Last Updated : 17 April 2013 at 16:00 IST
I have exhausted all the adjectival arrows in my arsenal that would best describe the recent events that played out in the global economy and markets.
Shocking, weird, catastrophic, bloodbath, butchery, massacre...the list can be representative of all the gory words in Oxford English Dictionary.
When it starts, it starts small, just like a bowl of snow that would in turn become a giant snowball. In this case, it started with the small Mediterranean island nation of Cyprus. The Cypriots were asked to give up a portion of their bank accounts in exchange for a bailout, first time in the history of Eurozone. This was rejected by the Cypriot Parliament and a crisis followed.
Hectic parleys followed and Cyprus spared depositors with less than 100000 Euros in their accounts. But a bank was put in coffin and depositors with more than 100000 Euros were bound to lose 60% of their bank account balance.
Capital controls were put in place for the first time in Eurozone history.
Then a phase of calmness. Days passed without much events happening.
Suddenly, one fine morning Cyprus' creditors told that the rescue would cost some 23 billion Euros and Cyprus will have to raise 13 billion Euros; 6 billion Euros in excess change.
The news sparked speculation that Cyprus may have to sell its gold reserves to raise the money. The Cypriot central bank denied that such a move has been discussed. But the next day, spokesperson of Cyprus government said that the option was on the table.
This sparked the sell off in gold as thoughts ruled that other central banks in the Eurozone periphery may be forced to follow suite. Meanwhile S&P 500 hit all time highs.
A bloodbath followed in gold and silver. Gold began to plunge to multi-year lows. China GDP data too spooked markets.
The question lingers: is this calm after the storm or before the storm? Further data from Eurozone and US, not to speak of China would provide the necessary clues to the answer.
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