The Cyprus Deal is Already Under Threat (Of Course)
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Walter Crane Pandora Opens The Box 1892 One day after it was agreed on and announced by the Eurogroup and Cyprus president Nicos Anastasiades, the dea
[See the full post at: The Cyprus Deal is Already Under Threat (Of Course)]Hi Illarghi,
Actually the situation in Cyprus plays nicely in to the hands of those who want to quash doubts over the efficacy of austerity; that and the fact the UK budget is coming up:
Chancellor George Osborne has insisted that ditching his plan to restore the nation’s finances could leave the UK facing an economic disaster like Cyprus.
The bleak assessment came as Mr Osborne rejected calls for a change in approach ahead of Wednesday’s Budget, saying there was no “miracle cure” to the country’s troubles.
The Chancellor said the crisis in Cyprus was an example of “what happens if you don’t show the world you can pay your way”. He told BBC1’s Andrew Marr Show: “That is why in Britain we have got to retain the confidence of world markets.”
The Cypriot parliament is set to consider a European Union and International Monetary Fund bailout, with the possibility of a levy on bank deposits of up to 10%.
Mr Osborne, who has promised to protect British military personnel and Government personnel from the levy, added: “It is an extraordinary situation. I remember coming on this show a couple of years ago and we were talking about Greece then. Since then we have had Ireland and Portugal, problems in Spain, problems in Italy, now in Cyprus.
“Anyone who thinks Britain is alone in having these challenges should look on their TV screens, look at tonight’s news and realise that it’s a very tough economic situation out there. Unless we in Britain front up to our own problems, the problems in our banking system, the problems that we are borrowing so much money, the problems that actually our businesses need more help to create jobs. If we don’t do those things then the difficult economic situation in Britain will get very much worse.”
…
Shadow chancellor Ed Balls, appearing on the same programme, called for a stimulus package funded by increased borrowing. “Vince Cable, the International Monetary Fund, myself, many others are all saying unless you get the economy moving, unless you get some growth back, the deficit will stay high. Whereas if you act now with some stimulus to kickstart the economy, that’s the way to get growth moving.”He accused Mr Osborne and Prime Minister David Cameron of refusing to consider a change in approach because of the political fallout. “The only reason why they won’t now change course is to avoid their own political humiliation. That is no reason to stick to a failing plan. Stimulus now, kickstart the economy, get growth moving, that’s the only way to get the deficit down.” He added it was the “economics of the lunatic farm” to call for more spending cuts and tax rises when those were the policies which had choked off the recovery.
They will of course bail out British military personnel (don’t want any mutiny in the ranks!) its a handy base to have to have in the region (for the geographically challenged like me, its next to Syria) but plain old UK citizens will have to take the hit unless their branch is in the UK:
“What I’d say specifically about the Cyprus situation – first of all, we are not part of the bailout because David Cameron got us out of these euro bailouts when he became Prime Minister.
“Second, I’d say that the Cypriot banks in Britain – this is important because there are many thousands of people who bank with Cypriot banks in Britain – those banks are not going to be included in this bank tax.”
There are several more reports on the ‘crisis’; given that propaganda is always proportional to policy:
And of course like any system:
…To Those Within A System, The Outside Reality Tends To Pale And Disappear.
This effect has been studied in some detail by a small group of dedicated General Systemanticists. In an effort to introduce quantitative methodology into this important area of research, they have paid particular attention to the amount of information that reaches, or fails to reach, the attention of the relevant administrative officer. The crucial variable, they have found, is the fraction:
Ro/Rs
where
Ro equals the amount of reality which fails to reach the relevant administrative officer
and
Rs equals the total amount of reality presented to the system.
The fraction Ro/Rs varies from zero (full awareness of outside reality) to unity (no reality getting through).Of course from a deflationary point of view, this ‘tax’ could also be seen as the ‘correct rate’ of interest, nobody complained when they got 10% or more back in 2008:
Just how do bubble realities burst? Maybe its a case of ‘green bottles’ rather than dominoes:
https://www.youtube.com/watch?v=99XPHwuGjMIL,
Sid.Ilargi said “Something doesn’t add up here.”
It seems as if the powder in the keg has been ignited. The cat is out of the bag. Things are being set in motion. BUT no country nor bankster nor politician wants to be blamed for the crash.
