Cyprus would seek EU bailout money 'if necessary

[Octogon]

Imagine the deflationary impact of this. Property will get hit for much more than the c 9% “tax”; it’s draconian nonsense.
The sooner the Germans leave the Euro the better

The Germans don’t want to leave the Euro. They want the peripheral countries to leave, one by one. This is the first salvo in that campaign: the tax on depositors is to be so outrageous and unfathomable (and politically difficult) that the country has no choice but to leave the euro.

[Daniel_Plainview]

I know they don’t, they’re mercantilists who mistake their use of an artificially weak currency as “efficiency” and “vorsprung durch technik”. This ignorance, combined with incessant paranoia of the hyperinflation phantom, are destroying the periphery; the solution for the Euro is to jettison the Germans.

[everybody_knows]

If does not spark a bank run across Europe in the next couple of days , then nothing will .

[BoyRacer]

Imagine the deflationary impact of this. Property will get hit for much more than the c 9% “tax”; it’s draconian nonsense.
The sooner the Germans leave the Euro the better

The Germans don’t want to leave the Euro. They want the peripheral countries to leave, one by one. This is the first salvo in that campaign: the tax on depositors is to be so outrageous and unfathomable (and politically difficult) that the country has no choice but to leave the euro.

Merkel does not want any bailouts before the September elections. Don’t forget there is precedent Argentina has already seized private pensions and the Irish government continues to raid private pension funds. The state will take whatever it wants to stay in power. Most of the bank runs in Europe have already happened, now if the Germans were to apply the same standards they demand of others to their own banks then the shit would hit the fan… I expect that the Irish state at some point will either compel your pension fund to buy Irish government bonds or convert your savings to bonds in order to fund yet another bailout.

[BoyRacer]

The Deeper Meanings of Cyprus - Charles Hugh Smith -> oftwominds.com/blogmar13/cyprus3-13.html

The deposit-confiscation “bailout” of Cyprus reveals much about the Eurozone’s fundamental neocolonial, neofeudal structure.

At long last, Europe’s flimsy facades of State sovereignty, democracy and free-market capitalism have collapsed, and we see the real machinery laid bare: the Eurozone’s political-financial Aristocracy will stripmine every nation’s citizenry to preserve their power and protect the banks and bondholders from absorbing losses.

The deposit-confiscation “bailout” of Cyprus confirms the Eurozone’s fundamental neocolonial, neofeudal structure and the region’s political surrender to financialization.

there is more

The Botching of the Cyprus Bailout: Worse Than Lehman Brothers - Eamon Fingleton -> forbes.com/sites/eamonnfingl … -brothers/

Everyone now agrees that Treasury Secretary Hank Paulson badly botched the Lehman Brothers crisis of 2009. But at least he had an excuse. Panicked by the speed of Lehman’s meltdown, he had no time for second thoughts. By comparison the German-led group of EU officials who engineered this weekend’s Cyprus bank bailout don’t have a leg to stand on.

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The Cyprus Bank Bailout Could Be A Disastrous Precedent: They’re Reneging On Government Deposit Insurance - -> forbes.com/sites/timworstall … insurance/

However, there’s a very great difference between allowing depositors without government insurance to take losses and actually reneging on the previously promised government insurance. And it’s that second that they’re actually doing here.

there is more

videos Cyprus shellshocked as savings tax imposed for EU bailout: cash machines EMPTIED 60,000 British savers face losing MILLIONS EU bank Raid - -> countdowntozerotime.org/2013/03/ … -machines/

Co-operative banks, the only ones open in Cyprus on Saturday, closed after people started queuing to withdraw their money.
At one bank in the Limassol district, a frustrated man parked his bulldozer outside and threatened to break in.

more

Cyprus’ savers bear brunt of unprecedented bailout - -> reuters.com/article/2013/03/ … 2220130316

(Reuters) - The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risk of a wider run on savings.
The eastern Mediterranean island becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the euro zone for financial help during the region’s debt crisis.

there is more

Germany And IMF’s Initial Deposit Haircut Demand: 40% Of Total -> zerohedge.com/news/2013-03-1 … d-40-total

Cyprus bailout a major game changer - Lars Seier Christensen-> tradingfloor.com/posts/cypru … 1728597128

This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere - not that it would have mattered much as the trust is gone anyway. It is now difficult to expect any kind of limitation to what measures the Troika and EU might take when the crisis really starts to bite.

if you can do this once, you can do it again. if you can confiscate 10 percent of a bank customer’s money, you can confiscate 25, 50 or even 100 percent. I now believe we will see worse as the panic increases, with politicians desperately trying to keep the EUR alive.

Depositors in other prospective bailout countries must be running scared - is it safe to keep money in an Italian, Spanish or Greek bank any more? I don’t know, must be the answer. Is it prudent to take the risk? You decide.** I fear this will lead to massive capital outflows from weak Eurozone countries, just about the last thing they need right now**. Even from the EU as a whole, I suspect, as the banking union is in place in most countries already.

there is more

The Banking Panics in the United States in the 1930s: Some Lessons for Today -> www2.warwick.ac.uk/fac/soc/econo … _1930s.pdf

Bank of United States -> en.wikipedia.org/wiki/Bank_of_United_States

Treasury reassures British savers over funds held in Cypriot banks’ London branches - James Quinn -> telegraph.co.uk/finance/fina … nches.html

Government sources stressed that deposits held in the London branches of Bank of Cyprus UK and Laiki Bank would not be subject to the new levy.

