Sunday, March 17, 2013

TALEB: 'If I Were President, I'd Fire Bernanke!'

Bernanke's artificial markets.
Good highlight clip.  This is the one to watch.
(Bloomberg) -- Dr. Nassim Taleb, professor of risk engineering at New York University, explains how he would have avoided the 2008 financial crisis.


Currency wars and the decline of the middle class.


Taleb on artificial markets and stocks vs. bonds.


Full interview.

Photos by William Banzai7

Ryan Warns of Financial Collapse Over Debt, Its About Time A US Politician Says This As We’re Looking At $700 Billion Just To Pay Interest On The Debt!!!

Ryan warns of financial collapse over debt, urges Congress to avert ‘moral failure’

Rep. Paul Ryan issued an urgent call to conservatives Friday to bridle the debt and head off a crisis he described as a looming “moral failure,” defending the budget he introduced earlier this week from a barrage of Democratic attacks.
“We have to tackle this problem before it tackles us,” Ryan said, speaking on the second day of the Conservative Political Action Conference.
Putting the problem in stark terms, the House Budget Committee chairman and former vice presidential nominee said the nearly $17 trillion debt will “weigh down the country like an anchor” within the next 10 years. He said lenders will at that point lose trust and interest rates across the country will soar — under pressure, he said the federal government will print more money, cheapening the currency and leading to a financial collapse that has the effect of unraveling the social safety net. 
“It would be a moral failure,” Ryan said. The deficit spending, he said, “has to stop.” 

The Final Con…”Better prepare! The tragedy that lies ahead is apt to make the Great Depression look like a walk in the park.”

The stock market has now been up for ten straight days. Many on Wall Street are singing “Happy Days Are Here Again.” For them, that is probably the case. They finally have something to sell that will bring the rubes back into the markets. We are not in Kansas anymore.
Fear is ebbing and greed is coming back. Those on the outside looking in are rounding up cash so that they don’t get left behind. The shills assist them with their pictures of economic recovery, new era crap and whatever other nonsense they can peddle successfully. So the cycle goes, as it has since the New York Stock Exchange came into existence. We are in another game of musical chairs where the music is playing joyfully. As in all such events, there are too few chairs to accommodate the participants when the music stops. And it always does!
There is no economic justification for the level of these markets, at least in the sense of improvements to the real economy. The economy is in worse shape than it was several years ago, made so via massive government interventions. Debt has been piled onto governments, corporations and individuals. It is not serviceable, certainly not at market-determined interest rates. Artificially low interest rates prolong the game, but do so by further corrupting economic decisions and the economy.

Former US Treasury Official – US Financial System To Collapse / March 16, 2013
Today a former Assistant Secretary of the US Treasury warned King World News, “This type of situation is extremely dangerous.  The world has never seen it before.”  Former Assistant of the US Treasury, Dr. Paul Craig Roberts, also told King World News that JP Morgan now threatens the stability of the entire global financial system.  And if the Fed loses control and we collapse, “Nothing and no one would be safe anywhere.”
Here is what Dr. Roberts had to say in the second and final part of this extraordinary interview:  “I can point out three giant bubbles that threaten the remains of the American economy … When these bubbles pop, the consequence is obvious:  The wipeout of the remaining wealth from bond and stock collapses, and a very strong domestic inflation from the rise in the import prices.”
Dr. Paul Craig Roberts continues…
“The United States is now an import dependent country.  It doesn’t produce its own manufactured products, clothes, shoes.  These import items dwarf the import of oil or energy.  So what is the potential for happening when these bubbles burst is widespread unemployment, and a rapid increase in inflation, before which the economic policy has no known solution.
… It is frightening, and it shows the extent to which the economic policy of the United States is misused in support of four or five big banks that are ‘too big to fail’ … We now have one bank, JP Morgan, which has derivative exposure equal to the (entire) world’s GDP….

‘We’re Looking At $700 Billion Just To Pay Interest On The Debt!’

On Bernanke’s balance sheet bubble.
‘How will Bernanke deleverage into this market when the Fed itself owns the bulk of tradeable Treasuries.  Who wants to sell assets into a fragile recovery with the debt continuing to rise. Bernanke will delay, delay, delay!’

Why Congress Will Never Cut Spending

‘We’ll fight it tooth and nail!’  Under no circumstances!’

Bernanke: ‘I See No Evidence Of A Stock Bubble’

Analysis from Bloomberg:

Equity bubble?  Bond bubble?  Is Bernanke right?

An Orwellian America…(Must Read!!)

The state, crippled by massive deficits, endless war and corporate malfeasance, is clearly sliding toward unavoidable bankruptcy. It is time for Big Brother to take over from Huxley’s feelies, the orgy-porgy and the centrifugal bumble-puppy. We are transitioning from a society where we are skillfully manipulated by lies and illusions to one where we are overtly controlled. We are one crisis away from a police state. All the powers are in place. Someone will flip the switch. Whether a Cyber Attack, escalating Currency War tensions or a ‘terrorist’ attack by indebted college youth, it is only a matter of time and circumstance… We are one crisis away from a police state. All the powers are in place. Someone will flip the switch. Whether a Cyber Attack, escalating Currency War tensions or a ‘terrorist’ attack by indebted college youth, it is only a matter of time and circumstance.

SHOCKING! Obama: ‘We Don’t Have an Immediate Crisis in Terms of Debt’ … I Won’t Balance Budget ‘Just for the Sake of Balance

In an interview that was released this morning with former Clinton aide George Stephanopoulos on ABC, President Obama talked a little about his view of the debt.
“[W]e don’t have an immediate crisis in terms of debt,” Obama said. “In fact, for the next ten years, it’s gonna be in a sustainable place.”
Obama continued, “The question is, can we do it smarter, can we do it better? And– you know, what I’m saying to them is I am prepared to do some tough stuff. Neither side’s gonna get 100%. That’s what the American people are lookin’ for. That’s what’s gonna be good for jobs. That’s what’s gonna be good for growth.”
President Obama Won’t Balance Budget ‘Just for the Sake of Balance’
In an exclusive interview with ABC News, President Obama rejected calls to balance the federal budget in the next ten years and instead argued that his primary economic concern was not balancing the budget, but rather growing the economy.
“My goal is not to chase a balanced budget just for the sake of balance. My goal is how do we grow the economy, put people back to work, and if we do that we are going to be bringing in more revenue,” he said.
Obama rejected a proposal put forth by Rep. Paul Ryan today that would balance the budget in ten years, saying the Republican House member’s plan “slashes deeply” at programs like Medicaid.
Dollar Value
Unfunded Liabili
US Debt Limit vs
Proposed O Tax H

Obama: “We Don’t Have An Immediate Crisis In Terms Of Debt”

Santander pair pocket £2.8m in hellos

Two new executives at Santander UK were paid a total of £2.8m in "golden hellos" last year, cutting across much stricter bank pay rules being introduced by the European Union.
The finance director Stephen Jones, who joined in March 2012, collected £2.9m, including £1.6m to buy out deferred share awards he lost when he left Barclays.
Santander UK's annual report also showed its highest-paid senior executive below board level received £2.5m, including £1.2m to buy out awards from a previous employer.
The executive is not named, but is likely to have been Charlotte Hogg, head of retail distribution, who joined from Experian.
Some investors dislike golden hellos, because they are paid before any work has been done.
The Swiss bank UBS provoked outrage on Thursday when it emerged that it had given its new investment bank chief Andrea Orcel a £17m package. "We don't agree to golden hellos but occasionally we will agree to buy out historical accrued awards or bonuses that have been earned," a spokesman for Santander said.
The spokesman said it was considered on an individual basis for top staff.
Santander UK's chief executive Ana Botin was paid £4m in 2012, down 3 per cent on 2011.
Santander had already revealed at the Spanish parent company level that she was paid €5.1m (£4.4m) and was the only main board member to receive a rise.
Santander plans to spin off and float its UK arm, but probably not until 2014 at the earliest. "The timing of this will remain subject to market conditions and to the emergence of a more positive outlook towards UK banks from investors," the annual report said.Santander said that 19 UK employees were paid more than £1m and that the overall bonus pool increased by 14 per cent last year despite a 2 per cent fall in profits.