So it will be the people everywhere in the world running the banks for their money. Of course there is not enough money for everyone, so it will be the people who will crash the markets trying to get their money out of the banks. The people will be blamed for the crash.
There is an alternative version Ten Green Hand Grenades. I found a polite version on youtube. At my school it ended no bloody wall.
Ilargi said “Something doesn’t add up here.”
There is a war going on.
We don’t understand the weapons.
We don’t know who is fighting who.
Alliances are made and changed for reasons we cannot fantom.
Attacks and defenses are only apparent long after they happened.The battle fields are leaving 50% of those under 30 yrs. as collateral damage throughout the Mediterranean and will never be able to find a way to put food on the table.
49 million people are on food stamp in the USA.Assets are being abandoned and mother nature is reclaiming the territory.
Growth is already dead.
Something surely is wrong here, it certainly doesn’t add up. Are we witnessing the work of a few buffoons, or the start of some major take down by the powers that be?
My only take on it is that it is giving me a most uncomfortable feeling because of it’s destructive potential and lack of a coherent explanation????
Here is how a Brit. taxi driver expressed himself.
https://www.youtube.com/watch?v=YDXtHsz2q6Q
The Great Cyprus Bank Robbery by Financial Terrorists
The enemy is easy to identify – it is Biggest Finance Capital defined as the people who define money as debt and control the debt based monetary systems that are prima facia fraud.
It works like this…
Debt Money Tyranny
https://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77
I think the most accurate paradigm is to view Biggest Finance Capital as the Grand Chess Master and the various establishment structures (Biggest Finance Capital financed structures) as pieces on the Grand Chess Board.
You can blame the knight or the rook when they take one of your “pieces,” but it really was the Grand Chess Master who is responsible, not the Grand Chess Board piece.
I keep banging this drum because people don’t seem to be able to “get it.” We know who the enemy is. Napoleon identified the enemy over 100 years ago!
“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
~ Napoleon BonaparteThe Grand Chess Board pieces of Biggest Finance Capital are easy to identify – they are anything and everything super big.
There may be a few exceptions, but not many.
The effects of Debt Money Tyranny are becoming real to the average citizen.
One point – did the Cyprus government bond holders also take a hair cut as well or just the bank deposits?
Yes! You’re right, Ilargi. Something does NOT add up here. I was about to come on here and make a comment to the exact same effect, but you’ve written a whole article on the question.
Something is completely awry. I am simply gobsmacked by the EU decision on Cyprus, and it so clearly threatens the rest of the Euro enterprise, I can’t believe they ventured along this path.
They could have simply continued their ridiculous bailouts a little longer. Why not? They know more are coming for Greece, Italy, Spain, et al.
But something is different for Cyprus for some reason. Is it an experiment? As you suggest, it simply too loaded with contagion risk. Are they trying to force an exit? As you suggest, that would create just as much contagion risk as the “stability levy/theft”.
I’m really watching this in total amazement. I do not know what game they’re playing. We’re on some point of the collapse continuum, I just can’t figure out where–certainly I did not see the hand of the EU being forced, not to this degree. Not yet. That will surely come in the future. But this? I’m just utterly perplexed…and unnerved.
After all, even proposing this notion risks contagion.
Perhaps they know that the jig is up and they want to make an example of Cyprus–which will default and dissolve into chaos, and it will be so awful that no other country dares follow?
Then again…we all must admit that the people (sheeple) of Europe and the world have been absolutely shockingly passive about EVERYTHING. And so far the Troika has been exceptionally savvy about reading our ability/inability to react. We all thought what’s gone down so far would have toppled the sand castle. 50% youth unemployment in Spain anyone?! And yet still, the incredible momentum of this 75 year credit super cycle has lulled the people into an equally unprecedented degree of acquiescence. Might not the Troika simply be emboldened enough to say something like this?
A: But if we propose this stability levy, we WILL get a run on Cypriot banks, which will precipitate runs on banks in Greece and Spain.
B: Nah, we just keep saying the same thing over and over, that this Cyprus move is a one-time thing. And for six months, it will be a one-time thing. And within a few weeks, all the Chicken Littles who say the sky is falling will come crawling back. I mean where are they gonna go?The people still want their cappucino frothing machines and smart phones. They want those more than they want to rebel. People want this to keep going. We can do almost anything we want if we play it right.
