– Ireland, You May Very Well Be Bust & I Make No Apologies For What I’m About To Show You (ZeroHedge, April 7, 2013)
– Visualizing The Cypriot Deposit Confiscation (ZeroHedge, April 2, 2013):
From ‘why Cyprus could not bail out its banks’ to its failed financing needs and the road to confiscation, Demonocracy provides the ‘everything you wanted to know about Cyprus’ infograph ‘but were afraid to read’.
The big depositors will get hit harder than expected, because a lot of money left the banks right before the banks went into lock-down.
Cyprus’ Banks are the first during the last 147 banking crises that will not get a single Euro from EU to bail out the banks. Greek branches of Cyprus banks had €15 Billion in deposits, they were sold last minute to another bank, by so they will not be included in sharing the losses- obviously suspicious. Some people are offering depositors to get their money out of Cyprus for a 20% fee. Cyprus officials are throwing around slogans such as “time for responsibility‘ (to pay up) just to turn around a week later and oppose it.
With the lack of backbone, the next political move is rather unpredictable. EU officials say Cyprus is a unique case, but EU has many countries with over-sized banking sectors.
The crash of Cyprus financial sector and government bailout sentences Cyprus to a long period of recession and debt. The list of demands by EU to Cyprus for accepting the €10 billion bailout includes things such as freeze on pensions, massive tax increase on just about everything and more taxes.
– The Great Cyprus Bank Robbery (Ron Paul, April 1, 2013):
The dramatic recent events in Cyprus have highlighted the fundamental weakness in the European banking system and the extreme fragility of fractional reserve banking. Cypriot banks invested heavily in Greek sovereign debt, and last summer’s Greek debt restructuring resulted in losses equivalent to more than 25 percent of Cyprus’ GDP. These banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.
– Cyprus Parliament President Says “No Future” Under Troika, Calls For “Iceland” Solution (ZeroHedge, March 30, 2013):
Just last week Yiannakis Omirou, Cypriot House of Representatives President, was calling for the nation to accept it is “time for responsibility” as they progressed towards a final solution; and yet today, as Cyprus’ Famagusta reports, he believes the ‘Troika-imposed’ responsibility will, “turn Cyprus into a colony of the worst possible type.” His ‘Icelandic’ solution is to “leave the Troika and EMS behind,” to ensure “national independence, national sovereignty, moral integrity, and economic independence.” He may have a point; judging from the chart below of the Troika’s poster-child Greece, relative to Iceland, things are not going so well. As Omirou ominously concludes, “if we remain bound by the Troika and the memorandum Cyprus’ destiny is already foretold and there will be no future.”
There is no other alternative but to free Cyprus from the bonds of the troika and the memorandum, House of Representatives President Yiannakis Omirou has said.
– Cyprus-Style Bank Account Confiscation Is In The New 2013 Canadian Government Budget! (Economic Collapse, March 28, 2013):
The politicians of the western world are coming after your bank accounts. In fact, Cyprus-style bank account confiscation is actually in the new Canadian government budget. When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013” which the Harper government has already submitted to the House of Commons. This new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks” in Canada. “Economic Action Plan 2013” was submitted on March 21st, which means that this “bail-in regime” was likely being planned long before the crisis in Cyprus ever erupted. So exactly what in the world is going on here? In addition, as you will see below, it is being reported that the European Parliament will soon be voting on a law which would require that large banks be “bailed in” when they fail. In other words, that new law would make Cyprus-style bank account confiscation the law of the land for the entire EU. I can’t even begin to describe how serious all of this is. From now on, when major banks fail they are going to bail them out by grabbing the money that is in your bank accounts. This is going to absolutely shatter faith in the banking system and it is actually going to make it far more likely that we will see major bank failures all over the western world.
What you are about to see absolutely amazed me when I first saw it. The Canadian government is actually proposing that what just happened in Cyprus should be used as a blueprint for future bank failures up in Canada.
– What Dijsselbloem Really Said: Full “On The Record” Transcript (ZeroHedge, March 26, 2013):
Hopefully the memory of the new Eurogroup head, who in a one day lost more credibility than his admittedly lying predecessor Juncker ever had, will be jogged courtesy of this full transcript provided by Reuters and the FT of what he told two reporters – on the record – and for the whole world to read. Because, by now, we are confident everyone has had more than enough with watching the entire Eurozone rapidly and tragically turn itself into a complete and utter mythomaniac, kletpocratic circus.
