http://www.zerohedge.com/news/2013-03-31/cyprus-presidents-family-transferred-tens-millions-london-days-deposit-haircuts
Cyprus President's Family Transferred Tens Of Millions To London Days Before Deposit Haircuts
A day after former Cypriot President Vassilou was found to be among many elite Cypriot (politicians and businessmen) who had loans written-off by the major (now insolvent) banks; it appears the rot is far fouler than expected. In a somewhat stunning (or purely coincidental) revelation, ENETEnglish reportsthat Cypriot newspaper Haravgi claims thatcurrent President Nicos Anastasiades' family businesses transferred 'dozens of millions' from their Laiki Bank accounts to London just a week before the devastating depositor haircuts were unleashed upon his people. Of course, the denials are loud and Anastasiades has demanded an investigation into the claims; we are sure the government-selected 'independent' committee will be as thorough as the Libor anti-trust investigators. As a reminder, as we noted yesterday, here are Cyprus' gun control laws.
A company owned by in-laws of Cypriot President Nicos Anastasiades withdrew dozens of millions from Laiki Bank on March 12 and 13, according to an article published in Cypriot newspaper Haravgi.The newspaper, which is affiliated to the communist-rooted AKEL party, reports that three days before the Eurogroup meeting the company took five promissory notes worth €21m from Laiki Bank and transferred the money to London.Responding to the allegations, Anastasiades said: “The attempt to defame companies or people linked to my family… is nothing but an attempt to distract people from the liability of those who led the country to a state of bankruptcy.”The president added that no one, including himself, will be exempt from the ongoing investigations looking into responsibilities over the near collapse of the economy.Anastasiades added that when the investigative committee convenes on Tuesday, he will request that its members look into this particular case with the same attentiveness as all other cases.The company in question has firmly denied the reports.Last Friday a list of companies and politicians that had loans written off by banks at the heart of Cyprus' bailout crisis was published in Greece and was subsequently handed to the Cypriot parliament's ethics committee. The list includes the names of politicians from Cyprus' biggest parties (excluding the socialist EDEK and the Greens).
cue the riot cam for Cyprus.....
http://www.zerohedge.com/news/2013-03-31/cyprus-parliament-president-says-no-future-under-troika-calls-iceland-solution
( As I have said , I give Cyprus two weeks before all heck breaks loose - if the thoughts of the Cyprus President are any clue , my timing seems about right..... )
Cyprus Parliament President Says "No Future" Under Troika, Calls For "Iceland" Solution
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, asCyprus' 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.Omirou also expressed his conviction that no Attorney General would dream of not following through with the results of an investigation led by an independent committee to apportion blame on those responsible for bringing the country’s economy and banking sector near collapse.Omirou talked about the troika demands, which according to him will multiply and will turn Cyprus to a colony of the worst possible type and warned “I would like to send a message to the Cyprus people that there is no other way, there is no alternative apart from freeing (the country) from the troika’s and the memorandum’s bonds”.He noted that certainly, “this road will demand sacrifices”, adding that “by leaving the troika and the EMS behind us, we will ensure our national independence, our national sovereignty, our moral integrity and our economic independence”.“If we remain bound by the Troika and the memorandum Cyprus’ destiny is already foretold and there will be no future”, he pointed out.
h/t Mark Grant
cyprus media outlets - items of note....
http://www.enetenglish.gr/?i=news.en.home&id=483
Chrysostomos: Troika threats following court appeal
«Both banks will go bankrupt»
Cyprus Archbishop Chrysostomos makes statements after a meeting with President Nicos Anastasiades, 20 March 2013 (Reuters)Following his recent appeal to the Supreme Court against the troika decision to write off shares held in the Bank of Cyprus, Archbishop Chrysostomos has said that the troika threatened him that “both banks [Bank of Cyprus and Laiki] will go bankrupt”.
The leader of Cyprus' Orthodox Christian church, which holds millions worth of shares in the bank, said he would not withdraw the appeal unless the governor of the central bank and the finance minister resigned.
Following the appeal, the court issued a temporary order to suspend implementation of the troika decision.
The archbishop has vowed to do all he can so that ordinary people "won't go hungry" amid the country's financial crisis.
Chrysostomos said the church's property belongs to the people, but "dignity" prevents them from asking for help. He said he has instructed parish priests to discreetly seek out those in need.
