Bailout of Cyprus to cost depositors 10% immediately

TheEnd · Mar 19, 2013

So now we have to wait until Thursday to see what damage has been done....I'm confused?

Henry Wartooth · Mar 19, 2013

Can't they just add 10% to the debt tab instead? Oh wait

kiwi_stacker_uk · Mar 19, 2013

Bit rubbish if debit cards cant even be used to buy groceries. I never carry enough physical cash to last long, guess I'll need to start.

If for some miracle debit cards are still working I would go straight to a bullion dealer and spend.

kiwi_stacker_uk · Mar 19, 2013

Actually I just read credit and debit cards still working in Cyprus. Time to go shopping I would think.

But if you were a retailer would you want to increase your bank balance?

JulieW · Mar 19, 2013

In another thread as well -Jim Sinclair at KWN on what it means

If people believe that $13 billion is the total of this bailout, they are out of their minds. $130 billion is not the true total of even the Russian deposits in Cyprus banks. One important Russian businessman, in his various business enterprises, would have $100 billion on deposit himself. 10% of all deposits in Cypress could be $500 billion or more because Cyprus is the banking entity for Russia, not Switzerland or Grand Cayman.

The Central Bank of Cyprus doesn't even know how big the Russian deposits are because it is held as secret at the behest of the Russians. It is a secret banking system set up for the Russians, by the Russians, and the IMF has just taken a large bite out of that elephant.
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AND

Part of the result of all of this is the Russian elite will now move heavily out of currencies and into gold. Going forward, the Russian sovereign entity will now support the price of gold and it will be for the benefit of the Russian oligarchy. This will also serve to bring Russian and Chinese financial interests closer together, and, in time, will finally result in freeing the gold market from Western price manipulation and influence.
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and that of course is the unthought, unintended consequence that the myopic self-entitled arrogant bureaucrats didn't consider.

My currently favourite right wing commentator Ann Barnhardt has this to say:
http://barnhardt.biz/

'This (Cyprus) opens up enormous possibilities...'
Posted by Ann Barnhardt - March 18, AD 2013 10:47 AM MST
'... for the Administration.'

Thus spoken on CNBC this day.

A couple of points. First, there STILL is confusion about these confiscations, dating back to the MF Global theft. People are still trying to say that the money that was/is confiscated, both from the MF Global customers and the Cypriot bank accounts is somehow "investment" capital.

No, no, no, no, no.

If you deposit money in a custodial account, you are NOT investing in the brokerage firm or in the bank. The MF Global customers were not investors in MF Global or sharing in any way in MF Global's proprietary trading profits. The people of Cyprus are not investors in their banks. The people of Cyprus who deposited money in the bank were not signing on to a share in an uber-leveraged scheme involving repos and credit default swaps on Greek sovereign paper.

THEY WERE PEOPLE WHO SIMPLY DEPOSITED THEIR MONEY, THEIR PROPERTY IN CURRENCY FORM, THE FUNGIBLE PROXY FOR THEIR LABOR AND CREATIVE CAPACITY WHICH THEY HAD ACCUMULATED, INTO A SACROSANCT, INSURED, CUSTODIAL DEMAND DEPOSIT AND/OR TIME DEPOSIT ACCOUNT.

The MF Global accounts were the same - they were fully-backed demand deposit accounts that were used to margin the account holder's futures and options positions. They were the sole, private property of the account holder and MF Global had ZERO ownership interest in that customer money.

Do you know why people used to keep fairly large balances in brokerage accounts like MF Global? Because before MF Global, brokerage accounts were guaranteed 100% by the exchange. No maximums. If a firm failed, the purpose and role of the exchange was to backstop and guarantee the firm with zero liquidity interruption. And, remembering that on the day MF Global imploded and the customer funds were swept and wired to JP Morgan, the Chicago Mercantile Exchange had an emergency slush fund of over EIGHT BILLION DOLLARS ready to go, the fact that the customers were not made INSTANTLY whole by the Chicago Mercantile Exchange is totally nefarious and criminal regardless of the circumstances.

Now the total integral failure of the brokerage paradigm has occurred in the retail banking paradigm. All deposits in the EU *were* insured up to 100,000 Euro, just like the farcical FDIC insurance. Now everyone knows that it is all total cow poop, just like the guarantees on brokerage accounts has been proved multiple times to be total cow poop.

Oh, and the oligarchs are trying to call this a "tax". Um, no. Taxes are passed by legislatures. This is Christine Legarde and some German bureaucrats arbitrarily, forcibly confiscating private bank accounts. Any "law" passed ex post facto in Cyprus will merely be a show trying to make it appear that this is not the arbitrary tyranny that it is.

