Saturday, March 23, 2013

CHART: Stocks Vs. Bonds Vs. Gold

Bonds have outperformed stocks and gold over the last 3 years:

Source: Bianco Research
See chart in full-size
Chart shows the total return for gold, treasuries and equities.  Total return includes both dividends for equities and interest payments for bonds.
Hat tip: Barry Ritholtz


Interest On National Debt Vs. Defense Spending
In a decade, interest on the national debt will exceed total federal spending on the defense budget by $125 billion, or 20 percent, according to CBO.

Washington's Spending Insanity Must Be Stopped
We're now borrowing to pay interest on what we've already borrowed.
In a decade, federal spending to pay for the interest on America's debt will exceed total spending on the defense budget by $125 billion, or 20 percent, according to CBO.  In fact, the interest payments are likely to be even higher, since these assumptions are based on the historically low interest rates remaining the same, which is not likely over the course of the next decade.  "If interest rates rise just 1% point above baseline projections, the government would pay an additional $1 trillion in interest payments over ten years."
Overall, Obama's budget would increase federal spending 58% - from a budget size of $3.6 trillion today to $5.9 trillion in 2022.

Meanwhile the U.S. Debt Machine rolls on, borrowing $3 million per minute.

Some Good News---Too Many Lawyers, Too Few Jobs

Becoming a lawyer seemed to be one of those career moves that could stand up to any type of economic setback.
The jobs would always be there, as most people, it was assumed, would need a lawyer at some point in their lives-and a downturn in the economy would likely last no more than it took to graduate from law school.
That's no longer the case. Because of the recession of 2007-2009 and a still-struggling economy, the legal profession is under severe stress. Besides not having enough positions for current lawyers, there are too many upcoming law school graduates and too few jobs to employ them.
"We never saw it like this just a few years ago, but now I've seen it first hand," said Ron Lieberman, a matrimonial lawyer the in New Jersey firm of Adinolfi & Lieberman in southern New Jersey. "There are too many lawyers and too few jobs. We just hired someone, but we didn't look very hard, and she was doing volunteer work."
He added: "I'm not sure it's going to get better any time soon."

The legal profession, like many others, has been downsizing. It's boosting productivity of current staffers, rather than hiring new employees, analysts say, and anyone newly hired is likely to be doing so at half the salary than that of a new hire just four years ago.

Not 99%

You shout this at the top of your lungs as if you know what it means. Although, if you really are rebelling – that is cutting yourself from the cord of tyrants – you are most certainly not 99% of the population. 99% may not be implementing the agenda of psychopaths, but 99% of us are also not necessarily doing anything about it. If the odds really did add up to that, the real counter-world would not have the challenge we do to get the real 99%  away from the plasma screen for more than ten minutes to look at what the government that represent them are doing. They do NOT represent me and they do NOT represent you if you can read this without cognitive dissonance.  
It is an insult to anyone seriously removing themselves from tyranny to put  us in league with drooling masses currently paying tribute, working at banks, collecting the government dole, voting for tweedle dee and tweedle dumb. The rest of us have worked hard to break our dependence and that 99% do not deserve the same credit. Those who read into a small fraction of the mystery like the economy or Zionism,   and then stop looking as if they’re at the apex of the problem. The truth is that it is not some people in government, it is all government.  It is not some people in control, it is the sickness that is the need to control. And your need to be controlled is because you’re too afraid to make decisions for and defend yourself.
No, I’m afraid that if we were the 99%, the situation would not be so grave.  If that great a number were really working against control, we would already be in control of our own lives. Unless what you mean is that 99% of us are neutrally sitting around quoting relatively subversive movies like V or bitching about their money on Wall Street then, my apology, you are the 99%.
But it takes so much more than that. These bizarre circuses that excite the inherent rebellion in all of us, just enough that you feel satisfied without doing anything about your own livelihood’s dependence on tyranny. The truth is  that few of us actually want an end to tyranny because they wouldn’t know where the next meal would come from. This is because they haven’t taken the responsibility to ensure that through their own self worth, not buying power.
You have a credit card, a mortgage, you have worked for them all of your life, yet you insultingly call yourself the 99% because you can’t get a job in the food court and this is why you repeat these mind numbing memes. The point is not to bring the corporate jobs back. Do you get it yet? The point is to eliminate the need for them. Slaves that first came to this country had the exact opposite problem. Americans are most proficient at this because they have instituted the first voluntary slavery. This degrading work force where you repeat whatever equally mind numbing slogan that your respective bosses tell you to, to avoid the “horrors” of manual labor. The madness continues because we work for them more than we work for the people and ourselves.  When we lose the opportunity to  support the machine, we complain about not having the boon to mankind that is voluntary wage slavery.
No, I’m afraid that if you understand this, you are not among the 99% of us!
The alternative is to work together  in a way that soon we won’t need the outside to agree with us. If we can produce our own food and technologies then it will be soon. What they do will not affect us and it won’t be a matter of getting the controllers to stop what they are doing, it will be a mater of continuing what we do for ourselves.
If you’re in debt, get out of debt soon.  It makes no matter how you do that, some  may choose to sell their consumer junk to achieve that while others may choose to use a debt cancellation service. Either way, until you get out of debt you’ll still be a wage slave.
Stop being someone’s wage slave.  For some of you it may require that you become SELF EMPLOYED and for others it may mean going off the grid and becoming truly SELF SUFFICIENT!
Most importantly stop being controlled by the MainStreamMedia and politicians who know all the right buzz words to activate your mind to their benefit.
Until you become really FREE, all the bitching in the world will only be a pressure release valve that TPTB know only too well how to use and all the bitching in the world will  only work to keep you in this rotting corrupt system.
by Jess

Economists See No Crisis Despite Debt Growth Outpace Economic Growth

“Three years after a government spending surge in response to the recession drove the U.S. past that red line — the nation’s $16.7 trillion total debt is now 106 percent of the $15.8 trillion economy”

Federal Debt: Total Public Debt as Percent of Gross Domestic Product (GFDEGDQ188S)

Federal Debt: Total Public Debt as Percent of Gross Domestic Product (GFDEGDQ188S)

2012:Q4: 103.66867 Percent of GDP   Last 5 Observations
2012:Q3: 101.61433
2012:Q2: 101.72876
2012:Q1: 100.67048
2011:Q4: 99.35996
Quarterly, Seasonally Adjusted, Updated: 2013-03-13 10:31 AM CDT

$16,750,130,322,121.01 (National Debt)

Why U.S. Economic Growth Must Outpace Debt Growth … And Why It Won’t without the Private Sector’s Resurgence
Other headlines:
  1. Chicago to close 54 schools to address $1 billion deficit
  2. Hunt for Yield Boosts Junk-Bond Debt
  3. Italy tries for stimulus, at a cost
  4. San Jose Updates Unfunded Liabilities for City Pension Funds
  5. Cyprus cash crisis hits small business (Video)
  6. Fitch may downgrade U.K.’s triple-A rating


Interest On National Debt Vs. Defense Spending
In a decade, interest on the national debt will exceed total federal spending on the defense budget by $125 billion, or 20 percent, according to CBO.

