Spain or Italy next in line for bank run and / or deposit thefts after Cyprus ? Santiago Nino Becerra , a spanish economist , says Cyprus solution can be extrapolated to Spain ! Commerzbank suggests Italy could see a 15 percent deposit tax !

Who's next after Cyprus ? Early vote for Spain ?

http://globaleconomicanalysis.blogspot.com/2013/03/cyprus-banks-closed-until-thursday.html

Monday, March 18, 2013 12:45 PM

Cyprus Banks Closed Until Thursday; "Solution is Feasible, Can Be Extrapolated to Spain", Says Spanish Economist; Lies of the Day

Direct robbery of Spanish citizens would net Spain about €120 Billion according to economist Niño Becerra who says "Cyprus Solution is Feasible, Can Be Extrapolated to Spain" 

 Santiago Niño Becerra, Professor of Economics at the University Ramon Llull in Barcelona, says a tax as imposed on Cyprus in exchange for bailout, would be possible and that "it is very clean, unlike a freeze all balances, which would be a mess."

Through his twitter account, Niño Becerra says it would be more painful for Cypriots if "the bailout were to occur in the form of public debt."

The Spanish government was quick yesterday to claim the Cyprus solution was not applicable to other countries. Niño Becerra disagrees: "I'm not saying this will happen, only that it is feasible, it is possible and if extrapolated to Spain, would be very clean."

Becerra estimated savings using Spanish a "tax" of 10% would raise €120 Billion. A 5% tax would raise €60 Billion, which, added to the €40 Billion commitment would be the amount regulators said a year ago that they may need for Spanish banks.

Direct theft is now considered a "feasible" option for Spain. Lovely.

Cyprus Banks Closed Until Thursday

While pondering that thought, note that Cyprus banks will stay closed until Thursday

 The Cypriot central bank has announced that the country's banks will stay closed until later this week as fears mount of a bank run.

The country's banks were closed for a scheduled Bank Holiday on Monday, something that allowed Cyprus to try to implement a levy on savers' deposits. That move triggered unease among depositors in Cyprus, where cash machines soon ran out of funds.

This is the first time the 17-nation eurozone has seen a country dip into people's savings to finance a bailout.

Meanwhile, an emergency session of the Cypriot parliament has been postponed until Tuesday. Also, Germany must approve the plan, but is not due to vote until next month.

Following eurozone finance ministers' negotiations last week, Cyprus became the fifth euro-area country to get a bailout to save its banks, which suffered significant losses because of their exposure to Greek debt.

"When It Becomes Serious You Have to Lie"

Recall the statement by Jean-Claude Juncker, Luxembourg PM and Head Euro-Zone Finance Minister "When it becomes serious, you have to lie"

So, why did Cypriot banks hold so many Greek bonds? They were stupid enough to believe lies by former ECB president Jean-Claude Trichet who insisted there would be no Greek bond haircuts.

Why was this move a shock to Cypriot citizens? They were stupid enough to believe lies by candidate (now president) Nicos Anastasiades when he said there would be no tax on deposits.

Lies of the Day

Today's lie of the day is by Chancellor Angela Merkel who says don't worry, Cyprus is a "Special Case".

How long will citizens of Spain, Portugal, and Italy believe that lie?

The answer is hard to say. People seem willing to believe what they want to hear, even when dealing with known liars.

and.......



http://globaleconomicanalysis.blogspot.com/2013/03/merkel-says-cyprus-is-special-case-so.html

Monday, March 18, 2013 9:49 AM

Merkel Says "Cyprus is a Special Case" (So was Greece); Is Spain the Next "Special Case"? Portugal? Merkel Guarantees German Deposits

The pertinent question for today is "How many lies will people believe?"

I ask that because a German government spokesman says The compulsory levy to pay the depositors in Cyprus, was a special case as Merkel guarantees German deposits for the first time since 2008. 