Finally, I don't care how much Russian money laundering is going on in Cyprus, and yes, I know it is huge. This is totally beside the point. Just because criminal money laundering is happening through Cypriot banks doesn't mean that anyone has the right to confiscate the money of innocent Cypriots. The whole Russian money laundering excuse is a total red herring. Look, the nation with the largest absolute quantity of money laundering is the United States of America. Think HSBC. Think Wachovia. Think Washington Mutual. Think Bank of America. Does that mean that every bank account in the entire country can be levied - and not just in the banks with the money laundering but EVERY ACCOUNT IN EVERY BANK IN THE NATION? Of course not.
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perthsilver · Mar 19, 2013

JulieW said:

In another thread as well -Jim Sinclair at KWN on what it means

If people believe that $13 billion is the total of this bailout, they are out of their minds. $130 billion is not the true total of even the Russian deposits in Cyprus banks. One important Russian businessman, in his various business enterprises, would have $100 billion on deposit himself. 10% of all deposits in Cypress could be $500 billion or more because Cyprus is the banking entity for Russia, not Switzerland or Grand Cayman.

The Central Bank of Cyprus doesn't even know how big the Russian deposits are because it is held as secret at the behest of the Russians. It is a secret banking system set up for the Russians, by the Russians, and the IMF has just taken a large bite out of that elephant.
Click to expand...

That could help explain this:
http://www.zerohedge.com/news/2013-...mediterranean-russian-naval-base-cyprus-comin

Caput Lupinum · Mar 19, 2013

Caput Lupinum said:

I wonder if the Cypriot finance minister will make it back to Cyprus. Sounds like a suicide mission
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Apparently the Cypriot finance minister has "resigned" after visiting Russia

http://www.zerohedge.com/news/2013-03-19/cyprus-finance-minister-resigns

Caput Lupinum · Mar 19, 2013

Things are starting to move a bit quicker. Apparently the Cypriot president has rejected the finance minister's resignation and the current ruling party in Cyrus will abstain from voting in the bailout proposal effectively rejecting the bailout. The euro has dropped, PIIGS bond yields are rising along with gold and silver. Bullish on popcorn atm

Caput Lupinum · Mar 19, 2013

Live stream of the Cypriot parliament bailout debate

http://play.streamingvideoprovider....n=#FFFFFF&colorHighlight=#0959b2&direct=false

Caput Lupinum · Mar 19, 2013

Cypriot government MPs expected to abstain

It appears certain that the Cyprus parliament will reject the bailout package as it stands.

A spokesperson for the governing Democratic Rally (Disy) party of President Nicos Anastasiades revealed before the debate started that its MPs have decided to abstain, rather than support the package.

With the rest of the parliament expected to vote against it, this is a major display of defiance from Nicosia against the eurozone

http://www.guardian.co.uk/business/2013/mar/19/eurozone-crisis-cyprus-bailout-government-vote

menotcrimex · Mar 19, 2013

Is this the first Domino to catipult Gold?

Perhaps I'm just being optimistic

That's for the updates Capt

JulieW · Mar 19, 2013

http://www.scoop.co.nz/stories/PA13...ing-cyprus-style-solution-for-new-zealand.htm

National planning Cyprus-style solution for New Zealand

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.

"Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

"If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference."

Dr Norman questioned the Government's insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

"Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people's deposits up to a maximum ranging from $100,000 $250,000," Dr Norman said.

"OBR is not in line with Australia, which protects bank deposits up to $250,000.

"A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

"Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely a measure which is ultimately the best protection against bank failure."
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Maybe it is starting.

JulieW · Mar 19, 2013

Source:ZH
http://www.zerohedge.com/news/2013-03-19/market-update-risk-reality

Things are escalating rather quickly... Treasuries have soared to yesterday's low yields (below 1.90%), S&P 500 futures are cracking lower on heavy volume -10 points (with the cash S&P below yesterday's lows) - after the other indices all went green earlier. The FX market is in a mini-crisis with EURUSD dumping and JPY strengthening considerably and rapidly. In Europe, it is worse as Portuguese, Spanish , and Italian bond spreads are snapping wider to post Cyprus wides; Spanish and Italian equity markets are tanking down 3-4% on the week; and GGBs are back under EUR50 - their lowest in 3 months. Gold and Silver are rising as Copper and Oil slide. Swiss 2Y rates are negative at their lowest in over 2 months. VIX is up 33% from Thursday's lows and back above 15% - biggest 2-day jump since Nov 11.
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southerncross · Mar 19, 2013

Computer say's NO!

Caput Lupinum · Mar 19, 2013

Cyprus has voted against the bailout. Calls Germany's bluff

Caput Lupinum · Mar 19, 2013

There's a good chance that Cyprus banks won't open until at least Tuesday now. Apparently Monday is another scheduled bank holiday in Cyprus.

tiddleyetom · Mar 19, 2013

Caput Lupinum said:

Cyprus has voted against the bailout. Calls Germany's bluff
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Poloniums off the menu this week then )

A majority NO ... http://www.bbc.co.uk/news/world-europe-21842966

kiwi_stacker_uk · Mar 19, 2013

make sure you're not too exposed over easter weekend.

Caput Lupinum · Mar 19, 2013

Should be interesting to see how this plays out. I still expect some renegotiated deal at the last moment which seems to be the norm in Europe, but the ECB can't front the entire bailout as Cyprus has no collateral left and the Germans will be up in arms if they try to weasel out a deal which will cost German taxpayers in the end. If Russia steps in and fronts the money in exchange for rights to future gas fields then it opens up a whole new can or worms about countries outside the eurozone bailing out countries within it.

menotcrimex · Mar 19, 2013

Its one big chess game and Russia IMO has some of the best players

Check

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