million in four days\u2019 time.<\/strong><\/p>\n

Negligence? I don\u2019t think so. I wish it were, as that could be rectified. Rather, I fear a significant deterioration in internal relations within the Eurogroup. A lack of harmony that has allowed the taboo word \u201cCorralito\u201d to return to the front pages of the press in Europe\u2019s periphery, all over a relatively minor sum. This divergence of positions within the Eurozone may have meant that an almost insignificant sum such as 7,000 million has now become unacceptable to the net contributor countries. In other words, they have dug their heels in at 10,000 million and have opted for the \u201ccorralito\u201d for the remaining 7,000, as a definitive statement from the Central European contributors that \u2018this is as far as we go\u2019.<\/p>\n

What might happen, then, when the markets demand further solidarity-based contributions from the Troika, on the scale of those that Italy and Spain will require? Well, it\u2019s as plain as day \u2013 or rather, as clear as a bottleneck. Common sense (and, of course, the experience of the periphery to date) points to a universal law which, despite being elementary and obvious, is sometimes obscured by demagoguery and politically correct euphemisms:\u00a0The money will come from those who still have it<\/strong>. As we said at the outset, only the unlikely mass electronic printing of euros by the ECB can prevent the crude and gradual confiscation of the public\u2019s money. But Germany does not seem willing to allow the\u00a0QE<\/a>Americans, and therefore the direct plundering of the population is and will remain a fact. And, as is only to be expected, the population that will be affected first is that on the periphery \u2013 that is, those in the countries responsible for the insolvencies that are destabilising the entire Eurozone. And within these, the most trusting \u2013 or rather, the most gullible \u2013 will be the first to suffer. It is a sad, unjust but overwhelming logic, whatever politically correct rhetoric and euphemisms may say.<\/p>\n

One way or another, the insolvency of banks and governments will be paid for by those who have money \u2013 in other words, by the general public<\/strong>. First of all, it is the turn of the most naive, trusting, risk-taking and\/or poorly advised (holders of sovereign debt, preference shares, bank shareholders, bank depositors, etc.), and soon the bloodletting will spread to savers and investors less inclined to believe and trust.<\/p>\n

At this point, it is worth recalling the sentence we wrote just a few weeks ago in the article entitled\u00a0\u201cShould I invest from Spain or from Luxembourg?\u201d<\/strong><\/a>:\u00a0Now that insolvency has crept in through the back door, the most prudent investors must already have jumped out of the window and headed for legitimate and transparent financial centres that offer lower legal, banking and country risks<\/em>. Although (fortunately) the momentum of trust and government promises is strong and slow-moving, deterioration and confiscation are spreading slowly but inexorably. And although it may not yet take the form of a scandalous tsunami, the tide is rising and drowning the most trusting and oblivious.<\/p>\n

Today it was the turn of the holders of deposits in Cypriot banks, who had placed their trust in the Deposit Guarantee Fund, in the statements made by the European Commission, in the Eurogroup\u2019s finance ministers, and in the bailout of the\u00a0Troika<\/a> and, ultimately, the Three Kings of the West. But the tide will continue to rise and drown more and more holders of that precious and scarce commodity called money, for which the Eurozone is killing \u2013 and will continue to kill \u2013 today. And provided we do so within the bounds of current law, we would do well to manage our assets in such a way that the next turn of events is always someone else\u2019s\u00a0idiots<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

La rima es f\u00e1cil. Pero no existe ninguna animadversi\u00f3n hacia ese pueblo, ni mucho menos, ya que lo ocurrido en Chipre ser\u00eda comparable con lo acontecido en el resto de la periferia del sur de la Eurozona. Las circunstancias y las rimas de un griego, italiano, espa\u00f1ol o portugu\u00e9s son distintas, pero los paralelismos son […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[38,51,45,41,39,37,55],"tags":[],"class_list":["post-2960","post","type-post","status-publish","format-standard","hentry","category-actualidad","category-banca","category-asesoramiento-deportistas-artistas","category-economia-y-finanzas","category-crear-mi-propio-family-offices","category-reflexion","category-necesito-un-family-office"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/2960","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/comments?post=2960"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/2960\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=2960"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=2960"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=2960"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}