Mar 262013

Posted by greydogg, 99GetSmart


Source: – Solidarity

Sign our petition! Visit

Solidarity with the Greek People Campaign
For a revision of austerity policies

Europe must prevent the situation in Greece from becoming a humanitarian catastrophe and make sure that the same remedy is not applied to other weak economies.

Sign the petition! We ask the members of the Troika and the Greek government, to revise the austerity plan and put humans and their needs at the centre of their policies.

The results will be sent to the Troika and Greek government on the 9th of May 2013.




By Henry Blodget, Business Insider

The good old days ...

The good old days …

As expected, Cyprus and the EU reached a new late-night bailout deal last night that will reduce the chance that Cyprus’s financial system and economy will completely implode.

The new deal is better than the last deal in one key respect:

  • Deposits under 100,000 euros will be protected

That’s very important. Those deposits were ostensibly “insured.” To seize them, the way the last bailout deal would have, would have been grossly unfair and would have set a truly alarming precedent.

Now, small depositors in European banks can breathe more easily. At least in this case of gross malpractice on the part of reckless bank managers, their life savings have been preserved.

Alas, the good news ends there.

Although deposits under 100,000 euros will be spared, deposits over 100,000 euros will be seized and subjected to an as-yet undetermined haircut–with the confiscated money going to bail out the gambling losses of the aforementioned reckless idiots who run some of Cyprus’s banks.

This seizure, needless to say, will dampen the enthusiasm of rich depositors for keeping money in banks that get themselves into financial trouble.

And because many, many banks in Europe have gotten themselves into financial trouble, this will create a general state of unease among rich depositors throughout the Eurozone.

And it should wig out some bank lenders, as well. […]




Source: Bloomberg


After one of the most fabulous verbal faux pas in recent history was committed yesterday, in which the truth briefly escaped the lips of the new Eurogroup head who still has to learn from his masterful “when it becomes serious you have to lie” predecessor and ever since both he and all of uber-incompetent Europe have been desperate to put the genie back into the bottle to no avail, everyone has been caught in a great debate: to template, or not to template?  Below is a summary of Wall Street’s thinking on this key for so many European (and soon global) depositors.

Deutsche Bank:

  • Damage from Dijsselbloem’s earlier message was done even as he tried later to clarify his Cyprus template remark, Jim Reid, head of fundamental strategy at Deutsche Bank, writes in note
  • Cat increasingly let out of bag in past week on different ways to resolve future banking and sovereign crises; comments yday add to risk nothing is off the table when it comes to future issues
  • Investors and creditors may also take the view that there’s increasing inconsistency about future rescues


  • Dijsselbloem’s comments reflect clear misalignment in views among Europe’s leaders on structure and timing of banking resolution, Fabrice Montagne, economist at Barclays, writes in note
  • Expect policymakers to clarify ESM role at upcoming EU summit in June; no clarity at the moment on whether ESM will take full responsibility for bank recapitalization for weak banks once the single supervisory mechanism is in place

Morgan Stanley:

  • Cyprus bailout shows increasingly apparent change in EU approach to place burden on investors and depositors rather than tax payers, Hans Redeker, strategist at Morgan Stanley, writes in note
  • Dijsselbloem’s comments of Cyprus template is consistent with with the change in approach to bailouts even after he back-pedaled; comments consistent with those of Merkel and recent bank nationalization in Holland
  • Investors who recently returned to peripheral mkts may be deterred by perceived change, increasing EUR’s downside risk


  • Dijsselbloem’s comments, together with the ditched plans to take on small deposit holders, show genuine change in approach to solve banking sector problems
  • In future, tax payers may not be the only source to absorb banking sector losses; re-fragmentation in
    Eurozone could be a consequence of Cyprus deal
  • Negative for Ireland if Dijsselbloem’s comments do point at a change in stance; inability to resort to ESM to take over recapitalization of Irish banks may complicate exit from bailout […]




By Paul Wallis, Digital Journal

ADAMS270512_2231005aYou get tired of writing about nothing but human stupidity after a while. The Cyprus case, however, is exceptional in its sheer bastardry. A bailout with no specifics, a policy with no objectives and less economic planning, you name it, it’s all there.

