29 March 2013: USA Markets – S&P index beat its historical maximum

Yesterday stock market of United States finished trading session with a moderate growth, at the same time the index of the wide market S&P 500, during the last minutes of the trading session, managed to subdue the level of its historical maximum 1565,15 points and was closed 4 points above it. Data on GDP of the USA presented yesterday, where the indicator increased by 0,4% in comparison with the previous assessment in 0,1% gave support to the market and positively influenced purchasing moods. The rest of the statistical data was not so positive, the number of primary requests for unemployment benefits last week increased by 16 thousand to 357 thousand and significantly exceeded expectations, and the Chicago index of business activity in March made only 52,4 points and more than 4 points didn't hold on to average forecasts.


Asian stock markets in the last working day not only of this week, but also month, and also the whole quarter show quiet multidirectional dynamics. Trading volumes are insignificant. The Japanese stock exchange bargains almost neutrally. Nevertheless, index Nikkei is ending quarter with growth of nearly 19%, which is the best result since middle of 2009. At the end of March the Nikkei index keeps about levels 12300-12400, which is just a bit lower its maximum levels. From the middle of November growth of the main exchange indicator of the country grew almost by 45%.


Leading stock indexes of Europe also closed yesterday’s trading session with a moderate growth - the British FTSE-100 grew up for +0,38%, the German DAX grew by 0,08%, the French CAC increased for +0,52%. Also it should be noted that in relation to the Catholic holiday “Passionate Friday”, markets of the USA, Australia, Hong Kong, India, Singapore and as well as many European platforms are going to be closed today.


Prices of oil following the results of last trading session continued a shy rebound upward and again showed positive dynamics. In the short term ascending dynamics can be continued up to the closest zone of resistance around $112-113 for barrel. This morning, we can see BRENT traded on a level of 109.77$ per barrel, NYMEX adds 0.67% in price and is on a level of 97.23$ per barrel.

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28 March 2013: Asian indexes are decreasing on news that China is going to limit foreign investments

China will encourage foreign investments into services and high technologies sectors, but at the same time will rigidly limit capital investments in construction, real estate, and also the projects, differing to high power consumption and polluting environment. This news brought negative impact on Asian stock markets where weaker than the others is Chinese continental SSE index. Most of all it was reflected in the banking sector, where Bank of Communications and China Merchant Bank are losing more than 4%.

On Wednesday, American market could not any longer ignore bad news coming from the Europe and did not continue its growth started the day before. Index of incomplete transactions on sale of houses in February decreased more strongly than expected 104,8 points. Following the results of the trading session the indicator of "blue chips" the Dow Jones Industrial Average index was closed with -0,23% on a level 14526,16 points, the S&P 500 lost 0,06%, and the index of the hi-tech companies Nasdaq grew up for 0,12% to a level of 3256,52 points.

In Europe, besides Cyprus – Italy is again coming to the headers of news feeds. On last placement of the Italian debt papers, Rome managed to attract only 6,91 billion euro from the planned 7 billion euro. In Nicosia, in turn, the authorities presented a package of measures for capital control. Among other things it should be noted that single withdrawal of funds won't exceed 300 euros, and it will not be possible to take more than 1000 euros out of the country. The Cypriot banks will open today after almost two-week break.

Prices for oil are stable this morning and both Brent and NYMEX are adding 0.22% and 0.33% accordingly. Brent is traded on a level 109.94$ per barrel and NYMEX on a level of 96.90$. Ascending movement proceeds against noticeable strengthening of the American dollar in relation to the majority of world currencies. Gold is losing 0.12% and is traded on a level of 1604.28$ per troy ounce.

EUR/USD pair is slightly correcting and is strengthening for 0.20% traded on a level 1.2804.

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27 March 2013: Asian shares gains on positive US data

Asian shares rose on Wednesday as positive US data confirm a moderate recovery. US Home sales and manufacturing fed optimism with the Dow Jones industrial climbing more than 100 points to a new record high. 14 559 beats he former record from March 5th 2007. Data showed that single family home prices in January rose at the fastest pace in six years. Durable manufactured goods also shot up in February. The numbers are boosting investor confidence and loading up on equities.

The rosy US picture is in stark contrast to Europe where the Cyprus crisis and its possible contagion impact on other vulnerable members of the euro zone take central stage. The Cyprus bank bailout inflicts huge losses; up to 40% on deposits above Euro 100 000. Banks are still closed. When they hopefully open tomorrow it would be strict restrictions on currency transactions to avoid a run on the banks.

The second biggest bank, the Popular Bank of Cyprus, has been closed down. Its healthy assets, deposits below Euro 100 000, will be transferred to the Bank of Cyprus in an effort to boost and save the island’s biggest bank. Minister of Finance Michael Sarris stroke a positive tone yesterday when he stressed that the banking transaction restrictions would last only for some weeks. Others are more realistic. Cyprus fears capital flight and a run on their banks. It is likely that big Russian, British and Middle Eastern clients will take their money out as soon as there is a chance.

The handling of the Cyprus crisis also threaten to set a bad precedence. For the first time EU, the European Central Bank, ECB, and the International Monetary Fund, IMF, has confiscated funds on private accounts to finance a bailout. That has violate sacred principles. European politicians have later indicated that this practice would be followed in connection with possible other bailouts inside the Eurozone. This has sent shock waves through the European financial system and threaten banking clients especially in countries like Italy and Spain which might be next in line.

The practical consequence of the Cyprus bailout is that it might have undermined public trust in a banking system ridden by high profile scandals and banker’s speculation and misuse of client funds. The way the EU, ECB and INMF has handled the Cyprus crisis has further increased the divide between north and south in Europe. Southerners are reacting with dismay on what they see as German and EU technocrat arrogance. Confidence in the common currency is thereby also hit. While bankers are saved with generous parachutes the EU and IMF imposed austerity measures have meant unemployment and misery for the people in the southern periphery.

The Euro/USD is under steady downward pressure and trades at 1.2849. Currency analysts are expecting 1.25 in a short two months perspective. Oil prices are up with NYMEX trading above 96 the highest level seen for weeks. Brent crude is above USD 109 a barrel on the better US data. The BRICS countries meeting in Durban in South Africa has decided to establish a new investment bank in support of weaker economies with acute payment problems. It is stressed that this banking establishment is not a substitute, but a complementary to IMF.