Rick Santelli Slams Freddie & Fannie Price Controls, Housing Will Return If Left To Private Sector


The Financial System Is Breaking Down And Collapsing Right Before Our Eyes

Celente – The Financial System Is Collapsing Before Our Eyes

Today top trends forecaster Gerald Celente told King World News that the financial system is breaking down and collapsing right before our eyes. Celente had correctly forecast back in 2012 that a bank holiday would occur in Europe, and also said events continue to spiral out of control going forward. Celente is the founder of Trends Research, and the man many consider to be the top trends forecaster in the world.
Eric King: “Gerald, I have to start off talking here about the bank holiday we’re seeing in Cyprus. You had called for bank holidays, your thoughts here?”
Celente: “First we thought they were going to happen in the United States, but we didn’t know they were going to be dumping quantitative easing unlimited into the economy. This is unprecedented. So we knew there was going to be a bank holiday, and in 2012 we started warning about bank holidays in Europe. I’ve been saying it for the last 14 months, there are going to be bank holidays….
The Dow is at a record high, and there is rejoicing on Wall Street in reaction to the stock market rally. In fact, the stock market rally appears to have made more people rich. A total of 300,000 newly minted millionaires were created from the current multiyear stock market rally, according to Spectrem Group. (Source: Frank, R., “US (and Booming Market) Adds 300,000 New Millionaires,” CNBC, March 19, 2013.) This is great news for the new members of the $1.0-million club (excluding primary residence), but the reality is that there continues to be a mass of Americans collecting food stamps—around 48 million according to—and they have not reaped any rewards from the stock market rally.
The headlines commenting on how America is becoming richer are myths; that is, unless you don’t care about the other 95% of Americans who are just getting by and the bottom rung of this group who are considered America’s poor, making minimum wage.
What is also alarming is the low saving rate, which shouldn’t be a surprise, given that income levels have flattened out and declined over the past decade. According to the Employee Benefit Research Institute (EBRI), a staggering 57% of workers surveyed said they had less than $25,000 in combined household savings and investments, aside from their homes. (Source: Greene, K. and Monga, V., “Workers Saving Too Little to Retire,” Wall Street Journal, March 19, 2013.) The survey also reported that 28% of respondents expressed no confidence that they would have sufficient money to retire in a comfortable manner. Trust me when I say this group doesn’t care about the stock market rally.

$900 Million Says Euro Crashes In 2 Weeks: PUT Trade Rocks London Options Market

Someone has placed a GIGANTIC $900 million EURO PUT trade on the Euro to crash vs. the dollar within 2 weeks.  Is this a ‘smart bet’ by someone who has seen the writing on the wall with the situation in Cyprus or does someone have inside knowledge that something big is about to happen? Beware! We have seen this before as shared in the videos below; in fact, it happened prior to September 11th, 2001, and we ALL saw what happened thereafter….

Euro may be doomed whether Cyprus stays or goes

Commentary: No one can now trust Brussels, or Berlin
However the crisis in Cyprus is resolved, there will be lasting effects on the European Union that may well have sealed the fate of the euro (ICAPC:EURUSD) .
It is impossible to imagine that politicians in Germany, for instance, would dare to confiscate nearly 7% of the savings of their own citizens for any reason. But they were willing to do it to Cypriots.
“What we are witnessing is the slow death of the European Project,” Anthanasios Orphanides, the former head of Cyprus’s central bank, said in an interview with Bloomberg TV this week. “We are in a situation that some European governments are essentially taking actions that are telling citizens of other member states that they are not equal under the law.”
Orphanides, who worked as an economist at the U.S. Federal Reserve before his stint as central bank governor from 2007 to 2012 and who currently teaches at MIT, added that the Cyprus proposal endangered the banking union seen as necessary to preserve the euro by undermining confidence in deposit insurance.
“Indeed by making a mockery of that right now, the governments who pushed for this measure are sending a message that they want no part of a banking union,” Orphanides said.

CYPRUS: Talks With Troika In Final Stages, Next Few Hours Will Determine The Future

Whatever It Takes? Cyprus and the Euro on the Brink! Cyprus Shifts To Plan ‘DD’ (Douple-Dip The Large Depositors), SPAIN To Go With Cyprus type TAX !? Ireland? The Market Is Afraid That The OBVIOUS Cyprus Outcome Will Happen… Economic Armageddon Is Inevitable!?

WE DECIDE TODAY IF CYPRUS STAYS IN EURO – HEAD OF THE CENTRAL BANK OF CYPRUS! Germany Rejects Cyprus Pension Fund Plan! People Are Running Out of Cash, Petrol Stations In Fear of Closing Down! Cyprus’ Central Banker Thinks Confiscating Deposits Is The Preferred Solution!! $900 Million Says Euro Crashes In 2 Weeks!
EU Doom Is Expanding: 2013 PORTUGUESE BUDGET DROP DEAD BY CONSTITUTIONAL COURT! This Is An Hole In The Budget of One Billion Euros!!! No ‘plan B’ And Germans Openly Debating Euro Exit On TV!

Cyprus Rushes Bailout Plan as Clock Ticks Toward Chaos
Cyprus May Become Europe’s Lehman, Billionaire Potanin Says
Mass Panic In Cyprus: The Banks Are Collapsing And ATMs Are Running Out Of Money
Banking System in Cyprus ‘Artificial’: Ross

Global Slowdown Accelerates Driven By Confidence / New Orders Plunge

Goldman’s ‘Swirlogram’ places the global industrial cycle squarely in the ‘Slowdown’ phase as growth momentum fades rapidly. Driven by plunges in aggregate confidence levels and New Orders (less inventories) – as well as CAD and AUD data – this reinforces last month’s preliminary view of a slowdown beginning. Goldman notes we could potentially see weaker global activity over the coming months. Is it any wonder we are seeing bellweather names missing in a big (un-unique) way.

Imminent War With Iran and Collapse Of The Financial System. By Gregory Mannarino

Several “International markets” are facing important resistance lines!

35% of the blogs viewership is from outside of the United States, reflected in the chart below.  I am deeply humbled by the global viewers that come to the blog daily.  Thank you.
The above 6-pack reflects that the DAX, CAC-40 & FTSE-100 are all facing important resistance lines right now, while the Hang Seng and FXI (China ETF) are falling away from key resistance lines and the Euro is breaking support.

Not only are these important international markets facing important technical lines in the sand, the hottest international index of late, (Nikkei 225), is facing its 50% Fibonacci level of its 2007 peak and 2009 lows below.