Chrysostomos said after Sunday's liturgy that the church would help create jobs "so that smiles can return to our people's faces again."
http://famagusta-gazette.com/antigerman-sentiment-in-cyprus-could-harm-tourism-p18779-69.htm
Anti-German sentiment in Cyprus could harm tourism
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"The big question mark is will anyone from Germany want to go to Cyprus this year?" says Noel Josephides, founder and managing director of Sunvil Holidays, in an interview with the Guardian.
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• Sunday, 31 March, 2013
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However, according to the magazine, industry figures have expressed confidence that the British market will remain strong.
Online travel agency Lastminute.com reported that bookings to Cyprus on its site plummeted by 75% during the first week of the crisis, as fears grew that travelers would be trapped without access to cash – although bookings began to recover last week.
Another area of serious concern for tourism operators is Germany.
Many Cypriots are angry at Germany and the troika's demands and German media have given extensive coverage to the animosity towards Berlin on the streets of Nicosia.
Angela Merkel bears most of the hostility, with one banner strapped to a railing near parliament depicting Merkel as Hitler.
"The big question mark is will anyone from Germany want to go to Cyprus this year?" says Noel Josephides, founder and managing director of Sunvil Holidays, in an interview with the Guardian.
"It's what we saw in Greece last year. A lot of Germans will feel they are just not welcome. And will the Russians take fright? If they do, there are going to be some very good deals, especially around Ayia Napa."
On Wednesday, CTO President Alekos Orountiotis said that so far there hasn’t been a serious problem with holiday bookings cancellations, adding that tourism has to do with Cypriot hospitality amongst other things, thus the situation has not affected the arrivals and reservations.
According to CTO President, the main markets are UK, Russia, Germany, Greece and the Scandinavian countries.
He said arrivals from UK are expected to be around 900.000 and Russia 550.000.
Regading the ani-German sentiment, Minister of Tourism George Lakkotrypis said that he respects everyone’s right to demonstrate against the austerity measures, however: "We must all make sure that we don’t create a negative picture and send a negative message about our country abroad."
Just a week before the bailout crisis, the Cyprus Tourism Organistaion launched an "aggressive" policy to promote Cyprus as a destination for Germans, with the hope of also promoting the island as a business center in order to attract investors.
On March 7th, Lakkotrypis, along with CTO officials were in Berlin for a series of contacts with representatives of airline companies and major tour operators.
A CTO press release, published early March, noted “ Cyprus is an “interesting destination for German tourists, since besides the good weather, it offers safety, hospitality, culture, excellent cuisine and a number of thematic forms of tourism.”
Tourist numbers from Germany fell following the demise of Eurocypria, with the market peaking in 1997 when 250,053 German tourists came to the island.
In 2009 that figure had fallen to 131,158.
NEW STATS
Separately, revenue from tourism last year showed an increase of 10,2%. According to figures by the Cyprus Statistical Service, for the period January – December 2012 revenue from tourism is estimated to €1.927,7 mn compared to €1.749,3 mn in the corresponding period of 2011.
The above data show an increase of 10,2%. Meanwhile, on the basis of the results of the Passenger Survey, revenue from tourism reached €41,59mn in December 2012 compared to €41,64 mn in the corresponding month of the previous year, recording a decrease of 0,1%.
and.....
http://famagusta-gazette.com/estate-agents-federation-paints-bleak-picture-for-cyprus-property-market-p18773-69.htm
Estate agents federation paints bleak picture for Cyprus property market
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He added that some of those who were planning to make investments have lost funds earmarked for this purpose with the haircut on banks.
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• Saturday, 30 March, 2013
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The FIABCI Cyprus Honorary President, Nicolas Lemonaris, said the crisis had shaken the confidence of possible foreign investors, adding that the past two –year sales of property had been ‘low’.
Lemonari told the semi state Cyprus News Agency that the current situation has deteriorated further with the slashing of deposits at the Popular and Bank of Cyprus creating uncertainty for both Cypriots and for Europeans.
He added that some of those who were planning to make investments have lost funds earmarked for this purpose with the haircut on banks.
Earlier, a Central Bank official and a senior finance ministry technocrat said Bank of Cyprus savers with over €100,000 could take losses of up to 60 per cent, according to an Associated Press report.
http://famagusta-gazette.com/cyprus-determined-for-in-depth-investigation-of-banking-sector-near-collaps-p18775-69.htm
Cyprus determined for in depth investigation of banking sector near collapse
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• Saturday, 30 March, 2013
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Nicolaou was replying to journalists’ questions after a meeting with Attorney General Petros Clerides and the three members of an investigative committee established by the Cabinet on Thursday.
