Is Our Money Safe?

The answer all depends on how much money you have, where you have it invested, and how aware you are of the various and diverse challenges which can devalue your money other than straight confiscation. The Cyprus bank debacle introduced the world to the unthinkable, the bald-faced theft of people’s and business’s monies from their bank accounts. The current story on the great Cypriot bank robbery is that the European Union (EU) and the International Monetary Fund (IMF) have agreed to take as much as half of the money in any account above the guaranteed insured deposit amount of one-hundred-thousand Euros. This larceny has redefined the presumed safety of our bank accounts if we have over the government guaranteed deposit insurance amount which is dependent upon the country that has jurisdiction over your bank. The next obvious question is what would happen if the government reached a deal with the IMF in order to receive a bailout and changed the amount they guarantee after they had frozen all accounts, as was done in Cyprus, and instead of guaranteeing $250,000.00, as the FDIC does in the United States, and lowered it to a mere $50,000.00 allowing the world banking powers of the IMF to take even a larger amount of money? The answer is there is nothing which would prevent such a move. So, this makes every penny you have in even a presumably guaranteed deposit of a bank or other financial institution could be adjusted overnight while also denying you access to your account in order to take your money out and keep it safe.

But there are far more devious ways that governments and world organizations can steal your money. What we have to remember is our money is all relative and only worth what the world market allows it to be worth. The usual worth of any particular monetary unit be it Dollars, Euros, Shekels, Rubles or Yen is how it measures with all of the other currencies. This can often be figured by comparing the worth of an ounce of gold in two currencies and figuring out the ratio will give you their relative worth. The current system recognized in much of the world is every currency is weighed against the Dollar as the United States currency is taking its turn as the standard reserve currency. In previous periods the standard reserve currency has been the English Pound Sterling, the Spanish Dollar, and in ancient times it was the coinage of the preeminent empire be it Rome, Greek, Persia, Babylonia, or Egypt. At some times in history salt was used as currency and in the earliest of times there was straight barter which made trade difficult which is what led to making forms of currencies. Gold has been a standard which has withstood the test of time and will likely be recognized along with silver and other precious and semi-precious metals for the foreseeable future. For much of history most countries held their currency value against a set amount of Gold which was presumed to be the amount of Gold and other precious metals in their vaults, in the United States the vault was presumed to be at Ft. Knox. Currently currencies are all relative in value and are no longer pegged to Gold or other forms of set and measurable value. This is what is implied by guaranteeing a currency like the Dollar is backed by the full faith and credit of the United States, whatever that actually means.

One manner in which our monies become devalued is inflation. We all have probably seen the effects of inflation most evident when doing the weekly food shopping. Over time the price of the grocery bill rises despite the fact that we are eating the same amount of food. The prices have gone up because the money we are paying with has less buying power. When inflation gets out of control it can become something called hyper-inflation where the amount of food or other items you can buy with a set amount of money changes weekly if not daily and in the most egregious cases, hourly. When the hyper-inflation was at its worst in Zimbabwe employers would pay their employees daily at lunch time for the whole day and allow them to shop for food and then return to work as if they waited until the end of the day to shop the prices would have gone even higher than they had been at lunch time. The rise of the Nazis before World War II was facilitated by hyper-inflation which befell the German economy after World War I during the Weimar Republic.

But there are policies which governments can willingly pursue which will cause inflationary practices and devalue the people’s monies eventually making saving money counter-productive which only serves to exacerbate the problems as a certain amount of savings are necessary for investment to be possible. The most obvious of these policies is when government introduces additional monies into distribution. This can be accomplished in numerous ways. Government can print more money which will devalue the currency in a direct amount equal to the percentage of the newly printed monies to the previous total amount in circulation. Government can run deficit spending actually borrowing through selling bonds to a foreign or private interest that purchases these bonds as an investment. This is another way that the government has invented more money into the money supply though it has less of an effect as the bonds accrue value over time which spreads the effect out over time. The final path to devaluing a currency is to have the government monetize their deficit spending which means that they simply spend money without taking any money from accounts and without actually selling assets or bonds to outside entities. This can be accomplished by the government or semi-governmental institution buying bonds in order to literally invent new money. This acts exactly the same way as printing more money and placing it in circulation. This is a dangerous risk to run as the effects can easily run out of control which can lead to a period of hyper-inflation and cause the currency to crash in value compared to the rest of the world currencies. This makes import of goods prohibitively expensive and weakens the country’s place in the world directly proportional to the devalued worth of their currency.

