Finally, another sleepless night for my friend/buddy/pal Mark Grant at Southwest Securities:
I am up at 2:00 A.M. this morning. This was not because I couldn't sleep it was because the debate began on the Cyprus decision in Nicosia and I felt that I owed it to my clients and friends to be up and paying attention. The financial markets do not sleep; sometimes neither do I.
One of the most interesting issues of what has happened in Cyprus is where was the problem three weeks ago? There was not a mention, not a hint of anything that was wrong. All of the banks in Cyprus had passed each and every European bank stress test. The numbers reported out by the ECB and the Bank for International Settlements indicated nothing and everything reported by any official organization in the European Union pointed to a stable and sound fiscal and monetary policy and conditions. The IMF, who monitors these things as well, did not have Cyprus or her banks on any kind of watch list.
Let me assure you it was not some "Miracle on 34th Street" that took place overnight while everyone was in bed and counting sheep. I can also assure you it was not because some bean counter in Brussels or Frankfurt stumbled over some new bit of data and informed his superiors. Nothing of the sort. The culprit is what is counted and not counted in the European financial system and the quite real consequences of uncounted liabilities.
Before I even go on with Cyprus, so you do not glaze over the punch line, I point out to you what has taken place. In just two weeks' time we have gone from not a mention of Cyprus to a crisis in Cyprus because none of the official numbers were accurate. Without doubt, without question, if this can happen in Cyprus then it could happen in any other country in the Eurozone because the uncounted liabilities are systemic to the whole of Europe. The European Union does NOT count sovereign guarantees of bank debt, sov