Tag Archives: Euro

I’m Latin, I can’t Keep Calm! Adios Euros

3/21/2013 Portland, Oregon – Pop in your mints…

On Monday, we shared with you our friend Tom’s first hand experience and general impressions with the Spain’s currency conversion from pesetas to the Euro.

Adios Pesetas: A look back at adoption of the Euro in Spain

The conversion to the Euro, for most practical purposes was a long, drawn out process which took two years to implement, starting with the final exchange rate peg to the Euro and culminating with the coin and bill conversion which Tom so eloquently described.

Adios Euros!
Adios Euros!

Today, thanks to the prospect of forced bail ins, the term for a levy or tax (depending upon your preferred term for asset confiscation) such as the one proposed in Cyprus which would bail out the government and/or banks, there is a run on banks throughout Iberia.

The reason is that the preference for the bail in solutions are now popping out of central banker’s mouths like pop corn.  Even Ben Bernanke, slave master of the US currency, has uttered that it would be a possibility.

However, this is the twenty-first century, and bank runs aren’t what they used to be.  For one thing, banks now have instant access to all of the digital currency they could possibly want.  It is a simple ledger entry for the bank to replace the customer’s deposit with a Central Bank liability.

However, there is still the matter of cold, hard currency.  As the Spaniards begin to withdraw currency en masse, the bank branches are bound to run out of Euros.  Thanks to technology, holding Euros, either in physical or digital form, is no longer an absolute necessity and, at this point, it is extremely undesirable.

According to a report at Zerohedge.com, Spaniards are getting a crash course on Bitcoin adoption:  Spain Bitcoin run has started

As the monetary authorities are just now beginning to understand the practical implications o

Bienvenido real money!
Bienvenido real money!

f forced bail ins, the peoples of the world are not content to stand pat while their leaders sqauble over how much to confiscate from whom.  Thanks to digital solutions like the Bitcoin, Spaniards and people the world over are making a run on banks from the comfort of their own homes on their smart phones.  The Euro, which took two years to implement, may be largely replaced in commerce in a matter of weeks.

Even so, the Bitcoin has its limits, as wealth held digitally has a flight risk of its own.  Silver and other hard currencies do not have this problem, and the first stages of the next leg up in Silver and Gold is commencing in lockstep with the Bitcoin app downloads in Iberia.  Either way, it is a unanimous democratic process whose end result will be the Euro being voted off the continent.

While the monetary authorities prepare their familiar mantra, “Keep Calm and Carry on,” the response in Iberia is ringing back “I’m Latin, I can’t Keep Calm!”

Neither should you.  Here at The Mint, we have taken the step of accepting Bitcoins in exchange for silver coins to deal with this contingency.  We ship worldwide and guarantee your satisfaction.  If you are interested, please email us at the address below for a quote as we have yet to fully automate this process.

Adios Euros!  Bienvenido real money.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 21, 2013

Copper Price per Lb: $3.47
Oil Price per Barrel: $93.15
Corn Price per Bushel: $7.32
10 Yr US Treasury Bond: 1.94%
FED Target Rate: 0.15% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,614 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*: 0.25%
Unemployment Rate: 7.7%
Inflation Rate (CPI): 0.7%
Dow Jones Industrial Average: 14,512
M1 Monetary Base: $2,466,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base: $10,499,300,000,000

Cyprus – The Waterloo of Eurocratic management or the ultimate catalyst for Euro zone growth?

3/18/2013 Portland, Oregon – Pop in your mints…

While the management of the ongoing banking crises on this side of the Atlantic has been dishonest, the management on the other side of the pond, or in today’s case, sea, has been an unmitigated disaster.  Or so it would seem.

We are talking about Cyprus.  For those who have yet to hear about Cyprus, it is an island nation located in the far eastern Mediterranean Sea, just below Turkey.  It is currently inhabited by a fiery mix of Greeks and Turks, who have lived in an uneasy peace with each other for some 40 years after the events that took place during the summer of 1974.