The Hidden Face of Austerity: American Corporate Executives Cash In

As the US government prepares to furlough 1 million federal workers and slash hundreds of billions in social spending, corporate executives in the United States are receiving among the highest payouts in history. USA Today reported Thursday that at least ten CEOs took in $50 million apiece in 2012, largely as a result of cashing in stocks that have soared in value with the rising market. According to the newspaper,
“Early 2013 proxy filings detailing 2012 compensation show a growing number of CEOs reaping $50 million or more, gains that could prove unmatched in breadth and size since the Internet IPO craze enriched tech company executives more than a decade ago.”
In its own analysis, the Wall Street Journal observed that executive pay has become ever more directly tied to stock values, noting that last year, more than half of compensation at major companies was tied to “stock or financial performance,” compared to 35 percent in 2009.
Among the top pay packages according to preliminary calculation is that of Starbucks CEO Howard Schultz, which included stock options valued at $103.3 million this year, on top of $30 million in other compensation and stock, as well as $10.2 million in vested shares, according to USA Today.
Ford CEO Alan Mulally likewise took home $61 million by cashing in shares that vested last year, added to his compensation of $21 million. This payout was based on a sharp rise in the company’s profitability that has been made possible by downsizing and the slashing of wages for newly hired workers to $15 per hour. Mulally’s pay is more than 2,500 times that of a new auto worker.
Apple’s Tim Cook got $139.7 million from restricted shares that vested last year, while Oracle CEO Larry Ellison was granted $90 million in stock.
These payouts are only a sampling of the huge sums that the ruling class is handing itself. The stock market, inflated through $85 billion a month handed to the banks by the US Federal Reserve, is the central transmission belt for this enrichment.
The engorgement of the ruling class has been facilitated by the actions of the state, and in particular the Obama administration. After the financial collapse of 2008, facing widespread public outrage at executive compensation, the administration explicitly opposed any constraints on pay. “We don’t disparage wealth,” Obama said repeatedly. Proposals for CEO pay centered on encouraging companies to tie this pay more directly to “performance”—i.e., share values.
Even while the corporate CEOs and other members of the financial oligarchy rake in astronomical payouts, the constant refrain from the media and big business parties is that there is no money to pay for social spending, and that health care and retirement programs must be cut and workers’ incomes slashed.
Next month, as a result of $85 billion in “sequester” spending cuts, over 1 million federal government employees will begin scheduled furloughs, resulting in effective pay cuts of 20 to 35 percent. These furloughs come together with tens of billions in cuts to public education, anti-poverty programs, and unemployment insurance.
With both Democrats and Republicans acknowledging that the cuts will be permanent, the turn now is toward working out an agreement to slash hundreds of billions of dollars from Medicare, Medicaid, and Social Security. The ultimate aim of the ruling elite is to dismantle everything that remains of the social safety net, plunging the working class into Dickensian poverty and social misery.
The argument that there is no money to pay for these programs is rendered absurd by the vast amounts of cash being handed out to executives or simply sitting around on corporate balance sheets. In 2012, the amount of cash held by US non-financial corporations rose by 10 percent, to $1.45 trillion, according to Moody’s. This figure is enough to pay for the sequester cuts 17 times over.
In fact, Apple, whose cash hoard rose to $137 billion, could itself pay for this year’s sequester cuts, with $50 billion to spare.
Loaded with cash and unwilling to invest, corporations have dramatically increased dividend payments to investors. The New York Times reported earlier this month that S&P 500 companies are expected to hand investors $300 billion in dividends this year, an increase over last year’s payout of $282 billion. American corporations bought back $117.8 billion in their own stock last month, the highest total on records going back to 1985.
The relationship of the American ruling class to the rest of society is a fundamentally parasitic one. Over the course of three decades, under conditions of economic decline, stock market speculation, rather than production, has become the central mechanism of wealth accumulation.
The 2008 crisis, far from reversing this process, has strengthened it. The ruling elite seized on the crisis to escalate the transfer of wealth. The soaring CEO pay and investor payouts on one hand, and vast social misery on the other, are in reality two sides of the same process.
The American ruling class proceeds with an almost shameless disregard for the consequences of its own actions. Amidst mass poverty and unemployment, as it dictates the most brutal austerity measures all around the world, the financial aristocracy engages in an uncontrollable orgy, propelled by its own social being.
Such actions, however, do not go unnoticed. They are producing within the United States an immense wellspring of social opposition that will take the form of working class struggle.

Barclays fighting claims it tried to bury details of a £40m jackpot for nine top executives from public view

Barclays: Empty promises?
Barclays was last night fighting claims it tried to bury details of a £40m jackpot for nine top executives from public view.
Critics lined up to slam the bank for sneaking out details of the share windfalls – which included £17.6m for top casino banker Rich Ricci – just hours after the Chancellor delivered his latest austerity Budget.
Trade unions and campaigners argued it undermined any progress the bank has made this year on being more open about how much it pays its staff.
But Barclays yesterday scoffed at criticism that it was guilty of a classic ‘Jo Moore’ by publishing details of huge long term incentive awards and deferred bonuses just hours.
Jo Moore was an aide in the Labour Party who sent a notorious email to colleagues on September 11, 2001 – the day of the terrorist attacks in the US – saying it was ‘a good day to bury bad news’.
It argued that the timetable to dish out these huge awards was set out 12 months ago, long before the Budget date was set on December 11.
It also said it was governed by strict ‘disclosure and transparency’ rules, set by City watchdog, the Financial Services Authority.
These dictate that the bank has a 48-hour window to disclose pay awards once it has been informed of them by administrators.
In this case Barclays said third party administrators had bought the shares  to hand to the directors on Monday.
The lender was informed of this on Tuesday and then had to disclose the awards to the stockmarket by the end of the next business day – which happened to be Budget day.  
Banking insiders suggested that changing the dates of the awards once the Budget date had been announced in December would have been fraught with legal difficulties.
It may also have opened the lender up to allegations of insider trading, with suspicions that it may have manipulated the date to benefit the recipients of the awards – for example to coincide with a deal which may have driven the share price up.
But critics last night gave all these defences short shrift.
Deborah Hargreaves from the High Pay Centre said: ‘I think they had leeway on when they announced this. They did not have to do it on Budget day.’
She added: ‘To announce such massive share awards with no proper explanation just smacks of hypocrisy.
‘It seems so unbelievably insensitive to ordinary people to do it just hours after the Chancellor has delivered such a grim Budget.’ Martin Wheatley, boss of the new regulator the Financial Conduct Authority, certainly did not help Barclays’ cause when he told journalists yesterday that he was not aware of any rules which would have forced Barclays to disclose details of the pay awards when it did.
But others jumped to the bank’s defence.
Sarah Wilson, from corporate governance consultancy Manifest, said: ‘There are strict timetabling issues which banks have to adhere to.
‘It could have been worse – they could have released the details in the middle of the Chancellor’s speech.’
Instead she criticised the huge scale of the awards, pointing out that Rich Ricci’s £17.6m windfall was six times the median pay package for a boss of a FTSE 100 company.
Barclays has claimed to be at the vanguard of transparency by publishing the number of employees paid more than £1m – 428 – in its annual report this  month. But in another blow Manifest revealed last night it is set to slap the bank with a C-grade for transparency on its pay awards.
Its report, which is expected to be published as early as today, suggests the bank has only made an minor improvement in transparency since last year when it was awarded a D grade.
Shareholders were particularly incensed by Barclays’ decision to hand former chief executive Bob Diamond a £5.75m ‘tax equalisation’ payment for 2011 to cover his US taxes.
Wilson described the bank’s latest report as being ‘light on detail’, including how targets are set for performance related awards.
But she added: ‘It’s a start. Shareholders will want to give Barclays some slack.
‘It’s a massive undertaking to turn Barclays around.
‘We will be looking for more comprehensive disclosure next year.’

Forbes’ Siedle: US Headed for ‘Greatest Retirement Crisis’ in History

The United States is failing to prepare but is nonetheless set to witness the world's “greatest retirement crisis,” warns Forbes contributor Edward Siedle.

People are living longer, but there are growing indications that many can’t afford to live comfortably in their golden years.

Findings from the Employee Benefit Research Institute (EBRI) reiterate the harsh reality reported in other surveys: Americans do not have enough money to retire.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

According to EBRI, more than half of U.S. households possess less than $25,000 in savings and investments when their homes and pensions are excluded from the picture.

Many have no pension to consider in the first place, as the trend of extending these benefits is evaporating. And those that are so lucky to receive them better watch out.

