Tuesday, April 23, 2013

As Forewarned, The Irish Savers Have Just Been "Cyprus'd"....

I just got this in an email... any of you that are more savvy at the financial stuff  will probably

 understand it better than I......

This is likely to be the biggest finacial story of the month, a story that's bigger than Cyprus, and a story that you're not going to see in American mainstream media - not by a long shot. Let's take this from the top, for BoomBustBloggers were warned weeks in advanced. On Wednesday, 27 March 2013 I published EU Bank Depositors: Your Mattress Is Starting To Look Awfully Attractive - Bank Risk, Reward & Compensation wherein I explained that the situation of extreme loss faced by Cyprus bank depositors, savers and bondholders will not be a unique story - as excerpted:
The deposit accounts that you were getting just a few hundred basis points for have developed:
    1. Liquidity risks: The capital controls that weren't supposed to happen (see No Capital Controls In The EMU? Liar Liar Pants On Fire), happened! See Cyprus Banks Set To Reopen, To Serve As Glorified ATMs With A €300 Cash Withdrawal Limit
    2. Credit risks: Your so-called safe investments will suffer up to a 40% haircut! Mainstream Media Says Cyprus Salvaged By EU Deal, I Say Cyprus Is Sacrificed By Said Deal - Thrown Into Depression
    3. and Market risks: Demand depositors have forcibly purchased highly speculative synthetic call options with their haircuts that are unlikely to compensate anyone for anything!
The little app below calculates what return you should expect to receive to take on the risk of a potential 40% haircut. The second tab offers what recent Cyprus bank rates were. Do you see a disparity???


1 comment:

  1. Corrected for spelling.

    While we are sidetracked with last weeks events, it's worth remembering that TPTB always take advantage of these situations to do something when they know people aren't looking. Always watch what both hands are doing.... not the one that the "talking heads" show you on TV.

    For instance last Monday while people were getting killed and losing limbs in Boston, Congress, in both houses, passed the Stock Act. Didn't heat about that on TV did ya?

    This had been repealed in the last year or so. Now they passed it again. It gives Congress and their aides the legal ability to act on insider information regarding Wall Street trades.... things that would send us to jail.

    On another note, here is an article that everyone should read, that dovetails with your post.



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