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26 March 2013: Markets negative to Cyprus bail-out

Digesting the details of the Cyprus bailout markets reacted negative to the scheme agreed in Brussels Monday morning. After initially rallying stock markets fell back yesterday evening and Asian shares eased as investors worried about the potential risk from the Cyprus bailout scheme. Euro/USD which rallied on the news and reached 1.3050, fell steeply back and trades at 1.2869 putting the single currency under new downward pressure. “Safe haven” currencies as USD and Japanese yen have strengthened. Gold is falling back after initially rallying to 1614.

Markets were positive to the news that a crisis was averted. But as the details of the bailout scheme became clear, markets were starkly reminded of the risk involved in the Euro zone. When little Cyprus with a million people and a GDP constituting 0,2% of the GDP in Western Europe, creates such waves in the financial markets what when a crisis occur in Spain or Italy? The EU handling of the crisis leaves serious questions and strengthens the impression that the Euro zone is living on borrowed time and a breakup of the common currency edges closer.

The Euro based on a lack of common taxation and financial policies has over the last years experienced 5 crisis situations ending up with bailouts in Ireland, Portugal, Greece, Spain and now Cyprus. While tax payers were doomed to pay the bill for the first four crisis, Cyprus is instituting a new unheard principle. Bank depositors are this time asked to pay for the mess created primarily by Bank of Cyprus and Popular Bank of Cyprus’s speculations with depositors’ money over the last years in crisis ridden Greece.

The new package exempts depositors with accounts below Euro 100 000. Depositors with a balance above EURO 100 000 will have their accounts frozen and the door kept open for future confiscations in the magnitude of 40%. EU officials stated yesterday that this step, confiscating private depositors’ funds, might constitute the rule for the future. Strict currency controls are introduced and the banks are going to open firstly on Thursday being closed for two weeks. Bank clients are permitted to subtract Euro 100 from their accounts using ATM machines.

EU and especially Germany have in their propaganda for justifying what they with a misled concept have called “levy”, made Russian depositors in Cyprus the scapegoat. Most observers with some knowledge are aware that the big chunk of the Russian cash in Cypriot banks has its root in the chaotic privatization following the fall of communism and the Soviet Union in 1991. The bank system broke down, and Russians used Cyprus as one of many new domiciles for cash stashed in their luggage. Nobody asked, too, many questions. The west supported the wild-west privatization as the true token of freedom and democracy. Cypriot auditors, law offices, real estate agents and bankers did not ask naughty questions and greatly thrived on the Russian business.

OECD in the late 1990-ies put Russia on the black list for suspected money laundering countries. After thorough investigations Cyprus was removed from this list in 2002. Removal from the black list was one of the preconditions for EU membership in 2004 and the entry into the Euro in 2006. The 10% corporate tax which now is going to be increased to 12,5%, was introduced as a result of negotiations and EU-agreement to facilitate a country that had to accept the common agriculture policies and prohibition of production of traditional products. The so called “troika” has for a long time demanded free access to banks and other institutions. Suddenly over the night Russian money and some “oligarchs” have been turned into a money laundering mafia.

President Nicos Anastasiades who has his fair share of rich Russians on his law office clients list, defended the bailout terms in a televised speech to the nation yesterday last night as the majority of Cypriots ask for independence and threaten to leave the Euro. Whether his arguments will dampen the anger of fury in a small country realizing being dictated from Berlin and Brussels, are open questions. The last two weeks have opened independent Cypriots’ eyes for what it means to be member of a rich man’s club in Northern Europe. Cypriots are as Greeks, Russians and Serbians orthodox. Religion plays an important role as strategic and security considerations did when Turkey invaded the island in 1974.

In this situation it may be dangerous to concentrate only on small figures and behave as elephants in a Chinese porcelain shop.

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25 March 2013: Euro gains on Cyprus bail-out

The Euro and Asian shares rose on Monday after Cyprus reached a last minute deal with international lenders for a 10 billion euro bailout. The agreement was reached hours before a deadline to avert a financial collapse. The European Central Bank (ECB) had declared on Friday that it would stop emergency liquidity to two big exposed, Cypriot banks, Bank of Cyprus and the Popular Bank, on the 25th if a solution was not found. The deal which is not dependent of support by the Cypriot parliament which last Tuesday rejected a bail-out proposal obtained in Brussels earlier. Euro/USD trades 1.3029; 50 points up from Friday.

During the negotiations all the concerned parties plaid hard ball. The newly elected Cypriot president, Nicos Anastasiades, who is known as Euro-friendly, threatened the Euro-ministers to resign if he was pressed, too, far. Anastasiades also firstly rejected to participate when final EU-meetings were resumed late Sunday night stressing the unacceptability of Cyprus negotiating with a pistol to its head. The German Finance Minister countered claiming a total lack of realism on Cyprus’ behalf. A crisis sentiment ruled during the talks, and in line with Brussels traditions a last minute deal was clinched after 12 hours negotiations.

The deal involves a winding down of the second largest bank, the Popular Bank of Cyprus, Laiki, and shifting deposits below 100 000 euros to the biggest Bank of Cyprus to create a bank with healthy assets. Deposits above 100 000 euros in both banks, which are not guaranteed under EU-law, will be frozen and used to recapitalize the Bank of Cyprus through a deposit/equity conversion. This raid on uninsured Laiki depositors is expected to raise 4,2 billion euros. Up to 40% of the balance on these accounts risk to be confiscated much higher than the 20% originally envisaged. This will especially hurt foreigners and mainly Russian depositors who stand to lose billions of dollars. It is estimated that Russians have deposited up to 35 billion euros in Cyprus.

It is likely that the proposed agreement will create strong negative reactions from Russia, Ukraine and other concerned countries. Prime Minister Medvedev likened last week the EU-proposal with Soviet-type confiscation. Most of the 6 200 employees in Laiki would probably lose their jobs. Employees reacted last week with fury on the proposals and out the President and Parliament under strong pressure. A poll during the weekend showed that 2/3 of the Greek Cypriots preferred to leave the Euro. A week earlier 67% was in favor of the Euro.

The Minister of Finance, Michael Sarris, said in an interview with BBS that the agreement avoided financial disaster for Cyprus. Anastasiades left Brussels without making any comments. A Cypriot exit from the euro might have been avoided in this first round, but the fact that international lenders for the first time during the debt crisis in the Euro zone use sacrosanct private account funds in a bail-in arrangement might have serious contagion consequences all over the euro zone.

