Daily Digest

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Daily Digest 3/28 - Anxious Times For Cyprus, The Birth Of A Global Currency

Thursday, March 28, 2013, 3:43 PM

Economy

Cyprus – A Frightening Update After An Historic Bank Holiday (Taki T.)

From a macro point of view, Moody wrote in an official announcement on March 27th that a Eurozone-exit of Cyprus becomes likely. The Grexit fear and fuzz is now being replaced by Cypro-exit.

Cyprus bail-out: savers will be raided to save euro in future crises, says eurozone chief (Dana T.)

The euro fell on global markets after Jeroen Dijsselbloem, the Dutch chairman of the eurozone, told the FT and Reuters that the heavy losses inflicted on depositors in Cyprus would be the template for future banking crises across Europe.

"If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'," he said.

Europe Announces, and then Retracts, a Plan to Destroy Its Banks and the Euro (Kevin J.)

The euro crisis quietly entered -- and left -- a new and destructive phase, all in the space of a few hours, on Monday afternoon. All it took was a single interview and a single retraction. Eurogroup president (and Dutch finance minister) Jeroen Dijsselbloem shocked markets when he told Reuters that the Cypriot bail-in -- which was supposed to be a "very special" case that wiped out uninsured bank depositors of €100,000 or more -- would actually be a "template" for future bank rescues.

Can It Happen Here? (Nervous Nelly)

Seizing money that people put in the bank would be a classic example of such short-sighted policies. After thousands of American banks failed during the Great Depression of the 1930s, there were people who would never put their money in a bank again, even after the Federal Deposit Insurance Corporation was created, to have the federal government guarantee individual bank accounts when the bank itself failed.

The Birth Of A Global Currency (Doug A.)

"The world’s second-largest economy has a currency that ranks 14th most used in the world, just ahead of the Danish krone, behind the Russian rouble and miles away from the euro and US dollar, No. 1 and No. 2, respectively.

But that is quickly changing. The internationalization of the RMB, as engineered by the Chinese government, is happening at warp speed. At the start of 2012, the RMB ranked 20th among international currencies, according to SWIFT (Society for Worldwide Interbank Financial Telecommunication). It leaped six spots in nine months.

Cyprus Shows Your Savings Will be Stolen! UK Theft is by Means of High Inflation (adam)

The emerging details early Monday morning in the face of a literally eye popping deadline are that of at least 40% of deposits over Euro 100k will be stolen in the two largest cypriot banks, one of them Laiki (2nd largest) will definitely be wound down, many mainstream commentators have jumped onto the fact that the depositors will receive shares in the banks which might be fine if the shares were given AFTER the banks were restructured i.e. bad assets being written down, but they are not instead the depositors are likely to be handed what amounts to worthless toilet paper in exchange for their hard cash.

Tiger Woods Has The Solution To The Massive US Debt — And Larry Summers Agrees With It (Dana T.)

People were annoyed because it states a matter-of-fact truth, that ultimately if you win tournaments and do good, then nobody cares about your past flaws or anything like that.

Of course the message is 100 percent true, which is probably why it bothered people.

The Price Of Gold Is Pointless (Dana T.)

Yet by the time President Obama took the oath of office in January 2009, the wars in Afghanistan and Iraq and profligate spending by Congress had driven the value of the dollar down to less than a third of its worth when Mr. Bush was sworn in. Its value has been halved again under Mr. Obama, to less than a 1,600th of an ounce of gold.

Instead Of Doing His Job, Jeroen Dijsselbloem Has Given Us A Glimpse Of The Euro 'End Game' (Dana T.)

And for all of the fear that the Cyprus bank bailout deal – which, per the Eurogroup's wishes, forces haircuts on uninsured depositors – has caused elsewhere in Europe in recent days, Dijsselbloem really hasn't been doing too well on that front.

It's important for European leaders to portray Cyprus as a "special case." Otherwise, depositors at other banks in Europe could get spooked, thinking they might be next to take a hit. The same goes for bank bondholders.

Marc Faber: Not Even Gold Will Save You From What Is Coming (Dana T.)

Now from time to time it will lift the NASDAQ like between 1997 and March 2000. Then it lifted home prices in the U.S. until 2007. Then it lifted the commodity prices in 2008 until July 2008 when the global economy was already in recession. More recently it has lifted selected emerging economies, stock markets in Indonesia, Philippines, Thailand, up four times from 2009 lows and now the U.S.

So we are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide. Even in gold, it will be difficult to hide.

Next stop New York: wealthy Russians hurry money from Cyprus to US (Tall)

The European crisis has forced more and more money out of the bank accounts of wealthy Russians in Cyprus and elsewhere and into the US. "This past year, we've been seeing a shift in investments in the United States as a result of the financial state of the European Union," said Ed Mermelstein, a New York real estate lawyer who advises wealthy Russians.

Bitcoin Bonanza: Cyprus Crisis Boosts Digital Dollars (Dana T.)

Bitcoins operate on a network that, at least on the surface, resembles a typical exchange on the capital markets. Buyers can exchange their paper currencies for bitcoins and use them wherever they are accepted. Sellers can exchange their bitcoins back for their original currency.

But the value of the currency has been anything but typical.

