Mish's Global Economic Trend Analysis

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Reader Asks "Where's the Money?" Posted: 23 Mar 2013 12:54 PM PDT Reader Robert at Americans for Limited Government asks an interesting question. Robert writes ... Hello Mish We are led to believe that taxing Cypriot deposits in the amount of 5.8 billion euros will make the banks solvent. I have a question: Why the need for capital controls after "recapitalization"? How can deposits be used for taxation but not withdrawals? Robert I believe that's a rhetorical question. Robert knows the answer. Even with the EU kicking in 10 billion euros (a loan not a gift), the money is not there. If the banks were sufficiently capitalized, there would not be a need for capital controls. End of the Single Currency in All but Name Jeremy Warner at the Financial Times has an interesting article on this very subject. Warner says If capital controls are introduced in Cyprus, it is the end of the single currency in all but name. With the European Central Bank threatening to pull the plug on Monday by denying further liquidity support, and showing absolutely no sign of blinking, Cypriots have little choice in the matter. The present plan is only slightly more palatable than the last. The two most problematic banks are to be restructured, with uninsured creditors taking a 40 per cent hair cut. That gets the Cypriot authorities some of the way towards the €5.8bn they need, or is that €6.7bn? Reports suggest the beastly Troika has upped the ante. In any case, the balance, whatever it might be, is going to come from "taxing" uninsured deposits above €100,000 in other banks in the way originally proposed. However, the perhaps more widely significant part of the proposal is the planned application of capital controls. This is of course entirely necessary to prevent a further run on the banks the moment they open their doors on Monday. Many Russian depositors are threatening to remove their spoils if they are subjected to any kind of a haircut. This would quickly render these organisations essentially insolvent regardless of the recapitalisations. Almost no amount of capital is sufficient for a bank which has lost the confidence of its depositors. Yet the point is that if capital controls are introduced, it basically makes Cypriot euros into a national currency, rather than part of wider monetary union. The capital controls will severely limit your ability to get your euros out of Cyprus, rending them essentially worthless in the wider eurozone. It would be a bit like telling Scots they can't spend their UK pounds in England. Monetary union is many things, but above all it is about free movement of money and a uniform value wherever it is spent. When these functions are disabled, then you cease to be part of a single currency. This is precisely what happens in a fractional reserve lending system when faith is lost. And faith certainly has been lost. Why shouldn't it be lost? The entire global financial system would be recognized as insolvent if even 25% of the people tried to get their deposits. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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Damn Cool Pics

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• Smartass YouTube Comments
• Bubble Wrap Bikini
• Mary Jane Waston Cosplay
• Oz The Great And Powerful Exclusive

Smartass YouTube Comments Posted: 22 Mar 2013 10:24 PM PDT Funny and stupid YouTube comments.

Bubble Wrap Bikini Posted: 22 Mar 2013 09:52 PM PDT I hope such bikini will be popular this summer.

Mary Jane Waston Cosplay Posted: 22 Mar 2013 09:45 PM PDT Very sexy Mary Jane Waston cosplay. / Via modelmayhem

Oz The Great And Powerful Exclusive Posted: 22 Mar 2013 08:29 PM PDT

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SEO Blog

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• What Is Duplicate Content And Why Can’t You Use It?
• Conventional link building techniques are getting overhauled
• 2013 Is The Year Of The SEO And Content Marketing Mantras
• Top 6 Ways to Boost Your Blog’s Loading Speed
• Social Media Marketing Vs Content Marketing
• 3 Steps Agencies Should Use To Make Client Marketing More Successful

What Is Duplicate Content And Why Can’t You Use It? Posted: 23 Mar 2013 11:45 AM PDT Duplicate content is a confusing concept which has led many content writers to believing rules and regulations which simply aren't true. On the face of it, identifying duplicate content is obvious. If you're copying another web page, you've duplicated the content. Google, and the other search engines, don't take kindly... Read more »

Conventional link building techniques are getting overhauled Posted: 23 Mar 2013 11:15 AM PDT Webmasters and general business owners create wonderful websites, which have two underlying purposes in mind: generate sales or harvest new users which could, inevitably, turn into future buyers.  In purporting new websites, misguided individuals are still behind search engine changes in link building methodology, causing a foray of miscues or... Read more »

2013 Is The Year Of The SEO And Content Marketing Mantras Posted: 23 Mar 2013 10:46 AM PDT So everyone has been going gung-ho over The Mayan calendar which spoke of 2012 being the last year of human existence (if the predictions are to be believed). But did the world end? No it didn't and this just means that we have to move on with full gusto to... Read more »

Top 6 Ways to Boost Your Blog’s Loading Speed Posted: 22 Mar 2013 11:22 PM PDT If you want to attract more visitors to your site or blog, then you should first concentrate on the loading time of it. If it takes more time to load, then it is sure that the customers will log out of your blog and prefer some other blogs of same... Read more »

Social Media Marketing Vs Content Marketing Posted: 22 Mar 2013 11:01 PM PDT Rather than look at Social Media Marketing and Content Marketing as two separate entities, start looking it as you cannot have one without the other. Together, Social Media Marketing and Content Marketing share a great bond in building your SEO. You need great content for your readers, but how do... Read more »

3 Steps Agencies Should Use To Make Client Marketing More Successful Posted: 22 Mar 2013 10:56 PM PDT Online marketing is an important part of doing business in the Internet era, and many businesses are turning to online marketing agencies to assist in creating the most sensible marketing campaign possible. Read on for three steps every online marketing agency needs to cover to make clients' campaigns more successful.... Read more »

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