Bank employees and the public have additionally taken notice that leading managers in Bank of Cyprus and Laiki lately have received generous parachutes when the two banks for all practical purposes were bankrupt. Many Cypriots are asking the fairness of such parachutes in a situation where the same bankers have gambled with clients money and speculated in treasury bills and unsecured Greek loans. The two biggest banks have 25 billion euros in bad Greek loans after firstly losing billions on the Greek Treasury bill haircut imposed by EU and IMF.

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22 March 2013: ECB gives Cyprus bailout ultimatum

The Cyprus drama escalated with furious banking employees protesting in front of Parliament as worries about the effect of the Cyprus-crisis on the euro zone intensified. Shares in Europe fall yesterday as did USD/EURO. The Euro is under continued downward pressure. The European Central Bank (ECB) simultaneously issued a bailout ultimatum that liquidity transfers to the Central Bank of Cyprus would be stopped on Monday unless Cyprus agreed on terms and conditions for a bailout.

In a bid to raise investments in a Solidarity Fund to raise the required Euro 5,8 billion that is necessary to unlock the EU/IMF’s Euro 10 billion financial assistance package for Cyprus, the Government yesterday succeeded in mobilizing support from all the political parties. The powerful and economically strong Greek Orthodox Church has also stated its willingness to contribute with cash injections and land assets. The Fund would be built up on possible future income from the oil and gas reserves on the continental shelf.

Any effort to speed up offshore natural gas exploration as a way of attracting desperately needed investment to save its teetering economy, might, however, be challenged by Turkey which questions Cyprus sovereign rights to explore and exploit what Turkey regards as disputed areas. According to the International Law of the Sea Convention agreement between the concerned parties is a prerequisite for starting drilling activities in disputed areas. A possible Turkish challenge gives an added dimension to the crisis as a stark reminder of the Turkish invasion of Cyprus in 1974.

Potential gas riches also seem to have been part of the negotiations the Minister of finance, Michael Sarris, is conducting in Moscow. The gas resources have been identified as one area where Russia might be interested in investing. A lot of rumors are surrounding these negotiations which so far has reached no breakthrough. Yesterday it was claimed that the second biggest bank, Popular Bank of Cyprus, was bankrupt, and that Gazprombank the financial arm of Gazprom, the world’s biggest gas company was ready to take over in a trade off with access to blocks on the shelf. That was denied by Gazprombank. It is, however, a fact that both Popular and the Bank of Cyprus are closed to bankruptcy.

Rumors were also spread that Cyprus has given Russia rights to establish a naval base in Meri. Russia might in connection with informal talks on the side line of the official negotiations, sounded out the opportunity to establish repair facilities for its merchant fleet in Cyprus. Similar sounding outs have been given to Greek islands. Nothing has yet been finally settled. Russia might be willing to extend the Euro 2,5 billion credit given to Cyprus for 5 years at 4,5% interest rate for 5 more years.

It is nevertheless worth reminding that England has had two military bases on the island since Cyprus gained its independence in 1960. There are also bases on the Turkish occupied northern part of Cyprus. On that basis a Russian naval base seems rather unlikely.

A delegation from the EU-commission headed by the President, Manuel Barroso, met yesterday with Prime Minister Dmitry Medvedev. Before the meeting Medvedev lambasted the EU’s handling of the Cyprus debt crisis comparing the “levy” with Soviet style confiscations. The fact that EU and the newly elected Cyprus president, Nikos Anastasiades, left Moscow, one of the most concerned parties, out in the dark regarding the bailout created outrage.

Officials in Moscow were privately skeptical to a Russian bailout or in Russia’s interest to provide further bridging loans. Commercial criteria would be the basis for any possible investments. This was clearly expressed by one Russian banker: “Buying worthless equity in a bank for a million or two. That is not going to bear very far here in Moscow”.

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21 March 2013: EU threatens Cyprus with cutoff of funds

Cyprus is considering to nationalize pension funds which hold between 2 and 3 million euros and issuing an emergency bond linked to future natural gas revenues as talks continue in Nicosia, Brussels and Moscow. The Government has decided to keep banks closed till Tuesday 26th next week in an effort to try to avoid a customer’s run on the bank when they open. The banks have been closed since Friday last week. The Cypriot Parliament on Tuesday rejected EU’s term and conditions for a Euro 10 Billion bailout and turned to Russia for aid. This comes amid threats for a complete cutoff in funds to Cyprus.

Finance Minister Michael Sarris has extended his stay in Moscow. Russian officials said that Sarris has asked for a further 5 billion euros on top of a five year extension and lower interest on an existing 2,5-billion euro loan given in 2011. Russian clients hold approximate 30 Billion Euros in Cypriot banks, and would be especially hard hit by the proposed bailout which threaten to confiscate 9,9% or more on all bank accounts with a balance above 100 000 Euros. That equals a confiscation of 3 – 5 B euros from Russian citizens’ dependent of which percentage is finally chosen. EU has indicated an even higher levy than 9,9% on deposits above 100.000.

Russian Prime Minister Dmitry Medvedev will today meet with a delegation from the EU Commission in Moscow. Both President Vladimir Putin and Medvedev have expressed outrage with the way both EU and the Cyprus government have handled the bailout question. Russia was in spite of promises not consulted in advance. Putin called the bailout package “unfair, unprofessional and with unprecedented consequences”.

In a statement yesterday Medvedev said that Euro zone ministers had behaved “like a bull in a China shop” and likened the proposals to Soviet-era confiscations. This made little impression on EU-leaders who continued to stress that the bailout was fair and urgent action needed to save the overblown banking system in Cyprus from collapsing. The European Central Bank (ECB) warned simultaneously that Cyprus was running out of time. ECB would pull the plug on Cyprus unless the tiny country of 1 million people, quickly accepts a bailout.

That made little impression on Cypriots who continue to balk at EUs demands for a confiscation of 5,8 billion Euros from private accounts. This has so far been a taboo in Europe’s handling of the debt crisis. Private accounts have been regarded sacrosanct and not touched. The reason why EU in relation to Cyprus has chosen to break with this sacred principle, is probably due to the fact that a big number of Russian accounts are involved. Facing an election in September the German Chancellor, Angela Merkel, is afraid of being accused for bailing out rich Russian with for what might be claimed as German taxpayer’s money.