Cyprus, very reluctantly, has been forced into a bottom line deal which it didn’t want. Consumers are being made to pay for the failures of financial institutions. The EU and IMF, supposed guardians of the public interest, are punishing the public. The Cyprian economy is poised to take advantage of natural gas reserves offshore, and is being crippled before it does.

If this sounds like a quick fix at the cash register, it is. What’s screamingly obvious is that the future isn’t being considered at all. Likely job losses will decimate the Cyprus economy, which in what may well be a Depression mode, is then expected to support itself. According to some sources, 70% of Cyprians work in the financial sector. Guess what’s going to happen to those jobs as the sector shrinks.

Double standards, there are many:

(a) Cyprus has been accused, in fact, of having a financial sector that’s “too big”. This means that Luxembourg, Switzerland, Monaco and other financial centres around the world are also too big?

(b) Russian money is a problem- For someone. People have been quick enough to accept Russian money around the world, but not Cyprus? If there are any irregularities with the Russian financial interests, why are the Cyprian people, not the Russians or apparently anyone else, paying for failure to enforce financial laws?

(c)The reasons cited for the crackdown on the Cyprian banks are “poorly performing assets”. The fix is to create a “bad” bank to manage those assets and transfer deposits to the Bank of Cyprus. This will be done after ripping off whatever’s available from the depositors who are supporting the economy.

(d) It’s also being done at the expense of the domestic economy which is paying the bread and butter for businesses with their savings. That means that the net amount of money in the Cyprus economy is being drastically reduced.

Meanwhile, the rumbles in a small island economy are affecting global “optimism” and stock prices, according to Bloomberg. Isn’t that just too damn sad? They’ve even found another way for other people to lose money as a result of the crisis. The sheer genius never ends, does it?

Now a few questions:

1. How are Cyprians going to pay bills?

2. How does an economy keep working if people can’t pay their bills?

3. How is the small Cyprian economy expected to function with so much less cash in circulation?

4. How is the economy supposed to develop from this point?

There’s a typical finance sector situation in play here, too:

1. There’s a series of disasters, but absolutely nobody is held responsible. There’s no suggestion that anyone will ever be held responsible.

2. The complexities of financial asset management are used as a smokescreen for various forms of corruption, money laundering etc., but that’s OK with the EU, just as it was with the US after the mortgage securities disaster.

3. The public are penalized. As in the US, the catastrophic failures of the finance sector in Greece and Spain have resulted in massive job losses and trashing the domestic economies.

4. Priorities are distorted. € 10 billion is peanuts to Europe. Why not come up with a workable long term fix, instead of a slash and burn exercise for such a small amount of money over say 20 years, not 2 weeks? Because someone obviously doesn’t want a rational solution. […]




By Tyler Durden, zerohedge


Yesterday, we first reported on something very disturbing (at least to Cyprus’ citizens): despite the closed banks (which will mostly reopen tomorrow, while the two biggest soon to be liquidated banks Laiki and BoC will be shuttered until Thursday) and the capital controls, the local financial system has been leaking cash. Lots and lots of cash.

Alas, we did not have much granularity or details on who or where these illegal transfers were conducted with. Today, courtesy of a follow up by Reuters, we do.

The result, at least for Europe, is quite scary because let’s recall that the primary political purpose of destroying the Cyprus financial system was simply to punish and humiliate Russian billionaire oligarchs who held tens of billions in “unsecured” deposits with the island nation’s two biggest banks.

As it turns out, these same oligrachs may have used the one week hiatus period of total chaos in the banking system to transfer the bulk of the cash they had deposited with one of the two main Cypriot banks, in the process making the whole punitive point of collapsing the Cyprus financial system entirely moot.

