Bailout of Cyprus to cost depositors 10% immediately

RT reporting that the Cyprus vote is delayed until Tuesday:
...
A meeting of the Cyprus parliament had been originally scheduled for Sunday but was postponed until Tuesday in order to try and broker a deal between the parties, Cypriot state media reported.

At the same time authorities have extended for another day Monday's bank holiday, so the levy is unlikely to come in force on Tuesday morning as was initially planned.
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http://rt.com/business/cyprus-bailout-bank-tax-deposits-401/
 
Cypriot bang : We have your money, we wood decide how much to apply the levy on your balance. :p

we do help out our customers to top up their balances before they are ready for the levy... we
as well offer them cash in their account for such an incentive, after the clipping is applied. then we take back what is ours, that is after the amount of levy has been calculated...

that is how the game should be played :lol:
 
Ok it's late and I am severely tired so I am not going to read all 5 pages to see if this has been answered, so.

Do I have this right?

The two major banks in Cyprus are about to go belly up. One causing the other. The result for depositors according to the PM is that depositors would be lucky to get back 40c on the dollar if a natural bankruptcy was to take place. Europe has agreed to bail these two banks out, but one of the conditions is that they take a MUCH smaller haircut of up to 10c in the dollar because the Cypriot government can't cover the losses.

Do I have this part right?

If so what are they having a whinge about?
 
^ The whinge is the ECB/Germans have bailed out billions upon billions to European banks and depositors haven't copped a haircut. This is the first time depositors will have to cough up anything. That's the central issue.
 
Deposits up to 100K euros are supposed to be insured / safe. A bankruptcy is supposed to affect junior and senior bondholders / creditors - not depositors. The "free" market is supposed to punish risks gone bad and allow new actors to fill the void when a bad actor fails.

The political class couldn't possibly be more in your face with the simple truth that the rule of law doesn't exist any more. They will steal from your pocket and expect you to thank them for the transgression to "solve" (it doesn't solve the fundamental / root issue) a crisis of their own making.

The Euro experiment will eventually either achieve a political union or unleash another world war. $.02
 
http://www.telegraph.co.uk/finance/debt-crisis-live/9936737/Cyprus-bailout-live.html
11.40 And now Reuters is reporting that the vote has been postponed until Tuesday at 4pm GMT, citing Yiannakis Omirou, the speaker of the Cyprus parliament.

11.36 We just reported (11.08) that the Cypriot government is looking at introducing a tax-free threshold of 20,000. But some politicians are determined to go further than that. According to French news agency AFP, Michalis Sarris, Cypriot finance minister and Panicos Demetriades, the central Bank governor separately told parliament that they were looking to see a tax-free threshold for savings up to 100,000, and ramping up the charge on deposits larger than this. Mr Sarris said that of the 67bn euros in deposits, 30bn represent savings held in accounts of less than 100,000. Mr Demetriades told parilament:

Quote I suggest we work on the numbers again, if we don't we will be unable to rebuild trust among depositors because we have broken our contract with them.

He assured parliamentarians that if the law is passed, the ECB will hold an emergency meeting aimed at injecting extra liquidity into Cyprus banks to stabilise them against a possible rush on accounts, adding "There will be a large outflow but we will deal with it."

Meanwhile, Mr Sarris said there had been a change of stance from Cyprus' troika of international lenders. He said:

Quote Together with the Central bank we are discussing the reconfiguration of rates which are close to zero for 100,000.
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And now, just in case you need a replacement scary monster to frighten the children into behaving:

nowotny_2512604c.jpg

Ewald Nowotny, Austrian central bank governor and member of the ECB governing council
Source: Telegraph
ECB Governing Council member Ewald Nowotny, speaking on Austrian radio, said the eurozone periphery nations have "nothing to fear" from the Cyprus bailout, since the island's unique circumstances - a banking system that makes up an above-average proportion of national output and a particularly high share of foreign depositors - make it a special case.
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Putin is scaring the pants off them I'd say.
"Putin said that this decision, in case of its adoption, will be unfair, unprofessional and dangerous," Russian news agencies quoted Kremlin spokesman Dmitry Peskov as saying on Monday.

The reports said Putin made the comments during an emergency meeting with members of his administration and economic advisers to discuss the Cyprus tax.

It is estimated that some 20bn of the 70bn on deposit in Cyprus a country of only 800,000 people belongs to Russians. Those deposits helped the banking sector grow beyond all reason, just like in Iceland.
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and Zero Hedge:
Russia has ~$60 billion exposure to Cyprus, including loans to companies registered in the country and after the haircut 90% of Russian deposits will still be free to leave the country if the levy is approved.