The first turbulence in global markets after the Cyprus crisis is slowly fading for now. Asian markets rose on FED chief, Ben Bernanke’s statement yesterday painting a more optimistic picture of the employment situation without indicating an end to monetary easing. The Euro has stabilized from steep falls earlier in the week. The handling of the Cyprus crisis has once again put the question of the survival of the common currency on the agenda and raised focus on negative growth, political instability and the mass unemployment inside the Euro zone.

On that basis global observers are asking whether the EU-leaders complete have miscalculated markets reaction in their handling of the Cyprus crisis. It is announced that the Cypriot President, Nikos Anastasiades, today is going to present his Plan B for how possibly get out of the crisis.

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20 March 2013: Cyprus might travel east

After serious miscalculations both on the part of the Cypriot government and the euro zones finance ministers, the newly elected President Nikos Anastasiades might be heading east. After building close and friendly relations with Angela Merkel and his German sister party, CDU, during the first month of his Presidency, the real content of these relations were put on a severe test during the Euro zone meeting last Friday.

Anastasiades was met with a done deal. His strong objections and clear statement that the proposed bailout would have no chance to pass Parliament, fell on death ears. When appealing to Merkel for flexibility when calling her on Monday, he was met with a cold shoulder and instruction to talk with the troika. Merkel also strongly advised against any contact with Russia.

This response and the Cypriot parliament’s flat rejection, might have given the Cypriot President exactly the encouragement he needed to demonstrate that he is nobody’s puddle. He is neither the property of the German Chancellor or the European Union. In a critical moment of need what the ruling technocratic elites in Europe were able to come up with, was a proposal to temper with private banking accounts and confiscate from 6.75 to 9,9% of their value. This infuriated everybody concerned from poor Cypriot pensioners to rich Russian oligarchs, Arab sheikhs and ordinary employees with small accounts. Nobody likes to have their savings stolen. Over the last days the Euro zone proposal has created an uproar. We can see the beginning of global financial crisis where the Euro falling as a stone and everybody asks which are the next banks to fall.

If this was a calculated risk on behalf of European technocrats they are paying a high price completely overlooking the explosive political dimension in Southern Europe. The President of European Central Bank, Mario Draghi, was as late as in September willing to take whatever it takes to save the Euro. By his strong statement he stabilized euro zone markets and the common currency. By treating a small, but very proud nation as a given entity, the euro zone and the financial markets are plunged back to where they were a year ago. The result of the German inspired austerities are there for everyone to see; negative growth, mass unemployment and new lost youth generations, especially in the periphery of Europe. This does not inspire belief in the high values of democracy and freedom preached by European technocrats.

During the session in the Cypriot parliament yesterday there was not a single vote in favor of the European bail out. Outside Parliament there were furious demonstrations and flag waving remarkably enough in favor of a Russian solution. No wonder that Anastasiades, humiliated and rejected from his Western European friends, feels for going east. His Minister of Finance is already in Moscow. If the President decides to take the next plane the whole nation shall stand behind him and wish him well in the negotiations. From being the “traitor” selling out Cypriot interests, he might during some days have turned into a national hero.

There is, however, be no easy sell for Anastasiades. President Vladimir Putin was furious and offended for not being consulted either by EU or Cyprus before last Friday’s decision. He found the proposed solution “unfair, unprofessional and with unforeseeable consequences”. Russians are world masters in chess, and each move must be carefully considered not at least from the Cypriot side.

But much is at stake also for Russia. The German Minister of Finance, Wolfgang Schaeuble, said this morning that Cypriots only have themselves to blame when they don’t understand that they have an overblown banking sector. From a logical point of view he might have a point. Psychologically he is building under the image of the arrogant German in a situation where the streets in Southern Europe are boiling and where especially bankers and the Brussels technocratic shall think twice before finger pointing. It might be easier for Anastasiades to find common language with their eastern orthodox brothers in Moscow than with a German Lutheran protestant.

Russia has recently given Cyprus a loan on Euro 2,5 billion. To prolong it with 5 years on better conditions might be the easiest part. But by playing hard ball with EU going east, Cyprus might be seeking a bail out partner for their banks in Moscow. For a Russia which already has deposited Euro 30 – 35 Billion in Cyprus, the 10 billion offered in bail out from EU, IMF and ECB, might seem such an excessive amount of money. And in addition: Qatari and Chinese money bags are flirting at the doors. Newly discovered gas on continental shelf is also a part of the game.

Might be that Western Europe in the end needs Cyprus more than Cyprus ever needed the euro. The Cyprus drama seems just about to begin.

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19 March 2013: Deadlock over Cyprus bailout

The Cypriot parliament is scheduled to vote over the Brussels agreed bailout later today. The meeting for yesterday was postponed when party deliberations showed that there was no majority in favor of the package. The President of Cyprus informed Angela Merkel last night that he had not been able to mobilize a majority for the bailout package which has created anger and fury in Cyprus and shaken international markets. The initial reactions to the so called “levy” have been disastrous. It is likely that today’s scheduled Parliament meeting again would be postponed. A reject of the bailout shall most probably create new tumults in the markets.

The Cyprus government has decided to close the banks today and most probably for the rest of the week to avoid a rush on withdrawal of deposits. The ATM machines which were emptied during the holidays have been filled up again and are functioning.

The decision to enter private banking accounts and confiscate them at will, have had far reaching effects. Major principles are at stake. The decision to put a levy on deposit accounts have scared global markets. Nervousness and risk aversion are back in play with focus on the Euro zone. Stock markets in America, Asia and Europe fell dramatically yesterday with Asia recovering this morning after digestion.

The big question is that when this could happen to euro member with a tiny economy as Cyprus; constituting 0,2% of the total euro zone GDP, who might next in line? Spain, Portugal or Italy? If the Cyprus bailout continues to be handled in an unprofessional manner this can lead to contagion and a run on the banks all over the euro zone.

The plain content of the Brussels decision is that it overstepped and violated sacred principles of private property rights. Governments should not mess with citizen’s private banking accounts regardless of which strong arguments you think you have. The “troika” representing some of the strongest capital forces in the world, has stressed that Cyprus has an overblown banking sector. Germany and other Euro countries accuse Cyprus for money laundering and that rich Russian oligarchs presumably have deposited money in Cypriot banks.

But are these news have not come to light over night? They have lived with Cyprus since the breakdown of the Soviet Union when Russian businesses without a functioning banking system at home turned its attention to the visa free Cyprus. Anti-money laundering measures are functioning more efficiently in Cyprus today then did when Cyprus entered the European Union 10 years ago and the Euro in 2006. Cyprus has been following the same rules and regulations practiced inside the European union and the Euro zone relating to money laundering.