Like many island nations, Cyprus has been able to find common ground with those who have been unable to find common ground on the mainland.  It has found that it can leverage its sovereignty and willingness to bend the rules to offer banking services without the nagging regulations which increasingly plague banks and their clients in the Western nations on the mainland.

Now that the government of Cyprus is bankrupt and in need of a bailout, showing that even a tax and banking paradise can be poisoned by a bad currency, they have gone hat in hand to Belgium, a strange country in the north with absolutely nothing in common with Cyprus, save the currency in question.

The Eurocratic apparatus in Belgium, either on its own or at the behest of the global banking giants in Cyprus, has decided that the terms of the bailout, or “bail in”, which is the Euro friendly way to say “Corralito,” {Editor’s Note:  Corralito is the Argentinean term for when the Government decides to unilaterally make use of the funds in its country’s banks to fund the government because there is literally no one willing to lend them currency on any terms}, would be the direct confiscation of funds from depositors bank accounts in the form of a tax, in this case between 3 and 9.9% (because 10% just looks bad in print) to ultimately pay back the countries who have been generous enough to provide the funds, which, despite the technicalities involved, for most Europeans means Germany.

Predictably, the people of Cyprus, who caught wind of the confirmation of the rumors on Friday and awoke Monday to find that their government had declared what is, at this writing, an indefinite banking holiday (meaning banks and ATMs are closed) to prevent anyone who did not want to participate in the bail in from withdrawing their funds from the country’s banks, are channeling their anger at the German Embassy, quite naturally:

Henry Blodget has written a decent analysis on the details of the Cyprus bail in over at the Daily Ticker.  Blodget does a good job of analyzing the events up until the point where He presumes:

“…the moment depositors think that there is risk to their savings, they rush to banks to yank their money out.

That’s called a run on the bank.

And since no bank anywhere has enough cash on hand to pay off all its depositors at once, runs on the bank cause banks to go bust.

That’s what happened to hundreds of banks in the Great Depression.

And it’s what happened to Bear Stearns, Lehman Brothers, and other huge banks during the financial crisis (though, with Bear and Lehman, the folks who yanked their money out weren’t mom and pop depositors but other big financial institutions). It’s what threatened to bring the entire U.S. financial system to its knees. And it’s why the U.S. and European governments have been frantically bailing out banks ever since.

But now, thanks to the eurozone’s bizarre decision in Cyprus, the illusion that depositors don’t need to yank their money out of threatened banks because they’ll be protected has been shattered.”

What Blodget presumes is that a bank run is bad for the bank.  Here at The Mint, we postulate that this tax on depositors is taken precisely for the benefit of the Cypriot banks.  Further, it has been taken not only for the benefit of the banks in Cypriot, but to serve as the catalyst for the Euro zone to return to growth, or the activities which pass as economic growth circa 2013.

How can this be?  To understand this will take a basic understanding of the banking revenue model.

Ever since 2008, the Federal Reserve and the ECB have been underwriting the banking sector by providing cheap cash to banks and, indirectly, the governments and people’s of their respective countries.  This is where Blodget’s parallel of today’s bank runs and those that occurred during the Great Depression falls apart.  For all of the mistakes that Ben Bernanke has made, the unconditional guarantee of liquidity in the banking system is the one that he will never relinquish, despite appeals to reason, for he mysteriously sees it as his life’s calling.

However, in an effort to stem the fall in asset prices, which is largely a product of the insane “jack the rate 25 basis points every month or so” policy that the Greenspan and Bernanke Fed followed from June 2004 until June 2006, the policy that caused markets to seize up like a car engine losing oil as they accelerated to record speeds, the Feds and the ECB have largely ignited an increase not in economic growth, but in bank deposits.

Bank deposits, far from being a boon to the receiving bank, are a huge problem when market conditions force them to reinvest (read lend out) those funds for rates that are unconscionably low (3.75% to consumers for 30 years, in a fiat currency system, are you out of your mind?).  Making matters worse, the consumers have been slow to take the bait, resulting in a big time squeeze on the traditional banking revenue model.