With the economic crisis befalling countries in Europe spreading slowly across most of the Euro Zone nations and the repeated crises addressed by the United States Congress recently are signs that both the Dollar and the Euro are in trouble and difficult decisions are going to have to be made going forward. There have been rumors and mention that similar actions to those utilized to bailout Cyprus may be taken in the future in order to stabilize other countries within the Euro Zone such as Spain, Italy, Greece and possibly France. Should this theft become accepted practice, the world can expect banks to become more frail and subject to failure as the people take their monies out of banking institutions and put them elsewhere to keep them safe possibly including their mattresses. Though it has not been mentioned as an alternative approach that may be used in the United States, it does not mean that there are not people in positions of power considering a similar theft of American’s bank accounts. This theft in Cyprus may have a ripple effect far wider and more severe than anybody may have calculated. One can only hope that the potential reaction to this bold sacrifice of trust in the financial system was not something the powers who executed this potential disaster were counting on in order to facilitate some even more draconian and sinister act in the near future. This has the stench of a strong poke at the people with the intent to threaten the sensitive trust upon which our banks and financial institutions use as their foundation. That begs the question of what is the goal that these actions are aiming to attain and what is the desired result. Danger abounds and Europe is under financial attack while the Middle East and North Africa are being politically targeted and governances completely transformed. Perhaps this is simply coincidence but what if it is intentional and there exists some devious change being formulated and thrush upon the peoples of the world?

Beyond the Cusp

A Few Facts Tying Syria to American Change in the Middle East and the World

The efforts originated in Iraq where the idea was to replace an evil dictator and inject democracy and free the people allowing them to live as they chose. That was supposed to be relatively fast and painless transition. Something went terribly wrong as it turned out the United States leadership did not understand some basic premises about the Middle East. The problem that plagued the efforts of the United States in Iraq were a direct result of European decisions made facilitating their rapid exit from the ever growing expense of holding on to colonies especially in the Middle East, Africa, and Asia. The mistake was countries were formed with the advice from those who were to be placed in power when the Europeans departed and these new leaders each desired to assure they would rule over those who were historically their enemies. This led to borders including different sects, tribes, families and former national interests within each new nation with Europe choosing the rulers who would end up holding power through subjugation often of ancient enemies. This led to growing mistrust of Europeans and constant strife. Iraq was formed containing three distinct groups within its borders; the Sunni, the Shia, and the Kurds; along with a few smaller groups such as Christians and Jews. When the United States was presumably liberating Iraq it was also setting the tables for retributions of past injustices and ended up facing the dilemma of trying to make sense and peace of the mess which the Europeans had sewn when they hastily departed.

The exact same miscalculation was made by the same people who misjudged the situation and challenges of Iraq when dealing with the Palestinian autonomy when they decided to meddle in the Palestinian elections. Never mind that Mahmoud Abbas pleaded with President Bush and his point person, Secretary of State Condoleezza Rice, not to include the Hamas terror group in the election process as they would easily defeat any challengers. Never mind that the Israeli leadership unanimously agreed with Mahmoud Abbas and his warning about the imprudence of including the Hamas terror group in the election. Surprisingly, at least if you read the reports in the United States, Hamas won a significant majority of the legislative seats in the newly elected Palestinian Parliament. This caused the situation which exists today where the Palestinian Authority holds on to power in Judea and Samaria, aka West Bank, while Hamas took over the Gaza Strip in a quick and violent coup. Mahmoud Abbas, in order to retain any semblance of power, decided to cancel the elections for President of the Palestinian Authority as it was obvious that Hamas would easily win such an election. The two separate leaders of the Palestinian people, Abbas representing a nationalist influence and Hamas representing a theocratic influence, have been in opposition with every attempt to cobble together a ruling coalition agreement eventually collapsing as the two views do not mesh well.

So, was there any hope once the power in the United States changed and the new President, Barack Obama, came in promising a new vision to repair all the previous problems and to change the face that the United States showed the world? In his first term the new American President has most definitely charged through the Middle East and changed the face of the United States and done even more transformational face-work on the Middle East. Where there had been at least the semblance of cooperation forged in Iraq, the precipitous removal of the influence by the United States has allowed a regression in Iraq where the old Sunni-Shia animosities are running rampant and the Kurds have formed their own virtual state in the north severing most of their ties and concerns from the government in Baghdad. The picture in Afghanistan is not much prettier as the United States had begun secretive negotiations with what were termed the better interests of the Taliban. The government of Hamid Karzai was forced to attempt to forge his own agreement with those Taliban who might have been more friendly with his government and not completely defiant. The result has been the Taliban retreating from both negotiations and simply deciding to outwait the United States who has promised to completely leave Afghanistan when they can simply sweep into power either through election or other means. Meanwhile, for some unperceivable reason, sarcasm intended, the Afghans have steadily grown less and less friendly with their American counterparts and many feel betrayed while others prepare to return to their separate factions and Afghanistan is likely to return to the same problems that have plagued the remote lands since before Alexander the Great attempted to force some sense of order by marrying off daughters of his generals to the tribal leaders in order to allow Greek influence to be maintained. There are likely a number of general’s daughters in the United States who are very happy that the United States would never try the same approach.

