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Forget Cyprus... These could be the next "dominoes" to fall in Europe
User ID: 24118278
04/10/2013 08:12 PM
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If things fail from the periphery to the core, perhaps dominoes fall that way, too.
Wondering which dominoes are next to fall in Europe? Correspondent David P. provides a list based on a simple but powerful precept: follow the smart money.
In this case, the smart money enters the at-risk banking sector of a particular nation to skim the fat premium offered by its higher interest rates – rates that reflected the higher risk.
The smart money then exits the nation's banking sector before the inevitable solvency crisis triggers capital controls and depositor expropriations (the comically misleading "bail-in").
... As we saw in The Real Cyprus Template (the one you're not supposed to notice), once the smart money exits the at-risk banking sector, it is allowed to fall. This suggests that one way to identify which dominoes are likely to fall next is to look at the smart money's deposits in each nation's banks.
If the smart money has pulled most of its capital out, ECB and Eurozone authorities have a diminishing stake in propping up the domino. As a result, its fall becomes increasingly likely...
[link to charleshughsmith.blogspot.com]