A: Like duh. Of course. What was I thinking. Let’s do it.
Good take on it Ilargi, it just doesn’t make anymore sense than…
It’s needs a TARP, I tell ya. We need to throw a TARP on it or else we’re all gonna die! Hank Paulson fixed it all in 07. It’s been TARPED.
Personally, I find it fruitless trying to 2nd guess beings as naive as econ illiterate pols. Most are only there because they can’t make it in the real world, or as Moonbeam Brown said, ‘They are good liars.’
The logic could be complex, or even as simple as “Where are we going to get the money to save this ship? Why, the deposits in the banks of course, isn’t that where the money is, after all?”
As for the depositors in Cyprus, put this to a popular political face “They didn’t save that.”
And why can’t we just dump 3 wire bales of money on Cyprus? The extra weight!…https://www.youtube.com/watch?v=bs23CjIWMgA
The “WHALE” lost $6B for JPM.
Cyprus needs ONLY $10B to kick the can down the road.
It does not make sense.
Religions like to portray that the forces of evil are always battling the forces of good.
I disagree!
The forces of evil are battling each other for dominance.
These battles have already caused more suffering than the previous WW. and its only starting to hurt.It will become increasingly difficult to avoid the battle fields and to avoid being trampled.
Reason? How about
“A last-resort desperation move, born of an unholy combination of procrastination, blackmail, and sleep-deprived gamesmanship”
From some blogger whose name I don’t know and can’t link to. In other words not part of some grand strategy, just the opposite.
37% – deposits of Russian mafia and that makes Ciprus different from the rest of the West. Sense of justice is in the mix. But, if that’s the case for some, why not make 90% haircut and then compensate (maybe out of that money) the Cipriots’s deposits? Just like Brits are prepared to compensate their troops’ deposits?
I think a lot of people have been sucked in by all this “mafia” talk. The fact is that the biggest mafias of them all are at the City of London and Wall Street. The big drug money is all laundered through large “respectable” banks – not though Cypriot banks.
If you go into Google and type “fined for money laundering”, it will come up with the following suggestions:
Wachovia
HSBC
ING
Coutts
RBS
Barclays
Lloyds
Wells Fargo
Standard CharteredIf the list is heavily weighted with British concerns it is simply because the Americans prefer to fine them than to fine their own. It is really just a form of tax – a business expense – to the banks.
Seriously wealthy Russians keep their accounts offshore UK – that is what the City excels at doing – or in places like Lichtenstein. Israel is another favourite as 70% of the really big oligarchs happen to be Jewish. The phrase “Russian mafia” is often used because “Jewish mafia” would upset some people. Just check out some of these guys and you will see what I mean:
https://en.wikipedia.org/wiki/Russian_oligarchs
Cyprus is for ordinary middle-class Russians who have already seen their savings wiped out once – in 1998. I suspect a lot of them will be moving their money either back to Russia or to Asia. They will give the West a miss.
https://en.wikipedia.org/wiki/1998_Russian_financial_crisis
This particularly obnoxious mafia spin has been very successful at stopping people from asking the correct questions.
Hmmm …
Bank runs have been underway in the EU since the first Greek bail almost 3 years ago. They ebb and flow but have never stopped.
Central banks’ strategy is to force dis-hoarding which is tantamount to triggering a ‘bank walk’ or a flight out of accounts into consumption. The use of negative real interest rates is the tactic, there are no earnings for savers/’hoarders’. The 10% levy is negative real rate, for example.
All this is pretty classic Keynes business. What is underway in Europe leaves out the necessary Keynes’ fiscal stimulus to replace private sector demand. In that instance there would be an economic return to depositors in place of the 10%. For instance, when Roosevelt took specie out of circulation in 1933, both the US money supply and the economy expanded about 100%. The trade of some gold for an improved economy was a good one.
There is to be no improvement in Cyprus as the problems are not simply money or credit. After this bailout will come others … until bailouts become impossible and the banks unravel.
Bank runs occur for different reasons. The biggest problem in the euro-banks isn’t tactics, but the ongoing bankruptcy of the system in its entirety and the lack of a real lender of last resort. The reason for this latter condition is the absence of good collateral and the (implied) requirement for central banks to make unsecured loans (in excess of collateral).