To clarify what Dijsselbloem said, we’ve decided to post a transcript of the portion of the interview dealing with how the eurozone might deal with bank failures in the future in light of the Cyprus example. The interview we conducted alongside Brussels bureau chief Luke Baker of Reuters (@LukeReuters) lasted about 45 minutes, and the portion on bank resolution lasted for about 10 of those minutes. The interview started out with some Cyprus-specific questions – like how capital controls might work, whether Dijsselbloem had learned any lessons form the Cyprus experience – and then shifted to a discussion about whether north-south relations were hampering EU decision making. That’s when Baker asked the first question about whether Cyprus set a precedent for future bank rescues…
Q: To what extent does the decision taken last night end up setting a template for bank resolution going forward?
A: What we should try to do and what we’ve done last night is what I call “pushing back the risks”. In times of crisis when a risk certainly turns up in a banking sector or an economy, you really have very little choice: you try to take that risk away, and you take it on the public debt. You say, “Okay, we’ll deal with it, give it to us.”
From the article:
Deposits above 100,000 euros, which under EU law are not guaranteed, will be frozen and used to resolve debts, and Laiki will effectively be shuttered, with thousands of job losses.
The revised bailout plan may not require further parliamentary approval since the idea of a levy was dropped.
The tottering banks hold 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros – enormous sums for an island of 1.1 million people which could never sustain such a big financial system on its own.
– Cyprus Reaches Bailout Deal With International Lenders (Huffington Post/Reuters, March 25, 2013):
* Deal to shut Laiki bank, transfer insured deposits
* Clinched hours before Monday deadline to seal EU bailout
* Without deal banks faced collapse, possible euro zone exit
BRUSSELS, March 25 (Reuters) – Cyprus clinched a last-ditch deal with international lenders on Monday for a 10 billion euro ($13 billion) bailout that will shut down its second largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians.
The agreement emerged after fraught negotiations between President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund – hours before a deadline to avert a collapse of the banking system.
– Cyprus bailout: Deal reached in Eurogroup talks (BBC News, March 25, 2013):
Eurozone finance ministers have agreed a deal on a bailout for Cyprus to prevent its banking system collapsing, officials say.
Reports suggest the deal will include a levy on deposits of more than 100,000 euros in Cyprus’ two biggest banks.
The levy on accounts in Laiki Bank – the country’s second-biggest – could be as high as 40%, correspondents say.
– Rampapalooza As Cyprus-Troika Reach Deal (Updates) (ZeroHedge, March 24, 2013):
UPDATE: It appears the ‘deal’ to default/restructure the banks has been designed to bypass the need for parliamentary votes, since it is theoretically not a tax.
While we have little color on what kind of carnage the President of Cyprus had to accept to his fellow countrymen, the news is that :
- *CYPRUS, TROIKA REACH AGREEMENT IN PRINCIPLE, EU OFFICIAL SAYS
- *DEAL MADE AT DINNER WITH DRAGHI, LAGARDE, VAN ROMPUY, BARROSO
The terms, unsurprisingly what zee Germans wanted, are:
i) Laiki to be wound down;
ii) Bank of Cyprus to survive but with deposit haircuts, and
iii) deal would see secured deposits in Laiki moved to Bank of Cyprus.
In other words, a deal far worse then the original on proposed by the Eurogroup last week – when the banks still existed. The key appears to be the ‘saving’ of the insured depositors (crucial to avoid a pan-European bank run) and the crushing of the ‘whale’ depositors.
– Cyprus Bailout Needs Rise By €2 Billion As Conditions Deteriorate Rapidly (ZeroHedge, March 24, 2013):
A week of closed banks, depositor angst, and economic malaise is creating an increasingly vicious circle for Cyprus (and implicitly the European Union). As Die Welt notes, because the economic data of the tiny ‘irrelevant’ island could be considerably worse than previously thought (or forecast by Troika) thanks to the distortions created this week by bank closings, several people around the Troika said the exact amount of the bailout remains uncertain and could amount to EUR2bn more than expected. With the Troika capping their handout at EUR10bn of the current EUR17bn needed (and the deposit levy reportedly filling EUR6bn of that EUR7bn hole), the need for a bigger bailout – which seems increasingly likely – will fall on Cyprus banks’ depositors (or taxpayers) leading to a hard-to-beat downward spiral. Simply put, the more deposits are pulled, the more deposits need to be confiscated; and with retailer stocks running low (“will last another 2-3 days”) and cash-on-delivery demanded, the real economy will “have a problem if this is not resolved by next week.”
Retailers, facing cash-on-delivery demands from suppliers, warned stocks were running low. “At the moment, supplies will last another two or three days,” said Adamos Hadijadamou, head of Cyprus’s Association of Supermarkets. “We’ll have a problem if this is not resolved by next week.”
Cyprus needs a lot more money than expected
A few hours before the emergency meeting of the situation seems to capture from bankruptcy Cyprus to deteriorate: From Troika says that money could not exceed the estimated range.