Enter Cyprus, an island that holds a disproportionate amount of bank deposits.  As a thinking Eurocrat, of which we suspect there are few, save Nile Farage, who is hunting for a way to both ensure that the banking revenue model continues to function, the government of Cyprus retains legitimacy, and that economic activity in the Euro zone will increase, the pile of Euros in Cypriot banks looks like a great target not to loot, as most analysis of the situation will paint this move as, but to force billions of Euros out of the digital vaults of the banking system to wash from the shores of Cyprus outwards into the other Euro zone countries in search of real goods, not simply another cash warehouse.

One sees the Eurocratic genius in the move at the moment one (again, that is you and I, fellow taxpayer) understands that the mere threat of a unilateral tax on deposits as a condition for a Euro zone bailout is causing lines to form at ATMs from Andalu to Cataluña, across the border into Torino and down to the lonely parts of Sicily.

Cyprus Flag
Will the Cyprus Misadventure by the catalyst for elusive economic growth in the Euro zone?

Within a matter of days, billions of Euros which were locked up in the accounts of villainous savers and otherwise useless to the European economy will be running around the Spanish and Italian streets in a desperate attempt to purchase anything real in which to hold said savings.

With what appears to have been a typically boneheaded Eurocratic move, the Eurocrats may have managed to do what Ben Bernanke and all of the helicopters in the world could not have done to the club Med economies:  Shower them with foolishly spent cash while at the same time bailing out both the banks and the governments as a grotesque side effect.

To be sure, it is a short term fix and will leave the Euro zone further down the scorched earth economy path in a matter of years.  Even so, you have to give the Eurocrats some credit for pulling out all the stops, even if they did stumble upon their ultimate stimulus, which relies upon their own stupidity to function, completely by accident.

Meanwhile in Cyprus, the latest is that the government wants to “think over” the terms of the bailout.  The formal vote has been postponed until Friday, and we presume that the banking holiday will remain in effect until after the vote is taken and any taxes are skimmed.

It is a hard assignment, and we do not envy them nor blame them for thinking it over.  The decision before Cyprus’ government officials is simple.  Should they accept the bailout, they face being blamed by their countrymen for sacrificing their parched island on the Eurocratic altar as well as spending the rest of their lives dodging the hit men of any oligarch’s who did not have sufficient forewarning of the move.

Should they reject the bailout, their government may even find a few contributions from said oligarchs to keep operating, and the only cost will be a few less German tourists on their shores, which, given the alternative, seems a small price to pay.

In the end, if our hunch is correct, the mere threat of corallito should be enough to stimulate the Euro zone.

Were we in their shoes, and we are glad we are not, we would reject the bailout.  Either way, it is a strong argument for exiting the formal banking system or becoming a large net creditor.  It is much easier for “crats” of any stripe to confiscate assets with a few keystrokes than for them to lift a finger to grab something in the real world.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 18, 2013 (PM)

Copper Price per Lb: $3.43
Oil Price per Barrel:  $93.79
Corn Price per Bushel:  $7.20
10 Yr US Treasury Bond:  1.96%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,606 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,452
M1 Monetary Base:  $2,466,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,499,300,000,000

Ballot burning, our breaking point, and why the next Gold Rush just began

11/9/2012 Portland, Oregon – Pop in your mints…

The 2012 US Presidential election is over, and the only thing that remains to be seen is whether or not the No vote will maintain its absolute majority.  At last count it was 50.2% and will go down to the wire.

For our part, we finally got around to burning our mail-in ballot last night.  For those who will lament that we did not perform our civic duty, we report that we did give it a cursory check to make sure there were not City or County measures which required our input.

If you are joining us late in the game, we presented our personal reasons for not voting a few weeks ago.  To be fair, we have never been much for voting, mostly attributable to our inner laziness.  However, this time was different.  We made a conscious decision not to participate.  We decided not to to meddle in the affairs of others.  We took the position that the largest sphere of influence which we could, in good conscious, cast our vote over others was at the County level.

