Wednesday, March 27, 2013

Money is Gold

Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession  (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market" (, 2009)

I believe Dennis Gartman compiled this list through June 13, 2012.

"Spain is not Greece." - Elena Salgado, Spain's Finance Minister, February 2010

"Portugal is not Greece." - The Economist, April 22nd, 2010

"Ireland is not in Greek Territory." - Brian Lenihan, Ireland's Finance Minister

"Greece is not Ireland." - George Papandreou, Greek Finance Minister, November 22, 2010

"Spain is neither Ireland nor Portugal." - Elena Selgado, again... November 16, 2010

"Neither Spain nor Portugal is Ireland." -Angel Gurria, Secretary-General of the OECD, November 18, 2010

"Spain is not Uganda. - Emeriano Rajoy, Spain's Prime Minister, June 9, 2010

"Italy is not Spain."- Ed Parker, Fitch Managing Director, June 12, 2012

"When it becomes serious, you have to lie." - Jean-Claude Juncker, the Europe Group President, April 2011

"The worst is now over... the situation is stabilizing." - ECB President Mario Draghi, March, 2012

"Uganda does not want to be Spain" - Asuman Kiyingi, Uganda's foreign minister, June 13th 2012

"For a small, open economy like Cyprus, Euro adoption provides protection from international financial turmoil." - Jean-Claude Trichet, President of the European Central Bank, January 2008

"Luxembourg is different from Cyprus" - Business Insider, March 22, 2013

"Latvia is not Cyprus." (Actual quote: "[T]here is no truth in statements that Latvia could become Cyprus." - Kristaps Zakulis, head of the FKTK financial sector regulator, March 21, 2013)

"Slovenia is not Cyprus." - (Actual quote: "I am very sure that we (Slovenia) will not get into such a situation (as Cyprus)," Marko Kranjec, Bank of Slovenia governor.)


"Malta is not Cyprus." - Tony Zahra, Times of Malta, March 23, 2013

"Hungary is not Cyprus." -Financial Times, March 21, 2013, See below

"The Czech Republic is not Cyprus." -Financial Times, March 21, 2013, See below

"Poland is not Cyprus." -Financial Times, March 21, 2013, See below

"Countries like Poland and the Czech Republic have very solid banking systems, completely unlike the situation in Cyprus - and there is no sign of a banking run. The most exposed are Hungary and Slovenia, but even they are a world away from Cyprus's situation." - Jan Cienski, "CEE: Contagion Risk from Cyprus?" - Financial Times, March 21, 2013

"Credit is not money. Credit is trust. Trust can vanish in an instant." - Frederick J. Sheehan, March 25, 2013

TESTIMONY OF J.P. MORGAN - THE MAN - IN 1912 BEFORE THE "PUJO COMMITTEE," a subcommittee of the House Committee on Banking and Currency. Morgan was questioned by Samuel Untermyer. The source is Jeanne Strouse's biography of Morgan:

"Untermyer: "The basis of banking is credit, is it not?"

Morgan: "Not always. That is evidence of banking, but it is not the money itself. Money is gold, and nothing else."
Untermyer asked Morgan whether credit was not based on money - that is, did not the big New York banks issue loans to certain men and institutions "because it is believed that they have the money back of them."

Morgan: "No sir. It is because people believe in the man."

Untermyer: "And he might not be worth anything?"

Morgan, with less than perfect regard for grammar: "He might not have anything. I have known a man to come into my office, and I have given him a check for a million dollars when I knew they had not a cent in the world."

Untermyer: "There are not many of them?"

Morgan: "Yes, a good many."

Untermyer: "That is not business?"

Morgan: "Yes, unfortunately it is. I do not think it is good business, though."

Untermyer did not, apparently, think much of this answer, for he repeated his proposition. "Is not commercial credit based primarily on money or property?"

Morgan: "No sir; the first thing is character."

Untermyer: "Before money or property?"

Morgan: "Before money or property or anything else. Money cannot buy it" - and he elaborated after a few questions - "because a man I do not trust could not get money from me for all the money in Christendom."


"The reason people hold gold is protection against tail risk, really, really, bad outcomes. To the extent that the last few years have made people more worried about the potential of a major crisis, then they hold gold as a protection." - Federal Reserve Chairman Ben S. Bernanke, the greatest tail risk in the West since Genghis Khan, July 13, 2011.

"With the current policy, [European leaders] will need force to keep it going against the interests of the people. You do not need to be a eurosceptic to conclude that such a monetary union is also deeply immoral." - Wolfgang Manchau, Eurozone Break-Up Edges Even Closer, Financial Times, March 25, 2013

The People are growing angry. The People will become very, very angry.