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Monday 27 March 2023

Do not do it like Cyprus..


It is that period of the financial circle.. Again..

History repeats itself, first as tragedy, then as farce.

When you investigate a pattern and you see it happening again, 10 years later, it is more than frightening..

This month is full of memories. Bad memories.. Scary memories..

Ten years ago, the Cyprus citizens lost their access to their savings.

It was Saturday morning. 

I was going to shop and I decided to withdraw some cash.

The ATM rejected the transaction but I knew I had money in my account so I tried once again.

The transaction was rejected again !

In the area, I could see a few more ATMs. People tried to withdraw money. With no success of course..

Then my phone rang. We had an emergency meeting at the Cyprus Green Party.

The country was bankrupt and they needed all possible suggestions.

I was a member of the Cyprus Green Party, that time.

I was actually a Member of the Finance Committee.

We have been informed of this possibility since 2012.

We spent that weekend on models. We spent the next weekend on new models.

I still keep all those documents.

Hundreds of pages.

Central bank documents. Parliament documents. Banking documents. Emails. Thoughts.

Every March I have the habit of reading them. Again, again and again.

What went wrong ?

The Central bank was asking for explanations. 

The Bank Governor was not part of the oligarch system that was developed.

He even ignored crucial issues of what was happening before he was appointed.

Based on the evidence, the crime was well hidden for a couple of years.

They pretended that there was nothing wrong.

There was too much wrongdoing but who cares..

The oligarch system was protected by design.

Unofficially, it was always obvious, we all expected “IT” to happen..

“IT” refers to Hyman Minsky..

He published a few very interesting books that most people would never read or understand..

I first heard of Minsky during 2013 and I got lucky to buy his books regarding Ponzi financing.

Till 2013 I was having experiences from Ponzi practices through the stock exchange.

You don’t have to call it a Ponzi scheme.

It may not be a Ponzi scheme but it is something similar..

It's a Ponzi pattern or a Ponzi behaviour.

Based on history, Ponzi finance, Ponzi patterns and Ponzi schemes are well known throughout the centuries.

You just need to have a look at Charles Dickens reading “Little Dorrit”.

Whoever invested at the “Miracle Bank” went poor.

The Bank made just one miracle, making the depositors poor ! 

Silicon Valley Bank ceased operations this month.

The next discussion was for Signature Bank.

Then it was Credit Suisse.

Now we have rumours for Deutsche Bank.

The mistakes, the possible crimes, any wrongdoing will take time to be revealed..

Exactly 10 years earlier Cyprus faced the perfect storm.

Somebody removed the money from the system.

It was expected as another Minsky moment.

Funny thing, politicians tried to avoid it.

The people who stole the funds expected to be rescued by the people that were warned !

Cyprus was and still is a perfect ponzi pattern example. Even today !

The money we saved to the social security fund, were instantly supporting the public sector expenses.

That was how they got their salary, their pensions, their benefits.

This is exactly how they still get paid.

Our savings are their salary. 

Lessons gained from training ourselves. Whoever wants to save themselves they leave Cyprus.

Because the pattern will be repeated. Sooner or later..

Bank of Cyprus and Marfin Laiki bank made huge investments in Ukraine and Russia.

As the investments were devalued, they needed new funds.

Until investors’ money was not enough to support their plan..

Lehman memories, Barings Memories Ponzing memories..

15 September 2008.

It was not a huge shock !

Based on my experiences from the Stock Exchange, the behaviour was expected.

I already noted similar patterns both in Cyprus and Greece stock exchange but nothing similar in a worldwide size..

26 February 1995. The Barings issue.

That time, for me, it was clear curiocity.

I never expected to read that a bank collapsed and sold for a pound!

How can it be true?

You just dig. You make assumptions. Then you find the evidence.

The first mistake, in the case of Cyprus, was actually a legalised crime.

The Social Security funds were never invested, they were continually devaluated..

The Social Security funds were(  and still are..)  transferred to the government’s expenditure.

The time we needed funds, we realised that we needed to beg from abroad.

Because of the robbery..

The second mistake was the design of the next day.

Laiki closed and the good part was transferred to the Bank of Cyprus.

I noticed the mistake a few months earlier.

You need to make smaller pieces and let capitalism do the rest.

If not, you increase the instability of the project and in addition you send too many people to the unemployment service.

Why not keep good assets separate and seek for a serious investor.

I still remember that HSBC was one of them.

The third mistake that was repeated this month.

Good assets were all transferred to the Bank of Cyprus, increasing the instability of another institution that sooner or later will ask for recapitalization..

The Swiss government followed the same pattern this month  !

Not pleasant to realise that the mistake is repeated..

A too big to fail model could be soon too big to be saved..

Based on evidence, the design failed 10 years before.

It was a waste of time. It was a waste of money.

Because of the wrong solution, soon we demolished the Co-Op, the healthier part of our financial system.

A few more billions of public money, wasted.. Another crime !

When you see the pattern you really don’t want to be there..

When you observe this behaviour, you need to design your own solution.

It is that period of the financial circle.. Again..

This time, I am far away.

This reading is a reminder not to do it like Cyprus..

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