Thursday 18April2013 - Euro Currency Comments!

From Blackswan Capital 16April2013 Monthly Newsletter.

"Italy and next-door Slovenia are rapidly coming up the radar screen as the most vulnerable to depositor flight. The Italian situation is further aggravated by the ongoing political struggle for power where two of the three major power contestants – Berlusconi and Beppe Grillo – are accumulating voter support by threatening exit from the Eurozone. The calls for Italy to exit the

Euro will gain more credibility if events in Cyprus and Greece proceed as expected.

A run on Italian banks will have major impact on French banking and, through the channel of French banks, on Belgian banking as well. French banks have an Italian exposure of €334 billion and an overall exposure to all Eurozone crisis countries of €778 billion.

Of the Eurozone banks’ total balance sheet of almost €33 trillion, roughly €11 trillion or one-third are bonds issued by banks and deposits owed to banks themselves. So whenever any single bank’s ‘shareholders, bondholders and uninsured depositors’ are expropriated, the event instantly ratchets down the solvency of every other bank, because those ‘shareholders, bondholders and uninsured depositors’ are these other banks," writes Leto Research. We don’t believe another crisis can be avoided given the global economic backdrop and the still massive structural problems still facing the Eurozone."

As a Canadian I am long the US Dollar (IE Holding US$ Deposits in Accounts) and short the Euro vs the US dollar with the ProShares Ultra Short Euro which trades as EUO-NYSE.

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