The critical point is that, should this occur (such a large outflow of Russian cash - dwarfing in fact the size of the bailout package itself) it is hard to see how the Cypriot banking system could survive (even with the assistance of the ECB's ELA). Russia's Finance Minister Siluanov expressed disappointment that Russia was not involved in the deal and it is clear that should those outflows leave Cyprus, they are unlikely to end up in other European nation banks.

It seems the pre-emptive contagion and anxiety of this 'levy' have only just begun.
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Seems like the ECB almost wants the euro banking system to implode around this. I can't imagine a more poorly implemented agenda than this tax on savings! I see what Keiser means by 'suicide bankers'.
 
In relation to looting etiquette, how long are banks required to be closed before one takes up cinder blocks? Surely if the banks are closed until next week there will be riots and lootings.
 
[youtube]http://www.youtube.com/watch?v=L-YF1PZjNGg[/youtube]

Cypriot protestors removing the German flag from its embassy
 
Lovey80 said:
Ok it's late and I am severely tired so I am not going to read all 5 pages to see if this has been answered, so.

Do I have this right?

The two major banks in Cyprus are about to go belly up. One causing the other. The result for depositors according to the PM is that depositors would be lucky to get back 40c on the dollar if a natural bankruptcy was to take place. Europe has agreed to bail these two banks out, but one of the conditions is that they take a MUCH smaller haircut of up to 10c in the dollar because the Cypriot government can't cover the losses.

Do I have this part right?

If so what are they having a whinge about?
Click to expand...
Yep. Got it in one.

IMHO The people are rebelling about being targetting directly for such a bailout rather than indirectly as has been done to date.

They were told their banks were safe ("stringent" stress tests in 2011 etc).
They were told the Government deposit guarantees meant something so there's no need to panic.
They were led to believe that demand deposits are always the last thing to be hit (i.e. hit bondholders and non-savings creditors - haircuts to the "risk taking" investors not to the "ordinary" savers).
They were led to believe that the ECB has everything under control and will do anything (except outright theft) to protect the banking system.

All of these are being proven to be the lies that stackers like us have been warning against for years. It's become mainstream. :)
 
So, banks are closed from Friday until Thursday, possibly longer. How are people that need money to buy food and medicines going to get by?

This will turn very ugly very quickly as people realise they can't eat!

This is Their fruit and Their promise.
 
boston said:
Caput Lupinum said:
I'm tipping Slovenia will be the next country to require a bailout.
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Any reason why? The reason I ask, is that I have an interest there and any information would be helpful.
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The speed in which there import driven economy is shrinking, unemployment level rising, poor condition of their banking sector and political instability. Slovenia have been on the brink of needing a bailout for quite some time. It's only a matter of when. They've only freshly elected a new parliament after the last one got ousted in a vote of no confidence and the current one is lacking any real experience and is anti-austerity. I'd be very surprised depending on the conditions of the rest of the eurozone that Slovenia don't need a bailout before the end of the year.
 
Anyone shed some insights on this pls

One side says that this is a good sign where now not only taxpayers burden the debt but the depositors share the pain. This indicated Euro starts taking this matter more seriously and also incapable to take more and more debts.

On the other hand, this 'run on the bank' disease can be contagious and spread to other previous bailout countries PIIGS and surely if the depositors (mom n dad or big boys or big finanicial institutions) in these PIIGS countries take all their money out, isnt this a sudden death to Euro economy? The banks will go bankrupt instantly because they cant pay all the deposits in one go.

Hmmm .. One riddle to be unfolded soon by those officials
 
^ In today's times where there are far more digits than cash I reckon the impact of a bank run depends on where people move the digits to. From Greece to Germany isn't a large problem since the ECB have mechanisms to channel it back. From Greece to UK/USA may be a different story but again, the central banks are supporting each other nowadays, so it may be manageable. From Cyprus to Russia???

I'm thinking the ECB's restraints on undertaking QE may allow a large bank run to actually work (unlike in the US where the Fed can bailout anyone it chooses to). The question is "can there really be a large enough bank run?" Presumably this restraint will go (even though they have tricks they have been using to get around it anyway).

End result is that I don't think a domestic-driven Euro bank run will eventuate.

NB Just thinking out loud here, so some comments may be bollocks :P
 
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