“Whether you know it or not someone is busy trying to figure out how to screw you out of your pension,” Siedle writes. He warns that those funds may not survive as long as those receiving them.

He considers 401(k)s, which were marketed as placing people's futures in their own hands, as a great experimental disaster. Siedle, who was once employed as mutual fund legal counsel, said the way retirement funds were sold to working Americans is “almost laughable — if the results were not so tragic.”

The financial status of Americans is so grim that EBRI said if an unexpected need for $2,000 arose in the next month, only half of U.S. households could find the money.

And, though there is much focus on Social Security and its importance to the aging, it is often overlooked that these benefits were designed to be supplemental income.

Whereas many interpret a crisis as a flood of tragedy, Siedle said the problem for retirees would come in “waves.”

As we are already seeing, many older people have had to return to work because they either could not afford the costs of living or they need employer-subsidized healthcare. Others realize they need more money so they work longer, considering themselves to be postponing retirement. But many Americans have put ideas of retirement aside and plan to work as much as they can for as long as they can.

In the end, most people will end up in the same boat, according to Siedle — with deteriorating health, a lack of employment opportunities and insufficient funds.

“Too frail to work, too poor to retire will become the new normal” for the majority of the nation’s elders, he explains, noting that the problem will be too big for the nation to ignore.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

© 2013 Moneynews. All rights reserved.

Petrol Bomb Riots In Greece

‘Euro is a house of cards waiting to topple’- Nigel Farage

UK Independence Party leader Nigel Farage (Reuters / Paul Hackett)
UK Independence Party leaderel Farage (Reuters / Paul Hackett)
 According to Nigel Farage, leader of the UK Independence Party, northern EU leaders realize they risk vast losses if they allow Cyprus, Greece or any other southern member to fail. To prevent this, they have resorted to extreme measures - even theft.
RT: Every bailout comes with strings attached. But can Cyprus afford the price the EU has set?

Nigel Farage: What is really happening here is we are having a reconcilable split between the North and the South of Europe. In the North of Europe – Germany, the Netherlands, and Finland – there are very strong political voices saying “We do not want to go on bailing out southern European countries.” And bear in mind that Cyprus is now the fifth country out of 17 that has needed to be bailed out. And that is why the Germans extracted the terms that they did. But I must say that even in my direst predictions in this parliament over the years about the way the EU bosses were behaving, never did I think that they would in a completely unprecedented manner resort to stealing money from people’s bank accounts.

RT: But is that because Europe can’t afford Cyprus to fail?

NF: Well, It can’t afford Cyprus to fail, it can’t afford Greece, Portugal, Spain or Ireland to fail. They know that once one country goes the whole deck of cards will come tumbling down. And countries like Germany will realize absolutely vast losses – possibly as much as one trillion euro.

So, they are prepared now to do literally anything to try to keep the Euro afloat. And that is why they have now resorted to what can only be described as theft.

Now they’ve done it in one country, they are quite capable of doing it in Italy, Spain, Portugal, or anywhere else.

And the message that sends to people who have got savings in banks in those countries – certainly if I was them is “get your money out while you can.”

RT: In 2010, almost twice as much British money went to Cyprus as transfers from Russia - according to the country's official website. Haven't you got a responsibility to safeguard your constituents’ interests there?

NF: The government has had nothing to say on that subject whatsoever. And what the government ought to do is to help the British people living down there – mostly pensioners.

But what the British government needs to do is to say to the hundreds of thousands Brits that are living Southern Spain, that “For goodness sake, get your money out of that country and have a monthly transfer to pay your bills. And that is what I’d like to see [Britain's Chancellor of the Exchequer] George Osborne do in budget statement in the House of Commons tomorrow.

RT: And what sort of message is this sending to foreign investors? Essentially, are not they being taxed to cure a crisis they had no part in causing?

NF: Don’t invest in the Eurozone! Do not invest anywhere in Eurozone. You’ve got to be mad to do so, because it’s now run by people who don’t respect democracy, who don’t respect the rule of law, who don’t respect the basic principles upon which western civilization is supposed to be based.

I think that this German-dominated and led decision is the worst decision we’ve seen so far in this whole Eurozone crisis. 

RT:  Various EU leaders have said recently that they are not happy with the way tax havens work. Is something being done about that now?  

NF: The EU has been unhappy about so-called tax havens for a very long time. Ironically, whilst continuing to turn a blind-eye to many activities that go on in Luxemburg. I mean Cyprus finds itself right now in a very difficult, desperate position. But I would say that it is better to officially go bankrupt, to default on international bond obligations. And to do that best to keep a banking industry and to keep some confidence in that country.

Taxpayers Are GIVING Big Banks $83 Billion A Year!

On television, in interviews and in meetings with investors, executives of the biggest U.S. banks — notably JPMorgan Chase & Co. Chief Executive Jamie Dimon — make the case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the country’s position in global finance.
So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?
Granted, it’s a hard concept to swallow. It’s also crucial to understanding why the big banks present such a threat to the global economy.
Let’s start with a bit of background. Banks have a powerful incentive to get big and unwieldy. The larger they are, the more disastrous their failure would be and the more certain they can be of a government bailout in an emergency. The result is an implicit subsidy: The banks that are potentially the most dangerous can borrow at lower rates, because creditors perceive them as too big to fail.
Lately, economists have tried to pin down exactly how much the subsidy lowers big banks’ borrowing costs. In one relatively thorough effort, two researchers — Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz — put the number at about 0.8 percentage point. The discount applies to all their liabilities, including bonds and customer deposits.

Big Difference

Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $83 billion a year. To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.
The top five banks — JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. – - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry — with almost $9 trillion in assets, more than half the size of the U.S. economy — would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.
Neither bank executives nor shareholders have much incentive to change the situation. On the contrary, the financial industry spends hundreds of millions of dollars every election cycle on campaign donations and lobbying, much of which is aimed at maintaining the subsidy. The result is a bloated financial sector and recurring credit gluts. Left unchecked, the superbanks could ultimately require bailouts that exceed the government’s resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009.
Regulators can change the game by paring down the subsidy. One option is to make banks fund their activities with more equity from shareholders, a measure that would make them less likely to need bailouts (we recommend $1 of equity for each $5 of assets, far more than the 1-to-33 ratio that new global rules require). Another idea is to shock creditors out of complacency by making some of them take losses when banks run into trouble. A third is to prevent banks from using the subsidy to finance speculative trading, the aim of the Volcker rule in the U.S. and financial ring-fencing in the U.K.
Once shareholders fully recognized how poorly the biggest banks perform without government support, they would be motivated to demand better. This could entail anything from cutting pay packages to breaking down financial juggernauts into more manageable units. The market discipline might not please executives, but it would certainly be an improvement over paying banks to put us in danger.

UPDATE: New Bill Requires Gold & Silver Registration

The slippery slope to confiscation has begun.
Gold and silver buyers could soon have to register with the state of Illinois.
Rick Santelli provides an update on legislation that requires every gold and silver transaction to be registered with the State.  Here are the basics.  The bill, officially called SB-3341, was introduced in 2012, immediately passed the Illinois Senate and is now awaiting action by the House.  Click here for the latest status update on SB3341...