Obama On Wall Street Fraud

Bank fraud, prosecution, and rule of law.
Flashback.  Just discovered this clip.  White House press conference from October 2011, otherwise known as 'presidential lip service to Occupy Wall Street.'
Transcript is here...

Ratigan clip on Occupy Wall Street from the same week:

David DeGraw and William Black with Dylan Ratigan.
'We put the Treasury up for auction and Goldman Sachs was the highest bidder.'

Degraw, an organizer of Occupy Wall Street says:
  • "The Wall Street protests are a rejection of the failed Left-Right Paradigm.  Both parties are to blame and both are owned by the big banks."
Black says:
  • "The first thing we have to do is fire Tim Geithner, Eric Holder and force Ben Bernanke to resign.  There is no excuse for not prosecuting all 20 of the largest banks for obvious and demonstrable fraud.  Where is Paul Krugman and his use of the F-word, FRAUD!"

More fraud:

Retail Stocks Showing Possible Consumer Retreat

Everyone knows that consumer spending keeps the economy running in the United States. If the consumer decreases their spending, the economy will usually come to an abrupt halt. Think about it, in 2008 when employers started to lay off workers the economy slowed down. Credit card lenders and banks also cut credit lines. This action by the large financial institutions also helped to cause a dramatic decline in the economy. Basically, when money is taken out of the hands of the U.S. consumer, the economy will slow down. After all, consumer spending accounts for roughly 70.0 percent of the gross domestic product in the United States. At the start of the new year the payroll tax cuts expired and everyone is seeing less take home money in their pay checks. Less discretionary income will make the consumer have no choice but to change the way they spend their money.
How can we tell when the U.S. consumer cuts back on spending? One of the best ways to figure out when the consumer is beginning to pullback on its spending habits is to follow the large leading retail stocks. One stock that is making a higher low on the daily chart is Costco Wholesale Corp (NASDAQ:COST). This stock had been a major winner in 2012, but now the stock is looking top heavy on the charts. It is still a strong stock and good company, but it now showing signs of slowing down in its price action. This stock still has some minor daily chart support around the $100.00 level in the near term. Should COST break that level with higher volume, then this stock could easily decline to $93.00 a share which is the next important support level.
Some other stocks that are making lower highs on the chart include Wal-Mart Stores Inc (NYSE:WMT), Bed Bath & Beyond Inc (NASDAQ:BBBY), Lululemon Athletica inc (NASDAQ:LULU), and Gap Inc (NYSE:GPS). All of these stocks have one thing in common, they have made lower highs on the chart. Lower highs on a chart are never a good sign for a stock. When lower highs occur in the leading retail stocks it is a sign of an economic slowdown by the U.S. consumer.
Retail Stocks Showing Possible Consumer Retreat

Nasdaq's New Private Market: Trading Unlisted Stocks

Helping the start-up ecosystem.
(Bloomberg) -- Bob Rice of Tangent Capital talks about Nasdaq's new private market.
Details are here...
Nasdaq, SharesPost To Set Up Market For Unlisted Stocks
The new venture, Nasdaq Private Market, will help the exchange rebuild its reputation as the exchange of choice for unlisted companies, after it was criticized for its role in the botched Facebook IPO last May.
"NYSE was taking a lot of share away from the Nasdaq even in tech listings, so I think it's kind of an opportunistic move for Nasdaq," said Josef Schuster, founder of Chicago-based financial services firm IPOX Schuster LLC.
Major market makers and broker dealers say they lost upward of $500 million because of technical glitches on the Nasdaq during Facebook's May 18 stock market debut.
Privately held SharesPost was charged by the SEC for failing to register as a broker-dealer before offering securities in its marketplace. It registered as a broker-dealer and paid $100,000 to settle the allegations.
Recent legislation, the Jumpstart Our Business Startups Act, has boosted opportunities for trading of unlisted companies. Under the act, an unlisted company can have 2,000 shareholders, up from 500.
Can't tell yet if the Naz announcement is related to this story from a few weeks ago.
SEC Seeks Stock Exchange Only For The Rich

How to Fix the Fix

How to Fix the Fix
by Adrian Ash, BullionVault

US regulator the CFTC is anxious about the London gold fix. But what is the fix, and why…?

the London gold fix a fix? US derivatives-market regulators think it might be.
The CFTC is no doubt absolutely within its rights to question the use of certain prices as reference points (aka “marks”) in US transactions. Joining the International Roundtable on Financial Benchmarks three weeks ago, its commissioner Bart Chilton said he also thought many other markets might deserve attention, too. But quite what a Washington commission overseeing the US futures markets might achieve – or hope to – as regards the London Fixings as a process, however, we can’t imagine.
What is the London gold fix, and why does it exist? The fixing exists because, in the physical bullion market, there isn’t any single price at any one time. Instead, all the different bullion banks and dealers quote their own prices direct to their clients. So the deals they strike are unique, with no centralized “clearing house” or “recognized exchange” reporting those deals as some kind of official price.
This is very different to a formal stock market or derivatives exchange. It makes valuing gold (in central bank vaults, say, or jewelry stockpiles) difficult. It also means that less active traders – such as gold miners, or industrial users – can’t be confident they got “true” market price.
Hence the fix, and hence it’s name. The fixing is essentially a snapshot of where the market stands for gold at 10:30am and 3pm (and for silver at midday) in London, heart of the world’s physical bullion trade.
To take that snapshot, the biggest bullion banks look at their outstanding client orders, net off the buyers and sellers, and then get together to agree a price which clears what remains. So make no mistake – the fix is NOT a notional price.
Real supply and demand from real sellers and buyers creates the fix, and real business is done at that price (lots of it, too). That makes the fixing very different from the interbank Libor lending rate.
Libor, as you’ll recall, is merely reported by the big banks. It doesn’t necessarily match interest rates which anyone has been charged or paid. Which clearly opens the door to fraud, manipulation and – four or five years after regulators catch onto the scandal – big fines for offenders.

The London bullion fixes, in contrast, offer genuine price discovery. No, it isn’t formally regulated by government (oh horror!). Yes, the fix is done behind closed doors (gasp!). But the banks’ clients can enter orders to buy (or sell) at the Fix if it is below (or above) a certain level, and they can be updated throughout the process, too. It also follows and then leads the “spot price” quoted in live wholesale trading. But that single “spot price” doesn’t exist, remember. The fix exists to fill that gap. And running since at least 1919 (and probably before, history fans) it has for almost a century acted as the global benchmark where none existed before.
Buy wholesale gold for Hong Kong delivery, and you’ll be quoted the London price plus (or minus) a premium for delivery. Ask a central bank the value of its reserves or a stockist the value of its holdings, and they’ll refer to the PM gold fix in their answer. Sell a gold mining company a long-term forward contract so they can hedge their exposure to prices today or raise capital to finance tomorrow’s drilling, and the PM London gold fix will be your obvious reference.
You want another? How might this more-perfect benchmark be achieved exactly? No doubt communism is a long way from Bart Chilton’s intentions. But judging from the CFTC commissioner’s comments to date, the concern seems to be that a “government, quasi-government or appropriate not-for-profit entity should oversee” how prices are reached.

Soviet Russia tried that for a while. Didn’t end well.

Adrian Ash is head of research at BullionVault – the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver vaulted in Zurich on just 0.5% dealing fees.

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Shock in Cyprus as savers face bailout levy

People in Cyprus have reacted with shock to news of a one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.
Savers could be seen queuing at cash machines amid resentment at the charge.
The deal reached with euro partners and the IMF marks a radical departure from previous international aid packages.
President Nicos Anastasiades defended it as a "painful" step, taken to avoid a disorderly bankruptcy.
It had, he said in a statement, been a choice between the "catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis".
The Cypriot leader, who was elected last month on a promise to tackle the country's debt crisis, will address the nation on Sunday.
Lenders are said to be gambling that the risk of a bigger banking crisis elsewhere in the eurozone has receded.
While Cyprus may be one of the eurozone's tiniest economies - its third-smallest - there could be serious repercussions for other financially over-stretched economies, such as those of Spain and Italy, BBC Business editor Robert Peston writes.
The point of the levy is to warn lenders to banks that they should take care where they place their funds, and avoid banks that overstretch themselves - as Cypriot banks did, he adds.
Cyprus is the fifth country after Greece, the Republic of Ireland, Portugal and Spain to turn to the eurozone for financial help during the region's debt crisis.