At the same time Cyprus has been living high on Russian capital injections. Banks, law offices and auditors have prospered and so has the real estate sector. Why this sudden change of heart? What justifies that euro ministers and President Anastasiades permit to give banks a green light to intrude on and steal from clients banking accounts regardless of whether you call it a “levy” and not theft or for that sake a bank robbery.

The Cypriot government has used the last 24 hours to try sugar a decision which from the very beginning was ill thought. Brussels have seemingly blessed that Cypriots are free to decide to exempt smaller savings account from the “levy” as long as the total confiscation stands at 5.8 Billion Euro.

That does not change the sacrosanct principles involved in spite of Euro ministers and the Cyprus government now pretending to be modern Robin Hoods stealing more from the rich than the poor. Russian and British companies and private accounts are most severely hit. President Vladimir Putin and Prime Minister Medvedev are understandably furious. Russia gave Cyprus a generous loan on Euro 2,5 billion in 2011. Nevertheless neither Euro finance ministers nor the Cypriot government bothered to consult Moscow before this crucial decision was taken.

The Cypriot Minister of Finance has planned to go to Moscow on Wednesday presumably to ask for better terms. We wish him a good trip. The Minister might find that the timing for asking for more favorable terms and conditions on existing loans is ill planned when it comes on the top of a confiscation of might be 4 – 5 billion Euros. Putin has rightly called Friday’s decision “unprofessional, unfair and creating a dangerous precedent”.

For clients of MAYZUS Investment Company it is once more important to stress. Whatever outcome the planned “levy” shall have no impact on their deposits with MAYZUS Investment Company. Only a tiny portion of our funds are placed in Cypriot banks. Client funds are with prime banks outside Cyprus.

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18 March 2013: Vote on controversial Deposit haircut today

 The Cypriot Parliament is later today going to vote on EU finance ministers unprecedented decision  to impose an all-out haircut on Cypriot deposits. The newly elected President Nikos Anastasiades was in Brussels with his  finance minister Friday night and returned back to a uproar among Cypriot and foreigners who had entrusted their savings to the island’s banks and now found them in risk of being confiscated.


The bail-out was cut from Euro 17 to 10 Billion and implies that savers have been forced to bear the cut. Banks are by Tuesday 19^th automatically going to withdraw 9,9 % on deposits above Euro 100 000 and 6,75 % on all smaller amounts. It is unclear whether this implies both private and corporate accounts.  But most likely both.  It also seems that the decision applies to accounts in all Cyprus based banks regardless of their origin country.  All accounts seem to be hit in an action that best can be described as pure confiscation or theft of private savings and funds.

 The unilateral action of the European Union and the Cypriot government have instituted a new practice never earlier seen in financial markets. The confiscation or “levy” which they call it, is estimated to contribute Euro 5,5 billion towards the recapitalization of the Cypriot banks. This counts for more than 50 % of the bail out from the richest countries in Europe.  In a televised speech on Sunday  President Anastasiades defended his decision and stated that Cyprus was faced with the gravest situation since the Turkish invasion in 1974. The Cypriot government has “sugared”  its measures by stressing that the confiscated funds are compensated by shares in the island’s   bankrupt banks, the Bank of Cyprus and Popular Bank.

Supporters of the new president have lately stressed his good and friendly relations with Angela Merkel and other European center right leaders.  “Lazy” Greeks and “irresponsible” Cypriots have for long time leading up to the German elections in September,   been negative headlines in the German press. Nikos Anastasiades got his chance to prove he is Germany’s devoted  friend.  He might have helped Merkel’s election campaign, but does this decision serve ambitions of making Cyprus a financial center?

This is also a question of negotiating tactics. In its dealings with EURO zone finance ministers and the “troika” of representatives from the International Monetary Fund, IMF, the European Central Bank, ECB, and EU, Cyprus demonstrated that they were overeager to strike a deal. This never pays off in  a Brussels nourished by confrontations and last minute’s deals.  The late hours exercise in Brussels have given both Cyprus and the Euro zone members a hard  lesson.  It is time for blue Monday blues.

 The new Cyprus government  has experienced – if they believed it in before - that there are no solidarity or true friends in Europe.  It does not matter  whether you are  a goodwill pro-European   or a former communist. European relations are built on interest politics.  Cyprus has less than a million people and institutes 0,2 % of the Gross Domestic product inside the Euro zone. But exactly the size is why European leaders could have afforded to be a little generous.  Instead  EU once again demonstrated  an attitude which lately has brought the Southern periphery of Europe to despair.

Today the Euro is falling 100 points close to 1,29.  The message is clear.  Neither  markets nor Cypriots any longer trust the Eurozone reliability.  Why should other Western European depositors do when their banks are bankrupt.   Today Cypriot bank customers are  treated dis respectfully. Their deposits are stolen  and  they are offered valueless shares.  Next time the same medicine might be ordained to Italy, Spain, Greece, Portugal or  for that sake Netherlands.

 It has been sent a clear message to whole Europe. When governments are reluctant to pay for their banks speculations and excesses private property rights do not apply. Then it is up to the man in the street to pay the bill by having their accounts confiscated.

Luckily enough Mayzus Investment has been wisely enough to keep our client funds in banks outside Cyprus.

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15 March 2013: Stock market growth smile on US dollar

  The Dow Jones Industrial rose for a 10^th straight day in a stock rally not seen since 1996, and ended up 0,6 % at 14 539. This followed a strong session in Europe.  In Asia stocks rose again this morning after two loss making sessions. The rally was spurred by new US- labour market data showing a fall in the weekly numbers of people applying for unemployment benefits. The data reflects  that the American economy is steadily improving.  A raft of recent data from retail sales and manufacturing to employment and housing have shown that the US  economy is gathering steam.

 In contradiction to former historical stock rallies where the green buck was used as some kind of a life jacket, the USD has this time benefited greatly on the stock market’s surge to new highs and improved economic data.  Against a basket of currency, DXY, the dollar has reached a seven month high. Since January USD/JPY has jumped from 86,67 to over 96. Pound Sterling, GBP, has fallen from 1.62 to a bottom of  1.4832 earlier this week. The moves suggest that the dollar has entered a multi-year bull cycle where the dollar has outperformed nine of the major G-10 currencies.