On his part, Clerides, who asked to sent a message to the people said that an investigation will be conducted by three “more than qualified people”, adding that through their report the people will be led to the a conclusion.
According to both Nicolaou and Clerides the meeting had to do with practical issues such as the personnel which will help the committee and the place where their sessions will take place.
Asked whether it is expected that the committee can conclude its report within three months, Nicolaou said that the law provides for three months with a possibility of the investigation to continue for an additional three months.
It is a huge issue, the Cypriot minister said, adding that the investigative committee will define the issues it will look into on the basis of its mandate and will do its utmost to complete its work within the timeframe as they are provided by the law.
Nicolaou further stressed that the government is determined to proceed with an in depth investigation of all these matters, adding that the experiences and the objectivity of the persons appointed to do the job cannot be questioned.
He assured that this determination will continue until the end of the process, noting that the government’s aim is that any persons the committee concludes are responsible will be led to justice.
Clerides, on his part, explained that the procedure to be followed will be decided by the committee.
The government appointed on Thursday a three-member Committee to probe into possible civil, criminal or political liabilities concerning developments in Cyprus’ banking sector.
The committee will be chaired by Georgios Pikis, a former Supreme Court President and former member of the International Court of Justice in The Hague. Two more members include Panayiotis Kallis and Yiannakis Constantinides, both former Supreme Court judges.
http://www.presstv.ir/detail/2013/03/31/295939/cyprus-church-calls-on-minister-to-resign/
Cyprus Church calls on finance min., central bank chief to resign
Cypriot Archbishop Chrysostomos II speaks to the media outside the Presidential Palace after his meeting with Cyprus President Nicos Anastasiades in Nicosia on March 20, 2013.
Sun Mar 31, 2013 2:44PM GMT
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Archbishop Chrysostomos II, the head of Cyprus’ powerful Orthodox Church, has urged the country’s finance minister and central bank chief to resign following the announcement of a bailout plan for the Mediterranean nation.
On Sunday, Chrysostomos called on both Central Bank Governor Panicos Demetriades and Finance Minister Michalis Sarris to leave their posts.
"If I was satisfied, I would not have called on them the other day to resign and leave, because they have the same views as the troika.... We put up no resistance (to the terms imposed by the troika namely the European Union, the European Central Bank and the International Monetary Fund) and I think this is unacceptable, ” Chrysostomos said.
He went on to say, "If we had spent within our means, we would not have the results we see today…. This misfortune that has occurred to our country seems like an economic problem but it isn't -- at its core you will find sin.”
Chrysostomos’ remarks came after Nicosia and the EU reached a stringent bailout deal which included a tax of up to 40 percent on deposits of over 100,000 euros in Cyprus two biggest banks, a move which undermines the nation’s status as an offshore banking center.
Under the deal agreed in Brussels on March 25, Cyprus must raise 5.8 billion euros (USD 7.4 billion) to qualify for the full loan from the European Union, the European Central Bank and the International Monetary Fund (IMF), and avoid bankruptcy.
Thousands of Cypriots have been demonstrating in the capital to denounce their government, the EU and the IMF for their austerity plan.
and....
http://www.zerohedge.com/news/2013-03-31/david-stockman-weve-been-lied-robbed-and-misled
( This applies not just to the US , but to the Zerozone as well - especially Cyprus ! )
David Stockman: "We've Been Lied To, Robbed, And Misled"
- AIG
- American International Group
- Bear Stearns
- Ben Bernanke
- Citibank
- Corruption
- Fail
- Goldman Sachs
- goldman sachs
- Great Depression
- Main Street
- Meltdown
- Morgan Stanley
- TARP
- Too Big To Fail
Submitted by Adam Taggart of Peak Prosperity,
Then, when the Fed’s fire hoses started spraying an elephant soup of liquidity injections in every direction and its balance sheet grew by $1.3 trillion in just thirteen weeks compared to $850 billion during its first ninety-four years, I became convinced that the Fed was flying by the seat of its pants, making it up as it went along. It was evident that its aim was to stop the hissy fit on Wall Street and that the thread of a Great Depression 2.0 was just a cover story for a panicked spree of money printing that exceeded any other episode in recorded human history.David Stockman, The Great Deformation
David Stockman, former director of the OMB under President Reagan, former US Representative, and veteran financier is an insider's insider. Few people understand the ways in which both Washington DC and Wall Street work and intersect better than he does.
In his upcoming book, The Great Deformation: The Corruption of Capitalism in America [37], Stockman lays out how we have devolved from a free market economy into a managed one that operates for the benefit of a privileged few. And when trouble arises, these few are bailed out at the expense of the public good.