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It is never nice or easy for any bank to see a vast amount of cash walking out the door”
The country has been in financial difficulties since the collapse of the Greek economy, where Cypriot banks had huge investments.
It appears that the heavy presence of Russian money in Cypriot banks was a factor in imposing the levy.
'Robbery' People in Cyprus with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said.
Those with greater sums will lose 9.9%.
Depositors will be compensated with the equivalent amount in shares in their banks.
Reports suggest that depositors will be able to access all of their money except the amount set by the levy.

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This is robbery and we must get the EU to stop this”
Alan, a British expatriate saver in Cyprus Speaking to BBC News
The levy itself will not take effect until Tuesday, following a public holiday, but action is being taken to control electronic money transfers over the weekend.
Co-operative banks, the only ones open in Cyprus on Saturday, closed after people started queuing to withdraw their money.
At one bank in the Limassol district, a frustrated man parked his bulldozer outside and threatened to break in.
Alan, a British expatriate saver in Cyprus, told BBC News: "This is robbery and we must get the EU to stop this.
"We retire and bring our savings to a bank in Cyprus and they can just take our money away without permission and then say we have shares in a bankrupt bank."
Maria Zembyla, from Nicosia, said the levy would make a "big dent" in her family's savings and "erode the investor confidence".
"Russians that currently keep the economy afloat will leave the country along with their money," she added.
According to Reuters news agency, almost half of the depositors in Cyprus are believed to be non-resident Russians.
Russian money There has also been speculation that Russia could help finance the bailout by extending a 2.5bn-euro loan already made to Cyprus.

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Russia agrees to help a troubled EU state, and the EU calls Russian investors money-launderers? This is totally unfair”
Igor Kim Moscow-based blogger
Cyprus Finance Minister Michael Sarris will travel to Moscow for meetings on Monday, reports say.
"My understanding is that the Russian government is ready to make a contribution with an extension of the loan and a reduction of the interest rate," said the EU's top economic official, Olli Rehn.
European regulators and politicians are convinced that a vast amount of cash in Cypriot banks belongs to Russian money launderers, our business editor writes.
Few German politicians would vote for a Cyprus rescue that simultaneously rescued these launderers so the only way to make the bailout palatable to the German parliament was to tax the launderers, too, he says.
Russians reacted angrily to the news of the levy on social media.
"Russia agrees to help a troubled EU state, and the EU calls Russian investors money-launderers? This is totally unfair," Moscow-based blogger Igor Kim told the BBC News website.
"Levying a 10% charge on investors is barbarian, interventionist and more Soviet than the Soviet Union!"
In Berlin, German Finance Minister Wolfgang Schaeuble called the levy part of the "fair" distribution of the bailout's burden.
"Profit expectations and risk have to coincide again, this gap [between the two] was one of the grave mistakes of the financial bailout [in 2008], and we have learned the lesson," he said.

Bailout Cuts Cyprus Bank Accounts, Withdrawals Barred

Central Bank of CyprusCyprus, whose banks were pushed to the edge of default by their exposure to heavily devalued Greek bonds, will get a 10 billion euros ($13 billion) bailout from international lenders, but bank depositors will lose up to nearly 10 percent of their money and authorities have prohibited withdrawals for now, setting off furious reaction as depositors lined up outside the institutions demanding their cash. Interest will also be taxed at 20-25 percent but the move won’t affect customers in Greece where Cypriot banks have branches.
Newly-elected conservative President Nikos Anastasiades’ government relented to the harsh conditions, an unprecedented decision by officials of the Eurozone that forces a so-called “haircut” on all bank accounts on the island’s banks with immediate effect along with the ban on cash withdrawals.
To guard against capital flight, Cyprus will take immediate steps to prevent electronic money transfers over the weekend.
A citizen even used an excavator so as to go into a Bank branch!
In the coastal town of Larnaca, where irate depositors queued early to withdraw money from cash machines, co-op credit societies that are normally open on Saturdays stayed closed.
“I’m extremely angry. I worked years and years to get it together and now I am losing it on the say-so of the Dutch and the Germans,” said to Reuters British-Cypriot Andy Georgiou, 54, who returned to Cyprus in mid-2012 with his savings.
“They call Sicily the island of the mafia. It’s not Sicily, it’s Cyprus. This is theft, pure and simple,” said a pensioner.
Cyprus has been forced to seek emergency aid from the same Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that is putting up $325 billion in two rescue packages for Greece in return for harsh austerity measures that could also be imposed on Cypriots although the government said it wouldn’t be necessary now under the deal.
In return for the rescue loans, Cyprus will trim its deficit, significantly reduce its troubled banking sector, raise taxes and privatize state assets, said the Netherlands’ Jeroen Dijsselbloem, President of the Eurogroup meetings of the 17-nation Eurozone’s finance ministers. “The assistance is warranted to safeguard financial stability in Cyprus and the eurozone as a whole,” he said, briefing reporters after almost 10 hours of negotiations in Brussels.
Dijsselbloem defended the decision to seize depositors money through the tax. “We found it justified in terms of burden sharing to also involve the depositors,” said Dijsselbloem, noting that it was a “unique measure” because of Cyprus’ outsized banking system. “As it is a contribution to the financial stability of Cyprus, it seems just to ask a contribution of all deposit holders,” Dijsselbloem added.
Along with loans adding up to 10 billion euros ($13 billion) from the European Support Mechanism, Cyprus will have to find another 7-7.5 billion euros from privatizations and get the rest by taking 6.75 percent of all bank accounts all bank accounts with a balance up to 100,000 euros ($130,000) and 9.9 percent for those above that amount. That means customers with 100,000 euros in a Cypriot bank will lose 6,750 euros by paying a special tax on their capital, and the immediate reaction was rage.
The decision came late in the night of March 15 and by the next morning customers were trying to make a too late run on the bank, lining up outside major and cooperative banks, SKAI TV reported. Instead of their seized funds, customers will get shares of  the banks they are clients of in return for the capital lost, of the same value as the haircut their accounts have suffered. The banks, however, are shaky.
The depositor haircut is estimated to gain some 6 billion euros ($7.84 billion) to the state, bridging most of the gap between the 10 billion euros the ESM is offering to Cyprus and Nicosia’s requirements of an estimated 17 billion. This is the first time in the Eurozone that a levy has been imposed not on the interest of bank accounts but on the capital itself.
In addition to that there is a levy on interest, too, and an increase in the 10 percent corporate tax that has been one of the main driving forces behind Cyprus’s financial progress after the 1974 Turkish invasion, generating growth by attracting foreign direct investment.
Changes will have to be ratified by the House of Representatives, the country’s Parliament, over  the weekend, while an emergency cabinet meeting was underway in Nicosia.  Finance Minister Michalis Sarris postponed his official visit by two days and will now go to Moscow on March 20.
Cyprus state broadcaster CyBC reported that German Finance Minister Wolfgang Schaeuble had proposed Cypriots lose 40 percent of their bank accounts although they were not responsible for the economic debacle that was caused when a previous Greek government, in a frantic bid to reduce its debt, imposed 74 percent losses on investors and bondholder. Sarris said the IMF agreed with Germany.
Sarris stated in Brussels that in view of the threat from the ECB for banks in Cyprus to shut down and the chaos that would follow, the new government had no choice but to submit to an increase in interest taxation and the haircut to bank accounts. “A disorderly default, that was a genuine possibility, has been averted,” he said. “It allows our economy to proceed decisively to a new beginning.”
He also noted that after the dramatic meeting of the Eurozone ministers a further slashing of salaries and pensions was been avoided and confidence in the Cypriot economy has been restored, unless you’re a bank customer. He said that the bailout funds loaned to Cyprus as sustainable and manageable and will not constitute an unbearable weight on the next generations. “It spreads the load on this and on the following generations,” he said.
EU officials said they wanted to prevent the country’s economy from collapsing and spreading market jitters, as the continuing Greek crisis melodrama has. While the lenders and government put a spin on the story that it was beneficial, analysts warned that making blameless depositors bail out banks who made ruinous decisions could undermine investor confidence in other weaker Eurozone countries and lead to a run on the banks as customers fear their money will be taken too.
Cyprus_bank_panicBank specialists also warned  that the drastic step could undercut the Eurozone’s credibility as a safe place in which to bank. Although the leaders stressed the levy was a unique measure for Cyprus, they said the same when private holders of government bonds were forced to accept losses in Greece.
The measure risks scaring investors, which could lead them to move their deposits to more stable Eurozone countries such as Germany, which has supported harsh measures on Greece and could benefit now. In that case, banks in southern Europe’s economies might be considerably weakened and could possibly require new bailouts. That could then weaken the respective governments, which might then need further assistance from their Eurozone partners — possibly setting off a vicious spiral. Cypriots though, had backed the idea of getting a bailout during the election campaign there.
Joerg Asmussen, a member of the ECB’s governing council, sought to dismiss fears of bank troubles stemming from the levy, saying the ECB stands ready to provide financial institutions with emergency liquidity assistance. “The levy, it’s an appropriate tool. It’s really tailor-made to the situation in Cyprus,” he said. “It’s a country in extreme financing need, and what you do is to expand the tax base, not only to residents but also to non-residents,” he said.
Russian citizens are estimated to have at least 20 billion euros ($26.15 billion) in deposits in Cyprus, some of that, critics have said, from organized crime amid speculation the country is being used as a money-laundering haven, which made some EU officials wary of assisting.
Asmussen stressed that there was no risk of such a levy being implemented in other countries that have already received bailouts, such as Greece, Ireland or Portugal, because those countries’ financing needs are covered by their international rescue loans. Cypriot banks moved swiftly too make sure that depositors cannot withdraw money to shrink the tax basis, Asmussen said. The remainder of their holdings can be withdrawn, he added.
It was not reported whether the customers still have to pay their loans, credit cards and mortgages in full as is being required in most cases in Greece despite big pay cuts, tax hikes and slashed pensions. That has led to a 25 percent default rate, cutting deeply into bank’s reserves.
Sarris added that electronic bank transfers won’t be possible before March 19 as the day before is a holiday. “It was a very difficult decision,” Sarris acknowledged, but added that “much more money could have been lost in a bankruptcy of the banking system or indeed the country.”
“I want to underscore that this is a once and for all levy. We wanted to do it in a way, in a decisive way … to remove any doubt about the future,” Sarris said. “There is no reason whatsoever that deposit holders in Cyprus, existing and new ones, should have any concerns,” although he didn’t say how the jibed with the government seizing their money.
While the Cypriot bailout is many times smaller than Greece’s $325 billion package or Ireland’s €67.5 billion ($88.2 billion), it is still considered crucial to the future of the Eurozone because a default even by a small country could roil financial markets and undermine investor confidence.
Cyprus’ financing needs to recapitalize its banks and keep the government afloat were initially estimated to total 17 billion euros, which is almost the equivalent of Cyprus’ annual economic output and would have ballooned the country’s public debt to about 140 percent of its economy, a level the IMF considers unsustainable.
Losses will also be imposed on the banks’ junior bondholders, the officials said. In addition, Cyprus agreed to increase its capital gains tax, and to raise its corporate tax from 10 to 12.5 percent, Dijsselbloem said. To further reduce the financing needs, Russia was expected to significantly extend the maturity of a 2.5 billion euros loan granted in 2011 after the country could no longer access markets.
The ministers also agreed to make sizeable Greek operations of the country’s two largest banks, Bank of Cyprus and Laiki, eligible for spare rescue cash from Greece’s bailout accord. Under the bailout deal, Cyprus debt is forecast to reach about 100% of GDP by 2020.
Cyprus, which first applied for a bailout last summer, wasn’t in imminent danger of bankruptcy, as it faces its next bond redemption in June. But the ECB, worried that uncertainty could undermine confidence, wanted a swift deal and had threatened to cut the country’s financial system off from emergency funding.
To appease its creditors, Cyprus has already accepted an independent audit of its banks, which hold billions in Russian deposits, to soothe concerns voiced by Germany, France and others that they launder dirty Russian money.