Cyprus needs for information of the “world” more money to bail out its banks and the stabilization of its national budget. Not initially agreed 17 billion euros were enough states in the field of negotiations. The exact amount is not certain. Several people around the troika said the “world” that the increased demand would amount to around two billion euros.
– Former Cyprus Central Bank Head And Senior Fed Economist: “The European Project Is Crashing To Earth” (ZeroHedge, March 22, 2013):
Back in August 2011, one of the most prescient European (ex) central bankers, Cyprus’ very own Athanasios Orphanides was optimistic, but with a caveat: “I am optimistic that with the right actions and effort by all we will pull through this,” Orphanides told reporters after a meeting with Finance Minister Kikis Kazamias. They were Orphanides’ first public comments since warning authorities in a July 18, 2011 letter that Cyprus ran the risk of requiring an EU bailout unless urgent action was taken to shore up its finances.”
Two years later, following endless dithering and pretense that just because the ECB has stabilized the markets, all is well, and “action was being taken” when none was (because in the New Normal the lack of market collapse is somehow supposed to represent structural changes are taking place, which never actually happen), Cyprus is beyond the bailout stage – it is now quite literally on the verge of total collapse. This is also why Orphanides, who recently (and perhaps prudently) quit as Central Banker of Cyprus following a clash with the new communist government (and was replaced by a guy named Panicos), no longer is optimistic. “The European project is crashing to earth,” Athanasios Orphanides told the Financial Times in an interview. “This is a fundamental change in the dynamics of Europe towards disintegration and I don’t see how this can be reversed.”
It can’t. Which is what we have been saying all along. But it apparently takes a former Federal Reserve senior economist to say the perfectly obvious, and for reality to finally hit front and center.
More from the FT’s interview with Orphanides:
This week’s events had made “a mockery” of EU treaties, he added. “It suggests that in Europe not all people are equal under the law.”
“We have seen other eurozone countries, the Netherlands, for instance, put national interests ahead of the European interest by trying to bring down the economic model of countries such as Cyprus or Luxembourg.”
– Troika Hikes Cyprus Bailout Demands, Says “Conditions Worsened” (ZeroHedge, March 22, 2013):
Just when you thought you knew the rules, the Troika has changed them… (via MNI)
- TROIKA SAID CONDITIONS WORSENED, WANTS BILL TO REFLECT
- TROIKA HIKED CYPRUS CONTRIBUTION TO E6.7 BN VS E5.8 BN:
SOURCEMoar Bigger Haircuts for the rich please – and following Schaeuble’s veiled threat (leave – we can handle it)…
- *SCHAEUBLE: MARKET SEES EURO-ZONE BETTER PREPARED FOR TURBULENCE
– National planning Cyprus-style solution for New Zealand (Green Party of Aotearoa New Zealand, March 19, 2013):
The National Government is 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.“If a bank fails under National’s plan, all depositors will have their savings reduced overnight to fund the bank’s bail out.”
“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.
– New Zealand Government Now Planning a Cyprus-Style Confiscation to Fund Bank Bail Out (IntelliHub, march 20, 2013):
Many people around the world were relieved to learn yesterday that a proposed measure to fund a bailout in Cyprus was not approved by the local government.
The proposed plan would tax every single person in the country with a bank account, forcing them to fund a bank bailout that shouldnt even be happening in the first place.
However, fears that other governments may take similar measures have now been proven to be well founded, as the New Zealand government is considering a similar approach.
“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.”
– Cyprus Parliament Rejects European Bailout Proposal: Calls Germany’s Bluff (ZeroHedge, March 19, 2013):
Just as we predicted yesterday, the Cyprus bailout vote has not passed parliament in a move that was merely there to force Germany’s bluff.
- CYPRUS BANK LEVY BILL DEFEATED WITH 36 VOTES AGAINST
- CYPRUS BANK LEVY BILL DEFEATED WITH 19 ABSTENTIONS
- CYPRUS PARLIAMENT VOTED IN SHOW OF HANDS IN NICOSIA
- ANASTASIADES FAILS TO SECURE VOTES FOR DEPOSIT LOSS BILL
What happens now, nobody knows. Prepare for a litany of very angry headlines out of the inner sanctum of Europe’s despotic chambers. Hopefully Pisani can explain it all.