Ontario municipalities raise oil spill concerns on Enbridge pipeline reversal (westcoastjan)

Calgary-based Enbridge wants to send oil east along a 639-kilometre section of the 1970s-era pipeline from North Westover, Ont., near Hamilton, giving Quebec refineries owned by Suncor Energy Inc. and Ultramar Ltd. access to cheaper crude oil from Alberta and North Dakota’s Bakken formation. Enbridge has also applied to increase capacity on the entire Sarnia-to-Montreal route to 300,000 barrels per day, from 240,000 barrels today.

Watchdog to impose 1% surcharge on Canada’s top six banks deemed ‘too big to fail’ (westcoastjan)

The banks named by the Office of the Superintendent of Financial Institutions are the Bank of Montreal, the Bank of Nova Scotia, the Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank.

Why are Zimbabwe police seizing radios? (westcoastjan)

But the police force has said the radios are being used to spread "hate speech", brought into the country by unregistered groups ahead of the polls expected in July after four years of power-sharing between President Robert Mugabe's Zanu-PF party and the Movement for Democratic Change.

Cyprus crisis: Anxious times for residents (westcoastjan)

With all the banks still firmly shut, most people are eking out their euros. A takeaway pizza is about the biggest treat they are willing to splash out on.

But even though they still have customers, these are anxious times for husband and wife team Mike and Faye Avraamides.

Global internet slows after 'biggest attack in history' (westcoastjan)

Recently, Spamhaus blocked servers maintained by Cyberbunker, a Dutch web host that states it will host anything with the exception of child pornography or terrorism-related material.

Sven Olaf Kamphuis, who claims to be a spokesman for Cyberbunker, said, in a message, that Spamhaus was abusing its position, and should not be allowed to decide "what goes and does not go on the internet".

Taxpayers paying more than $25 for every dollar politicians contribute to MP pensions (westcoastjan)

But when you factor in the more than $90 million in interest and adjustments (eventually covered by taxpayers) attached to the two different MP pension accounts, Canadians are ultimately paying $25.50 into the parliamentary pension plan for every dollar contributed by the politicians, says the Canadian Taxpayers Federation.

The average annual pension in 2011-12 was $58,051 for former MPs (up from $55,102 the previous year) and $66,218 for former senators (compared to $60,599 the previous year).

London on $7,700 a week: Mark Carney’s wife Diana angers U.K. with tweet saying she can’t find place to live (westcoastjan)

According to a report in the Daily Mail, Ms. Carney, vice-president of research at Ottawa-based think tank Canada 2020, tweeted a link to a story about the French government relaxing taxes on wealthy residents, many of whom left for Britain and surrounding countries to escape high taxation from the previous, more socialist government. The rich expatriates have been blamed for driving up prices in London’s already soaring real estate market, and their departure may alleviate some of the strain.

Brics nations discuss development bank (westcoastjan)

"Russia calls for using the economic potential of Brics more effectively, with the backing of business for increasing the volumes of mutual trade, investment and broadening industrial and technological co-operation. Certainly, the creation of a Brics development bank [would support] this task."

He added that any bank would have to work "exclusively based on market principles and offer support to the business community of all of our countries".

Energy

US shale gas to heat British homes within five years (ScubaRoo)

Though there was no immediate danger of a cut-off, because of imports through pipelines connecting to supplies from Russia and Norway, the tightening of supply raised grave concerns. The failure of a key pipeline on Friday morning caused an immediate doubling of gas prices in the spot market – though prices fell back later as the problem was resolved, the incident highlighted the vulnerability of the UK to energy shocks, because of the high dependence on gas imports for heating and power generation.

UK gas supply pressure eased with arrival of tanker from Qatar (ScubaRoo)

As the unseasonal cold snap increased demand for heating and electricity, the government moved to reassure people that there would be no danger of shortages, and that the energy regulator and the National Grid are closely monitoring the situation. John Hayes, the energy minister, said: "The UK's gas needs continue to be met. We get our supplies from a diverse range of sources and the market is proving highly responsive to the UK's needs."

US shale gas to heat British homes within five years (Donna S.)

Though there was no immediate danger of a cut-off, because of imports through pipelines connecting to supplies from Russia and Norway, the tightening of supply raised grave concerns. The failure of a key pipeline on Friday morning caused an immediate doubling of gas prices in the spot market – though prices fell back later as the problem was resolved, the incident highlighted the vulnerability of the UK to energy shocks, because of the high dependence on gas imports for heating and power generation.

Suncor seen shelving Voyageur oil sands plant (westcoastjan)

The two events show the changing dynamics of Canada’s oil sands industry as it deals with more difficult economics due to surging production of cheaper light oil from the North Dakota Bakken and a move away from “upgrading” the oil sands bitumen into lighter, refinery-ready oil in Alberta.

Oklahoma earthquake linked to oil extraction wastewater (westcoastjan)

Wastewater was first injected into Oklahoma's Wilzetta oilfields, near the town of Prague, some 18 years prior to the November 2011 series of quakes that included three of magnitude 5 or greater.

The new study adds to an increasing body of evidence that the injection of wastewater is correlated to an increase in seismic events.

Huge scale of California pollination event (westcoastjan)

With over 1,000 sq mi of the Valley under almonds, the almond bloom of late spring is a spectacular sight. Almond blossom appears before the leaves emerge and the resulting white and pink flowers make great swathes of the Valley look as if heavy snow has fallen.

Gold & Silver

Click to read the Gold & Silver Digest: 3/27/13

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