Background and text of the bill:
A Bill to Register Buyers of Gold and Silver Coins
Creates the Precious Metal Purchasing Act.  Provides that a person who is in the businessof purchasing precious metal shall obtain a proof of ownership, create a record of the sale, and verify the identity of the seller.  Provides that a person who is in the business of purchasing precious metal shall not pay for the precious metal in cash and shall record the method of payment.  Requires the purchaser to keep a record of the sale for one year or, if the purchase amount is over $500, for 5 years.  Provides that a person who violates the Act is guilty of a petty offense and subject to a fine not exceeding $500. Provides that the Attorney General may inspect records, investigate an alleged violation, and take action to collect civil penalties.
To read the entire bill, click here.

Prior to the failure of the Illinois legislature to force citizens to register outlawed firearms, the state moved to place restrictions on the sale of gold.  Santelli ties the floundering legislation to FDR’s 1933 Executive Order 6102 confiscating gold and setting the stage for Richard Nixon severing the connection between gold and the dollar in 1971.
“So let me get this straight,” writes Mike Krieger of Liberty Blitzkrieg. “First they want gun registration and now precious metal registration?  I’m sure the government would only use such information in our best interests, because as we all know: Your Government Loves You.  Sounds reasonable, after all, only ‘terrorists’ buy guns and gold anyway.”

Check out what they are now doing in Houston:

RED ALERT: The Gold Police Have Arrived!

Bernanke Gold Varmint by William Banzai7...

S&P Downgrades Cyprus’ Long-term Rating to ‘CCC’

S&P Downgrades Cyprus’ Long-term Rating to ‘CCC’

The truth is that austerity in Britain has barely begun

Why can’t politicians learn to tell it as it is?

Open and shut case: George Osborne was like a boom-time Chancellor, with a Budget of wheezes, stunts and giveaways
George Osborne is often accused of cowardice and a lack of radicalism. He needs to be much bolder if he is ever to get to grips with the public finances, critics say Photo: Julian Simmonds
With each passing Budget, the full horror of Britain’s economic predicament becomes steadily more apparent, yet like a stuck record, the message is still the same. Be patient, the Chancellor says. Recovery is coming; wait a few more years and things will be fine again. Well here’s the truth — they will not.
The raft of delayed-action goodies announced in the Budget on Wednesday disguise a programme of continued austerity which now stretches far out into the middle of the next parliament and beyond. With each passing year, the point at which the pain is supposed to end and things return to normal gets pushed ever further into the future. To travel in hope, it is sometimes said, is better than to arrive. Not in this case it’s not. A nightmare journey confined to cattle class lies ahead.
What’s more, to get to the supposed end in five years’ time requires growth to pick up quite sharply from next year onwards. Unfortunately, the Office for Budget Responsibility’s forecasting record to date gives little reason to believe in the latest set of predictions. Any shortfall, which given the developing multiple pile-up in the eurozone looks all too possible, and paying for all those years of Labour profligacy will take even longer, with public debt mounting all the while.
The situation looks little short of hopeless. Trawling through the Institute for Fiscal Studies’ always-illuminating post-Budget analysis reveals a truly devastating story of cuts in departmental spending still to be decided, likely tax rises and rising indebtedness.
It was all meant to be so different. Rewind to the emergency Budget of 2010, and the deficit should by now have been reduced to £89bn, with £60bn and £37bn pencilled in for the two years running up to the election.
In fact, the deficit is still stuck at £121bn, with £120bn and £108bn extrapolated for the next two years. Lack of growth has completely poleaxed the centre piece of the Government’s economic strategy — getting the deficit under control. The flatlining economy is making the task of getting back to sustainability in the public finances both much longer and steeper than it was supposed to be. The IFS analysis points to a further £23bn of departmental spending cuts still to come after the next election in 2015, or an extra real terms reduction in spending of 7.6pc. Continued protection for health, education and overseas aid would concentrate all these cuts on other public services — transport, the police, defence and so on — though the Budget Red Book notes ominously that “it would, of course, be possible to do more of this further consolidation through tax instead”.
In view of the way protected spending is magnifying the cuts elsewhere, the IFS’s Paul Johnson reckons that such tax rises are more likely than not. I’d go further; if Labour wins the next election, they are a dead certainty.
Yet it’s even worse than it seems. To pay for his own tax giveaways, the Chancellor has engaged in accounting trickery worthy of the master illusionist himself, our unlamented former prime minister Gordon Brown.
I’m not referring here to what the Treasury has labelled “exceptional inter-period flexibility”, a deliberately mysterious term for an extraordinarily simple wheeze. Exceptional inter-period flexibility is in fact just the practice of deferring expenditure that might have been made this year into the following one so as to ensure that the political objective of some kind of a fall in the headline borrowing figure, marginal though it has turned out to be, can be met.
This is not obviously a good use of civil servants’ time, the IFS notes sarcastically. Actually, on this narrow matter, I beg to differ. No household living far beyond its means would rush to pay its bills early.
That civil servants are beginning to show the same due care and attention when dealing with taxpayers’ money is an entirely welcome development. More of that, and we wouldn’t be in this mess. Now if civil servants have got bonuses riding on their diligence, then there really would be a scandal, but we have had no evidence of them so far. Watch this space.
The more serious use of smoke and mirrors lies in the Government’s treatment of national insurance revenues from public sector employees. This is the big “gain” which has given the Chancellor the fiscal flexibility he needs to announce a series of tax and spend “giveaways” for the year after next. It’s also complicated, so do keep up there at the back.
As part of the government’s reform of the state pension, the government is in effect going to have to pay more national insurance on behalf of public sector workers than it has done. In its desperation, the Treasury has decided to bank this extra money as if it was extra tax revenue, even though this is actually just one part of the government paying more to another part. The government is actually just paying the extra revenue to itself. It’s a big sum of money — a hefty £3.3bn a year. What a find.
The wonders of public sector accounting never cease to amaze. It seems to allow things that would be considered basically fraudulent out in the real world of private enterprise. Yet even the Treasury would struggle to book such a gain without something appearing on the other side of the ledger, so where is this money going to come from?
Basically, it will have to come from extra spending cuts not yet specified. Government departments are going to have to fund the extra £3.3bn a year in national insurance from existing budgets. So that’s another £3.3bn of cuts they will have to push through after the next election. Whitehall agony is piled on Whitehall agony.
Osborne is often accused of cowardice and a lack of radicalism. He needs to be much bolder if he is ever to get to grips with the public finances, critics say. This may or may not be true, but the perhaps surprising reality is that if he is given the five years now needed to complete his plans, he will have brought about a remarkable transformation — some £24bn in selected tax cuts at the same time as a fiscal squeeze which reduces the size of the state as a proportion of GDP back to where it was before the last government began its madness. Brown’s public sector expansion will have been entirely reversed.
Promises, promises. We’ve heard them before. We should already have been well on the way, but we are not. And as things stand, it seems most unlikely Osborne will get the extra time he needs. To deliver, he also requires growth to pick up sharpish from next year onwards. Who would bet on that? And because key parts of government spending have been ring-fenced from the cuts, he’s going to have to impose destructive levels of contraction on almost everything else to succeed. It’s hard to be optimistic about his chances.

Shall Russia pay for Germany's great plans?