The next grand step was the great speech of Cairo where the nascent President of the United States, Barack Obama, apologized for the sins of the United States and promised to stand with those who would choose to forge a new and people-empowering future throughout the Middle East. Egyptian President Mubarak pleaded with the American President not to make the speech and implored that he at least not invite the Muslim Brotherhood, a banned group in Egypt since the rule of Gamal Abdel Nasser. Needless to say, the President of the United States insisted that he knew best and was fully aware of what he was doing and that the President of Egypt should calm down and everything would be perfectly wonderful. Within a short period the world began to witness the changes which were birthed that day in Cairo with the rise of the Muslim Brotherhood throughout the Middle East much as Hamas rose to power after the previous Administration had meddled against the strident warnings of those who live in the Middle East. Since then we have witnessed the spread of Middle East democracy through North Africa and now into the heart of the Middle East. As the initial birth pains of democracy have spread around the Middle East it has spawned the birth of new governance which has meant the Muslim Brotherhood just as Egyptian now former President Mubarak has predicted. What has become evident is that there was a difference between the rise of Hamas through George Bush and his Administration’s miscalculations and President Obama and his Administration’s intentional empowerment of the Muslim Brotherhood. The rise of Hamas was not the intended result that the Bush Administration sought but it appears that the Obama Administration knew full well that their efforts would result in the empowerment of the Muslim Brotherhood. That leaves the world with a simple question; will the Muslim Brotherhood allow further free elections or will their rise to power result in simply the replacement of nationalist dictatorial rule with theocratic rule.

After the change in power in Tunisia and Egypt the wave hit a couple of snags in Libya and Syria where the removal of their dictators was not smoothly attained through a couple months of demonstrations as had been the case in Tunisia and Egypt; the changes in these countries took full blown civil wars. This also attracted al-Qaeda and other terror interests to join in the change of power and has spawned what one hopes was an unintended consequence, the arming of terror entities by the efforts of the Europeans and the United States. This has been most evident each time the Egyptians have prevented shipments of arms from Libya terror influences heading to Hamas in Gaza. There has been far less success in preventing the weapons injected into Libya from reaching their counterparts in Syria most often through Turkey. Recently the flow of weapons into the Syrian rebels has shown a marked increase and reports have mentioned that the logistics are being aided by the United States Central Intelligence Agency. The reports have also noted one troubling side effect; the arms are not necessarily ending up in the hands of the secular rebel forces and are instead being used to arm the Islamist rebel forces. This begs another question; is the arming of the Islamist rebel forces an oversight or intentional? It actually should not be all that surprising if this is a result of planned program instituted by the Arabist Islamic influences in the United States State Department and Muslim Brotherhood influences throughout various elements in the United States government.

This then may continue to play out much like the falling of dominoes across the Middle East with these same arms being transferred from one targeted country to the next. The current number one candidate for next is very likely Jordan. There will be no ability to prevent arms and Islamist influences from entering Jordan from the north once Syria has fallen, providing such is as inevitable as has been advertised. Where the transformation of the Middle East will finally run out of steam is anybody’s guess. The question which needs to be answered is whether the transformation of the Middle East and the empowerment of the Muslim Brotherhood will end in the Middle East or spread into Europe starting in the Balkans and Greek Islands. The other question is which influence will prove to be foremost in the Middle East, the Shia centered in Iran or the Muslim Brotherhood mostly in Egypt. Before anybody jumps to a decision, it might be best to reveal who is sided with each side. In the Iranian corner we have the Russians and Chinese while in the Muslim Brotherhood corner we have the United States and the NATO allies in Europe. This brings up another item of recent interest, Cyprus.

The bailout which has been implemented in Cyprus is tantamount to a declaration of financial war between the West and the Russians. The naked aggressive theft of as much as twenty-five-percent from deposits over one-hundred-thousand Euros from the Cypriot banks is a financial assault on the Russian interests who have deposited large quantities of presumably laundered monies with these banks. Whoever thought that was a good idea must have a large vacuous space between their ears. This move will not go unpunished and will possibly lead to a financial war between the Western nations and the Russian alliance of interests. The ramifications from this financial assault will be interesting to watch over the coming months. Also, is gifting Greece with ownership of some of the Cypriot banks really prudent seeing as Greece is not exactly the rock of economic strength. This appears to be a case of the blind leading the blind but it is a case of birds of a feather being flown into ruin together. Next we get to wonder how long before the Euro zone starts to collapse and throw out the weaker nations until only a select few remain and the European Union slowly sinks beyond the horizon and into history. Are we having fun yet?

