Pre 8 a.m. comments

Good morning! Radio 4 is reporting that a bail-out deal has been agreed for Cyprus, which involves large bank accounts being raided by up to 40%. Well that's going to do wonders for confidence in the banking system isn't it?! Apparently accounts under E100k will not now be hit, but surely the damage has been done, in that they originally intended to hit those accounts too. It's like a burglar telling you that they intended burgling your house, but changed their mind at the last minute! You wouldn't sleep soundly at night, you would redouble your efforts to protect yourself & your assets.

The only rational course of action now is for anyone with liquid assets anywhere in Southern Europe is to get them the hell out! So there must surely already be a massive capital flight going on, or maybe the money is long gone anyway? It strikes me that the end game for the Euro is capital controls being imposed in all the weaker Euro countries, and of course by imposing capital controls, they will effectively be creating new currencies - Cyrprus Euros, Greek Euros, Spanish Euros, etc, which are no longer convertible at par. Instead the free market will determine what the exchange rate is. People who left money in the weaker countries will be the losers as they devalue, and as usual Germany will be the winner. They may have lost the war, but they are sure winning the peace.

The sooner the Euro, and the EU, are consigned the dustbin of history, the better, in my opinion. Both fit into the category of "seemed like a good idea at the time", but have just been poorly executed. Eurozone crisis after crisis has meant that the whole continent has failed to recover economically from the 2008 financial meltdown, when we should have been in a robust recovery by now if imbalances had been resolved through exchange rate adjustments. After funding unimaginably vast bail outs previously, the refusal to pump another E6bn into Cyprus on reasonable terms might turn out to be the straw that broke the camel's back?

 

I have been watching the drama at Cupid (LON:CUP) with interest. A ferocious attack by bears saw the share price collapse further on Friday, down by more than half, closing at 49p, on continued allegations against…

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