The managers simply don’t know what to do. This is because the problem is a shortage of capital rather than un-balanced ledgers or irregular credit flows. We moderns have burned up our capital and there is nothing particularly useful to show for the burning. What remains is some ‘currency’ deposited in bank accounts.
These deposits are the collateral for the entire finance system: all ‘assets’ within the credit system are leveraged against these currency deposits. Dis-hoarding is a failed strategy for two reasons: a) it removes collateral from the system, b) this in turn becomes an incentive for more collateral to vanish.
Ordinary consumption recycles collateral, forced dis-hoarding simply alters how collateral is hoarded, making it less accessible.
The nominal collateral is the euro-system’s assets which are nothing more than redundant debt-claims against a) other debt-claims and b) toxic gases in the atmosphere and some used cars. Europe is literally bankrupt, depositor funds are all that are left.
What the system managers don’t grasp is simple common sense: It does not matter who owns good collateral! What matters is that the collateral remain within the system, parked safely in bank accounts. This is why the entire structure of central banks, deposit insurance and other guarantees have been implemented over the past 200 years or so, to protect the banks and banking system, by guaranteeing bank customers’ deposits.
Now, all of this is unwound in an afternoon, for what gain? There is no point to collateral being ‘owned’ by bank preferred shareholders or senior creditors. These fellows might feel like they are ‘richer’ somehow but their exposure to asset deterioration has been increased by the amount of good collateral that they themselves have removed from the banking system!
When the collateral is gone there is no more system, which is now set on ‘self-destruct’. Welcome to Argentina!
There’s another possibility that fits with Occam’s razor. There is nothing else they can do. They are finally reaching the point where the alternatives to actually, directly stealing people’s savings is all there is left.
CHS at oftwominds.com suggested that Cyprus might be a test run, and if the people don’t revolt, the technique will be applied in other bank failures. If people do revolt, well the deal will be hastily renegotiated, and no harm done.
Of course, it could also be “the best idea they had at the time” – something that would sell to the German taxpayer.
Certainly none of us were in the room when it went down so we can’t really know for sure.
Hello Ilargi,
thanks for insights – but I do not really think that stealing xx % from peoples accounts could set-up the break-up of the Eurozone.
That is too far-fetched, IMHO. That said, if it will cascade into similar actions in bigger nations, EU might break-up, but I think that will not happen.
People are to apathic to bother. And most of them does not have savings, rather debt, I suppose, so why bother taking away few bucks from the wealthy?
Just thinking… 🙂
Cheers,
Alex
P.S. – You mean Nigel Farage? 😉
3/19/13
The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman. “The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.
“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat. “While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.
I’m with Steve from V on one point, maybe a couple of others as well. Stagnant hoardings, as attempts to preserve a modicum of assets, kill money velocity, the only thing preventing the Keynesian dream progressing toward it’s point of destruction, into the dust bin with Wiemar.
They might imagine all that cash coming out of the negative interest accounts world wide now. As a bank run starts small, then exponentially expands, so does a run on where to spend the proceeds, while they are still worth anything.
This could very well be an attempt to light a fire under the reluctant consumer. Ill advised, it only serves to scare the horses further, but par for econ savvy impaired micro managers of a government controlled capitalism (fascism). The same logic that builds empty cities in China and proposes a $20 an hour minimum wage. Sure, driving up the cost of productivity will create more jobs, right? I mean, just mandate that struggling small businesses pay $200 an hour and we’ll all drive Hummers. Gas will stay the same price though, yes?
Accomplishing this transition from savings to spending through the slow steady process of debasement was getting the manipulators nowhere. They were only able to stay slightly behind the rate of de-leveraging with their print fest. Admin costs (non productive elements) skim off too much of the newly created loot. They might be finally realizing it takes ever more money creation just to stay in the same place.
Of course, getting through to the anointed is like attempting to get building permits, ” I have a customer that would like to build a…’NO!’ Wait, just hear me out, he would bring jobs…’NO!’ May I speak to your supervi…’NO! Is there any way to…’NO!’ “
Mish has a nice piece on the positives of all this up. https://globaleconomicanalysis.blogspot.com/2013/03/from-smoldering-ashes-comes-good-news.html
Seems there is an ever growing chasm developing between the managers and the managed in our twisted system where the non productive rule over the producers, the latter demanding more and more supervision (protection?) be imposed on themselves as things deteriorate. Diminishing returns, maybe?