Treasury sources said that “deposits in UK subsidiaries and branches [of Cypriot banks] aren’t affected” by the new measure, part of a drastic series of measures imposed by the eurozone against Cyprus in return for its aid.

The sources were backed up by a statement from Bank of Cyprus UK which stressed it is “a separately capitalised UK incorporated bank, is subject to UK financial regulation, and eligible depositors are protected by the UK’s Financial Services Compensation Scheme." Laiki Bank placed a similar statement on its website.

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Cyprus bailout - Your stories - Jeremy Gahagan -> bbc.co.uk/news/world-europe-21812436

Alan and Janet, from Cyprus

This is robbery and we must get the EU to stop this. We retire and bring our savings to a bank in Cyprus and they can just take our money away without permission and then say we have shares in a bankrupt bank.

Cyprus is finished, is crooked and illegal. Anyone thinking of coming, go back and take your life, your holidays and your family somewhere else!

We had a government guarantee on this money we’d invested and now as pensioners, how can we possibly recoup this money? It’s currently a holiday weekend here and ATMs aren’t working, so people aren’t able to take money out. It’s as if the money has been locked down.

By all means the rich developers in this country can afford to pay but us expats should be excluded from this as our savings have nothing to do with the general economy as we already give money to Cyprus both in taxes and in buying things to live.

We take nothing from the state. Two weeks in government and this is what they do to us pensioners from the UK. How can the UK government support stealing from its citizens? Cameron and Clegg must step in and do something. My wife and I are currently creating an e-petition on the Number 10 website to draw attention to what’s going on here.

there is more

[BoyRacer]

Gazprom Offers Cyprus Restructuring Deal to Avoid EU Bailout - -> greece.greekreporter.com/2013/03 … u-bailout/

Russian energy giant Gazprom has offered the Republic of Cyprus a plan in which the company will undertake the restructuring of the country’s banks in exchange for exploration rights for natural gas in Cyprus’’ exclusive economic zone, local media reported.
Representatives of the Russian company submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening, Sigma TV reported.

there is more

Russian Navy to send permanent fleet to Mediterranean -> rt.com/news/fleet-mediterranean- … ships-390/

Russia will dispatch a permanent group of five to six combat ships to the Mediterranean Sea, Russian Navy chief Admiral Viktor Chirkov said. Frigates and cruisers will make up the core of the fleet.
“Up to five or six ships must be on a permanent basis in the Mediterranean Sea. They should be controlled through the command of the Black Sea Fleet,” Russian TV channel Zvezda quoted Admiral Chirkov as saying.
Supply vessels will also be included in the permanent deployment to the Mediterranean.

there is more

[werpen]

Tonnes of stuff in the media about this today. Most are in shock.

The background to this is the instance of germany/finland that 7bn should come from cypriot pockets
How it was done is was down to the cypriots
If the 7bn is not on the table the threat is virtually wiping out all deposits

The deal will not be the end of it for Cyprus. In 2 years time there will be another ‘bailout’ with further conviscation of deposits in what remains of the country.

The best article i could find is below

Cyprus: The next blunder

Charles Wyplosz, 18 March 2013

The decision to tax all Cypriot bank deposits has attracted massive attention (Spiegel 2013) – and rightly so. It is a huge blunder:

In the unlikely event that all goes well, the government will receive a bit of cash – but not enough to cover the loan generously offered by its European partners – and the Cypriot banking system will be history.
The alternative is a massive bank crisis in many Eurozone countries – a huge blow to the euro, maybe even a fatal one.

Not an emergency measure

Policymakers have been debating the Cyprus’s bailout for nearly a year; this cannot be classified an “emergency action”. They engaged in a lively debate whether Cyprus is “systemic” or not, the answer to which can only be “it depends”. It depends not on the size of Cypriot banks but on the way the Eurozone acts. They also debated the Russian deposits that apparently represent a sizeable proportion of bank liabilities. The debate turned around the issues of how dirty this money is and how to do the laundry. They also debated on the size of a possible loan to the Cypriot government. The government itself requested something to the tune of 100% of its GDP, why not? After all this amounts to 0.2% of Eurozone GDP.

Eurozone’s help: Suffocating solidarityFrom what is known:

Cyprus will receive a loan of about half the requested size under the usual austerity conditions.
The gross public debt of Cyprus will rise from its current level of some 90% of GDP to about 140%, a level that is unsustainable and will eventually require some deep restructuring.
This debt trajectory is a forecast, of course, but well in line with experience.
The effects of this Eurozone austerity programme are now well known. Cyprus joins a distinguished list of countries that benefit from suffocating Eurozone solidarity (Wyplosz, 2011).