From Reuters:

While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.

No one knows exactly how much money has left Cyprus’ banks, or where it has gone. The two banks at the centre of the crisis – Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus – have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia’s Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks’ largest depositors. […]

Via The FT

One Cypriot lawyer with Russian clients said he had already been approached by half-a-dozen European banks in locales ranging from Latvia to Switzerland to Germany, some of them promising they could open new bank accounts for his clients in under an hour.

The Cypriots killed their country in one day,” says Mr Mikhin, referring to Friday March 15, when President Nicos Anastasides accepted the EU’s proposal to seize €5.8bn in emergency funds from Cyprus’s local and foreign depositors.

“The locals should understand: as soon as the money leaves, the people who go to restaurants, buy cars and buy property leave too. The Cypriots’ means of living will disappear,” he says.

“They are saying we laundered all the money, but they lived on that money for 10 years and forgot about it.”

Says another Nicosia-based lawyer: “I don’t understand why it is money laundering when it’s in Cyprus, when in London it’s a perfectly respectable company.”

If the double-taxation treaty is lifted there will be no reason for us to stay in Cyprus,” an oligarch’s Russian lawyer says bluntly.

Mr Mikhin complains that the Cypriots do not appreciate the extent to which Russia has propped up the local economy. “When the Russians leave who is going to stay at the Four Seasons for $500 a night? Angela Merkel?”

But there are signs that a growing number of locals realise how drastic a mass emigration of Russian business would be.

Over the past week, a new billboard has sprung up on the highway between Limassol, the palm-treed beach town favoured by the Russians, and Larnaca International Airport.

Drawing on Russia and Cyprus’s shared Orthodox faith and deep political ties dating back to the Soviet era, the advertisement displays a massive Russian flag, with a desperate plea in Russian underneath: “Brat’ya ne predaite nas!”

“Brothers, don’t betray us!”




By Steve Hanke, Proffessor of Applied Economics, Johns Hopkins University

Hayek v. Krugman – Cyprus’ Capital Controls

Nobelist Paul Krugman has a propensity to spin and conceal. This allows for deception – the type of thing that hoodwinks some readers of his New York Times column. While deception doesn’t qualify as lying, it also fails to qualify as truth-telling.

Prof. Krugman’s New York Times column, “Hot Money Blues” (25 March 2013) is a case in point. Prof. Krugman sprinkles holy water on the capital controls that will be imposed in Cyprus. He further praises to the sky the post-1980 capital controls that were introduced in a number of other countries.

Prof. Krugman then takes a characteristic whack at all those “idealogues” who might dare to question the desirability of capital controls:

But the truth, hard as it may be for ideologues to accept, is that unrestricted movement of capital is looking more and more like a failed experiment.

Fine. But, not once did Prof. Krugman mention that there just might be a significant cost associated with the imposition of capital controls – a cost with which Prof. Krugman is surely familiar.

Before more politicians fall under the spell of capital controls, they should take note of what another Nobelist, Friedrich Hayek, had to say in his 1944 classic, The Road to Serfdom:

The extent of the control over all life that economic control confers is nowhere better illustrated than in the field of foreign exchanges. Nothing would at first seem to affect private life less than a state control of the dealings in foreign exchange, and most people will regard its introduction with complete indifference. Yet the experience of most Continental countries has taught thoughtful people to regard this step as the decisive advance on the path to totalitarianism and the suppression of individual liberty. It is, in fact, the complete delivery of the individual to the tyranny of the state, the final suppression of all means of escape—not merely for the rich but for everybody.

When it comes to capital controls, I think the Cypriots – even the non-ideologues – might be inclined to agree with Hayek over Krugman. […]

READ @–-cyprus’-capital-controls



By Eirene, A Place Called Space


Did you like this? Share it:

 Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>