 Political uncertainty in Italy has re-ignited  fear about the  euro zone’s debt crisis and put new pressure on the Euro.  Weak economic growth and  prospects of aggressive monetary easing in Japan and Britain have driven the yen and GBP to multi-year lows.  Spending cuts in Washington could for sure damper US economic growth and the FED has further pledged to keep interest rates low for the foreseeable future.   But capital flows continue to rotate in the favour of US-assets and  strengthen both the US economy and the dollar.

The dollar strength against JPY and Euro  took a little breather  on Friday. USD/JPY trades at 96,03 down from the peak of 96,71 on Tuesday. If the Bank of Japan (BOJ) follows up on its  declared strong monetary easing policies, USD/JPY is likely to trade in a future range between 95 – 105. If BOJ disappoints the trading range is expected to be 86 – 96. Euro/USD was in the short term  strengthened by a positive Spanish bond auction on Thursday. It  trades at 1.3010. Pound sterling and Australian dollar were yesterday’s winners. The Aussie added another 0,8 % after another  one percentage jump on good employment numbers on Wednesday.

 British pound surged yesterday as investors scrambled to cover short positions made on expectations of more quantitative easing by the Bank of England. The Bank’s Governor stated that GBP according to his opinion is properly valued and not seeking further depreciation.  GBP was helped by rumours that Qatar is planning to invest billions of GBP into British infrastructure projects. The GBP yesterday’s one % gain is the biggest seen in seven months.

 These short term gains are nevertheless not expected to  have any major medium or long term  impact.  The long medium and long term outlook point towards  a stronger USD both in relation to Euro, JPY, GBP and most other currencies. These forecasts for Euro/USD point to  a new test on former bottom levels 1.19 – 1.20. It is also predicted that GBP/USD can drop as low as 1.35.  The corridor range 95 – 105 is the most likely medium term scenario for USD/JPY.

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14 March 2013: Retail report boosts DOW to new high

Surprisingly strong retail sales helped the Dow Jones Industrial to rise for the ninth straight session in a stock rally not seen since 1996. The new record high posted for DOW is 14 455. Also Nasdaq edged higher to 3 245. Trading volume was light with investors consolidating positions after a strong run up in the three first months of the year. Sign of strength in the economy and the Federal Reserve’s (FED) monetary easing have accelerated the advance of US equities, but many investors are asking whether we are in for a technical correction. The retail sales report helped underscore the impression that the economy is gaining momentum.

Asian shares fell for the second day in row with regional factors outweighing the positive sentiments from another Wall Street record close. The MSCI-index for Asia-Pacific was down 0,6%. Australia plunged 1% in spite of positive employment numbers. The Australian dollar reacted positive to the employment news and hit a five-week high. The Japanese Nikkei bucked the negative trend and added 0,4%. Net inflows in Japanese mutual funds reached USD 11 billion in February. A domestic stock rally for the last four months have increased investor’s appetite for Japanese stocks.

Monetary policy direction remains diverse in Asia as countries also watch development in Chinese economy and North Korea closely. Japan wants powerful monetary easing to get out of a vicious deflation spiral harming its economy for two decades. Other central bankers are fearful of inflation. South Korea has been holding the interest rate steady at 2,75% for the last half year.

The Australian dollar jumped to USD 1,0383 after employment soared by 71 000 in February. JPY continues to gain strengthen against USD trading at 96,03 down from its 96,71 peak on Tuesday. Euro/JPY has also retreated from its record high on Tuesday. The brighter forecast for the US economy has negatively affected the Euro trading down to 1,2947. The yield on Italian short and long term bonds increased during yesterday’s auction, the first after the rating agency Fitch downgraded Italy’s credit rating in February. Investor’s attention will today turn to the Spanish bond auction.

Oil prices, gold and silver have dropped since yesterday. NYMEX crude trades at USD 92,28 a barrel. Brent crude is down to 108,40. Gold trades at USD 1586 an ounce.

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13 March 2013: Fear of triple dip recession puts GBP under pressure

Fears of a triple-dip recession put new downward pressure on British Sterling (GBP) yesterday. January data showed a surprise fall in British industrial output. This pushed GBP down to a low level of $1.482. USD/GBP has since recovered and trades 0,2% to 1.4933. The state of the British economy is highly questionable. Some analysts are waiting an even weaker British sterling, and expect to see that USD/GBP can fall as low as 1.35.

Asian shares fell on Wednesday as the recent stock rally run seems to run out of steam. The MSCI index for Asia-Pacific outside Japan fell 0,6%. Stocks in Australia, Hong Kong and mainland China also fell from 0,6 to 1%. The Dow Jones Industrial, however, posted a new record high rising for the eight straight day on Tuesday. European shares retreated just short of fresh 4-and-a-half year high. Some investors fear that stocks have risen, too, quickly without fundamental support. Investors might be more risk willing, but are still scared by past events as the financial crisis in 2008 where fingers were burnt.

USD/JPY which fell to a low of 96,71 yesterday, trades today at 95,87 reflecting fears that the yen has fallen, too, steeply. The Nikkei stock index retreated 0,5% on profit taking after the last days strong rally; boosting exporters taking advantage of a weaker yen.

Euro/USD is steady in the interval between 1,3030 and 1.3040. It was weighed down on Tuesday by a warning from the Chairman of the Bundesbank, Jens Weidmann, who is also on the board of ECB, the European Central Bank. Weidmann stated that euro crisis in no way is over. In other developments drought has put the New Zealand agricultural dependent currency under pressure.

NYMEX crude is up to USD 92,71 a barrel while Brent crude is weaker at 109,64. Gold, silver and copper are all up 0,2% clinging to gains earlier in the week. Gold trades at USD 1592.

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12 March 2013: Asian stocks higher on record Wall Street

Wall Street’s record close overnight bolstered most Asian shares on Tuesday. Growing confidence in the US economy underpinned investors risk appetite. The Japanese yen slipped to fresh lows on speculation over imminent monetary easing. USD/JPY stands at a new low of 96,51. JPY is losing ground also against Euro and Australian dollar. Euro/USD is trading at 1.3027.

The US stock indexes extended its winning streak to seven sessions and touched its highest intraday level since October 2007. Dow Jones closed at a record high 14 447. The MSCI-index for Asia-Pacific also continued up led by financials echoing US trading where finance were the best performing sector. Also Australia, Hong Kong and Shanghai were up as the Japanese Nikkei. The weaker yen is giving exporters a welcomed boost and Nikkei was up for the eight day in row.