– Europe’s Final Gambit: 20%-30% Haircut For Oligarchs To Force A Russian Bailout (ZeroHedge, March 19, 2013):
It now seems sure that the ongoing discussion in Cyprus’ government will see a “no” vote as the WSJ is reporting a rather stunning gamble by the Cypriots (and by Cypriots we mean European leaders) to force the Russians to bear the brunt of the cost of the bailout. The non-resigned Cypriot FinMin is heading to Russia to propose a deal that includes imposing a 20% to 30% levy on Russian-held deposits in Cypriot banks, which could cost them billions of euros. In exchange, Russia will be given equity in Cyprus’s future national gas company and some additional strategic benefits in the sector, while Russian investors would be given control of the board of directors at Cyprus’s banks. The apparent quid pro quo in this deal does nothing to hide the fact that private property was stolen and while pointing fingers just at the Russians may play well for PR purposes, it is described as “a long shot” as the Kremlin notes, “it’s practically impossible to talk without knowing details.”
The official said that Michalis Sarris, who is being accompanied by a delegation of businessmen, is going to propose a deal that includes imposing a 20% to 30% levy on Russian-held deposits in Cypriot banks, which could cost them billions of euros. In exchange, Russia will be given equity in Cyprus’s future national gas company and some additional strategic benefits in the sector, while Russian investors would be given control of the board of directors at Cyprus’s banks.
– UK Bankruptcy Tzar On Verge Of Bankruptcy (ZeroHedge, March 13, 2013):
Despite around $135 million in bailouts, the UK government’s Insolvency Service disputes its own insolvency. The FT reports that one British MP summed it up – “it is fair to say that if this was a company it would be in deep trouble.” The group, which polices bankrupt companies, liquidates failed businesses and disqualifies unfit directors, would be bankrupt were it not for the government’s cash injection. Dependent on fees and recoveries from bankrupt companies, the agency over-estimated its ability to recover assets from collapsed businesses. It dismisses the insolvency claims against itself however, noting the service is “living within its means” and expects to be deficit-free by 2015 (though it is unclear how unless they expect recoveries to rise dramatically or bankruptcies to increase significantly) as it is forced to provide services even when there is no prospect of recovering fees from bankrupt people or companies. Their rate of prosecution has dropped from 40% to 21% and even the creditor community has lost faith arguing that the agency’s model was “unreliable in the current economic climate” and required urgent reform.
The UK government’s Insolvency Service is all but insolvent.
Experts suggest the group, which polices bankrupt companies, liquidates failed businesses and disqualifies unfit directors, would be broke had it not received an emergency injection of cash from the government.
– French Socialist Nightmare: ‘The State Cannot Do Everything’ (Testosterone Pit, Feb 8, 2013):
The preannouncement came Thursday evening: PSA Peugeot Citroën, France’s largest automaker, would have a write-down of €4.7 billion. On top of a hefty operating loss. It would be colossal. An all-time record. Rumors spread immediately that PSA would need a bailout. The second in four months.
PSA passenger car sales in France dropped nearly 17% in 2012 from an already awful 2011. In January they dropped another 16.7%. Sales for all automakers dropped 15%, and PSA’s market share had eroded further. Kia-Hyundai sales jumped 21.2%, the only major automaker with gains. Even Volkswagen Group got clobbered: down 23.9%. PSA isn’t internationally diversified enough. It doesn’t have much in China and nothing in the US, the largest markets in the world, both growing. It’s mired in Europe where auto sales have ground to a halt. It’s bleeding €200 million a month. It’s trying to lay off 8,000 workers and shutter its plant in Aulnay-sous-Bois. And its Banque PSA Finance was bailed out last October with €7 billion in taxpayer money.
The government was so worried that it was actively studying a bailout, sources told the Liberation after the losses were announced. It was just hypothetical. “But if a capital infusion would become inevitable, the state could participate,” the source said. Instantly, a cacophony of discord erupted—within the Socialist government.
YouTube Added: 07.02.2013
– ‘EU Parliament no better than banana republic’ with PR campaign (RT, Feb 8, 2013):
As eurozone leaders lock horns over the budget deal, speculation is rife the EU is set to invest millions in a PR campaign against online critics. It puts the EU Parliament on a par with so-called ‘banana republics’, MEP Nigel Farage told RT.
“The words ‘legal’ and ‘European Union’ don’t fit together. Nothing matters here, there are no rules,” says the UK Independence Party’s Nigel Farage of the EP plan to spend huge sums of taxpayer money on social network smear campaigns against those who speak out against it.
– How The Fed’s Latest QE Is Just Another European Bailout (ZeroHedge, Feb 2, 2013):
Back in June 2011 Zero Hedge broke a very troubling story: virtually all the reserves that had been created as a result of the Fed’s QE2, some $600 billion (which two years ago seemed like a lot of money) which was supposed to force banks to create loans and stimulate the US (not European) economy, ended up becoming cash at what the Fed classifies as “foreign-related institutions in the US” (or “foreign banks” as used in this article) on its weekly update of commercial banks operating in the US, or said simply, European banks.