Cash machines EMPTIED across Cyprus as 60,000 British savers face losing MILLIONS after £8.7billion EU bailout imposes tax on all of nation's bank accounts

  • Lines formed at ATMs as people scrambled to pull their money out
  • Word spread that rescue package included a one-off levy on deposits
  • Restrictions stopping people emptying accounts or moving money abroad
  • Up to 3,000 British service personnel are based on the bankrupt island
  • President Nicos Anastasiades agreed to raid with European finance chiefs
  • Said country in 'state of emergency' and not acting would be 'catastrophic'
  • But expats accused the island of 'plain theft' as violent protests sparked
  • Britons have around £1.7b of deposits on island and could lose up to £170m

  • Up to 60,000 British savers are to lose thousands of pounds each after European finance chiefs ordered an unprecedented raid on personal bank accounts.
    Expats and UK troops based in Cyprus will have their savings decimated as part of a painful bid to bail out the bankrupt island.
    Britons have about £1.7 billion of deposits in Cyprus and could lose up to £170 million.
    One disgruntled customer
    Panic: A move by Cypriot authorities that could see up to ten per cent of bank deposits seized to bail out the bankrupt sparked panic and violent protests. One disgruntled customer parked a bulldozer in front of a bank in the coastal town of Limassol in protest
    The Cypriot government has agreed to seize up to ten per cent of savings and use the money to bail out the island’s crisis-hit banking system.
    The move sparked panic and violent protests yesterday as crowds desperately tried to withdraw their money at cash machines.