Beyond the Cusp

The Real Reasons Behind the Cypress Problems

The current crisis of the moment is what to do and how to rescue the Cypriot banking system which is carrying an unsecured debt load of between seventy-five and one-hundred thousand Euros. This is approximately the amount of new debt added each month to the United States total debt due to excess spending which pretty much puts the Cypriot bank debt in perspective. The European Union has much deeper financial crises than the Cyprus situation which include but are not limited to Greece, Spain, Portugal, Italy and even possibly France. What makes the Cyprus problem seem even less of a potential catastrophic disaster is that much of the Cypriot banks difficulties are derived directly from the financial crises in Greece as the Cypriot banks purchased significant amounts of Greek bonds and notes which are now greatly devalued as Greece collapses. Should the European Union find some path to resolving the Greek debt and financial crises, then such a problem, if it paid off Greece’s creditors, would go a long way to alleviating the Cypriot bank debt situation. So, if the Cyprus situation is not quite as dire as it is being made out to be, then why are the Cypriot banks and thus the country and people of Cyprus being subjected to such a severe crisis situation? What exactly is behind all this hyperventilating causing tremors to ripple through the financial world?

The first item that comes to mind is that Cyprus recently became a partner sharing some of the substantial oil and gas finds under the Mediterranean Sea sharing this coming boon with Israel as these fields are drilled and come on-line. What is at play here is partly an attempt to force Cyprus to place their shares in the oil fields up for bids so that all of the European Union can share equally in the benefits and cheap energy which these finds promise. The European Union partners of Cyprus simply wish to play a share the wealth card forcing Cyprus to share its coming wealth with all of the European Union and not simply keep the profits and energy gains to itself. After all, is this not what socialist governance is all about, taking from those who have and giving to those who need so that nobody makes any gains but rather share the wealth, or in this case, share the energy. This is simply a ploy to alleviate Cyprus from the responsibility for selling their energy finds and instead will allow for all of the nations in the European Union to the responsibility for distributing this energy thus making them all equal partners in the Cypriot energy boon which is on the horizon.

Another side of the Cyprus dilemma comes from the well backed rumors that the Cypriot banks had been utilized by numerous Russian oligarchs to launder their ill-gotten gains and that many of these Russians very well might have left serious amounts of wealth in Cypriot banks. These monies may very well have been the main target of the attempted wealth surcharge on the accounts held in the Cypriot banks. Does it not seem to stretch credulity to solve the problem of the Cyprus banks being insolvent by taxing the monies they hold in accounts? If the Cypriot banks have sufficient cash on hand in accounts to cover the required shared burden to facilitate their bailout by taking up to ten percent, then shouldn’t they also have sufficient funds to be solvent? This has all the evidence of a forced run on the Cypriot banks by the European Union in order to leverage influence over Cypriot financial affairs and making a stab to get at a percentage of the Russian monies which are suspected of being on deposit in the very same Cypriot banks that are insolvent. This would also explain why Russia jumped in so fast to offer to also bail out the Cypriot banks. Perhaps the Russians have something in these banks in Cyprus which they prefer does not become under public scrutiny.

Then there is the one entity which made their bid to bail out the Cypriot banking system may have validated both of the above theories of what is occurring with what hints at being a manufactured problem. The giant Russian energy company Gazprom jumped up noticeably quickly offering to bail out the Cypriot banks in exchange for a percentage of the oil fields resources recently found in Cypriot and Israeli waters in the Mediterranean Sea. Having Gazprom receive rights to segments of the Cypriot energy finds would serve both dilemmas detailed above, the Russian laundered funds in Cypriot banks could remain conveniently unrevealed and the Russian energy sector would be granted rights to oil and gas reserves recently found within Cypriot waters. Sometimes one singular event from within an entire plethora of events addressing a situation by itself defines the whole of the reality driving the events and in this case Gazprom definitely appears to be such an answering event. Hopefully, for Cyprus and its people’s sake one would hope that they find some path to resolve the demands now being foist upon them that allows Cyprus to retain their natural resources and also does not set a precedent of stealing funds from the accounts in banks, especially accounts of individual people. This situation should be treated as a learning experience by all the people in Europe, the United States and the rest of the industrialized world as it may be the precursor of things to come. After all, the Cypriot predicament threatening the people, their bank accounts, and the natural reserves of Cyprus is over less than one-hundred-billion Euros, a paltry sum when considered against the debts of many other European Union countries and definitely a miniscule sum when compared to the debts and unfunded liabilities threatening to choke the economic life of the United States. If this is the fuss over this relatively minute amount of debt, imagine the imbroglio which will result when some of these other indebted countries are called upon to settle their, by comparison, enormous indebtedness.

Beyond the Cusp