Other than swap meets and individual transactions at local community levels, we’ve never really given free market capitalism a chance, because it can’t thrive in captivity, just as Chanterelle mushrooms can’t.
I believe the day will come, as faith in complex institutions disintegrates, we will have no choice but to embrace the concept again, when the discomfort becomes like a rock in the shoe for enough folks, resulting in their ignoring the ranting and flailing of the controllers, as they stand on the side of the road with their hands out.
Mother Russia had banned foreign banks from opening branches just before the rash fiasco with Cyprus, were some Russian money was universally known to quietly reside:
https://www.itar-tass.com/en/c32/677099.html:whistle:
Hi Folks,
The Prof almost had it:
They might imagine all that cash coming out of the negative interest accounts world wide now. As a bank run starts small, then exponentially expands, so does a run on where to spend the proceeds, while they are still worth anything.
Where does one run to? For a start there is nowhere near enough hard cash for people to start hoarding that; about 3% if your lucky of the worlds wealth is in that form. No most of those lovely digital bits of ‘wealth’ have nowhere else to go but into some other digital storage facility. They got you by the one and two zeros so to speak…
L,
Sid.There are plenty of places to run too.
Gold, silver, stocks, reits, real estate, art, farmland, diamonds, hidden cash, commodity funds, oil drilling partnerships, natural gas mlps, junk bonds, corporate bonds, soverign debt.
None without some risk of course, but if you feel your funds are going to be confiscated anyway, the risk becomes less, or more tolerable. Perhaps that’s the plan??
Hi GO,
When was the last time you tried to withdraw a large amount of cash? Its no that easy; oh, they’ll give you a ‘check’ or a bankers draft or a BACS transfer, but hard cash? And that’ assuming that the people selling
Gold, silver, stocks, reits, real estate, art, farmland, diamonds, hidden cash, commodity funds, oil drilling partnerships, natural gas mlps, junk bonds, corporate bonds, soverign debt.
will take cash, or for that matter 1s & 0s in their bank account. This is where Stoneliegh’s ‘claims to underlying wealth‘ starts to kick in, get it while you can,, but make sure its a hard asset, and not more 1s & 0s in some bank [strike]computer[/strike] vault… And then if its things like gold, be prepared to give it up or do hard time:
Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates By virtue of the authority vested in me by Section 5(b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, entitled
An Act to provide relief in the existing national emergency in banking, and for other purposes~’,
in which amendatory Act Congress declared that a serious emergency exists,
I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section to do hereby prohibit the hoarding gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations and hereby prescribe the following regulations for carrying out the purposes of the order:
Section 1. For the purpose of this regulation, the term ‘hoarding” means the withdrawal and withholding of gold coin, gold bullion, and gold certificates from the recognized and customary channels of trade. The term “person” means any individual, partnership, association or corporation.
Section 2. All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership on or before April 28, 1933, except the following:
(a) Such amount of gold as may be required for legitimate and customary use in industry, profession or art within a reasonable time, including gold prior to refining and stocks of gold in reasonable amounts for the usual trade requirements of owners mining and refining such gold.
(b) Gold coin and gold certificates in an amount not exceeding in the aggregate $100.00 belonging to any one person; and gold coins having recognized special value to collectors of rare and unusual coins.
(c) Gold coin and bullion earmarked or held in trust for a recognized foreign government or foreign central bank or the Bank for International Settlements.
(d) Gold coin and bullion licensed for the other proper transactions (not involving hoarding) including gold coin and gold bullion imported for the re-export or held pending action on applications for export license.
etc. :unsure:
L,
Sid.I’m going back to what I insisted on in much older TAE comments all along. The first country to leave the Eurozone will be made to suffer and stand as a horrifying example of the ramifications of exit. The pain will be exacerbated by the Troika–they will underhandedly fan the flames, though in such a way that it doesn’t appear that way. The media will jump on the bandwagon with video footage of babies being born in abandoned hospitals, empty grocery store shelves, violence in the absence of a police force. It will be mayhem. And Greece et al. will be fairly warned: take our offer or suffer the same fate.
I thought Greece would be the first to exit and be made the example. But many pointed out that the Euro can’t really AFFORD, financially, for Greece to exit. They can, however, financially at least, afford a Cyprus exit. So Cyprus will be our horrifying example.