 The compulsory levy to pay the depositors in Cyprus, is a "special case", says the Chancellor. Given the compulsory levy in Cyprus, Chancellor Angela Merkel has renewed the deposit guarantee for German savers. "It's the mark of a guarantee" said government spokesman Steffen Seibert. Cyprus is a special case. There are "no parallels with other countries, and thus Cyprus has no effect on them," said Seibert. Unrest among depositors and savers in other euro area countries is therefore not justified.

Reflections on the "Special Case"

I seem to recall Greece too was a "special case". How many more special cases are there? What country is the next special case? Is it Portugal or Spain?

Toss a coin because it does not matter. Deposit guarantees cannot be believed.

Anyone and everyone in Spain and Portugal ought to be pulling out every cent they can out of their banks. Trust has been lost and once again the idiots in Brussels underestimated the reactions to their thuggery.

Why?

The real driver for this blatant theft is the re-election of Merkel.

Heaven forbid Germany provide any more bailout funds lest German voters get upset and flock to “Alternative für Deutschland“ (AfD - Alternative for Germany), a political party founded by a group of anti-bailout, eurosceptic German professors, businessmen, economists and journalists.

Merkel is willing to cram this "special case" down the throats of Cypriot citizens or her re-election bid in September may be in jeopardy.

Please see Merkel Coalition Doomed; Italy Exit Only a Matter of Time? for comments from reader Bernd who lives in Germany and claims that the anti-euro movement in Germany is far bigger than mainstream media lets on.

Also see Put a German Flag in Cyprus; Poker or Chicken? Cyprus Archbishop Says "Leave the Eurozone and Readopt the Cyprus Pound"

And what about Italy - Commerzbank suggest bank deposit scheme would work .....

http://www.zerohedge.com/news/2013-03-17/german-commerzbank-suggests-wealth-tax-italy-next

German Commerzbank Suggests Wealth Tax In Italy Next

Submitted by Tyler Durden on 03/17/2013 15:20 -0400

• European Union
 
• Gross Domestic Product
 
• International Monetary Fund
 
• Italy

While some argue that Cyprus was "one of the biggest money-washing machines for Russian criminals," and others that Cyprus ex-Pat community and energy resources brough deposits (not to say their high deposit interest rates), it seems the European Union (IMF et al.) have decided that the route to crisis stabilization, just as we outlined here over a year ago and updated here, is through a wealth tax.

However, as Handelsblatt reports, the gross distortions of wealth distribution among both core and peripheral nations (evident in the chasm between 'mean' and 'median' net assets - or wealth) makes some nations more 'capable' of 'giving' and as Commerzbank's chief economist notes, median wealth in Italy is EUR164,000 (as opposed to Austria's median of around EUR76,000 and mean of around EUR265,000) meaning that in theory Italy has no debt crisis (with net assets at 173% of GDP) - significantly more than the Germans at 124% - "so it would make sense, in Italy a one-time property tax levy," he suggested.

"A tax rate of 15% on financial assets would probably be enough to push the Italian government debt to below the critical level of 100% of gross domestic product." So there you have it, the 'new deal' in Europe, as we warned, is 'wealth taxes' and testing the "capacity of Cypriots" appears to be the strawman on what the public will take before social unrest becomes intolerable.

Media in Italy and Spain downplaying Cyprus - and they will until the shit storm comes their way ! 

http://openeuropeblog.blogspot.com/2013/03/when-everyone-is-speculating-about.html

Monday, March 18, 2013

While everyone is speculating about contagion to other eurozone countries: What are the Italian and Spanish press actually saying about the Cypriot bailout?

Analysts - led by Anglo-Saxon ones - have lined up to say that, following the deposit levy as part of the Cypriot bailout, a bank run on the rest of the Mediterranean is now a near certainty.

New York Times columnist Paul Krugman went the furthest, arguing that

It’s as if the Europeans are holding up a neon sign, written in Greek and Italian, saying “time to stage a run on your banks!”

But for all these speculations, very few analysts have actually bothered to properly assess the mood and immediate reaction in Italy and Spain - whose depositors are meant to be lining up outside banks and cash machines to withdraw all their savings. Surely, the response and tone in the media of these countries on the day following the deal will give a pretty strong indicator as to whether Italian and Spanish depositors will perceive themselves as being 'next in line', or whether, in fact, they consider the Cypriot situation unique.