Our County generally fulfills its commitments and is solvent.  As such, it meets our criteria for an operating Socialist system.  The State and Federal level do not.  We did not reach this conclusion through logical contemplation, rather, we had a minor breaking point with regards to the political systems at the higher levels as we read to our son about the Trail of Tears, which moved us to tears and, as a consequence, this form of peaceful resistance.

The rest, including what you, fellow taxpayer, are reading, is a slow digestion and reflection upon our weeping over the Trail of Tears.

For the record, we do not buy into conspiracy theories (although trading on them can be very profitable) nor are we cynical enough to say, along with Emma Goldman, “If voting changed anything, it would be illegal.”  What we do know is that we can no longer endorse the killing and robbing of people with whom we have no quarrel and who pose us no existential threat.

In a sense, we are peacefully surrendering our “right” to participate.  Were the government to suddenly stop taxing our wages, income, gasoline purchases, telecommunications, and capital gains, we may go as far as to relinquish the “right” to Social security, roads, and such.  On this point, however, we will not hold our breath.  Nor will we actively avoid taxes or reject monetary benefits which come to us.  This is a broader question which we will not delve deeper into today.

Speaking of taxes, the election seems to have ignited what may be the blow off phase in the precious metals markets.  Please read on…

The new Gold Rush, The triple Fiscal Cliff, and logical consequences

The market selloff continues today, as the logical consequence of the expectation of higher taxes manifests itself.  While we believed that higher taxes were coming, no matter who was elected, it is nonetheless fascinating to watch what is unfolding in the equity markets.

For a bit of background, the Federal Reserve, ECB, Bank of Japan, England, and all entities in the Central Banking industry are putting the throttle down and printing money at a breathtaking pace.  This has been enough to keep equity prices “afloat” with relatively minor nominal price drops.

However, the drop in value, commonly known as purchasing power, has truly been staggering over the past several years.  If you track such things, look at your grocery or utility bills for proof.  You are probably either paying more, getting less, or some combination of these double whammies.

The election results appear to have triggered a decoupling of the commodity and equity markets for the foreseeable future.  Meanwhile, while bonds are rallying as those who hold large unrecognized gains in equity positions choose to recognize them before December 31, when the clock strikes midnight and any gains left on the table will be taxed out of existence {Editor’s note: this is figurative language and speculation, of course}.

This is the logical consequence of the fiscal cliff.  When the election was called for Obama and control of the Senate and House looked to remain the same, equity holders saw the writing on the wall.  The stalemate at the Federal level will remain in place and the probability of the US plummeting off of the dreaded Fiscal Cliff (which, we remind you, is purely a government construction) greatly increased.

While some window dressing will no doubt be presented as the solution, those holding large equity positions will be seen as “new meat for the grinder” and likely will be the next lamb sacrificed on the alter of fiscal irresponsibility.

But it is not just the US looking over a fiscal cliff.  The anticipation of the US Presidential outcome distracted attention from the dire situation in Greece, where in 8 short days, the government will be out of funds and the once vaunted “Troika” now stands by, unwilling to throw more money at them.

Then there are the Spaniards.  Having lived three years in Barcelona, we have a special affinity for the Spanish in general and specifically for the Catalans.  While the Greeks may be coerced into having more conditions shoved down their throat, the Spanish situation is a bit more complex.

The Spaniards are smart, and the Catalans are even smarter.  Catalunya knows that they are indispensible to Spain.  They have also spent the past 30+ years building systems to ensure that they can operate perfectly well without the Spanish Feds in Madrid.

Those in Madrid know this, and are holding the threat of Catalan secession as their Ace in the hole which, at this point, has allowed them to extract concessions from the ECB, all the while avoiding surrendering what is left of their Sovereignty to Brussels as the Greeks, Irish, Portuguese, and Italians have.

Will the can which has been kicked down the road in Europe finally get kicked off the Euro Cliff?  Even if it doesn’t, the Spanish firecracker inside of the can will go off at some point and blow up the proverbial can, at which point all bets are off.

