Target Luxembourg

It will first start as trickle, and then it will grow to the size of a brook, then as other brooks join it will grow to the size of a creek, and then as other creek join it then a small river, and as the small rivers join together a large continent draining river.

The trickles are just starting in Luxembourg, a country known for it’s banking, but not much else.  Luxembourg is a country with banks deposits in significant excess of its gross domestic product, just like Cyprus.  But just like Cyprus, Luxembourg cannot print enough physical currency to cover the entire electronic Euro currently held/deposited within the various disk drives of its banks.

Cyprus banks had deposits greater 10.8 times the GDP of the country.  Luxembourg banks according to IMF in 2011 held deposits greater than 20 times the countries GDP.  I suspect that deposit growth has been greater than Luxembourg GDP growth, meaning that deposit to GDP is even greater today.  If you think Cyprus is bad, just wait.  The “ChubbChubbs” are coming.  It will sweep over the continent, each of the weak sisters being picked off one by one, as they succumb to monetary forces at work.

It was a good wave to ride while it lasted by the shore is close at hand the wave is starting to break lose form, it is really had to keep on your board in the spray and foam of a crashing wave.  The smart surfers would have already pitched out, looking for the next wave.

So the really smart money is starting to slowly move those electronic Euro’s out of Luxembourg.  I suspect a significant percentage of those electronic Euros’ that are being moved are also being converted to electronic Dollars.  Given that of all the various world currencies that are convertible and not illiquid, and that have enough GDP to cover deposits being held within the confines of their banking system, the United States is it.  At this time the exchange rate is rather favorable for jumping out of the Euro, not as good as it was a few weeks ago, but it is only going to get worse in the coming months.

Some of electronic Euro’s are staying in Europe.  These electronic Euro’s are just going to other location in Europe, which for the moment appear to be safer.  The reason for this is that individuals and companies need to cover operating expenses within Europe.  But where to put those funds is the solvency question?  As I look upon the GDP landscape the only European country with enough GDP to cover this flood of electronic Euro’s is Germany.

Another possible location is Switzerland, but even the Swiss have limits how many Euro’s they are willing to accept at the current exchange rates.  A big large flow of Euro will destabilize their currency something the Swiss National Bank is battling everyday, but even their reserves are limited.

As stated in the CNBC article "The Insanity of the Cyprus Crisis".  The ECB is not the FED.  The ECB on its own has no ability to print money to rescue failing banks.  The ability to print money falls to the various member National Country Banks that are members of the ECB who issue money in the name of the ECB.  The ECB is responsible for just 8 percent of the notes issued the various National Country Banks.  The National Country Banks are responsible for the remaining 92 percent, and the bad news it that their responsibility is limited to only those notes that they physically issued.  The majority of the printing of Bank notes his handled by each member country.  There is a country code printed on each note.  For those who are interested “G” is the code for Cyprus.

The European Banking Authority, which has some limit responsibility in regulation bank the majority of the authority rest with the respective nations and their respective agencies, does not have the authority to borrow money (issue bonds) to rescue these failed banks, since it does not have any taxing capacity to back up any bonds.

What individual/corporation would put their electronic Euro’s in Italian Banks, Spanish Banks, Portuguese Bank, French Bank, Belgium Bank, or Dutch Bank?  If I were a citizen of any one of the afore mentioned countries, I would be giving serious consideration to a minimum the amount of funds held in a bank.

The next question is when is a Euro note not a Euro note.  Some would say that it is any such note with a Country Code of “G”, after all 92 percent of that note is backed by the full faith and credit of the Government of Cyprus.

We have gone from “one for all and all for one”, to “one for some of us and some for some of us”, the finally step will be “one for me and nothing for the rest”.  It will be a very interesting summer, as another one bites the dust.

Something Different

I had the unexpected Honor and the Privilege rendering honors to those who as Abraham Lincoln had so eloquently said in the Gettysburg Address “they gave the last full measure of devotion”

My family and I travel to Bastogne to visit parts of this very large battlefield.  On the way home we stopped at the Luxembourg American Cemetery, located in Hamm, Luxembourg.  The remains of 5000 plus American are interred along with markers for 371 missing in action and 101 unknowns.  Among the dead are 22 sets of brothers who died in the Battle of the Bulge.

We have made it a family mission to visit as many of the American Cemeteries in Europe as possible while we are deployed in Europe.  The first thing that hits you is the sight of the number of white stones crosses that spread out before you, it is sobering.  I get this feeling/sensation at everyone of the military cemeteries that I have had the honor and privilege of visiting, some more so than others, but there is always a feeling that some part of their spirit is there.

My son has asked why do we come here?  I tell that we are there to honor these men and women.  That we are there as proxies for their loved ones who are unable to come and remember them.  I ask him to just pick one headstone and remember that individuals name so that for now this individual will not be lost to time.  I suspect that he is sure that from time to time that I have lost my mind.

As we were walk through the site, I noticed that one of the cemetery’s staff member had taken down the Stars and Stripes by herself, and I asked if she would like some help with folding the Flag, she responded in the affirmative.

It has been at least 30 years since I was on a color guard detail, but it is a very funny feeling that after all of the years, the hours of drills came back, a little rusty, but the knowledge was there.  My two task masters; Sargent Major Stewart and Master Sargent Howard were very possibly looking down at me with a smile.  It was these two departed gentlemen who had significant parts in my journey from childhood to adulthood.

It was not until almost the end of folding the Flag that I looked into the eyes of the staff member, and the way that she was looking at me that caused me to start to lose my composure.  It was a look that was a cross between wonder, compassion, pride and joy; it was then that the magnitude of what I just done and who was watching hit me.

I never thought in my life that this simple act of folding the Stars and Stripes would have this type of emotional effect on me, all of the times in the past had never elicited this effect but off course I had never done this act on Hallowed Ground, with 5000 plus spirits watching.  It took me several minutes to gather my composure and get ready for the drive home.

So what I am asking is that if you travel to a foreign country and there is an American Military Cemetery located in that country, take sometime to visit the departed who have given " the last full measure of devotion” all it will cost you is just some time.