Here the Troika apparently gave Cyprus a choice that they knew Cyprus would probably not accept. If Cyprus accepts, that’s a bonus. If it doesn’t, they have their example.
There will be blood. And it will make Mario Draghi smile. Just what the doctor ordered.
skip –
Its a nice theory, but it will founder on the rocks of international geopolitics. Russia appears to be shopping for naval bases in the Mediterranean, and if Cyprus leaves the eurozone and readopts its Pound, Russia underwriting that Pound would seem like a natural way for them to support all that KGB money AND obtain a nice base in a sunny climate.
That doesn’t even take into account any of the petroleum resources thought to be hiding under the seabed nearby the island.
Gold Confiscation
Is your point do not own gold because it can be confiscated, or to own nothing because it can be confiscated?
Should we all dispose of everything we own and walk naked on a pair of sandals and pray the swill don’t take our sandals from us, or is it just the Gold they have brainwashed you into hating..??
Hi GO,
Gold Confiscation
Is your point do not own gold because it can be confiscated, or to own nothing because it can be confiscated?
Should we all dispose of everything we own and walk naked on a pair of sandals and pray the swill don’t take our sandals from us, or is it just the Gold they have brainwashed you into hating..??
Non of the above – did you even read the post?
Get it while you can, that is hard assets that will be useful. The best hard asset IMHO is to gain as much skill and knowledge (how to garden/mend/make/repair sustainably etc) that will enable you and others to live as independently and sustainably as possible in the future. Have you read Orlov? What does he say?
Get out of the system, have as little to do with it as possible
or words to that effect. Also be flexible, all of what you suggested is a possible good investment (excepting the paper/digital stuff) but it is not a panacea. No one knows for sure what is going to go down, especially as regards the local situation. All that can be said for certain is that we will have to live more sustainably in the long run. I thought that this message was implicit on this site, but my assumptions appear to be wrong. The old industrial consumerist exploitation model is dead in the stagnating lifeless water that it has created. So why not start now? Be the change you want to see…
L,
Sid.gurusid post=6896 wrote: if its things like gold, be prepared to give it up or do hard time:
[url=https://www.the-privateer.com/1933-gold-confiscation.html]
The Gold Confiscation Of April 5, 1933Boy, if there were ever a time NOT to worry about gold confiscation, (but rather to worry about everything-else confiscation), it is NOW.
Gravity’s Constant:
[ 0 ≠ 0 ]Gravity’s Law:
[ 0 = 0 ] on average.Gravity is a recursive algorithm.
It really is.Alexander Ac post=6888 wrote: And most of them does not have savings, rather debt, I suppose, so why bother taking away few bucks from the wealthy?
Bravo, Alex!
To wit, here’s your average person’s bank run capability:
https://www.statisticbrain.com/american-family-financial-statistics/
I can’t find any statistics for EU (Cyprus), but I doubt they’re any better.Sometimes I really wonder about this disconnect from reality.
Hi Dave,
You got the geopolitics right:
ECB gives Cyprus bailout ultimatum, banks face cutoff
By Michele Kambas and Paul Carrel | Reuters. 21/03/2013NICOSIA/FRANKFURT (Reuters) – The European Central Bank gave Cyprus until Monday to raise billions of euros to clinch an international bailout or face losing emergency funds for its banks and inevitable collapse.
The ultimatum came with the island’s leaders locked in talks on a “Plan B” to try to raise 5.8 billion euros demanded by the EU under a 10 billion euro (8.56 billion pounds) rescue, after angry lawmakers threw out a tax on deposits as “bank robbery”.
Officials said new options discussed on Thursday could include nationalising pension funds of semi-state companies, issuing an emergency bond linked to future natural gas revenue or a revised bank deposit levy hitting only large investors, many of them Russians.
The European Central Bank, which has kept Cyprus’s banks operating with a liquidity lifeline, said the government had until Monday to get a deal in place, or funds would be cut off.
“Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU/IMF programme is in place that would ensure the solvency of the concerned banks,” it said.
Cyprus’s central bank governor said he expected to clinch a financial support package by then. He did not say how.
The government has ordered banks to stay closed until Tuesday. The stock exchange also suspended trading for the rest of the week.
There were long queues at some bank branches in Nicosia as staff replenished cash machines, which have continued to operate while banks have been closed since last week.
