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Was Euro designed to fail ?

UPDATE Mar 26 2013: What just happened in Cyprus created a really dangerous precedent: 20% of all accounts over 100000 euros has been confiscated. Moments ago, Dijsselbloem, the Head of the Eurogroup, declared Cyprus a template for the EU. That is very very dangerous because the next time word goes out that a bank is trouble in Europe it will easily start a bank run!

Also Medvedev reportedly warned all Russians to start pulling money out of western banks “as Kremlin fears grow that both the European Union and United States are preparing for the largest theft of private wealth in modern history.”

UPDATE Mar 25 2013:
Russia demands Cyprus exit Euro

Banks restrict withdrawel to 100 euros a day

El Pais retracts article alleging “Merkel like Hitler has declared war on Europe”

Gold shortages spread

UPDATE Mar 24 2013: The situation seems to be worsening by the hour. The former head of the Cyprus Central Bank warns that The European Project Is Crashing To Earth: “This is a fundamental change in the dynamics of Europe towards disintegration and I don’t see how this can be reversed. “

UPDATE Mar 20 2013: The next few days are crucial. As suspected, the powers that be are preparing to use Cyprus to start the circus and are now threatening to let Cyprus go (just like they let Lehman Brothers go). Also, Germany’s finance minister has warned Cyprus that its crisis-stricken banks may never be able to reopen if it rejects the terms of a bailout.

GoldSwitzerland, a subsidiary of Matterhorn Asset Management is issuing a dire warning: Get your assets out of the banks NOW!

Seeing what is happening today in Europe makes one wonder: what did Romano Prodi, one of the chief architects of the Euro, mean when he said:

“I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created.”

In fact a very interesting article was published in “The Wall Street Journal” in 2011 that suggests just that: Euro was created with an expectation to fail.

It seems impossible to a normal person to digest the recent events around the Cyprus bailout. Many still wonder in awe, how was it possible that the IMF and the EU to even consider asking depositors pay for the mistakes of bankers? Were they not thinking what the implications could be? The reactions are overwhelming, Nigel Farage says get your money out of those banks now, and the outrage is shared by many other – here is what Daniel Hannan had to say.

The following article seems to provide a good evaluation of the critical state of things at this point. It really seems that someone is really trying to put a spanner in the works. The damage has already been done and the situation is absolutely critical – the banks are currently closed (banking holiday declared for this week) and the risk of complete bank runs when they open is enormous:

Quote: “Cyprus will run out of cash on 3 June, when it has to repay a €1.4bn international bond. However, the decision will need to be taken long before that. Cypriot banks cannot stay closed for long but they cannot be reopened until a decision is taken, otherwise there will almost certainly be a deposit run. While people can reportedly withdraw up to €700 per day from ATMs, businesses, large and small, cannot function without banks being open. We would expect some decision would need to be taken by early next week before the lack of liquidity and lack of economic activity begins to severely harm the Cypriot economy.”

What does the NO vote in the parliament of Cyprus mean ?

Given the direct involvement of Russia (Cyprus is considered to be Russia’s tax heaven where many oligarchs keep their money), Turkey and Greece (both having opposing interests in the island which has been at the heart of a long and bitter dispute), any significant development in this part of the world is of direct interest to Orthodox Christians.

Russia’s particular interest in this matter is alarming and Jim Sinclair (also known as Mr Gold) has been very vocal for the last few days in trying to show how this is really all about the currency war between east and west with gold being the ultimate winner. He has this to say: There is no question now that there is a paradigm shift in gold toward the physical market. A paradigm shift in the longevity of the paper futures markets, which as I said before will now move towards a physical market. The West will end up losing control of the ability to manipulate the gold market much sooner as a result of this debacle in Cyprus. King World News, a blog that is doing an excellent job in showing what is really happening in the gold markets, has more relevant interviews with Jim Sinclair and many others.

Because of the size of the banking sector compared to its small economy, any upset of the fragile banking stability in Cyprus can have dire consequences. If a bank run was to start it would almost immediately hit Greece hard due to its exposure to banks in Cyprus, and rapidly propagate through Europe. Just imagine what could happen if the Russians were to decide to flee and withdraw their savings. The problem would be devastating due to high leverage ratios of the Cypriot banks where if just 100 billion were to be taken out (for example) it would immediately start a 2 trillion euro tsunami throughout Europe (because of the principles of Fractional Reserve Banking).

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