Jim Rogers BLOG : Cyprus is a real threat to the U.S. Everyone was asleep at the switch, in fact; many had a hard time finding the switc...
No doubt that Cyprus is in a heap of trouble with the collapse of its international banking model, but it's the integrity of the EU is where the bigger concern lies. How did they ever think these banks would survive when assets totalled more than six times the national GDP - what nobody fears or understands the consequences of leverage? That leads to the next question - how many more skeletons lurk around the EU's closet?
What can be surmised is that capitalization ratios of 1:8 may not be sufficient to ensure liquidity when Euro bonds go - No Bid! The ECB should be tabling bail-out plans now, to preserve confidence when the proverbial crap hits the fan - which is a foregone certitude at some point. There is some big money to be made shorting these puppies. How long are you on Spain? Italy? Portugal? And their respective financial institutions - a little homework here has BIG profit potential.
Observe that the Cyprus contagion has also poured into Egypt as well. There are more coming as food and fuel shortages plague the world. Importantly, oil prices are not being depressed, which is a very bad sign, suggesting supply may be a bigger concern than demand. Hmm...Peak Oil? And gold, is just lingering, perhaps as Central Banks dump reserves to buy food and fuel; defraying political upheaval to a future date. There are known unknown reasons for these pricing events.
The big issues: Who and What is next when?
First Financial Insights
March 27, 2013