The dollar index, DXY, has benefited from last week’s strong labor data, and continues to jump against the yen. Analysts stress that dollar/yen may take a pause in the second quarter when seasonal weaknesses typically slow US economic indicators. They see a possible USD/JPY downside on 92 yen to a dollar with strong technical support around the 90 level. For now the trend is clearly towards a continued weaker yen.

Euro/USD is steady at 1.3030 level. The Euro is under pressure from Italy’s inconclusive last month elections which are weighing in and delaying the country’s fiscal reform efforts. Gold has edged to 1583 marginally up from yesterday. In new York US crude, NYMEX, traded up 0,2% at USD 92,21 a barrel. Brent crude trades up from below 110 to USD 110,20 a barrel.

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11 March 2013: US-Dollar keeps the upper hand

The USD keeps the upper hand in the currencies markets and continue to gain both against a currency basket and major currencies as Euro, GBP and JPY. USD/JPY traded at 96,10 – a 3-and-a-half year high following surprisingly strong USD labor data on Friday. US employers added a more-than-expected 236 000 workers to their payrolls in February. The jobless rate fell to a four year low of 7,7%.

There is still a way to go before the unemployment numbers reach the 6,5% target set by the Federal Reserve (FED) and monetary easing is reconsidered. Before this target is obtained the US economy must produce more than 200 000 monthly jobs for the next three consecutive months. The strong February data has, however, created a momentum and new optimism that the US economy finally is turning and lying the financial crisis from the autumn 2008 behind.

Risk appetite was, however, curbed by a mixed bag of economic data from China painting a patchy recovery in the world’s second-largest economy. The data signaled a looming dilemma for policymakers, as inflation stood at a 10 month high in February. Factory output and consumer spending were weaker than forecast. The data caught commodity prices between growing optimism of increased consumption and a stronger dollar. Non-dollar holders are buying dollar-denominated commodities.

In Asia the MSCI-index for Asia-Pacific was up 0,1% while Shanghai fell 0,3%. The Dow Jones industrial average posted its fourth consecutive record high on Friday. European shares also jumped on the strong US labor data. The strength of the dollar is also a reflection of more fundamental money flows out of the yen and euro. These developments nudge the dollar higher. Currency speculators are boosting their bets in favor of USD and raised their short positions in most other currencies as yen, pound sterling GBP and Euro. Oil and precious metal prices keep steady.

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08 March 2013: USD/JPY rallies before US jobs

The dollar surged to its highest level against Japanese yen in 3-1/2-year before US job numbers for February are going to be presented later today. USD stands at 95,43 yen up 0,6% since yesterday. It is expected that that the US economy last month created net 160 000 new jobs. The unemployment rate still stands at 7,9% far from the 6,5% which the Federal Reserve (FED) has set as target for ending monetary easing.

Investors waiting for more dovish signals from the European Central Bank (ECB) at its press conference yesterday was disappointed. The single currency posted its biggest rally this year and jumped more than 100 points against the dollar and stands at 1.3092 after flirting with 1.29 figures earlier in the week. ECB President Mario Draghi plaid down the threat of contagion to other euro members following the Italian political stalemate. Draghi stressed growing market confidence in the Euro which had EURO bears quickly to cover short positions.

The Euro skyrocketed 2% to 124,57 against the JPY. It stood at 118,74 last week. The 34 month peak of 127,71 set last month is thereby brought back in play. The rally might, however, be short played with investor’s attention back on Chinese trade data and whether the US unemployment rate will stay at 7.9%.

Bank of England (BOE) kept its guns yesterday and held fire on the expected more economic stimulus. The downward pressure on British sterling (GBP) continues, however. USD/GBP trades again below 1.50 after seeing some recovery yesterday. There is no change in the choppy trading pattern in commodity related currencies. Oil prices are steady. Gold fell back from USD 1583 an ounce reached yesterday to 1567 this morning.

The stock rally in the United States continue. Dow Jones ended at record high for the third straight day boosted by expectations of a pick-up in the payrolls report. Growth oriented sectors led the gains with strong jumps in Bank of America (up 2,9%) and JP Morgan Chase (1,2%). Worries about the path of US fiscal policy and the Euro zone crisis loom, however, in the background. For the moment the Bulls are in advance.

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07 March 2013: GBP and Euro face strong pressure

A solid job report showing that US private employers added a larger-than-expected 198 000 jobs in February, gave the dollar a strong boost yesterday, trading at its highest level against a basket of currencies in 6-1/2 months. Both the Euro and Pound sterling (GBP)are under strong downward pressure. Euro/USD dipped below 1.30 and trades at 1.2990 prior to meeting in the ECB, European Central Bank, later today.  GBPUSD traded below the critical 1.50 level on rumours on monetary easing.

 While the job data fuelled hopes that the US economy is improving, the British pound fell to its lowest level in 2-1/2-year as market players positioned for more stimulus from the Bank of England (BOE). The strict austerity measures introduced by the British government over the last two years have  not been working,  and the UK economy is facing the threat of triple-dip recession. While BOE and other central banks are considering the same monetary easing policies as the US FED  has practised, US is debating whether to exit their bond buying program.

After the dollar index, DXY, hit, a bottom level of 78,918, in the beginning of February  it has rallied 4 % since. The stronger employment data along with better housing figures are likely to fuel speculation that FED  will end its bond buying program sooner than expected in spite of FED Chairman, Ben Bernanke’s strong statement to the contrary only weeks ago.

 Of the three major Western central banks;  ECB, BOE and FED,  BOE is the most likely to act in favour of more easing. Three of BOE’s members voted in favour of quantitative easing last month.  It is expected that a majority this week will opt for a moderate 25-billion-pound balance sheet expansion.  That would put sterling under further strong pressure.  ECB meets in Frankfurt today on the backdrop of a political deadlock in Italy and prospects for a further fall in the Euro. It is, however,  expected that ECB will keep its policies unchanged.

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06 March 2013: Increased risk appetite on Dow’s record-high

Asian shares extended gains on Wednesday following Wall Street’s record close. The Industrial average index, Dow Jones, ended at an all-time high as the pan-European Euro first 300 index closed at its highest level in 4-and-a-half year. The MSCI-index for Asia-Pacific added 0,9% while the Japanese Nikkei surged 1,3%. Copper, crude oil and commodity related currencies are all up. The USD DXY-index eased 0,2% against a basket of currencies.

