Posted Jan 14, 2013 by Martin Armstrong
Cyprus is the 5th of 17 Eurozone countries to ask for a bailout. The entire structure of the Eurozone was a disaster. It is common knowledge that the commission attended our London Conference in 1997 and our warnings went unheeded. It was explained that allowing each nation to retain its own debt would NOT create a single currency since each nation could be individually targeted, which is precisely what took place. Bonds merely replaced currency. True, we were the only people warning publicly that would happen. However, we were by no means alone. For any trader on a dealing desk at a major bank laughed at the design. The problem that emerges is that those working for such banks cannot speak publicly for their words are attributed to the bank – not personally. Silence remains golden.
Cyprus might very well default and exit the Eurozone, but this could result in a an interesting problem. Using taxpayer money through the ECB to bail out Greece has left a bad taste in too many mouths – but that was justly deserved. The Euro initially fell to about 80 cents against the dollar and then rose to about $1.60. This meant that the PREVIOUS national debts DOUBLED in international value terms. That is what effectively forced the Euro Crisis. It was not the current spending in Greece, corrupt speculators, politicians, or every other capitalist label they can dig up to blame. True, the Euro has fallen, but by no means enough to devalue the outstanding PRIOR debts. The ONLY way the Euro would have survived was to consolidate the debts of all members creating a Euro bond, and thereafter, each nation would be separately responsible for their own debts as are the states in the USA. The key would be that the individual state debt would NOT serve as a reserve for the banking system. This BRAIN-DEAD scheme for the Euro has placed the entire world at risk, will be the catalyst to destroy Marxism once and for all, and threatens even international relations as losses mount outside of the Eurozone. This is all aside from the collapse of the European economy could very well entice Russia to get even. The barbarians succeeded in taking Rome because of its own internal economic corruption, mismanagement, and unfunded liabilities of promised pensions to state workers.
Cyprus is deeply intertwined with Russian “black money” raising political concerns at the international level. Cyprus is in terrible shape as its banks claim €152 billion in leveraged assets that are 8.5 times the country’s GDP of €17.8 billion. Even the exposure to Greece cost Cyprus banks €4.5 billion. Almost 30% of the banks in Cyrus are showing nonperforming portfolio assets.
The German Bundesnachrichtendienst (BND) reported last year that about €26 billion in Russian “black money” had been deposited in Cyprus. The Germans accused Cyprus of facilitating large-scale money laundering for the Russians cleaning their money and then becoming one of Russia’s largest foreign investor. They further have accused Cyprus of handing out Cypriot passports to Russian oligarchs giving them access to live within the EU.
The size of the required bailout for Cyprus is about 100% of its GDP – some €17.5 billion. This is raising serious problems behind the curtain and there is even talk of eliminating Cyprus from the EU nullifying all passports. This is just the tip of the problem behind the Euro. Where alliances are attributed to creating World War I, today it is the Euro that has created a financial alliance that nobody understood. Its design is fatally flawed and we are running out of band-aids here.
The entire world economy is at stake. It is time to stop the bullshit. We need REAL monetary reform. Unfortunately, hold-on. This rise seems headed to stop only when we reach the end. The European Commission issued its report on bank bailouts, the “2012 State Aid Scoreboard.” This has revealed that the amount that the 27 EU states handed to their banks because of this faulty design of using all member state bonds as reserves amounted to €1.6 trillion. This is 13% of GDP to keep the banking system floating and there are still leaks with a risk that the entire banking system collapses being supported by member bonds. Add to the fact that 2013 appears that GDP growth will be flat and may even be in real terms NEGATIVE. So those who still think the dollar is the greatest risk, better open your eyes. The USA is in prettiest of the ugly sisters. She may be no prize, but she will be the LAST to go.