The programme will impose tough austerity;
Its public-debt-to-GDP ratio will grow because deficits will not go away and because GDP will decline.
There will the need for more loans as economic predictions will be found to be “disappointing” over and over again.
Unemployment will skyrocket, spreading intense economic and social suffering.
Who knows, populist parties could well be on the rise, adding political drama to economic pain. This technology is now well oiled.
The bank deposit ‘confiscation’

What is new is that bank deposits will be “taxed”. The proper term is “confiscated”. Like everywhere in the EU, bank deposits in Cyprus are guaranteed up to €100,000. Depositors have arranged their wealth accordingly, only to be told that the guarantee has been changed ex post.

Taxing stocks is optimally time-inconsistent (Kydland and Prescott, 1977). It is a great way of raising money but it has deep incentive effects as it destroys property rights. What is at stake is the credibility of the bank deposit guarantee system throughout Europe.

The system was shaken in 2008 but in the opposite direction. Followed by all other countries, Ireland offered a full guarantee in a successful effort to stem an impending bank run. The cost to the government was such that it triggered a run on the public debt that led to the second bailout after the Greek “unique and exceptional” one.

That move has now been recognised as a mistake, which may explain how Cyprus is now being treated.

voxeu.org/article/cyprus-next-blunder

[looney]

Megan Greene update -https://theprodigalgreek.wordpress.com/2013/03/18/cyprus-current-state-of-play/

[yoganmahew]

Didn’t Noonan just remove the guarantee???

The EU just made all guarantees expensive extravaganses

[werpen]

Didn’t Noonan just remove the guarantee???

The EU just made all guarantees expensive extravaganses

Was there ever a guarantee?

[kuang1]

So THIS is it.
This is how the game ends. Stay tuned ladies and gentleman…we are about to witness extremely historic stuff unfold before our eyes.

What country are pinsters gonna move their money to?
I’m thinking Canada.

[yoganmahew]

Good post from Joseph Cotterill on FTA - ftalphaville.ft.com/2013/03/18/1 … he-system/

[Open_Window]

You know back in September 2008 I here never believed Irish politicians when they warned us, “that the ATMS would have stopped working”, as a justification for their actions. From the last 72 hours I think it’s clear he real reason was they would have had to go rifling Irish deposit accounts for what they could get and until they had been satisfied, accounts would have been inoperable to the owners.

THis is the very scenario predicted by many here. You do not always get the time and place right…

Should we panic, probably not. Will people panic. Yes. Question should you panic now or panic later or where you an early panicked! Is it a panic bubble? Suffering financial panical fatigue… well the Irish probably are and too hungover to care right now as the rest of the world bolts upright for a collective awww WTF!?

[looney]

Vote delayed till Friday .
twitter.com/zerohedge/status/313597117182648320

[Eschatologist]

What country are pinsters gonna move their money to? I’m thinking Canada.

Good post from Joseph Cotterill on FTA - ftalphaville.ft.com/2013/03/18/1 … he-system/

Barclays quote:

"We believe investors should remain aware of the key differences in national resolution frameworks – noting the riskier frameworks in place in Switzerland, the UK, the Netherlands, and Germany’

I don’t know what “riskier frameworks in place in Switzerland” means, but here must be a basic risk in putting money into a country where you have neither citizenship or a vote. When push comes to shove, governments are accountable to their own electorates.

Wherever you put cash you face either FX risk or redenomination risk (from a Eurozone collapse), and then there’s the inflation risk.

An unintended consequence of all this is that people with cash will seek “safe” places to park it, including property.

[podge]

Russian Navy to send permanent fleet to Mediterranean -> rt.com/news/fleet-mediterranean- … ships-390/

Looks like the Assad regime in Syria will be a big beneficiary of this move.
The russians have the use of a port in Syria. If they are sending a permanent fleet to Mediterranean, they will do what it takes to keep Assad in power.

[fungus]

Basically, Cyrpus have cancelled the vote today because they know that the outcome with be a no vote.

Bank holiday tomorrow+ with vote any time between tomorrow and Friday.

The longer this goes on, without ATM access, the more likely some Cyrpus MPs will cave and vote yes.

High stakes game being played.

[Open_Window]

Basically, Cyrpus have cancelled the vote today because they know that the outcome with be a no vote.

Bank holiday tomorrow+ with vote any time between tomorrow and Friday.

The longer this goes on, without ATM access, the more likely some Cyrpus MPs will cave and vote yes.

High stakes game being played.

A Bank holiday week! I was joking about this last night…

[Open_Window]

Russian Navy to send permanent fleet to Mediterranean -> rt.com/news/fleet-mediterranean- … ships-390/

Looks like the Assad regime in Syria will be a big beneficiary of this move.
The russians have the use of a port in Syria. If they are sending a permanent fleet to Mediterranean, they will do what it takes to keep Assad in power.

Financial Franz Ferdinand I hope not!

[Open_Window]

IT headlines today,

Putin describes Cyprus deposit levy as ‘dangerous’

Irish Government welcomes the agreement, describing it as a ‘positive development’

Mother of