The markets were spurred by fast February growth in the huge US services sector and bolstered by China’s announcement of record government spending in 2013. These factors boosted investors’ sentiment and hopes of economic growth and increased demand for gods. EURO, British sterling, GBP, and JPY which have been the big losers over the last weeks, have consolidated and gained some ground. Euro/USD trades at 1.3065. USD/JPY is at 93.22.

The strong rally in the stock markets is partially a product of the monetary easing policies conducted by the US Federal Reserve since last summer and followed intentionally and in practice by several other Western central banks. There have been a lot a spare capital on the side lines waiting to strike. Over the last weeks and months we have witnessed a recirculation of capital into the more risk prone equity market. The new records are a result of this recirculation. Major investors are gambling on a turnaround in the global economy and pushed their free cash into stocks in spite of the problems in the Eurozone and an overheated Chinese property market.

Oil prices are also up this morning. Venezuela’s President Hugo Chavez lost his two years long fight with cancer and passed away this morning 58 years old. Venezuela is one of the biggest oil producing countries in the world, and Chavez has led a policy where a substantial part of the country’s oil riches have been transferred to the poor and have-nots. Chavez has also been a guarantor for domestic political stability and encouraged other Latin American countries to follow his suit. It remains to be seen whether the power vacuum created by his death is filled in such a way that political unrest and renewed pressure on oil prices are avoided.

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05 March 2013: Wall Street higher in closing rally

In a late-day rally Wall Street pushed major stock indexes near all-time highs despite concerns about growth and China’s housing market. Any slowdown in China could affect US growth. Commodities and US-materials have a big exposure towards China. This goes especially for giants as Caterpillar and Alcoa which lost respectively 1,8% and 1,1% and were the big losers in yesterday’s trade.

Asian shares followed suit and rebounded strongly on Tuesday after a sharp sell-off triggered by slumping Chinese stocks the previous session. The MSCI-index for Asia-Pacific shares won back 1.1% of the 1.3% lost on Monday. In a prepared statement for the opening of China’s annual parliament meetings, outgoing Premier Wen Jiabao, stressed that China would boost fiscal spending in 2013 in a bid to deliver on the promised 7,5% economic growth for 2013.

This boosted the Australian stock market which rose 1,5% outperforming its Asian peers. Japan’s Nikkei stock average rose 0,8% to 53 month high. At least for now markets continue to be bullish in spite of spending cuts in the US, lack of any kind of political resolution in Italy and weaker data from China including an overheated property market. Markets are flush with capital due to monetary easing and continuous low interest rates. For the time being this seems to trump every other concern.

There are no big movements in the currencies. Euro/USD is steady on 1.3015. EU Finance Ministers met yesterday to discuss bail-out terms for Cyprus (see separate article). USD/JPY is at the same 93,50 levels as seen at the start of the week. British pound, GBP, has avoided to slump below 1.50 and trades above 1.51. Oil prices have recovered from yesterday’s low. New York crude, NYMEX, is above USD 90 a barrel. Brent crude trades at 110,25. Gold and silver are marginally higher than at the start of the week. Gold at USD 1580 an ounce.

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04 March 2013: Asia tumbles on China worry

 Asian  shares slipped on  Monday as China tightened its grip on the property sector. Beijing increased Friday  required down payments and loan rates for buyers for second homes in cities where prices have been quickly  increasing  in an effort to contain housing costs. This had immediately a negative effect on the Chinese markets and led to a tumble in Asia. The MSCI-index for ASIA-Pacific shares are 1,3 % down after Shanghai shares slipped 2,3 %.

 Slower growth in  Chinese increasingly important services sector had also an impact. The growth in this sector was slower than in five months, reinforcing the view that the Chinese recovery remains modest. The slower Chinese growth had an immediate effect on Australia where the AXJO index fell 1.2 %. Japan was the only positive spot.  The Nikkei 225rose 0,6 % as the sole gainer in the region. Export companies were boosted by a weaker yen and surprisingly strong US manufacturing and consumer sentiment.

 The new Governor of Bank of Japan (BOJ) stated that BOJ is ready to take whatever measures necessary to get Japan out of the vicious deflation circle. USD/JPY trades at 93,33. In spite of its budget problems USD is trading on a six months high against a basket of currencies. Currency speculators have over the last week increased their bets in favour of the US dollar.

 Evidence of Europe’s problem with Spain at risk needing a state bailout is weighing in on the Euro.  Data presented on Friday showed that Germany and Ireland are the only Euro zone members with factory output growth last month. Joblessness within the Euro zone rose to an all-time high. The Euro steadied at 1.3015 after slipping to a low of 1.2966 on Friday, the lowest level seen in 3 months.

 Concerns about the negative impact from the USA spending cuts also weighed in on US crude which is down to USD 90.59 a barrel. Brent is trading at 110,50. Gold and silver prices are hurt by the strong dollar.

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01 March 2013: Euro fall steadies in Asian trade

The Euro steadied in Asian trade Friday morning after steep losses yesterday and after notching its biggest monthly fall – 4% - against the dollar in nine months. This as investors digested slightly disappointing Chinese data, political uncertainty in Italy and impending US government spending cuts. These combined factors sapped investor’s risk appetite and put the Euro under increased pressure.

China’s official purchasing managers’ index for February showed manufacturing activity at its slowest pace in four months at 50.1 against the predicted consensus poll of 50,2 slightly lower than expected. The data is not dramatic. Risk-off sentiment doesn't usually help the Euro, but the Chinese data is not a major factor. The unclear situation in Italy is the basic worry. Euro/USD is trading at 1.3073 well above the 1.3018 hit earlier in the week. The European Central Bank (ECB) will consider interest rates today. A further cut will put the Euro under new pressure.

The Japanese yen was relatively steady against both Euro and USD. USD/JPY trades at 92.64. The yen which usually is regarded as a safe haven in times of heightened market stress, continue to under perform after Prime Minister Shinzo Abe nominated an advocate of aggressive growth and stimulus policy to head the Bank of Japan.

The big worry in global markets is nevertheless how the sweeping US budget cuts worth USD 85 billion starting from this month, will hit growth in the world’s biggest and the global economy. The International Monetary Fund (IMF) has warned that the cuts would hit US biggest trading partners especially hard. In Washington the blame game between Republicans and Democrats are in full swing with both parties accusing each other for failure to prevent the fiscal crisis.

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