In Moscow, Cypriot Finance Minister Michael Sarris said he was discussing possible Russian investments in the island’s banks and energy resources to reduce its debt burden, as well as an extension of an existing 2.5-billion-euro Russian loan.
Russian citizens have billions of euros to lose in the island’s outsized, teetering banking sector.
…Dijsselbloem said new loans from Russia would anyway not solve the debt issue, and that a revised levy on larger bank deposits was still on the table.
“I’m not sure that this package is completely gone and failed, because I don’t see many alternatives,” he told the European Parliament in Brussels.
EU officials believe at least some of the 5.8 billion they are demanding should come from the 68 billion euros in Cypriot banks, 38 billion of which are in the form of large deposits of more than 100,000 euros, mainly from foreigners.
But hitting small savers caused visceral outrage, and the Cypriot government fears that foisting too big a burden on large depositors would wreck the offshore financial industry that forms much of the country’s economy.
Among the other options, nationalising pension funds of semi-public companies could yield between 2 billion and 3 billion euros, although European officials say it would raise less. Issuing bonds linked to future natural gas revenue is problematic because pumping any gas is years away.
INSOLVENCY
Doubts about the fate of the small nation of just 1.1 million people has shaken confidence in the single-currency euro zone and raised geopolitical tension between the EU and Russia.
Russian Prime Minister Dmitry Medvedev, who meets a European Commission delegation in Moscow on Thursday, said the bloc had behaved “like a bull in a china shop”. He likened EU proposals, which would force Russian customers to contribute to the rescue of Cypriot banks, to Soviet-era expropriations.
Tuesday’s parliamentary vote marked a stunning rejection of the kind of strict austerity accepted over the past three years by crisis-hit Greece, Portugal, Ireland, Spain and Italy.
European officials maintained the pressure on Nicosia.
“I cannot rule out a Cyprus insolvency,” Austrian Finance Minister Maria Fekter said in an interview with the newspaper Oesterreich. “A euro exit would not achieve anything. Cyprus must act now.”
With Cypriot Energy Minister George Lakkotrypis also in Moscow, officially for a tourism exhibition, speculation was rife that access to untapped offshore gas reserves could be on the table as part of a deal for Russian aid.
Cyprus is a haven for billions of euros squirreled abroad by Russian businesses and individuals – one of the reasons why Germany and other northern euro zone states are reluctant to bail it out without a contribution from bank depositors.
The island’s banking sector was hollowed out by its exposure to bigger neighbour Greece.
The proposed levy on deposits would have taken nearly 10 percent from accounts over 100,000 euros. Smaller accounts would also have been hit, although the government proposed softening the blow to spare savers with less than 20,000 euros.
Cypriots were enraged at the proposal to tax accounts with less than 100,000 euros, which are meant to be protected by state guarantees across the European Union.
Marinos Panaretou, a 36-year-old retail manager, said he had been withdrawing the maximum 500 euros every day since Saturday, when news broke of the proposed levy.
“People feel safer if we have cash on us because you don’t know what you’re going to wake up to,” he said. “Quite simply, you don’t know what’s going to happen tomorrow.”
European officials say the Cypriot government could have protected small savers if it imposed a higher tax on big deposits, but it refused to do so to protect the rich foreign clients of its offshore banking business.
EU leaders are growing increasingly exasperated with Cyprus, while the threat of bankruptcy for a member of the euro zone, however small, raises fears for confidence in the currency.
“There is no obligation to accept help,” said Polish Foreign Minister Radoslaw Sikorski, whose country does not use the euro. “Cyprus has the possibility of living with its own mistakes.”
Reading between the lines, it looks like Russia is making a play on any gas resources off the shores of its old Soviet ally Syria, which interestingly is going through its own ‘democratic’ struggle. Maybe it likes the idea of total hegemonic control of all of the EU’s gas supplies… Even if its ‘years away’.
As for a military base, the UK has prior historical claim there
It is interesting how debt played a part in this back then as well:
Suffice to say the island has been a hot bed of geopolitics throughout the last century, and regardless of of its EU membership or not, will no doubt continue to be.
L,
Sid.>>>>>
Latest via sky news:
The proposed controversial bank levy – which was rejected by MPs amid a public outcry – was not even reconsidered and a vote on ‘Plan B’ make take place as early as Thursday evening.