Shall Russia pay for Germany's great plans?. 49693.jpeg
Germany is looking for ways to fund its major geopolitical projects. Taking money from the German citizens is dangerous as it may not be appreciated. German authorities set their sights on Russia. The Germans will take money from Russia without even asking for permission.
Recently the Russian-German relations have not been the greatest. Of course, they are not at the level of the Russian-American or Russian-Polish relations. Germany did not declare Russia its enemy and the Germans do not intend to stop interaction with Russia. However partnership is one thing, and money and interests is another. When money is needed for great goals, there is nothing wrong with emptying partner's pockets.
There is no other explanation for the actions of the Germans. They are very persistent in their wants. In the fall of 2011 in Berlin the offices of "Gazprom" subsidiary, Gazprom Germany, were searched. A year later, the European Commission where the Germans have an important role began an antitrust investigation against the Russian giant. The most zealous European bureaucrats issued it a bill for 15 billion euros.
The Germans (though not completely) achieved their goals. Since 2011, the Russian company has been forced to cut prices for European consumers, primarily German. Russia's dependence on German buyers is significant enough and the latter can dictate their conditions. Germany also made it clear that it would not mind starting development of shale gas on the German territory. Well, pressure is pressure.

Now number one issue in Europe is the decision of the authorities of Cyprus to partially withdraw the funds of local offshore investors. The decision was not made by the Cypriots. This was the requirement of the creditors from the EU and the IMF who otherwise threatened to refuse Cyprus a loan. Who pressured the Cypriots the most? That's right, the Germans.

This year, parliamentary elections will be held in Germany. The results of voting in certain lands indicated that the current coalition of Christian Democrats and Free Democrats have slim chances of winning. The need to help the Cyprus economy with German money will lower the bar of electoral support to a minimum. The Germans gracefully shifted the burden of salvation of Cyprus to others. This is understandable since they do not have spare money and are not willing to pay "freeloaders Greeks."

Only here Russia will be the one under attack. Approximately one-third of foreign funds in Cypriot banks are owned by Russian citizens and Russian companies. If the withdrawal takes place, they will lose more than others. Given that this way the Cypriots, urged by the Germans, want to collect nearly six billion euros, the Russians will lose nearly two billion. But the Germans will have a different use for this money. This is an elegant combination - the money is saved, and Russia was forced to pay.
Should the Germans pay Cypriots? At first glance, they do not have to, but this is only one side of the coin. The other is that Germany is considering the EU as a tool for expanding its influence. Influence costs money. Today the Germans are unconditionally number one in the EU, they want to dictate to others the rules of the game, and they want to make Germany a great power in every sense. However, they do not want to pay. Shifting the costs associated with political objectives to the Russian partner is a great solution.
Chancellor Angela Merkel represents the Christian Democratic Union (CDU). Her goal is active foreign policy and turning Germany into number one country in Europe. German conservatives do not share Adolf Hitler's racial theories, but a soft "push to the east" is being implemented. They launched a series of projects that claim their country as a European leader. They are prepared to do a lot for the sake of their goal.
One of these projects is the entry of Croatia into the European Union. The decision was made in 2009-2011, when the global economic crisis was in full swing. Maybe Croatia is a very wealthy country? Not at all. The standard of living there is about the same as in Poland or the Baltic countries. Hundreds of thousands of Croats are earning money abroad, mainly in Germany. Unemployment is extremely high. There are no Economic benefits for the EU.
However, not everything is ruled by money. Croatia is a longtime ally of Germany and Austria. When Yugoslavia broke up, it was Germany who first recognized Croatian independence. Despite the resistance from France and other countries, the Germans push for Croatia's membership in the EU. The expansion of German influence in Europe and another loyal voice in the EU could come in handy for the Germans. For the sake of such expansion Germany is ready to get to the Russian offshore accounts in Cyprus.
The second project is independent Kosovo. It is not purely German, but the Germans have an interest in the matter. For German conservatives Serbia is the enemy, and should be weakened. Berlin is obviously aware that the modern Albanian Kosovo is drug dealers' territory subsidized by the European Union by 70 percent, in which the share of Germany is the largest. Funds are needed again, and the Russians have to fork out.

The third task is of internal nature. The German budget burden of payments to multiple immigrants is increasing as the time progresses. If payments stop, the Turks and other "new Germans" would revolt. If the burden is passed onto Germans they will not like it. This is a great way to postpone a solution of a long overdue problem.

Finally, let's consider the fourth reason. Many representatives of the German elite are not hiding their negative attitude towards Russia. Going after "Gazprom" and urging Cypriots to withdraw Russian money, Germany tends to weaken a competitor in the face of Russia, making it more agreeable. The Germans have leverage with Russia, but it is not always enough. The more leverage, the better. What could be better than a transformation of a dangerous rival into a willing partner?
Pavel Chernyshev

UPDATE 1-Germany warns Cyprus "playing with fire" as aid deadline looms

* Germany insists Cyprus hit banks to win bailout
* Merkel ally says Nicosia "playing with fire"
* German parties, media support tough Berlin stance
By Noah Barkin
BERLIN, March 22 (Reuters) - Europe's paymaster Germany stepped up pressure on stricken Cyprus on Friday, rejecting its proposal to nationalise pension funds to plug its finance gap and demanding it take an axe to its banks if it wants a bailout.
Chancellor Angela Merkel stuck to the hard line Berlin has been pushing for weeks, telling lawmakers that while she wanted to keep Cyprus in the euro zone, the country must first recognise it had no future as an offshore financial centre for wealthy Russians and Britons.
One of her conservative allies took to the airwaves to warn Cyprus it was playing a risky game by refusing to impose losses on depositors in its banking sector, which has swollen to eight times the size of the economy and is on the brink of collapse.
"I still believe we will get a settlement, but Cyprus is playing with fire," Volker Kauder, parliamentary leader for Merkel's Christian Democrats (CDU), told ARD public television.
The tough rhetoric from Berlin came as Russia rebuffed Cypriot demands for aid, leaving the island's increasingly isolated leaders mere days to satisfy their European partners or face a default that could reverberate across the 17-nation bloc.
EU leaders are now awaiting a "Plan B" from Cyprus. The government must come up with 5.8 billion euros by Monday, the day the European Central Bank has said it will cut off funds to Cypriot banks.
A closely-watched survey of German business morale on Friday showed that after a lull to start the year, the euro crisis was unnerving domestic firms again. The indicator from the Munich-based Ifo institute fell for the first time in five months.
With just six months to go until Germany holds an election, a poll for ZDF television showed that average Germans are also growing worried, with nearly two-thirds expecting the crisis to worsen and nearly half fearful for their savings.
In previous bailout standoffs with euro members like Greece, Merkel has demanded a high price for aid only to compromise at the last minute in order to avert disaster.
But with tiny Cyprus, a Mediterranean island of just a million inhabitants, she seems determined not to bend, even if that leads to bankruptcy.
Comforting the Germans in their stance has been the relative calm of financial markets since the crisis in Cyprus flared up.
On Friday, the German benchmark stock index and most other European bourses were in positive territory, while the bonds of peripheral euro zone states like Spain and Italy were also trading higher.
That was partly due to a deal struck on Friday whereby Greece agreed to take over local units of stricken Cypriot banks, shielding its own financial sector from the fallout.
But it also suggested contagion from Cyprus may be limited, as German politicians have suggested in recent days.
Zsolt Darvas of Brussels-based think tank Bruegel said back-tracking by Berlin and other euro zone states at this point would be seen as a "victory for blackmail".
German media have also been withering in their criticism of the Cypriot government, which insisted at a euro zone meeting in Brussels a week ago that small savers in its banks be hit in order to limit losses on wealthy depositors.
President Nicos Anastasiades, elected only a few weeks ago, appears intent on preserving an economic model that relies on attracting billions of euros in foreign deposits, mainly from Russia, with loose regulations and low taxes.
Merkel explained in a closed-door session with conservative lawmakers, according to participants, that she considered this model dead and that Cyprus could not expect aid until it too acknowledged this.