    Restrictions have been imposed to stop people emptying their accounts or moving their money out of the country following the
    deal with other eurozone finance ministers, under which ordinary citizens’ deposits will be directly raided for the first time.
    Furious: Shirley Brooks, 61, who is originally from Manchester, said she stands to lose ¿18,600 of her retirement money
    Furious: Shirley Brooks, 61, who is originally from Manchester, said she stands to lose ¿18,600 of her retirement money
    One furious expat said: ‘This is plain theft. I’d love to hear someone explain to me why it isn’t.’
    And one of the 3,000 British service personnel based on the island said: ‘I stand to lose €4,000 [£3,500] We’ve tried to save quite hard while we are here – that’s been thrown back in our faces.’
    Cypriot president Nicos Anastasiades, who agreed to the raid following ten-hour talks with European finance chiefs, said it was necessary because Cyprus was in a ‘state of emergency’ and failure to enact the Brussels plan would be ‘catastrophic’.
    Under the deal, all bank deposits over €100,000 will be hit with a levy of 9.9 per cent. Those with smaller savings will pay 6.75 per cent.
    The raid will raise €5.8 billion, which will be added to a €10 billion bailout from Brussels.
    But financial experts said the move – designed to stop Cyprus crashing out of the euro, potentially destroying the currency – would send shock waves through the eurozone.
    If savers in other troubled nations fear their accounts might be next, they could withdraw their money and spark a catastrophic run on the banks.
    Economist Howard Archer from IHS Global Insight said: ‘It is an alarming precedent to hit the man in the street. As much as they say this is a one off, people will say if they can do it once they could do it again.’
    Tory MP Douglas Carswell added: ‘We should all be extremely worried about this. It shows that ordinary Europeans are being fleeced by the Continent’s elite in order to rescue foolish banks. Why would you risk putting your money in Greek, Spanish or Portuguese banks after this?’
    Panic: People queue withdraw their money from an ATM machine outside in Larnaca, Cyprus, after learning that the terms of a bailout deal includes a one-time levy on bank deposits
    Panic: People queue to withdraw their money from an ATM machine in Larnaca, Cyprus, after learning that the terms of a bailout deal includes a one-time levy on bank deposits
    The European Central Bank said Britons have £1.7 billion deposited on the island.
    British expats were stunned by the news, with many left high and dry by the restrictions on accounts.
    Cash machines had been working, but many ran out of notes because of the panic withdrawals. Tomorrow is a public holiday in Cyprus, too, so savers will have to wait until Tuesday until they can access their money.
    Worry: Steve Carr, a financial advisor originally from York, has been living in the coastal city of Limassol for 24 years. He said the solution could make the situation worse and personally stands to lose ¿2,000
    Worry: Steve Carr, a financial advisor originally from York, has been living in the coastal city of Limassol for 24 years. He said the solution could make the situation worse and personally stands to lose ¿2,000
    Andy Georgiou, 32, who grew up in Liverpool, said: ‘We are struggling. We can’t access money and we need it to buy petrol and food. It’s appalling. All without any warning.’
    Sean Chamberlain, a 39-year-old writer from Devon who now lives in Cyprus, said: ‘There are a lot of people who are very angry. Everyone was furious, feeling absolutely betrayed by yet another apparently incompetent government.
    And now they’ve done it once, what’s to stop them deciding to do it again next week? If there’s a run on the bank, that’s a terrifying thing.’
    Shirley Brooks, 61, originally from Manchester, stands to lose €18,600. She said: ‘I am extremely angry. This is our retirement money, and there was no warning that this was coming. I don’t think we should have to pay anything as we did not cause the problems in the economy.’
    Her sentiments were echoed by former Army officer Graham Smith, who moved to Cyprus from Dundee five years ago. ‘I don’t believe we Brits should have any money taken,’ he said. ‘We have not contributed to the bankruptcy. If anything, all we’ve done is contribute to the economy.’
    He stands to lose about €2,000, as does financial adviser Steve Carr, who is originally from York but has been living in the coastal city of Limassol for the past 24 years.
    He said the supposed solution to the island’s woes could make matters worse: ‘When the banks reopen, people will start moving their money out of Cyprus because they don’t want this happening again. This could create a run on banks, which would be a very bad thing for Cyprus.’
    Rescue package: The island national has been bailed out by European partners and the International Monetary Fund in a bid to prevent it entering a bankruptcy which could rekindle the region's debt crisis
    Rescue package: The island national has been bailed out by European partners and the International Monetary Fund in a bid to prevent it entering a bankruptcy which could rekindle the region's debt crisis
    Cyprus' Finance Minister Michalis Sarris defended the decision to accept the levy, saying it was either that or a complete economic meltdown
    Cyprus' Finance Minister Michalis Sarris defended the decision to accept the levy, saying it was either that or a complete economic meltdown
    Angry crowds gathered to demonstrate outside the presidential palace in the capital of Nicosia yesterday.
    President Anastasiades held emergency talks with his cabinet and other party leaders last night and is expected to make a televised address today explaining the situation.
    Because of tomorrow’s public holiday, he has two days to pass a law to enact the Brussels deal in time to seize the cash from bank accounts before Tuesday morning.
    In a statement he said: ‘We either choose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis.’
    It is understood savers will be offered shares in Cyprus banks as compensation for the raid on their savings, but it is unlikely to appease those who have lost hard cash.
    A spokesman for the Cypriot government said yesterday the agreement with Brussels was ‘serious but not tragic’ and said that the EU had wanted a much higher levy, but the government had fought hard against it.
    He said: ‘The dilemma is whether we would have a functioning economy or total collapse on Tuesday .  .  . whether to give in at the 6.75 per cent mark or lose 100 per cent.’
    The UK’s Ministry of Defence declined to comment, but Government sources suggested Ministers were considering whether to help the British troops affected.
    Additional reporting: Abul Taher and Martin Beckford


    Cyprus' eurozone partners and the IMF agreed early Saturday to bail out Cyprus to the tune of 10billion euro ($13billion) - largely to prop up its flailing banking industry. But the deal, as usual, comes with strings attached. The one causing the most consternation is a levy on bank deposits held in Cypriot accounts. Here's a look at how that will work - and the problems it may pose.
    Currently, all 17 European Union countries that use the euro offer deposit insurance to protect customers if their bank fails. But the measure in the Cyprus deal is a tax - not losses incurred because of a bank failure. In fact, it's meant to hold off a bank collapse. Countries have the right to raise or lower taxes whenever they want. Just ask the residents of Greece, Portugal and Ireland - all bailout recipients - who saw their tax bills skyrocket as those countries tried to reduce their debts. But Cyprus is charting new ground here, and there could be legal - and political - challenges.

    Banks have already acted to seal off the amount of the levy - a 6.75 per cent tax on deposits under 100,000 euro and 9.9 per cent on those above - so depositors can't access it. Bank customers still can draw on the rest of their funds via ATM machines this weekend, and nervous depositors did that on Saturday to drain their accounts. But the few banks that opened on Saturdays did so only briefly, and no international transfers will be able to go through until Tuesday, since Monday is a holiday. Cyprus' Parliament is expected to meet Sunday to pass the required legislation. The deal also needs the approval of several eurozone parliaments; it's unclear how fast they can act and what will happen to bank deposits in the meantime.

    So far in the euro crisis, depositors have been protected. But in the 1990s, Italy levied a tax on every bank account to stave off the collapse of its lire currency. The rate, however, was minuscule - 0.06 per cent - compared to what Cyprus is enacting. Iceland - another island with an outsized financial sector, although worse weather - also relied on depositors to prop up its banks. When the crisis hit there in 2008, Iceland protected its domestic deposits but reneged on deposit insurance for overseas, Internet-based accounts held by British and Dutch. Those two governments stepped in to help their citizens to the tune of $5billion. The U.K. and the Netherlands sued Iceland unsuccessfully in a European court to get their money back, but Iceland has nevertheless started to repay some of that money.

    European officials are promising that Cyprus is a unique case, and they are right in one aspect: the country's banks are overwhelmingly funded by deposits, so it wouldn't have been very fruitful to go after bondholders.
    All depositors - except those in Greek branches, which will be sold to Greek banks. EU and IMF creditors clearly wanted to protect struggling Greece, but perhaps also saw that Greece is the most likely place in the eurozone for a bank run. Protecting depositors there minimizes that possibility. Of the about 68billion euro on deposit in Cypriot banks, foreigners hold about 40 per cent - and most of those are Russians. Cyprus could have only gone after non-EU depositors, but it may have been hard to distinguish between Cypriot and Russian savers, Jacob Kirkegaard said, since many Russians have dual citizenship and many Russian businesses are registered on the island. Kirkegaard, who is a senior fellow at the Peterson Institute for International Economics in Washington, said Cypriots may paradoxically welcome this measure since the government just managed to widen its tax base to include a lot of Russians; the taxes levied in Greece, Portugal and Ireland were for residents alone to shoulder.

    Cyprus built its economy in recent years by becoming a financial centre, much the way Ireland and Iceland had done. Its banks offered Internet accounts to foreigners, were renowned for their service and provided substantial privacy to clients in a country with very low tax rates. It worked so well that Cyprus' banking industry ballooned to nearly eight times the country's gross domestic product at the height of the boom. In December, it was still more than seven times Cyprus' 17.5billion euro GDP. Russians - looking for warmer climes, friendly tax rates and shared culture in the form of Orthodox Christianity - are thought to hold the majority of those, with about 20billion euro in the island's banks.

    But Cyprus' banks held a lot of Greek debt and suffered significant losses when they took a write-down of those bonds as part of the Greek bailout. Much of Cyprus' bailout money will be used to recapitalise Cypriot banks to prevent them from collapsing. Like other eurozone countries, Cyprus has also seen its deficit and debt explode as growth has ground to a halt. And with the banking system so large, the government wouldn't have been able to bail it out even in a healthy economy.
    Cyprus may be on holiday Monday, but the rest of the world will go back to work. Kirkegaard says that the decision to tap depositors indicates that the European Central Bank is confident that the risk of a bank run elsewhere in the eurozone is low - and by excluding Greek branches of Cypriot banks, they have reduced the possibility even further. Bond markets may react a little since bondholders were also tapped. Bank stocks will probably fall and they'll see their borrowing costs rise since this deal is a signal that other eurozone countries may call on bondholders, if their banks run into trouble.

    But Heather Conley, director of Europe program for the Center for Strategic and International Studies, says it's hard to know the far-reaching implications of this one-off deal. The 'exceptions' created to solve Europe's debt crisis are adding up, she said. And some investors may look at this late-night, three-day-weekend deal and see what she saw: a dress rehearsal for a country dropping out of the euro.