By manipulating the price of money through sustained and historically low interest rates, Greenspan and Bernanke created an era of asset mis-pricing that inevitably would need to correct. And when market forces attempted to do so in 2008, Paulson et alhoodwinked the world into believing the repercussions would be so calamitous for all that the institutions responsible for the bad actions that instigated the problem needed to be rescued -- in full -- at all costs.
Of course, history shows that our markets and economy would have been better off had the system been allowed to correct. Most of the "too big to fail" institutions would have survived or been broken into smaller, more resilient, entities. For those that would have failed, smaller, more responsible banks would have stepped up to replace them - as happens as part of the natural course of a free market system:
Essentially there was a cleansing run on the wholesale funding market in the canyons of Wall Street going on. It would have worked its will, just like JP Morgan allowed it to happen in 1907 when we did not have the Fed getting in the way. Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been.As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that $16 billion of salaries and bonuses, 95% of it which was bonuses.Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system. These firms are supposed to come and go, and if people make really bad bets, if they have a trillion dollar balance sheet with six, seven, eight hundred billion dollars worth of hot-money short-term funding, then they ought to take their just reward, because it would create lessons, it would create discipline. So all the new firms that would have been formed out of the remnants of Goldman Sachs where everybody lost their stock values – which for most of these partners is tens of millions, hundreds of millions – when they formed a new firm, I doubt whether they would have gone back to the old game. What happened was the Fed stopped everything in its tracks, kept Goldman Sachs intact, the reckless Goldman Sachs and the reckless Morgan Stanley, everyone quickly recovered their stock value and the game continues. This is one of the evils that comes from this kind of deep intervention in the capital and money markets.
Stockman's anger at the unnecessary and unfair capital transfer from taxpayer to TBTF bank is matched only by his concern that, even with those bailouts, the banking system is still unacceptably vulnerable to a repeat of the same crime:
The banks quickly worked out their solvency issues because the Fed basically took it out of the hides of Main Street savers and depositors throughout America. When the Fed panicked, it basically destroyed the free-market interest rate – you cannot have capitalism, you cannot have healthy financial markets without an interest rate, which is the price of money, the price of capital that can freely measure and reflect risk and true economic prospects.Well, once you basically unplug the pricing mechanism of a capital market and make it entirely an administered rate by the Fed, you are going to cause all kinds of deformationsas I call them, or mal-investments as some of the Austrians used to call them, that basically pollutes and corrupts the system.Look at the deposit rate right now, it is 50 basis points, maybe 40, for six months. As a result of that, probably $400-500 billion a year is being transferred as a fiscal maneuver by the Fed from savers to the banks. They are collecting the spread, they've then booked the profits, they've rebuilt their book net worth, and they paid back the TARP basicallyout of what was thieved from the savers of America.Now they go down and pound the table and whine and pout like JP Morgan and the rest of them, you have to let us do stock buy backs, you have to let us pay out dividends so we can ramp our stock and collect our stock option winnings. It is outrageous that the authorities, after the so-called “near death experience" of 2008 and this massive fiscal safety net and monetary safety net was put out there, is allowing them to pay dividends and to go into the market and buy back their stock. They should be under house arrest in a sense that every dime they are making from this artificial yield group being delivered by the Fed out of the hides of savers should be put on their balance sheet to build up retained earnings, to build up a cushion. I do not care whether it is fifteen or twenty or twenty-five percent common equity and retained earnings-to-assets or not, that is what we should be doing if we are going to protect the system from another raid by these people the next time we get a meltdown, which can happen at any time.You can see why I talk about corruption, why crony capitalism is so bad. I mean, the Basel capital standards, they are a joke. We are just allowing the banks to go back into the same old game they were playing before. Everybody said the banks in late 2007 were the greatest thing since sliced bread. The market cap of the ten largest banks in America, including from Bear Stearns all the way to Citibank and JP Morgan and Goldman and so forth, was $1.25 trillion. That was up thirty times from where the predecessors of those institutions had been. Only in 1987, when Greenspan took over and began the era of bubble finance – slowly at first then rapidly, eventually, to have the market cap grow thirty times – and then on the eve of the great meltdown see the $1.25 trillion to market cap disappear, vanish, vaporize in panic in September 2008. Only a few months later, $1 trillion of that market cap disappeared in to the abyss and panic, and Bear Stearns is going down, and all the rest.This tells you the system is dramatically unstable. In a healthy financial system and a free capital market, if I can put it that way, you are not going to have stuff going from nowhere to $1.2 trillion and then back to a trillion practically at the drop of a hat. That is instability; that is a case of a medicated market that is essentially very dangerous and is one of the many adverse consequences and deformations that result from the central-bank dominated, corrupt monetary system that has slowly built up ever since Nixon closed the gold window, but really as I say in my book, going back to 1933 in April when Roosevelt took all the private gold. So we are in a big dead-end trap, and they are digging deeper every time you get a new maneuver.