Duke of Devonshire evicts farmer whose family have worked on his estate since 1830 - because the rent was ONE DAY late

  • Edward and Elizabeth Hill served with 'notice to quit' Chatsworth House
  • Parkinson's sufferer Mr Hill, 63, forgot to pay £2,000 in overdue rent
  • He immediately paid up after being served with the notice
  • But the couple's tenancy was terminated by the estate anyway

  • Letter: The Duke of Devonshire has evicted a farmer from his Chatsworth House estate because the rent was a day late
    Letter: The Duke of Devonshire has evicted a farmer from his Chatsworth House estate because the rent was a day late
    For almost two centuries his family has run a farm on the Duke of Devonshire’s famous Chatsworth estate.
    Edward Hill himself was born on Game Lea Farm, and has spent his life working hard to earn a living there – the seventh generation of his family to do so.
    But now the farmer has been evicted from his Peak District home – all because of a rent payment that was one day late
    Mr Hill, 63, suffers from Parkinson’s disease and blames his condition for forgetting to pay around £2,000 in overdue rent.
    The day after the final payment date, officials from the estate visited the farm to serve Mr Hill and his wife Elizabeth, 61, with a ‘notice to quit’.
    The farmer immediately paid up the arrears, insisting he had simply been forgetful – but the estate terminated the tenancy anyway.
    After prolonged negotiations, and despite pleas for sympathy to the Duke himself, the family were forced to sell their animals and hand over the farmland to a neighbour. They have been told they must be out of their home by Monday.
    The Hills have been shocked by their treatment. Mr Hill said: ‘I was not ready to hang my clogs up. They have not got a shred of humanity or sympathy in them. It has ripped my life apart.’
    The couple and their 17-year-old daughter Alicia have already found another home to rent eight miles away, leaving other members of the family at Game Lea Farm for the time being.
    But Mrs Hill’s son Dorian Madin, 32, his partner Georgina Parker and their children Josephine, seven, Harriet, five, and Philippa, 15 months, fear being left homeless.
    They are preparing to leave too and hope to be given a council house soon.
    Mr Hill claimed the estate had also been similarly ‘ruthless’ in their dealings with other farmers.
    John Hill founded the farm back in 1830 when he developed it from moorland. The farm was passed from one generation to the next through the centuries as Chatsworth House was also passed to successive Dukes.
    Chatsworth House: Mr Hill's family have run a farm on the Duke of Devonshire's estate for 183 years
    Chatsworth House: Mr Hill's family have run a farm on the Duke of Devonshire's estate for 183 years
    Mr Hill’s father Joe, 89, ran the farm under four different Dukes of Devonshire before retiring. He wrote to the current 12th Duke appealing to let his son stay.
    But that letter, along with one written by Mr Hill himself, was never acknowledged.  ‘The Duke has shown us no respect at all,’ said Mr Hill. ‘The way we have been treated is absolutely outrageous.’
    Shocked: Parkinson's sufferer Edward Hill and his wife Elizabeth
    Shocked: Parkinson's sufferer Edward Hill and his wife Elizabeth
    The farmer had been in the second generation of a ‘three generation’ long-term tenancy deal at the 200-acre farm.
    Mr Hill said he had hoped to negotiate a new five-year business tenancy with the estate, but in October 2011 discussions were brought to an end and they were given 18 months’ notice to leave.
    But that agreement was ended when he failed to pay his six-monthly rent on time.
    It had previously been run as a dairy farm, but the family diversified in recent years and ran a charity helping people with learning disabilities and problem children by allowing them to visit the farm, complete with its cattle, sheep and poultry.
    Mr Hill said: ‘They were saying the land was not tidy and the hedges and walls were not in place and things like that. They were also not happy about us running the charity from here.’
    His wife added: ‘We have been appallingly treated, but we are not the first farmers to be forced out.’
    The couple hope to continue running the charity from their new home, which comes with a smallholding.
    George Dunn, chief executive of the Tenant Farmers Association who was involved in negotiating with the estate, said the Duke of Devonshire’s estate has been ‘quite benevolent’ in the past and is now ‘more commercial in its approach’ and ‘more aggressive’ in its rate reviews with farmers.
    A spokesman for the Chatsworth estate said: ‘It is a very complicated and difficult situation and due to the circumstances we cannot discuss any details for legal reasons.’
    He said the land was now being farmed by neighbouring tenants who were ‘slowly bringing the land back into condition’.
    Heritage: Mr Hill's grandfather, also called Edward, with a horse-drawn cart
    Heritage: Mr Hill's grandfather, also called Edward, with a horse-drawn cart

    If Cyprus falls into Putin's grip, the West will have lost the first battle in the new Cold War

