The Next Domino To Fall In Europe: Greece, Portugal, Spain, or Italy?

Debt, not money, is the root of all evil. Think about it for a second. Money is just a medium to pay off our debts. Money is just a piece of paper that derives its value from Perception. The perception of the Creditor (Seller) and the Debtor (Buyer).  What do I mean by that? Well, let me give you an example. Almost every person in Zimbabwe is a Trillionaire, which is great, aside from the fact that a loaf of Bread costs upwards of  50 Billion Zimbabwe Dollars (that was way back in 2009). That is the perceived value of their currency. From the Creditors’ point-of-view, 50 Billion Z$ is only worth 2 loafs of bread. The point is, there are only 2 types of people in this world: The Haves (Rich) and the Have Not’s (Poor). Period. There is no 3rd category. And no matter where you live, or on which planet you live, the Haves always, I repeat, ALWAYS, will have the upper hand.

As long as there are humans, living together in a Civilized (?) Society, there will be Debt and there will be Debtors. There’s no escaping this reality. And one does’t need money for this relationship to exist. Back in the day, there was something known as a Barter System, where people exchanged actual tangible goods and services, in exchange for actual tangible goods and services. As we evolved and our population expanded, we created Coins, then Currency Note, and now just Digits on a Computer Screen (courtesy of Fractional Reserve System), to make the process of Buying and Selling more efficient. Credit, Loans, Leverage, are all derivatives of the Fractional Reserve System. And that my friends, is why we find ourselves in this Financial Mess. When a system (any system) allows one to BORROW more than one can AFFORD, the ultimate outcome is BANKRUPTCY. It’s just like musical chairs: When the music stops, someone is ELIMINATED. This same principle applies to both Individuals and Nations equally.

That brings me to the crux of this article: Beginning tomorrow, I will be posting a series of articles on the European Debt Crisis, focusing specifically on Debt, and the ability of the European nations to pay their Debt. The subject of these articles will be: Greece, Portugal, Spain, and Italy. I will carefully dissect every single economic variable for these nations, to arrive at a self-fulfilling conclusion as to which European Nation will be the next domino to FALL.

The Russians Are Coming, Comrades. Time To BTFD.

To quote one of the greatest thinkers and intellectuals or our time, Jim Cramer-opolis, “NO-ONE CARES ABOUT CYPRUS. It’s just a tiny island near Malta. The ‘Fundamentals’ of the US Economy are strong, which is all that matters. I wouldn’t want to invest anywhere else other than US Equities.” Translation: BTFD.

[Also, the only reason the market is UP right now is because some dim-wit sitting at his/her desk @ 30 Hudson St, Jersey City, NJ, started a rumor that the Russians have reached an agreement with Cyprus to buy Cyprus Popular Bank, and this deal would reduce Cyprus funding needs by 4 Billion Euros. The rumor was of course later denied. But that doesn't matter anymore, because the algos are only programmed to suck the market in one direction: UP]

I beg to differ with this naive assumption by the media that Cyprus is just a small island and whether it stays in the Euro or Exits,  it does not bear any global repercussions as the the ‘Fundamentals’ of the US Economy are strong. If by ‘Fundamentals’ they mean Seasonally Adjusted Numbers, the only thing I’d like to say to them is, Good Luck. Because just this morning, FedEx cut its global growth forecast and Caterpillar reported an accelerated DROP in it’s global retail machine sales. The media interpretation: Nah… They’re lying. They’re just trying to scare us into believing that All Is Not Good. Where’s Ashton… Hey Ashton, come out come out where ever you are. Where’s my Punk’d hat. LMFAOSTFUBTFDDDDD.

Cyprus is a Big Deal. Yes, it’s true that Cyprus is just an Island with a population of a measly 1 million, but there’s a much bigger issue boiling under the skin that no one in the media seems to talk about. Perception. If Cyprus were to pass the levy tax on bank deposits, it will start a domino effect that will spread to Greece, Portugal, Spain, Italy, etc… Because what this means is that if the Governments cannot raise enough revenues to repay their bailout/debt, as more than 20% of the population is unemployed, it will at some point, willingly or un-willingly, have to start stealing money from peoples’ bank accounts. And that my friends, is what’s ultimately going to happen. Deposit Tax or Not, once the banks in Cyprus open for regular business, there will be a Bank Run. It’s just human psychology. Once we lose our trust in someone or something, esp. when money is involved, we don’t give a F%#K what the outcome is; we just want OUT. Period.

Phrase of the Day: Contagious Bank Run

Markets In Turmoil: Cyprus Bank Run Imminent; $EUR Down 100+ Pips

And here we GO!!! Again. Just yesterday I published a blog questioning Europe’s long-term prospects and more importantly, the European Unions’ stability. To wit, Cyprus’ international creditors (IMF, Euro-Zone Members, esp. Germany), want Cyprus to impose levies on deposits held in Cypriot’s Banks, in exchange for a Bailout. The proposed levies are as follows:

  • 6.75% on deposits of less than €100,000
  • 9.9% on deposits exceeding  €100,000

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Is Europe The Next Lehman?

A lot has been written about Europe and The Great European Crisis. Many in the media have proclaimed, without any reasonable explanation, that the European Crisis is behind us now and the global economy is about the hit escape velocity and propel itself into the ether of space and time. Though I personally would love to see that scenario play-out, the truth is far from what the media and the politicians want us to believe. In reality the European Crisis is getting worse and worse every single day. Though this may not be reflected directly in the Bond Yields of the European nations (Yet), it’s certainly visible in the economic data coming out of Europe.
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