Cyprus crisis over...

[EE_]

Cyprus Reaches Banking Deal, Should Be Safe For At Least a Few Hours
—By Kevin Drum
| Sun Mar. 24, 2013 9:15 PM PDT12.

To the surprise of no one, Cyprus reached a deal at the very last second to bail out its banking system. The Financial Times has the basics:

Under the outlines of the deal, depositors with accounts worth less than €100,000 would not be touched. But those above those levels in Laiki Bank, the second largest and most troubled financial institution, would be severely cut, the officials said. The losses on large deposits in Bank of Cyprus, which will survive as a much smaller entity, have yet to be decided, but could be as high as 40 per cent.

....While the deal spares Cyprus of the sweeping levy on all deposits that caused outrage earlier in the week, it could end up being far more painful for large depositors, including Russian account holders, in both banks. Bank of Cyprus is particularly heavily laden with Russian deposits.

Strict capital controls will remain in place to prevent wealthy Russians from withdrawing all the rest of their money the instant that banks reopen, which is pretty much what anyone with any sense would do if they were allowed to. No matter how emphatically the great and good of Europe insist that Cyprus's problems are now solved for all time, the EU's recent history suggests taking their assurances with a great big shaker of salt.

And it turns out that this isn't all. AP reports that even haircuts this colossal will raise only €4.2 billion. The remaining €1.6 billion demanded by the EU will come from "tax increases and privatizations." The Wall Street Journal reports on the likely result:

"The [deposit] haircuts will have a calamitous impact on Cypriot output, leading to a decline in gross domestic product of 10% this year and 8% in 2014," said Gabriel Sterne at Exotix, a hedge-fund advisory. "We think the peak-to-trough decline in annual real GDP will be in the order of 23%, similar to Greece, but we see risks more on the downside than the upside."

As with the rest of Southern Europe, Cyprus faces crippling job losses, rising business bankruptcies and slumping tax collections, said economists.

That could imperil the country's ability to meet budget targets, something that in turn could call forth even harsher measures and once again stoke fears about the island's long-term future inside the euro zone.

As for possible revenge from the Russian government, there's no word on that yet. Stay tuned.
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http://www.motherjones.com/kevin-drum/2013/03/cyprus-reaches-banking-deal-should-be-safe-least-few-hours

[mamboni]

Crisis over? Not by a long shot. The Russians will not take this standing down. Watch for violent acts of retribution. And the people, the ones with their eyes and ears open, now see the writing on the walls: any money you have in the banking system is fair game for the bankers. Cyprus will see mass flight of bank depositis in reaction to this theft by the banksters. How the heck is Cyprus supposed to recover economically and pay her debts when GDP starts collapsing? Finance is the Cyprus economy. What a fricking joke.

[chad]

test run. greece was too big for them to try it on. cyprus, small island, etc. now that they know they can get away with it, time to refine the approach and roll it out to larger targets.

[Neuro]

The Russian patsy is set up for the greatest bankrobbery...

[EE_]

I should stop watching CNBC...I think they are giving me bad information?

Wall Street is happy the crisis has been averted. Stocks are ready to make new all time highs again...the S&P too.
Gold is DOA

[Horn]

I should stop watching CNBC...I think they are giving me bad information?

Wall Street is happy the crisis has been averted. Stocks are ready to make new all time highs again...the S&P too.
Gold is DOA

Some well timed pump money is all, can't see how markets making money for someone else could be reason to rally.

Well maybe for the pumpers.

[Mouse]

"Hey Jamie. How's it hanging? Good, good. Yeah, we got it fixed up for now. You took out your EUR shorts, right? Good, good. Tell Blythe to get back to work. Mmm kay. Buh-bye"

[Hatha Sunahara]

Watch for bank runs all over southern Europe. Spain particularly. If there isn't a forced bank holiday by the end of the day today, there will be tomorrow. Banks will be hemorrhaging in Italy, Greece, Portugal, and the contagion will spread. I wouldn't be surprised if there are bank holidays in the US by the end of this week.



Hatha

[Sparky]

Let's see what happens when the banks open tomorrow. Or whenever.

The stock market relief rally lasted 41 minutes.

[gunDriller]

"Lehman Brothers Holdings Inc. (former NYSE ticker symbol LEH) (pron.: /ÈliÐmYn/) was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth-largest investment bank in the US (behind Goldman Sachs, Morgan Stanley, and Merrill Lynch), doing business in investment banking, equity and fixed-income sales and trading (especially U.S. Treasury securities), research, investment management, private equity, and private banking.

At 1:45AM on September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies."

The Dow then fell about 900 points on Thursday, September 18, 2008.

The corpse of Washington Mutual was given to Chase Bank on September 25, 2008.

QE1 was announced on March 18, 2009.


So it was actually 6 months to the day from the initial major panic on the Dow, and the announcement of QE1.

i expect there will be a similar delayed reaction from the Cyprus thing.

i.e. it will have a powerful effect on world affairs in 2013.

if an Israeli attack on Iran is added to the mix, with the correspondent major increase in gas prices, it will create a tougher economic situation for people that are already stretched thin.


meanwhile, Gold and Silver are compressed lower & lower by panicked bankers.