    The capitalists will sell us the rope on which we hang them, said Vladimir Lenin. And for his successor in the Kremlin, Vladimir Putin, Cyprus shows the truth of that maxim. 
    The West’s financial weakness has become its Achilles heel. Greed and naivety have left an EU member in a vital strategic location at imminent risk of falling into Russia’s hands. 
    Fury among ordinary Cypriots at what they see as a ham-fisted European raid on their savings has stoked a search for an alternative economic saviour — Russia.
    Economic saviour? The West's financial weakness has become its Achilles heel. Greed and naivety have left an EU member in a vital strategic location at imminent risk of falling into Russia's hands
    Economic saviour? The West's financial weakness has become its Achilles heel. Greed and naivety have left an EU member in a vital strategic location at imminent risk of falling into Russia's hands
    On Wednesday, the island’s finance minister was holding talks in Moscow about a loan, after his country’s parliament rejected a €10 billion EU-led bailout.
    We do not yet know what Moscow’s terms for such a loan would be, but the likely result is a bonanza for the Kremlin, which stands to gain a naval base in a world hotspot and preferred access to the gas riches that lie deep below the Mediterranean seabed.
    That would mark a stunning renaissance after the Soviet collapse of 1991, which saw the Kremlin’s empire shrivel to its Russian heartland and the West triumphantly welcome the former captive nations into NATO and the EU. 
    For Europe, it will be a humiliation.
    The common currency was meant to unite Europe politically and economically. Now it is driving one of its weaker members into the arms of a regime whose rule is based on corporate looting and murder, and pays only lip-service to the democratic ideals supposedly cherished by the EU.
    For Britain — whose colonial rule over the island ended only in 1960, after a bloody civil war, and which retains two sovereign military bases in Cyprus — the blow would be particularly heavy. 
    It has been almost 25 years since we grimly talked of countries falling within Russia’s sphere of strategic influence. That could be about to happen again and the consequences would be just as disturbing as those felt during the Cold War.
    For Cyprus is on the doorstep of the world’s most explosive region. In its casinos, brothels and banks, Israelis, Iranians, Russians and Saudis forget their differences in pursuit of pleasure and profit.
    It's been almost 25 years since we talked of countries falling within Russia's sphere of strategic influence. That could be about to happen again and the consequences would be just as bad as those felt during the Cold War
    It's been almost 25 years since we talked of countries falling within Russia's sphere of strategic influence. That could be about to happen again and the consequences would be just as bad as those felt during the Cold War
    You can buy anything in Cyprus, the saying goes, from a villa on the beach to the entire country. The Russians started with the first and are on the way to the second.
    It is easy to imagine how the Kremlin masterminds will laugh at the West’s weakness in coming years.
    First, they pumped money into Cyprus, buying everything from real estate and banks to officials and politicians.
    One of Europe’s poorest countries, Cyprus rolled over instantly when the oligarchs came calling in the early Nineties. Tens of thousands of Russians flocked to the island. 
    They have newspapers, schools, churches, banks and lawyers. Many of them are decent and honest, eager to escape the unfriendly climate (meteorological and legal) back home. Cyprus requires no visas for Russians. 
    You can buy anything in Cyprus, the saying goes, from a villa on the beach to the entire country. The Russians started with the first and are on the way to the second (pictured Kyrenia Old Port, Northern Cyprus)
    You can buy anything in Cyprus, the saying goes, from a villa on the beach to the entire country. The Russians started with the first and are on the way to the second (pictured Kyrenia Old Port, Northern Cyprus)
    The island set up hundreds of thousands of companies for Russians and took in billions of dollars — often in cash — with no questions asked. By the time the hapless bureaucrats who police the world’s financial system tried to get a grip, it was too late.
    It was all too clear what kind of clientele the island was attracting — I still treasure a Russian-language newspaper I picked up on a visit in 1999. Its front page bore an advertisement for a law firm that specialised in defending clients ‘charged with racketeering, extortion and organised crime’. 
    Meanwhile, politically, Cyprus effectively became a warm-water outpost of the Russian Federation. 
    It shunned NATO. Cables exposed by WikiLeaks show U.S. diplomats describing their exasperation with former president Demetris Christofias, a Russian-speaking, Moscow-educated communist. He proudly called himself Europe’s ‘red sheep’. 
    The island paid only lip-service to international attempts to clean up the financial system. Mystifyingly, the West turned a blind eye. 
    Cypriot Finance Minister Michael Sarris has held talks in Moscow about a loan, after his country's parliament rejected a 10 billion EU-led bailout
    Cypriot Finance Minister Michael Sarris has held talks in Moscow about a loan, after his country's parliament rejected a 10 billion EU-led bailout
    After strident protests from Greece, European countries dropped their objections and allowed Cyprus to join the European Union in 2004. 
    That was a huge mistake. It sabotaged any chance of peace in the Cyprus conflict, which has left the island divided between the Greek-run south and a Turkish puppet state in the north. 
    The Turks had agreed to a deal that would have ended the crippling division of the island. But once in the EU, the authorities in the south refused to budge. That has left both parts of the island a playground for organised crime, money laundering and sinister games by outsiders.
    Worse, admitting Cyprus to the EU has given Russia eyes and ears in Brussels. In vain, top European officials went to Nicosia to urge officials to stop leaking secrets on trade, energy and security to Moscow. 
    ‘We are a small country. Russia is a big friend and Brussels is far away,’ a friend of mine was told by a smirking Cypriot official.
    The most scandalous display of Russian influence was in the spy scandal of 2010, when the flame-haired spy Anna Chapman and nine other undercover ‘illegals’ were arrested in America by the FBI. 
    The prize quarry for the American spy-catchers was the spies’ boss, who went under the name Christopher Metsos. A seasoned Russian spook, he had fled America as the FBI swooped. 
    Metsos, whose real name was Pavel Kapustin, was arrested in Cyprus — only for the authorities there, inexplicably, to release him on bail. He promptly disappeared. America was furious. 
    Other scandals abounded, involving arms sales and money laundering for rogue regimes.
    The result of the sleaze was nemesis worthy of the Greek legends in which Cyprus features so prominently. When the island’s financial system capsized in the wake of the disaster in Greece, it found it had no friends in Europe. 
    Putin, who termed the collapse of the Soviet Union the 'geopolitical catastrophe of the century', sees the humiliation of the hated West as the prime goal in his desire to restore Russia's greatness
    Putin, who termed the collapse of the Soviet Union the 'geopolitical catastrophe of the century', sees the humiliation of the hated West as the prime goal in his desire to restore Russia's greatness
    Now it has run to the arms of Russia, for whom the Cypriots’ woes are little more than a strategic opportunity. For decades, its only ally in the region has been Syria — Russia has its only overseas naval base in the Syrian port of Tartus. 
    Though the semi-derelict floating dock is of little use for the Kremlin’s clapped-out navy, it has other functions. Russia’s fearsome GRU military intelligence service uses the toe-hold on the Syrian coast for espionage, arms sales and other clandestine work. 
    But if the Assad regime falls, Russia’s redoubt will be threatened, too — and Cyprus would become an even more valuable prize.
    A whiff of the intrigues that bubble below the surface came in 2010 when the body of the GRU’s second-in-command, General Yuri Ivanov, washed up on a beach in Turkey. He had been visiting the Russian base in Tartus. Few believe the official story of a swimming accident. General Ivanov was in charge of a programme of assassination against the Kremlin’s enemies abroad.
    Fear: As Obama's America retreats from Europe, we can no longer rely on a friendly superpower to protect our interests
    Fear: As Obama's America retreats from Europe, we can no longer rely on a friendly superpower to protect our interests
    It is these murky games that await the Cypriots if they bow to Russia and offer a naval base to Mr Putin’s Kremlin as part of any economic deal.  
    Make no mistake. Putin, who termed the collapse of the Soviet Union the ‘geopolitical catastrophe of the century’, sees the humiliation of the hated West as the prime goal in his desire to restore Russia’s greatness. Where the Czars and Communists failed, he may succeed, in snatching a client state in the balmy Med. In 1992, after the collapse of the Soviet empire and economy, the 50 ships of Russia’s once-mighty Mediterranean fleet departed those waters, leaving what Russian strategists bitterly term a ‘NATO lake’. 
    Under Putin, the coffers brimming with petro-roubles, the country is hurling money at its naval forces again. 
    Its $659 billion (£440 billion) rearmament programme will add 18 warships and more than 30 other vessels to its fleet by 2016, including six submarines. Mr Putin is also shopping abroad: he has ordered two state-of-the-art Mistral helicopter carriers from France. 
    As a further signal of intent, the Kremlin only recently announced it was sending a fleet of five-to-six warships to the Med. How will NATO, many of whose members are pre-occupied with economic troubles, feel if those warships are patrolling the region from a Cyprus harbour in years to come?
    And what will be the future of Britain’s sovereign bases, at Akrotiri and Dhekelia? 
    They are a vital military, intelligence and diplomatic toe-hold in the Eastern Mediterranean. Our soldiers, spooks and allies use these bases for electronic snooping, for undercover missions by the SAS and Special Boat Service, and as a hideout for clandestine meetings of all kinds.
    For the moment, the Union Flag flies serenely over their trim lawns, bristling antennae and top-secret bunkers. If Russia has the whip hand, that could soon change. 
    In the middle of the 19th century, Britain and France went to war to stop Russian imperial expansionism in the Crimea. Does anyone believe we would now go to war to protect our right to stay in Cyprus if a new Moscow-friendly government in Nicosia demanded we pack our bags? 
    As Obama’s America retreats from Europe, we can no longer rely on a friendly superpower to protect our interests. Our shrunken defence budget and waning geopolitical clout will be pitifully exposed as a resurgent Russia shows it is back in the Great Game.
    Edward Lucas is author of Deception: Spies, Lies And How Russia Dupes The West.