Jim Sinclair, on King World News, makes a very important point that makes a huge difference in the whole Cyprus bank confiscation debacle:

Sinclair:  “Taking Russian money is very foolish.  You have to understand the culture of the people you are dealing with.  The government leaders in Cyprus have no ability to protect themselves from the retribution of the former Russian KGB agents, including Putin himself.

The government leaders in Cyprus are trying to back-pedal right now in order to save their lives.  Let me say it again, they are trying to save their own lives.  Remember, ‘revenge is best served cold.’  This means the revenge never comes at the moment of the miscreant act.  But it will come in time.

To take money from the leading economic entities in Russia, is to take money from the former KGB officers, and taking money from them is extremely dangerous.  I think the reality has quickly set in for the leaders of Cyprus that they have aided in the confiscation of the most serious and dangerous money you could possibly touch.  It has these leaders more afraid for their lives than their bank accounts.

I would also add that this was the biggest mistake made by the IMF and the ECB in their history.  Every time you do business with a Russian company, you do business with a bank in Cyprus.  Money goes in, it goes out, but it all funnels through Cyprus.  

Coming down on Cyprus as a test case for the new ‘Bail-In’ rather than ‘Bailout,’ the utilization of the depositors money to pay for the losses, could very well derail the entire efforts so far to maintain the appearance of solvency in the West.  

Trillions upon trillions of dollars have been put into the system in order to maintain this appearance of solvency, and so this Cyprus miscalculation is extremely serious.  This was a ‘test case’ and the IMF firmly believed the ‘Cyprus Solution’ wouldn’t mean anything.  

The real catastrophe here was the misidentification of the capital present in the banks, which, in fact, turns out to be KGB money they are confiscating.  And as I said earlier, taking money from them is extremely dangerous.”

This makes this entire catastrophe even worse from the EU's viewpoint. There is no pressure that they can bring more powerful than this, so the Russians now hold the upper hand. Control of this has now passed from the hands of the EU, into the power of those who may well have no problem seeing this crisis escalate. 

The markets here weren't too bad today, but hold on for the rest of the week.

This is more than a black swan event.   It's a black swan and a swarm of swarthy cygnets!

It's gonna be a bumpy ride!