As Mats Persson argued on his Telegraph blog yesterday,

Fears of deposit-led contagion to other parts of the eurozone should definitely not be be overstated...viewed with a depositor's eyes from Barcelona or Bilbao, Spain may have very little in common with Cyprus.

Of course, this is all very hard to predict and if talks about a bailout kicks of in Spain and Italy, will depositors trust what politicians are telling them? But what do governments and pundits actually say in these two countries? Put differently, what did Spanish and Italians depositors actually hear when they woke up to the news that their Cypriot counterparts will now see their savings taxed?

Here's a summary.

Italy  

Italy has some relatively fresh memories of a deposit levy: the 0.6% prelievo forzosofrom all Italian bank accounts enacted by the government led by Giuliano Amato in 1992, when Italian public finances were facing an "extraordinary emergency". So one would expect the Italian media - and Italians themselves - to make a pretty big deal of the Cypriot bailout.

Not quite.  Although Italy's borrowing costs have inevitably been driven up a bit by the news coming from Cyprus, the media is surprisingly relaxed (and certainly no queues outside ATMs). Of the largest Italian papers, only La Repubblica and La Stampa made some room for Cyprus on the front page of today's print edition. Pope Francis and Italy's own political troubles continue to dominate. However, some Italian commentators did flag up the risks involved in the Cypriot bailout for the rest of the eurozone.

Vittorio Da Rold of Il Sole 24 Ore calls the Cypriot bailout "a dangerous precedent which undermines confidence" in the eurozone.

Italian economist Giulio Sapelli put it more bluntly,

Stuff like this can generate bank panic throughout the EU. [European leaders] are crazy.

Ferruccio de Bortoli, editor of Il Corriere della Sera, has tweeted that Cyprus's deposit levy "risks creating uncertainty and fears".

Unsurprisingly, the authorities' reaction was targeted at being a lot more reassuring. Giuseppe Vegas, head of Italy's financial markets watchdog Consob, said,

There are no similarities between Cyprus and Italy...The markets are obviously nervous [over Cyprus], but I wouldn't dramatise.

Spain

Several Spanish dailies ran with Cyprus as front page story today (see here). The most common reference in the Spanish press is to Argentina's corralito - when Argentinians' accounts were frozen to prevent a bank run in the country at the end of 2001.

As in Italy, there are no signs of Spanish depositors taking to the cash points - but the interest rate on Spain's ten-year bonds has reached above 5% this morning. As in Italy, authorities have moved quickly to reassure the citizens that there is no risk of contagion spreading to Spain.

There has been some concern over contagion in the press, though, with Carlos Segovia, Economics Editor of El Mundo, writing,

Analysts from around the world start to doubt that Cyprus’s precedent may one day end up being applicable to other Southern European countries, even partially.

Under the headline, "We are a German colony", the paper's Washington correspondent Pablo Pardo goes all out,

The 'bailout' imposed by the EU [on Cyprus] is the closest thing to an armed robbery against that country's savers.

Spanish economist José Carlos Díez is not happy either. He writes in El País,

The Cypriot bailout deal confirms that there are no signs of intelligent life in Europe.

Spanish business daily El Economista is a bit more relaxed, saying in an editorial that a Cypriot-style corralito is "unthinkable" in bigger eurozone countries like Spain, Portugal or Italy. But the paper also notes,

A haircut should have been applied to bondholders before applying [the deposit levy], which now comes out as an inconsistent measure.

So critical and concerned about precedent set, but no "panic spreads amongst savers" type headlines that we have seen in certain other countries. We certainly do not play down the precedent, or defend the deal, but one should not exaggerate either.

There's no way this [the deposit levy] will be repeated in Spain or Italy, so it's not clear when the great bank run is supposed to take place - not that bank runs are impossible by any stretch of the imagination in these economies, but a deposit tax or even the precedent set here is not likely to be the cause. That said, a real question remains over whether this will hamper future bailouts, future funding from the eurozone or even the fledgling moves towards greater eurozone integration. But that is a slightly different discussion.