With the two largest, debt based financial currencies in the world facing unprecedented uncertainty and the prospect of higher taxes on the horizon, one has to question the wisdom of holding anything but physical gold and silver in place of financial assets.

This, along with the ongoing tension in the Middle East and that crazy Mayan prophecy, is why we believe that the final blow off in the gold and silver markets is at hand.  There is still time to get in and these quasi currencies have plenty of room to run.  While the physical production fundamentals are less compelling than they were 10 years ago (a 440% rise in price will tend to encourage production), the financial backdrop has never been more favourable, and its about to get even better.

Just remember, buy and hold the physical metals, as ETFs and futures will likely not catch all of the upside of this monumental move.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for November 9, 2012

Copper Price per Lb: $3.46

Oil Price per Barrel:  $85.14

Corn Price per Bushel:  $7.45

10 Yr US Treasury Bond:  1.63%

FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,730 THE GOLD RUSH IS ON!

MINT Perceived Target Rate*:  0.25%

Unemployment Rate:  7.9%

Inflation Rate (CPI):  0.6%

Dow Jones Industrial Average:  12,862

M1 Monetary Base:  $2,394,100,000,000

M2 Monetary Base:  $10,168,900,000,000

Margaret Thatcher’s Last stand against Socialism and Clairvoyance on the Euro

Margaret Thatcher is truly one of a kind.  This brief clip, besides depicting a session of British Parliament at its best, shows Thatcher rebutting the Socialist leanings for her ideological adversaries with classic lines such as, “by lowering the income gap you mean to say that you wish the poor to be poorer, if only the rich would be poorer as well,” and, “I condemn your Socialist policies along with the millions in Eastern Europe who have suffered under them.”

What is perhaps most striking about this discourse, which took place in 1990, is the final part of the clip where Thatcher saw clearly that the Euro currency would mean the end of democracy and Parliamentary sovereignty for the countries who adopted it, a prophecy which has begun to play out in Greece, Italy, Ireland, Portugal, Spain, and even the economic juggernaut Germany, where all branches of government are at the mercy of the whims of the ECB.

Enjoy the Iron Lady at her best via YouTube:

  

Should You Accumulate Gold Like China?

According to reports on Chinese imports of gold from Hong Kong, the People’s Republic is on track to import more gold bullion in 2012 than the entire official holdings of the ECB.  What does it mean for us, fellow taxpayer?  Our guest contributor Brad Evans, who is writing on behalf of BullionVault, explores this economic trend and possible implications for your portfolio in the following insightful editorial.  Enjoy and stay fresh!

Should You Accumulate Gold Like China?

In recent years, much has been written and speculated about the idea of Chinese authorities buying up massive amounts of gold bullion.  Indeed, the amount of gold going to China has increased notably over the course of the past few years, and it certainly seems as if the country is making a concerted effort to accumulate a great deal of the precious metal resource.  Is this just a passing trend, representative of independent economic movements, or a greater strategy with implications for the worldwide economy?  Ultimately that remains to be seen, but one result of China’s accumulation of gold bullion is clear.

With many of the world’s dominant economies located in the United States and the Euro zone, the U.S. and countries that use the Euro generally prefer to keep the cost of gold low, if possible, so as to avoid the strengthening of the resource against their respective currencies.  As things stand now, and have for some time, the U.S. dollar and the Euro are generally seen as popular reserve currencies, meaning that people in other economic zones frequently turn to the U.S. dollar and the Euro as the ultimate safe haven.  As long as the price of gold remains relatively low, the dollar and Euro remain strong as reserve currencies.  Therefore, it is plain to see why China buying up massive amounts of gold bullion may lead to an unwanted shift in gold prices that could take the focus away from the reserve currency status that U.S. dollar and Euro enjoy.

Perhaps more important for many people is how this economic strategy of China’s could affect your finances.  World economic trends will come and go, and economies will strengthen and weaken accordingly – but can you benefit from buying up gold bullion in your personal life, on a smaller scale, in the same way that China hopes to benefit in the long run internationally?  While you certainly can’t hope to influence any worldwide economic trends on your own – accumulating gold bullion may not be a bad strategy to consider if you feel that the price of gold will be rising relative to other assets in the coming years.