    Nervous Cypriots hit cash machines

    Belfast Telegraph
    Nervous depositors in Cyprus have rushed to ATM machines to drain their accounts following a bailout agreement with international creditors that includes a levy on all the country’s bank accounts.
    Lines formed at many ATMs as people scrambled to pull their money out after word that the 10 billion euro (£8.6bn) rescue package Cyprus agreed with its euro area partners and the International Monetary Fund included one-off levy on deposit, an unprecedented step in the eurozone crisis.  
    The levy is expected to raise 5.8 billion euro.
    European officials said people with less than 100,000 euro in their accounts will have to pay a one-time tax of 6.75%, those owning more money will lose 9.9%. Cypriot bank officials said that depositors can access all their money except the amount set by the levy.
    But that hardly assuaged people who continued to withdraw cash from ATMs until the machines ran out, unsure what or how much would be taxed. Officials said that withdrawing funds on Saturday would not reduce anyone’s levy.
    The country’s co-operative banks also shut their doors after depositors scurried in hopes of protecting their savings. Unlike commercial banks which remain closed on weekends, co-operative banks customarily open for business on Saturday.
    “Politicians and senior bank bosses have covered each other’s backs for years, now it’s ordinary people who are paying the price and are being punished,” said Christos Demetriades, 58, milling outside a shut Nicosia co-operative bank branch.
    Cyprus’ Finance Minister Michalis Sarris defended the decision to accept the levy, saying it was either that or a complete economic meltdown. “This was the least worst option,” he told state broadcaster CyBC. “We battled to prevent the country from completely going bankrupt.”
    News of the levy came as a shock to most people following strict assurances from Cyprus’ President Nicos Anastasiades that he would not accept a deal which required depositors to share in the losses. Government spokesman Christos Stylianides said Cypriot officials had resisted intense pressure to accept a deposit levy of a whopping 40%.
    Bank bosses are meeting with Central Bank officials to figure out their next steps, while Mr Anastasiades, who returns to Cyprus Saturday evening has called for a meeting of party leaders to assess the unfolding situation.

    Cyprus eurozone bailout prompts anger as savers hand over possible 10% levy

    Angry Cypriots try in vain to withdraw savings as eurozone bailout terms break taboo of hitting bank depositors
    cyprus banks
    Cypriots rushed to the cooperative banks on Saturdays after learning that the bailout terms involves them losing a one-off 10% levy on bank deposits Photograph: Pavlos Vrionides/AP
    European finance ministers have agreed an £8.7bn bailout for Cyprus which includes all Cypriot bank customers handing over up to 10% of their savings.
    Cyprus becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the eurozone for financial help amid the region's debt crisis, but also faces a possible run on its banks as depositors try to avoid losing up to 10% of their savings.
    The savers, half of whom are thought to be Russian, will raise almost €6bn. It is the first time a bailout has included such a measure.
    "I wish I was not the minister to do this," the Cypriot finance minister, Michael Sarris, said after 10 hours of late-night talks in which eurozone finance ministers agreed the package. "Much more money could have been lost in a bankruptcy of the banking system or indeed of the country."
    Without a rescue, Cyprus would default and threaten to unravel investor confidence in the eurozone, a renewed confidence fostered by the European Central Bank's promise last year to do whatever it takes to support the euro.
    However, on Cyprus, initial incredulity at the decision gave way to anger. Co-op credit societies, normally open on Saturdays, were shut for business in the coastal city of Larnaca as depositors started queuing early in the morning to withdraw their cash.
    "I'm extremely angry. I worked years and years to get it together and now I am losing it on the say-so of the Dutch and the Germans," said British-Cypriot Andy Georgiou, 54, who returned to Cyprus in mid-2012 with his savings.
    "They call Sicily the island of the mafia. It's not Sicily, it's Cyprus. This is theft, pure and simple," said a pensioner.
    The bailout was smaller than initially expected and is mainly needed to recapitalise Cypriot banks hit by sovereign debt restructuring in Greece.
    Cypriots with savings of under €100,000 will pay a one-off levy of 6.75%, which rises to 9.9% for those with larger deposits.
    The levy on bank deposits will come into force on Tuesday, after a bank holiday on Monday. Cyprus will take immediate steps to prevent electronic money transfers over the weekend.
    "As it is a contribution to the financial stability of Cyprus, it seems just to ask for a contribution of all deposit holders," the Dutch finance minister, Jeroen Dijsselbloem, who chaired the meeting in Brussels, told reporters.
    Such levies break the taboo of hitting bank depositors with losses, but Dijsselbloem said it would not have otherwise been possible to salvage its financial sector, which is around eight times the size of the economy.
    "We are not penalising Cyprus ... we are dealing with the problems in Cyprus," Dijsselbloem said, adding that that under the programme, the island's debt would fall to 100% of economic output by 2020.
    In return for emergency loans, Cyprus agreed to increase its corporate tax rate by 2.5 percentage points to 12.5%.
    This should boost Cypriot revenues, limiting the size of the loan needed from the eurozone and keep down public debt.
    The International Monetary Fund managing director, Christine Lagarde, who attended the meeting, said she backed the deal and would ask the IMF board in Washington to contribute to the bailout.
    "We believe the proposal is sustainable for the Cyprus economy," she said, "The IMF is considering proposing a contribution to the financing of the package ... The exact amount is not yet specified."
    Cyprus, with a GDP of barely 0.2% of the EU bloc's overall output, applied for financial aid last June, but negotiations were stalled by the complexity of the deal and the reluctance of the island's previous president to sign.
    Moscow, which has close ties with Nicosia, is likely to help by extending a €2.5bn loan to Cyprus by five years to 2021 and reducing the interest rate.

    Inflation Calculator

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    It will also calculate the rate of inflation during the time period you choose.
    We determine the value of a dollar using the Consumer Price Index from December of the previous year. All calculations are approximate.
    Fun fact: In 2007, the inflation rate was 4.08%. This was higher than any year since 1990. In 2008, the inflation rate was 0.09%, the lowest rate since 1954.

    The Federal Reserve System Is A Massive Wealth Redistribution Scheme

    Michael Snyder
    Activist Post

    During fiscal year 2012, $359,796,008,919.49 that had been forcibly extracted from American taxpayers was transferred into other hands. Most of it ended up in the pockets of the global elite. So what did the American people get in return for that 359 billion dollars? Nothing at all. No roads were built, no schools were constructed, no teachers were paid and none of it went to national defense. It was simply interest that was owed on the national debt, and most of it just made the ultra-wealthy even wealthier. But this is exactly what the Federal Reserve system was designed to do when it was created back in 1913.

    It was designed to get the U.S. government trapped in an endless spiral of debt that would systematically drain the wealth of the American people and transfer it to the ultra-wealthy and the international bankers. When most people think of a "wealth redistribution scheme", they think of a government raising taxes in order to give money to poor people. But the Federal Reserve system works in reverse. Money is taken from all of us and it is redistributed to the global elite. That is why a federal income tax was instituted the exact same year that the Federal Reserve was. Money is extracted from all of us through taxation, and then it is transferred from the federal government to the ultra-wealthy through debt payments.

    So what role does the Federal Reserve system play in all of this?

    Many critics of the Fed focus on how much money the Fed makes each year, but that is a mistake. The truth is that the Fed returns the vast majority of the money that it makes to the U.S. Treasury. The Fed is not a money making machine itself. Rather, it is a system that enables others to make hundreds of billions of dollars each year.

    I think that it is easiest to think of the Fed as a "middle man" between the U.S. government and the global elite. It was designed by the international bankers for the benefit of the international bankers. The entire goal of the Federal Reserve system is to make the ultra-wealthy even wealthier.

    The Fed is a privately-owned banking cartel that has a monopoly over money creation in the United States. Nobody else, including the U.S. government, can print money. So those that claim that "the U.S. government can print money" are just dead wrong.

    When the U.S. government wants to spend more money than it has, it asks the Fed to make some more money. The Fed then creates money out of thin air that did not previously exist. Normally this money is not even printed up. It is just entered into a computer.

    In return for the new money, the U.S. government gives the Federal Reserve some U.S. Treasury bonds. In essence, U.S. Treasury bonds are promises to pay back money. But the U.S. government always agrees to pay back more money than it receives. So a larger amount of debt is created than the amount of new money that is created.

    When the Federal Reserve receives those U.S. Treasury bonds, most of the time they take them and auction them off to interested buyers. This is how they get into the hands of the ultra-wealthy and the international bankers.