Finance minister Michalis Sarris is continuing talks on possible direct Russian aid through investment in Cypriot banks and energy resources.
He was also seeking an extension to an existing Russian bailout loan.
The troika of lenders – the European Union, European Central Bank and International Monetary Fund – have faced a barrage of protest since news of their demands on Cyprus emerged last Saturday.
The EU is now urging the capital Nicosia to merge struggling banks and impose strict capital controls while it is not clear if Brussels will even accept the alternative aid arrangements.
Latest from deflationist Gary Shilling:
“The last meaningful episode of deflation was in the 1930s. That’s also the last time the U.S. was truly at peace. Deflation is a peacetime phenomenon.” HUH?
But read the whole piece…
https://www.bloomberg.com/news/2013-03-20/why-global-economies-face-an-age-of-deflation.html
Alex
Just like to point out that some of the most conservative advice I am hearing about Europe is this is fast becoming one big dictatorship. Should expect something big within days. You piece together what he is saying and develop your own opinion.
The resullts of democratic votes in Greece and Italy are clearly showing movement in an antiestablishment / antiausterity direction.
The collectivist beaurocrats may be using Cyprus as an example of what will happen if the general electorate attempts widespread rejection of central management.
As always, just a thought.
Austerity is not an avoidable outcome given resource depletion, still folks do like to live in denial. Giving every buffoon the right to vote was always a flawed idea anyway, how can democracy possibly function when the vast majority of folks don’t have a clue. On the other end of the big slapping stick, people who stand up and say my plan is the correct one, follow me, have a good probability of being psychopath variants.
Outcome remains assured, collapse and die off. Only the derivative is uncertain.
Have a nice day:)
Hi Folks,
Its all over now:
Spokesman Christos Stylianides told state radio that the charge would be paid as the second largest Greek Cypriot lender is destined to be wound up.
However Russia, which is the source of many large uninsured Cypriot accounts worth up to 20bn euros (£17bn), reacted angrily on Monday to the levy news.
“The stealing of what has already been stolen continues,” Russian Prime Minister Dmitry Medvedev was quoted by news agencies as telling a meeting of government officials.
A spokesman for President Vladimir Putin added that the president has asked the government to restructure a 2.5bn euro (£2.13bn) loan to southern Cyprus.
Russian news agencies quoted Mr Putin’s spokesman, Dmitry Peskov, as saying that the president has instructed the government to work out the terms for restructuring the loan, which was made 2011.
The island’s last-minute deal to secure a 10bn euro (£8.5bn) EU and International Monetary Fund (IMF) approved bailout by eurozone ministers, saved the country from a banking system bankruptcy and eurozone departure.
Key markets across Europe, excluding Italy, reacted positively in midday trading.
The second-largest bank, Popular Bank of Cyprus – known as Laiki – will effectively be shut down and split into a “good bank” and a “bad bank”.
Sub-100,000-euro deposits in Laiki will be safeguarded and transferred to the Bank of Cyprus, the so-called “good bank”, while those above the 100,000-euro limit, which under EU law are not insured, will be frozen and hit with the levy of around 30% to resolve the debt crisis.
The move will yield some 4.2bn euros (£3.6bn) overall – the bulk of the 5.8bn euros (£4.9bn) Cyprus needed to raise as part of the bailout conditions.
etc.
Everything coming up [strike]roses[/strike] olives! Looks like Russia got the boot – 30% ow! …”because I used to love her but its all over now”:
https://www.youtube.com/watch?v=8rI8zV2-DooL,
Sid.Can’t run on a bank when you either don’t have anything to withdraw, or you don’t have anything to withdraw anymore, or ummm…. when you can’t withdraw what you don’t have anymore. Problem solved. :whistle:
Now, only the stock market finally crashing might spook the masses into paying attention to the fact that they don’t have anything anymore.
And the stock market finally crumbles. Watch out.
What is happening has been planned.
Its a troika experiment.
Now we get to see what happens when the central banks do the right thing and don’t start up the printing press.
The objective is to get a default and gather the data from the resulting chaos.
All doomers should pay attention.
Coming To a Town Near You
Keep watching. Keep gathering your own data.
https://www.zerohedge.com/news/2013-03-25/word-out-place-sends-europe-tumbling
A Word Out Of Place Sends Europe Tumbling
“Cyprus a Template For EU”
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