The tragedy in Cyprus continues. Reuters reports today that the island is in an impasse as the initial proposal of past weekend was killed by the Parliament with 100% of the votes. Several alternative plans are being discussed behind the scenes. One of the potential scenario’s is the Russians buying up one of the ailing Cypriot banks. Meantime it appears “EU officials voiced frustration but little sympathy for an ambitious but now bust banking system.” (via Reuters).
We wrote over the weekend our conclusion about the Cypriot case: Wakeup Call From Cyprus To The Rest Of The World. It was meant to help people SEE with their own eyes the truths and fundamentals behind the facts. Our article reached tens of thousands of readers.
The Cypriot case is all over the place, in all types of media. However, it is amazing how the following simple facts remain underexposed. It is one thing to look at the news, it is another thing to look at the learnings that come out of the news. For those who are willing to see, here is what Cyprus is teaching the whole world about money, the debt crisis and gold:
(1) The counterparty risk has never been that high in history. Keeping your money on your savings account not only has no yields, but also has a risk of losing (part of) it to the bank itself.
(2) Money in your bank is NOT safe. It appears incredibly difficult for people to understand this truth. In people’s mind, safety and banks go hand in hand, just like yin and yang or day and night.
(3) How is it possible that banks need their depositors’ money to survive when they borrow at 0% and lend at rates between 4% and 8%? It shows the whole banking system is truly ailing.
(4) Governments are truly desperate. Still they keep on pretending nothing major is going on. They have a plan for everything. But time and time again, they surprise us with unexpected major problems. The bankruptcy on major Spanish and Italians banks earlier this year are recent examples; the Cypriot thing is unimaginable.
(5) Didn’t we learn only half a year ago from our European leaders that the debt crisis was solved? Didn’t we hear that they would do whatever it takes to get the economy rolling again. Either they truly don’t know what they are doing and talking about, either they are liars of the highest degree … or both.
(6) Cyprus is telling that the debt crisis is not over, it is only worsening.
(7) The whole scenario was organized. The central bank blocked the electronic payment traffic in and out of Cyprus during the weekend. Cypriots feel betrayed. But who knows what other surprises our leaders are cooking for not-Cypriots?
(8) What did the financial and monetary system solve since the big crash in 2008? Indeed, nothing. The symptoms of the crisis are becoming worse. It means the true crash is yet to come.
(9) The key take-away in our humble opinion is that Cypriots holding physical gold and silver (or other tangible assets that preserve purchasing power) are not being touched by any means. Although we are 100% convinced of our point, we do not see this message appearing, nor do we hear people talking about it. Consider it a privilege if you have this insight, or if you understood this learning.
(10) Trust is what is touched much more than the bank accounts. The next crisis will be driven by trust. As our money system is only backed by trust (hence “fiat money”), you can be sure that our current money system can potentially be destroyed.
These learnings are there for anyone who is willing and open to see, whether they remain underexposed is not important. Ignoring them is at one’s own peril.