    So how is the U.S. government ever supposed to pay back all that debt if the amount of new debt being created is always larger than the amount of new money that is being created?

    Well, the theory is that the money will be able circulate through the U.S. economy really fast and that the federal government will be able to tax it enough times and at a high enough rate to be able to pay off the debt plus the interest.

    But that never seems to work out, does it?

    Instead, the federal government always finds that it can't fund government activities and pay off the debt at the same time, so they always come back to borrow more. That is why it is called a debt spiral.

    So the debt just keeps getting larger and larger. Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

    And as the debt keeps getting larger and larger, so does the money supply. And that is why we have such a problem with inflation. Since the Federal Reserve was first created, the U.S. dollar has lost more than 96 percent of its value.

    But the global elite are not just doing this in the United States. They have established similar systems in almost every nation on earth.

    So every year, gigantic mountains of money are transferred from taxpayers all over the globe into their pockets.

    And that is the primary reason why they have so much money.

    It has been estimated that the global elite have up to 32 TRILLION dollarsstashed in offshore banks around the planet.

    And that is just the money that we know about.

    Are you starting to understand why people are so upset about this stuff?

    Fortunately, people all over the world are starting to wake up to this massive wealth redistribution scheme.

    The creation of money should belong to the people - not to the global elite.

    Just consider a statement that Italian politician Beppe Grillo once made...
    Whom does the money belong to? Who does its ownership belong to? To the State fine…then to us, we are the State. You know that the State doesn’t exist, it is only a legal entity. WE are the state, then the money is ours…fine. Then let me know one thing. If the money belongs to us…Why…do they lend it to us??
    Doesn't that make sense?

    If the currency of a nation belongs to the people of a nation, then why do we let the elite create our money out of thin air and lend it back to us?

    Why do we continue to use a debt-based currency system that is making the global elite far wealthier at the expense of all the rest of us?

    For much more on how the Federal Reserve works, please see my previous article entitled "10 Things That Every American Should Know About The Federal Reserve".

    Please share this article with as many people as you can. I have tried to simplify things as much as possible.

    So what do you think about the Federal Reserve?

    Are you angry that hundreds of billions of dollars are being transferred from U.S. taxpayers to the global elite every single year?

    Are you disgusted that money that is created out of thin air by the Federal Reserve is being used to bankrupt our nation and enslave future generations of Americans to trillions of dollars of debt?

    Please feel free to post a comment with your thoughts below...

    This article first appeared here at The Truth. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

    It’s Going To End Badly

    It’s Going To End BadlyJim Cramer from CNBC: “We all know it’s going to end badly, but in the meantime we can make some money.”   Thank you Mr. Cramer for telling us the truth about QE and our economy.
    Stan Druckenmiller, Legendary Hedge Fund Manager, on CNBC 03/05/2013: “I don’t know when it’s going to end. But my guess is it’s going to end very badly.”
    The media encourages us to believe that practically everything in our economy is either good or getting better. Another way of stating the media hype is “all of our problems will be solved through the combined efforts of our capable politicians coupled with the wisdom and competent management of The Federal Reserve.”  Seriously?
    Congress has a miserably low approval rating, for good reason, and the Fed is busy creating and pumping money into banks and the bottomless pit of government spending. Neither has much interest in small businesses or the average American.
    What is going wrong? In no particular order, here are a few that come to mind:
    • John Mauldin as stated by his friend Juan Carlos: “In Argentina, we have the ability to make the same mistake many times, and nothing happens to change things. Why? Because there is a pervasive belief that the state can provide all that people need: jobs, welfare, everything.” This should sound familiar to Americans and Europeans? Don’t forget that Argentina has inflated their currency to near worthlessness several times in the last 30 years. It also could happen here.
    • Ellen Brown, February 24, 2013: “Quantitative Easing (QE) is supposed to stimulate the economy by adding money to the money supply, increasing demand. But so far, it hasn’t been working. Why not? Because as practiced for the last two decades, QE does not actually increase the circulating money supply. It merely cleans up the toxic balance sheets of banks. A real ‘helicopter drop’ that puts money into the pockets of consumers and businesses has not yet been tried.”
    • Official National Debt is approaching $17 Trillion and increasing about 12% per year. Is the economy growing in excess of 12% per year? Clearly not! Maybe debt can increase to infinity without horrible consequences, but I doubt it.
    • Unfunded liabilities for Social Security, Medicare, Medicaid, government pensions, etc. are estimated at $70 Trillion to well over $200 Trillion, depending on who is counting and what assumptions are used. The actual total does not matter since even the lowest estimate is unpayable. So we have an overwhelming liability that is beyond the capability of the economy to pay, and we continue to spend as if the country had $70 Trillion in excess assets instead of $70 Trillion in unfunded liabilities.
    • Nearly 49,000,000 Americans are currently on food stamps (SNAP). What about this indicates economic strength and healthy growth?
    • The Senate has not passed a budget in several years. Apparently there is no need for a budget. You know the old saying, “We must have money left – there are still checks in the checkbook.”
    • Bob Rinear: “If the Fed’s do not continually shoot juice into the system, we’ll get flushed down the toilet. So they have made it quite clear that they will use ‘every manner possible, both conventional and non-conventional’ to keep the economy from a deflationary depression.” In other words, there is an excess of debt and the economy cannot produce enough to pay for current expenses, government, wars, interest on debt, and old debts going bad. Hence, the Federal Reserve must create a huge amount of new money each month to “fill the hole.” If the economy and the banks were healthy, would the Fed need to pump $ Trillions into the banks and to monetize government debt?
    • According to Shadowstats, which calculates unemployment and inflation as they were calculated about 30 years ago, the non-politicized unemployment rate is about 23% and the inflation rate is about 9.2%. These numbers seem more real than the official numbers. A healthy economy does not have 23% unemployed and nearly 10% inflation in real costs.

    So What Do We Do?

    • Remember what Jim Cramer said, “We all know it’s going to end badly, but in the meantime we can make some money.” You can make some money in fixed assets that will appreciate as the Fed monetizes debt.
    • Trust your instincts and observations more and government statistics and the mainstream media less.
    • Put your savings and retirement, if possible, into investments that will benefit from “printing money,” money supply increases, economic decline, currency wars, devalued paper currencies, and out-of-control government spending. Gold, silver, farmland, some real estate, diamonds, crude oil, food, and many more come to mind.
    • Some of the extra liquidity created by the Fed is finding its way into the stock market. Hence, the Dow just made a new high and is much higher than its crash low four years ago. When will the “juice” run out? In the meantime, more central bank liquidity feeds market strength. Don’t fight the Fed! More QE will occur – it could “juice” the stock market higher and almost certainly will “juice” gold and silver, which are at significant lows and ready to rally.
    • Read Ten Steps To Safety.
    • Gold and silver have been a store of value for over 3,000 years. ALL paper money systems throughout history have eventually failed. Do you want to risk that the US Dollar and the Euro will be the exceptions? Put some money into gold and silver. They are insurance, value investments, and a safe way to preserve your purchasing power.

    Europe Does It Again: Cyprus Depositor Haircut "Bailout" Turns Into Saver "Panic", Frozen Assets, Bank Runs, Broken ATMs

    Europe has done it again.

    Late last night, after markets closed for the weekend, following an extended discussion the European finance ministers announced their "bailout" solution for Russian oligarch depositor-haven Cyprus: a €13 billion bailout (Europe's fifth) with a huge twist: the implementation of what has been the biggest taboo in European bailouts to date - the  impairment of depositors, and a fresh, full blown escalation in the status quo's war against savers everywhere.
    Specifically, Cyprus will impose a levy of 6.75% on deposits of less than €100,000 - the ceiling for European Union account insurance, which is now effectively gone following this case study - and 9.9% above that. The measures will raise €5.8 billion, Dutch Finance Minister Jeroen Dijsselbloem, who leads the group of euro-area ministers, said.
    But it doesn't stop there: a partial "bail-in" of junior bondholders is also possible, as for the first time ever the entire liability structure of a European bank - even if it is a Cypriot bank - is open season for impairments. The logical question: why here, and why now? And what happens when the Cypriot bank run that has taken the country by storm this morning spreads everywhere else, now that the scab over Europe's biggest festering wound is torn throughout the periphery as all the other PIIGS realize they too are expendable on the altar of mollifying voters and investors in the other countries that make up Europe's disunion.
    Bloomberg's take on the sacrifice of Cyprus' savers:
    Officials have struggled to find an agreement that would rescue Cyprus, which accounts for just half of a percent of the euro region’s economy, without unsettling investors in larger countries and sparking a new round of market contagion. Policy makers began meeting at 5 p.m. yesterday in a hastily convened gathering, seeking to overcome differences on bondholder losses while financial markets were closed.