Click the play button below to listen to Chris' interview with David Stockman (56m:33s):
Click here to read the full transcript
One of these two Cypriots is happy. The other is withdrawing his daily Troika allowance.
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http://www.forbes.com/sites/timworstall/2013/03/31/theres-something-very-strange-about-the-cyprus-bank-haircut-very-strange-indeed/
There's Something Very Strange About The Cyprus Bank Haircut. Very Strange Indeed
Now that we’re seeing the real numbers coming out about who loses what in the Cyprus haircut/bank consolidations there’s something very strange about the numbers. Whiffy even, and that’s not with a good odour to it either. For, as far as I can tell at least, the haircuts are far larger than they need to be in order to make good the damage that we were told about. I’m therefore coming around to the idea that this wasn’t what we’ve been told it was, a story of Russian offshore deposits and tax avoidance. Rather, it’s two banks which invested regular domestic deposits into just terrible opportunities and then lost it all.
I don’t think I can make the case absolutely but I think it’s a case worth at least investigating.
So, here’s what the actual haircut/bailout terms are:
Under the arrangement, depositors in Bank of Cyprus will receive shares in the lender worth 37.5pc of any savings over €100,000, while the rest may never be paid back, according to a statement from the Cypriot central bank.
Of the 62.5pc of uninsured deposits not converted to bank shares, about 40pc will continue to accrue interest but will not be repaid unless the bank does well, while the final 22.5pc will cease to attract interest.Government figures, including finance minister Michalis Sarris and central bank governor Panicos Demetriades, had previously indicated that depositors in the island’s largest lender would lose around 40pc of their uninsured savings as part of an 11th hour agreement reached in Brussels in the early hours of Monday.
Meanwhile, account holders in Laiki Bank, the country’s second largest, stand to lose up to 80pc of their money as the lender is wound down and insured deposits transferred to Bank of Cyprus.
So that’s an 80% haircut at Laiki and a what, 40% one at B of Cyprus? Or is that 77.5%, with the 22.5% being actual money and the rest conditional (ie, really, a bond in the bank). This isn’t the paper getting the terms of the deal wrong:
Under the terms of Saturday’s decree, the assets of Laiki will be transferred to Bank of Cyprus. At Bank of Cyprus, about 22.5 percent of deposits over 100,000 euros will attract no interest. The remaining 40 percent will continue to attract interest, but will not be repaid unless the bank does well.
And it’s at this point that I fail to understand what is going on.
Go back a bit to when we were first told there just had to be a reorganisation. We were given several numbers. The banks had to come up with € 7 billion, somehow. That’s how much depositors and bond holders had to be bailed in by. We were also told that there was €35 billion of foreign deposits in the banks (roughly speaking, that Russian mafiosi money we were told. Or at least tax avoidance money.) And €35 billion or so of insured, protected, deposits. This is how the 6.75% tax on insured deposits and the 9.9% on uninsured added up (adding in a bit from the bondholders, around €1.4 billion) added up to that € 7 billion required.
That is roughly what we were told at first.
But now we’re being told that Laiki needs an 80% haircut on whatever uninsured depositors it has and B of Cyprus near 40%. To make up that same €7 billion (well, actually, €5.6 billion, those bondholders are still wiped out). Or, on average between the two banks, not quite right but close enough, a 60% haircut of the uninsured deposits in order to make up €5.4 billion. From which we can calculate what their total uninsured deposits were: around €9 billion.
Which is a very different number indeed from that €35 billion that we were first told about, isn’t it?
Now there is one difference here: the original numbers were for the whole of the island’s banking system. These numbers are only for these two banks. But do note that the other two banks have not gone bust. They’re most certainly illiquid at present, there’s no way at all they could pay all depositors this week. But they’re not insolvent, they’re just illiquid.
Which means that the bulk of those large, uninsured and we should probably assume offshore deposits, were not in fact in the two banks that went bust. They were instead in other banks which did not go bust. Thus this isn’t a story about offshore deposits bringing down the system. It’s something that is contained in these two banks, something that they’ve done themselves.
