Thursday, March 28, 2013

Slovenia next after Cyprus

Our CMO as well as my Chief of Security and I are headed out for a lunch meeting as Cypriot banks reopen for business after being shut since March 16th. They Cypriot equity market remains closed until next Tuesday. It is the last trading day of the first-quarter of 2013 and there has been no bank run as we saw with Northern Rock. Private depositors are allowed to withdraw €300 per day, while businesses have a set daily limit of €5,000.

The capital controls give the Eurozone a taste of what day-to-day business is like in third-world countries except for the U.S. The Finance Ministry stated that the controls will remain in place for seven days, but we expect the decision to be made on a week-by-week basis. Politicians claim the limits will be lifted as soon as practical, while there is believe it will not take place until more stability will become evident in Cyprus.

Foreign investors have ordered managers to pull out of Cyprus, and we have done the same with our funds as we plan to abandon the country, at least for now. They Cyprus Central Bank said it would evaluate requests above €200,000 on a case by case base and we will have to be a bit patient as a substantial amount of the €68 Billion in deposits will head for the exits. There have been reports that some of the cash has been moved while banks were closed and the Cypriot government plans to launch an investigation into those cases.

Germany (Germany, Enemy Number One) wanted to punish Russian oligarchs and were idiotic enough to think they have succeeded. In reality they have given them the heart of Cyprus for free as the money the Germans will steal from Russia and other foreign depositors will be replaced by shares in those banks. Germany has started World War I and lost, they have started World War II and they have lost and now they have started another attempt to create a German Europe and will horribly fail as they have done throughout history.

We arrive at Pulcinella and order our food. I really love this restaurant and enjoy the ambient. We have put the Cyprus situation on the back burner for now as we have to focus on our new, but well-established enemy. Germany has already identified its next target, its next country to invade; Slovenia.

Slovenia has been on the radar, off the radar and did drown in the news flow as Spain and even Italy emerged as the next target for the German occupation. The reason for this was due to the believe that Slovenia could manage to come up with the €4 Billion they require, but since the massacre in Cyprus Slovenia has emerged as the next target as the Alpine nation struggles with its finances.

Newly elected Prime Minister Alenka Bratusek tried to calm fears in her first public speech and vowed to reinstate confidence in Slovenia as she called comparisons to Cyprus unjust. Germany has already invaded and occupied Greece, Portugal and Cyprus while Spain has managed to limit the impact and Ireland has fought back. Slovenia will be the sixth target of German tyranny.

The €4 Billion Slovenia needs are comprised of €3 Billion in borrowing needs the country requires in order to manage this fiscal year plus the €1 Billion in fresh capital required by Slovenian banks. The costs of the bailout are not yet clear and Germany has already started to deploy the financial artillery set on Ljubljana. Slovenia was plagued by two recessions in four years and its state finances are in a terrible mess. Slovenian banks saw bad loans surge as the countries construction industry has collapsed.

Borrowing costs for Slovenia has surged by over 100 basis points and the Finance Ministry said that Slovenia plans to tap the bond market which may prove more optimistic as well difficult as politicians want to acknowledge. Slovenia has not accessed the bond market since October when it sold $2.25 Billion in bonds. It is clear that Slovenia does not possess the luxury of time and Germany has already started to execute their marching orders.

The creation of the $100 Billion currency fund by BRICS (BRICSCollaboration and Currency Markets) is one tool against German oppressors, but we need to deploy our weapons and shield Slovenia from the German invaders while we need to create a combat plan in order to force Berlin to its knees long-term.


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