    “Further measures concern the increase of the withholding tax on capital income, a restructuring and recapitalisation of banks, an increase of the statutory corporate income tax rate and a bail-in of junior bondholders,” according to a communique released by ministers after the talks. It didn’t specify whether bank or sovereign bond holders could be affected.

    The European Central Bank will use its existing facilities to make funds available to Cypriot banks as needed to counter potential bank runs. Depositors will receive bank equity as compensation.

    Finance Minister Michael Sarris said the plan was the “least onerous” of the options Cyprus faced to stay afloat.

    “It’s not a pleasant outcome, especially of course for the people involved,” said Sarris. The Cypriot parliament will convene tomorrow to vote on legislation needed for the bailout.
    Needless to say, the locals are delighted:
    In the coastal town of Larnaca, where irate depositors queued early to withdraw money from cash machines, co-op credit societies that are normally open on Saturdays stayed closed.

    "I'm extremely angry. I worked years and years to get it together and now I am losing it on the say-so of the Dutch and the Germans," said British-Cypriot Andy Georgiou, 54, who returned to Cyprus in mid-2012 with his savings.

    "They call Sicily the island of the mafia. It's not Sicily, it's Cyprus. This is theft, pure and simple," said a pensioner.
    For the real response, look to Russia:
    The island's bailout had repeatedly been delayed amid concerns from other EU states that its close business relations with Russia, and a banking system flush with Russian cash, made it a conduit for money-laundering.

    "My understanding is that the Russian government is ready to make a contribution with an extension of the loan and a reduction of the interest rate," said the EU's top economic official, Olli Rehn.

    Almost half of [Cyprus'] depositors are believed to be non-resident Russians, but most of those queuing on Saturday at automatic teller machines to pull out cash appeared to be Cypriots.
    While "saving", pardon the pun, yet another insolvent country merely has the intent of keeping it in the Eurozone, and thus preserving Europe's doomed monetary block and bank equity for a little longer, this idiotic plan will achieve two things: i) infuriate not just Russians but very wealthy, and very trigger-happy Russians. The revenge of Gazpromia will be short and swift, and we certainly would not want to be Europeans next winter when the average heating level of Western European will depend on the whims of Russian natural gas pipeline traffic; ii) start a wave of bank runs first in Cyprus and soon everywhere else that has the potential of being the next Cyrpus.
    Sure enough, here come the bank runs:
    While the tax on deposits will hurt wealthy Russians with money in Cypriot banks, it will also sting ordinary citizens. Some ATMs in the country have run out of cash, Erotokritos Chlorakiotis, general manager of the Cooperative Central Bank, told state-run CYBC.
    Forzen assets and "national bank holidays" are baaaaack:
    Funds to pay the levy were frozen in accounts immediately, ECB Executive Board Member Joerg Asmussen said. The levy will be assessed before Cypriot banks reopen on March 19 after a March 18 national holiday. Sarris said electronic transfers will also be limited until then.
    Europe's response: this is a unique situation. Just like the Greek bailout was unique;  just like the Irish and Portuguese bailouts were unique;  just like the bailout of Spanish banks was unique.
    “As it is a contribution to the financial stability of Cyprus, it seems just to ask a contribution of all deposit holders,” Dijsselbloem said, noting the country’s financial industry was five times the size of its economy. The plan includes “unique measures” that address the “exceptional nature” of Cyprus and show “inflexible commitment to financial stability and the integrity of the euro area.”
    Curiously, even everyone's favorite liar, former Eurogroup president, Jean-Claude Juncker, has a warning that this "bailout" is the worst thing Europe could have done:
    Skeptics including Luxembourg’s Jean-Claude Juncker had said that imposing investor losses in Cyprus risked reigniting the financial crisis that has so far pushed five of the euro zone’s 17 members to seek aid. Last year, the euro area took what officials called a unique step to ask Greek bondholders to absorb losses.
    But fear not: Europe has promised this absolute resolution taboo won't repeat itself...
    When asked if a deposit assessment could be ruled out for future rescues, Rehn said in an interview: “It can and there is no concrete case where it should be considered.”
    ... Until it does repeat itself of course - after all the fundamental problem for Europe has never been resolved: the continent is still broke, and it still is running out of good, unencumbered assets (which as being repledged by the banking oligarchy) with every passing day.
    Now the only thing unknown is Russia's response:
    Corporate tax rates in Cyprus will rise to 12.5 percent to 10 percent as part of the deal, Dijsselbloem said. Rehn told reporters that Russia, whose banks have loaned as much as $40 billion to Cypriot companies of Russian origin, would ease terms on its existing loans to Cyprus as the rescue unfolds. Cyprus’s finance minister is scheduled to fly to Moscow on March 20.
    What is known, however is that Cypriots have taken the news in stride.... and to their local ATM machine, which sadly is showing the following message: "Your transaction has been cancelled due to a technical issue. This ATM cannot complete withdrawals at this time" (courtesy of Yannis Mouzakis).

    It didn't take long before the Cyrpus Cooperative bank issued a statement saying "some ATMs run out of cash" - by some they likely mean all as the entire country is now gripped in a full force depositor run.
    Some other snapshots of what is currently happening in Cyrpus, where locals are using excavators if not to force the ATMs into "compliance" then to block bank entrances out of blind fury. From Philenews:
    Indignant citizen who has the testimony of the Cooperative Credit Society Kyperoundas, cut the morning the entrance of the branch of the SEA, located on Avenue Nikos and Despina Pattichi in Limassol.

    He said he believes that deceived by the assurances that the relevant deposits are insured citizens and decided how to express his protest, parking the excavator outside the entrance of the branch of SEA

    And more from iefimeirda:
    With the first light of day after the unprecedented decision to the Eurogroup on the terms of the Memorandum of Agreement and the taxation of savings, hundreds of people flocked to Cyprus stores credit cooperatives Larnaca to withdraw their deposits.
    With the opening of stores found they could not withdraw all their money, because the electronic system of credit cooperatives was not working. And when it became possible, writes the Daily Cyprus, the system seemed to finally hit the appropriate amount of the new tax, which provoked strong reactions. Even after the government ordered the stores eventually closed.

    At the same time, according to information or ATMs of banks give no money so that there is a huge inconvenience.

    After lunch return to Cyprus President Papadopoulos Nikos Anastasiadis from Brussels in the morning reached political agreement on the rescue of the economy, while in the meantime the Presidential prepares emergency meeting of ministers of the government.

    According to all the information, will this weekend be submitted and voted on bills in the form of urgency, before the banks opened Tuesday morning.

    In the text of the agreement, with the characteristic title "We caught napping," the website says Sigma Live Nicosia agreed terms "under threat of closing banks."  painful Describing the agreement, Sigma relies on sources from Brussels you speak of night thriller and roll jams, and the Cypriot delegation warned even withdrawal from the negotiations.
    Congratulations Cyprus savers - you were just betrayed by both your politicians, and by Europe - sorry, but you are the "creeping impairments" in the game known as European bankruptcy. And so is anywhere between 6.75% and 9.9% of your money, which you were foolish enough to keep with your banks (where at least you were compensated with a savings yield of... 0%).
    More importantly, as of this morning Europe has finally grasped that there is a 6.75% to 9.9% premium to holding physical cash in your mattress rather than having it stored with your local friendly insolvent bank.

    Luckily Cyrpus is so "small" what just happened there will never happen anywhere else: after all in Europe nobody has ever heard of "setting an example". Or so the thinking among Europe's unthinking political elite goes.
    And congratulations Europe: just when people almost believed you things are "fixed" you go ahead and prove to the world that you are as disunified (because size doesn't matter in a true union), as confused, as stupid and as broke as ever.