[mamboni]

Cyprus will be economically destroyed by this deal, per Reggie Middleton:

In closing, I will also like to add that the 100k euro limit will likely hit the
small businesses and middle class ex-pat community considerably harder than it
hits the Russian oligarchs 0who are wealthy enough to have some geographic
diversification. The small businesses are the ones who employ the vast amount of
the population (them, and the now extra broke government, that is). Wiping out
40% of a small to medium business's liquid assets over 100k is tantamount to
corporate genocide. Add to that the extreme taxation to come from attempting to
pay back the Troika and the guaranteed spike in unemployment stemming from all
of those broken companies, the breakdown economic activity from those missing
businesses and the near guaranteed counterparty run whenever those banks open up
again (if ever), and you have a austerity-imposed depression on your hands. This
is a depression that's currently occurring in Greece and was forecast 3 years
ago, see That's actually good news compared to what's likely to happen to
those other countries' bank depositors who feel that their liquid assets, at one
time thought to be actually liquid and sacrosanct, are at risk like those of the
Cyrprians.

http://www.zerohedge.com/contributed/2013-03-25/mainstream-media-says-cyprus-salvaged-eu-deal-i-say-cyprus-sacrificed-said-de

[Horn]

Cyprus will be economically destroyed by this deal, per Reggie Middleton:

In closing, I will also like to add that the 100k euro limit will likely hit the
small businesses and middle class ex-pat community considerably harder than it
hits the Russian oligarchs 0who are wealthy enough to have some geographic
diversification. The small businesses are the ones who employ the vast amount of
the population (them, and the now extra broke government, that is). Wiping out
40% of a small to medium business's liquid assets over 100k is tantamount to
corporate genocide. Add to that the extreme taxation to come from attempting to
pay back the Troika and the guaranteed spike in unemployment stemming from all
of those broken companies, the breakdown economic activity from those missing
businesses and the near guaranteed counterparty run whenever those banks open up
again (if ever), and you have a austerity-imposed depression on your hands. This
is a depression that's currently occurring in Greece and was forecast 3 years
ago, see That's actually good news compared to what's likely to happen to
those other countries' bank depositors who feel that their liquid assets, at one
time thought to be actually liquid and sacrosanct, are at risk like those of the
Cyrprians.


True, but at least the trash will continue to be picked up twice a week from all the dead bodies.

[Hitch]

What I don't understand, is why Russia didn't bail out Cypress to take control of all that untapped natural gas. Just doesn't make sense why that wasn't part of the bailout package. Russia controls 100% of Europe's natural gas supply. They've used this as leverage, or punishment, in the past. Ukraine. I've read Cypress's reserves could supply 40% of all of Europe's natural gas. Why Russia would want to possibly lose their monopoly on that, I don't understand.

[mamboni]

True, but at least the trash will continue to be picked up twice a week from all the dead bodies.

"Bring out y'ur dead! .... bring out y'ur dead!"

[Neuro]

What I don't understand, is why Russia didn't bail out Cypress to take control of all that untapped natural gas. Just doesn't make sense why that wasn't part of the bailout package. Russia controls 100% of Europe's natural gas supply. They've used this as leverage, or punishment, in the past. Ukraine. I've read Cypress's reserves could supply 40% of all of Europe's natural gas. Why Russia would want to possibly lose their monopoly on that, I don't understand.The ball was not simply in Russia's court.

I think the Cyprus government preferred to punish Russian off-shore account holders, for their banks doing shitty trades with Greek debt, rather than giving Russia their gas resources... Cyprus off-shore banking status is gone, finito, caput. But they'll live a good life on the natural gas, instead...

[vacuum]

What I don't understand, is why Russia didn't bail out Cypress to take control of all that untapped natural gas. Just doesn't make sense why that wasn't part of the bailout package. Russia controls 100% of Europe's natural gas supply. They've used this as leverage, or punishment, in the past. Ukraine. I've read Cypress's reserves could supply 40% of all of Europe's natural gas. Why Russia would want to possibly lose their monopoly on that, I don't understand.
Perhaps they don't mind seeing europe collapse

[Hitch]

I think the Cyprus government preferred to punish Russian off-shore account holders, for their banks doing shitty trades with Greek debt, rather than giving Russia their gas resources... Cyprus off-shore banking status is gone, finito, caput. But they'll live a good life on the natural gas, instead...

Thanks, that makes sense. Still however, pissing off Russia seems like a bad idea...especially if they are salivating over your savings account! The Cyprus gov has a lot of balls, I'll give them that.

[Libertarian_Guard]

The western media cheerleading / puppet masters continue to apply their best spin job, should there be a selloff, they'll pimp it along as a buying opportunity.

[Libertarian_Guard]

The Cyprus gov has a lot of balls, I'll give them that.

They were stuck between bad and worse! And getting back to their own currency will be another chop.