Buying gold bullion is simple enough.  You just need to head to a precious metal trading site such a s BullionVault, where you can buy and sell gold as you please according to constantly updated world prices.  These sites also offer you various convenient and secure storage options, meaning that if you want to you can easily accumulate a great deal of gold bullion.  However, before making this or any investment decision it is important to formulate a sound investment strategy.  For example, if you are looking for short-term stability or gains, gold investment may be risky at the moment, as the dollar is strengthening and gold may be weakening.  But for long-term gains, this may be a strategy worth considering.

This has been a guest post on behalf of BullionVault, written by freelancer Brad Evans.

Why European leaders have forced Draghi’s put

Another great piece by George Friedman explaining what is going on in Europe. Will the new economic ties trump not so ancient rivalries? Only time will tell, but European leaders will do everything within their power, including a trashing of the Euro’s value, to ensure they do. Via Stratfor:

Financial Markets, Politics, and the New Reality

A Happy Ending to the Euro 2012 and the Futility of European Elections

For the few who missed it, Spain handily defeated Italy yesterday, proving Moody’s wrong once again and making us 1-0 on Euro cup calls here at The Mint.  The Spanish national team, which has won each Euro and World Cup since 2008, will now go down as one of the greatest national teams of all time.

Spain downs Italy as The Mint goes 1-0 on its Euro 2012 prediction

The continent will now turn its weary eyes to the Olympic games, while those who can afford it prepare for their constitutionally guaranteed summer vacation (no kidding, the EU high court has held it as such).

Unfortunately for footballers and vacationers alike, Europe is operating in a perpetual crisis mode, and it is possible that vacationers will return to a Europe that is quite different than the one they left just 30 days before.  One in which their options are limited and their ATM card doesn’t work.

Yes, what started as a minor Hellenic financial problem has predictibly mushroomed into a political crisis at the highest level of the EU.  Voters, fed up with the bailout/austerity approach to banker welfare, increasingly exercise what is left of their sovereign right to vote out relative conservatives and/or moderates and vote in technocrats and/or populists as their fearless leaders.

Here is another prediction, for what its worth, the populists take Germany in the fall of 2013, Europe’s version of Mega Maid will have turned all the way from suck to blow.   The path of austerity that they are currently on will be but a faint memory as the ECB and policy makers move from bailing out the bankers to bailing out any and every political ally.

{Editor’s note:  A populist, for our purposes, is a socialist who no longer masquerades as a conservative or moderate, they are out of the closet, as it were.}

Yet for all the drama and human suffering that is unfolding, we can’t help but think that this is all simply a high priced publicity stunt to get the doomed Euro currency some air time.

For many of the European peoples, the Euro currency has served as nothing more than an unwanted crash course in math and an agent of larceny on the grandest of scales.  The average Jacque, Giorgos, Jorge, or Giovanni would have been better off in the long run had the Euro never been dreamed up.

Rising Populism in Europe to test the ECB’s commitment to elasticity

However, the continued use of the Euro is an extremely high priority to for a select few with addreses on Wall Street, in The City, and anywhere in Germany.  As such, the current tack for the doomed Euroship is for it to be spoken of in the same context as climate change or terrorism, which invariably involves an increasingly illogical and alarmist rhetoric.

The question of whether or not something should be done is glossed over in favor of handing supreme power to a body who demands that something be done.  The only rhetoric that is allowed beyond fear mongering is a discussion of what the supreme power should do.

And so it is with the Euro.

There will be a number of elections over the coming months in the Eurozone, and not one of them will matter.  The tone in Europe is turning decidedly populist, as George Friedman eloquently describes in his recent Geopolitcal Weekly report via Stratfor:

The Futility of European Elections

The only question that remains is whether or not the ECB will accomodate the populist agenda with an accomodative monetary policy.

Our guess is that they will, for populism has never been bound by fiscal restraint.