My supposition here is that these two banks were the basic commercial banks for the island. All that hot/dirty/foreign money was floating around in smaller banks that the islanders themselves didn’t really use. And those are the banks that are currently just fine.
There’s a very fun post at Naked Capitalism which looks at events and really tries to work out what has happened with what money. Here. But that’s making a different point from the one I am. Although it’s interesting to note that the Greek haircut on government bonds cost the Cypriot banks €4.5 billion or so. And it wouldn’t surprise me at all to find that that fell almost entirely on Laiki and B of Cyprus. Nor the losses on Cypriot sovereign debt. Among other reasons I just don’t think that foreigners would run their money through a Cypriot bank to buy either of those bonds. So I doubt very much that any of that offshore money that all are complaining about did get caught in either of those.
Let’s be honest about it, if you’re clever enough to make a billion or two, clever enough to get it out of Russia, you’re not then going to lend it to the Greek Government, are you?
There’s a very amusing indeed interview with the former Governor of the National Bank here in the Economist.
Two months after Cyprus joined the euro area [in January, 2008], there were presidential elections and the Cypriot public elected as president a communist, Demetris Christofias. The public was convinced he could solve the political problem we had with Turkey and reunify the island. The issue was not economic.If one thing has become clear over the last five years in Cyprus, it is that the euro area, which is not just a market economy but a currency union with strict rules, is not compatible with a communist government. Why is this important? This government took a country with excellent fiscal finances, a surplus in fiscal accounts, and a banking system that was in excellent health. They started overspending, not only for unproductive government expenditures but also they raised implicit liabilities by raising pension promises, and so forth.
Well, that’s an explanation we’ve not heard so far. Cyprus went bust because they elected a commie. It might even be correct too. And here’s an explanation that says it is all the fault of the European Union. Which at heart it is of course: but that’s the ultimate cause, not the proximate one. Given the way the EU was set up, then the way the eurozone was, it was just always going to come to pieces in this sort of manner.
But back to the point I’m trying to work through here. We’ve been told that the immediate cause was all about all that foreign money which flooded the country’s banking system. Yet when we look at the amount that is being raised by the haircuts it doesn’t look as if the two bankrupt banks had all that much of those foreign deposits. It looks very much like the banks which had the deposits didn’t invest badly and thus didn’t go bankrupt. So the problem isn’t therefore one of all that foreign money.
Rather, it’s a problem of where those two banks invested their deposits. And it looks as if this was largely in Greek Government and Cypriot Government bonds. Which is why they are bust.
Not a problem of an offshore centre therefore. Rather, a lesson in the perils of lending to feckless governments.
Agreed, I could be wrong, I might be reading too much into these numbers. But wouldn’t it be interesting if this really was the story? Nothing to do with Russians and tax dodging but all about why you shouldn’t trust governments? Which is, of course, why the Russians were in Cyprus in the first place.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_31/03/2013_491015
Van Rompuy says 'Cyprus is not an example'
Van Rompuy was cited as saying that euro-area finance ministers made an “unfortunate decision” in approving an initial plan to tax bank accounts below the EU-insured limit of 100,000 euros ($128,000). That plan, which was rejected by the Cypriot parliament, and a subsequent agreement to force losses on creditors of the country’s two largest banks, won’t threaten other nations, he said in an interview with the Belgian newspaper. “Cyprus is a special case, because of the size, structure and characteristics of its financial sector,” Van Rompuy said in the interview, published on Sunday. He reiterated that insured depositors are protected under EU law. Cyprus’s decision to make uninsured depositors and senior creditors share in the cost of the country’s 10 billion-euro bailout roiled markets last week. The measures were accompanied by capital controls to avert a bank run. Van Rompuy defended Cyprus’s agreement with EU authorities and the International Monetary Fund. “The plan is the only possible way to reduce the costs for the European taxpayer while at the same time make Cyprus debt sustainable,” he was quoting as saying in the interview. Van Rompuy said the euro region is showing signs of being able to overcome its sovereign debt crisis and recession. “It’s our estimate that by the end of this year, beginning of next year, we will return to positive growth,” he was quoted as saying. [Bloomberg] |
http://www.cyprus-mail.com/coffeeshop/tales-coffeeshop-deleterious-delia-revealed-imfs-own-cruella-de-vil/20130331
There are tons of problem in European countries today particularly in Cyprus. I wish the government can solve this right away.
ReplyDeletebailouts