Cyprus

What Eurogroup Head Jeroen Dijsselbloem Really Said: Full ‘On The Record’ Transcript

by

– What Dijsselbloem Really Said: Full “On The Record” Transcript (ZeroHedge, March 26, 2013):

Hopefully the memory of the new Eurogroup head, who in a one day lost more credibility than his admittedly lying predecessor Juncker ever had, will be jogged courtesy of this full transcript provided by Reuters and the FT of what he told two reporters – on the record – and for the whole world to read. Because, by now, we are confident everyone has had more than enough with watching the entire Eurozone rapidly and tragically turn itself into a complete and utter mythomaniac, kletpocratic circus.

Via The FT,

To clarify what Dijsselbloem said, we’ve decided to post a transcript of the portion of the interview dealing with how the eurozone might deal with bank failures in the future in light of the Cyprus example. The interview we conducted alongside Brussels bureau chief Luke Baker of Reuters (@LukeReuters) lasted about 45 minutes, and the portion on bank resolution lasted for about 10 of those minutes. The interview started out with some Cyprus-specific questions – like how capital controls might work, whether Dijsselbloem had learned any lessons form the Cyprus experience – and then shifted to a discussion about whether north-south relations were hampering EU decision making. That’s when Baker asked the first question about whether Cyprus set a precedent for future bank rescues…

Q: To what extent does the decision taken last night end up setting a template for bank resolution going forward?

A: What we should try to do and what we’ve done last night is what I call “pushing back the risks”. In times of crisis when a risk certainly turns up in a banking sector or an economy, you really have very little choice: you try to take that risk away, and you take it on the public debt. You say, “Okay, we’ll deal with it, give it to us.”

Read moreWhat Eurogroup Head Jeroen Dijsselbloem Really Said: Full ‘On The Record’ Transcript

Have The Russians Already Quietly Withdrawn All Their Cash From Cyprus? … YES!!!

by

As I’ve said here:

– Cyprus ‘Bank Holiday’ Gets Another Extension, Bank Reopening Now Set For Thursday:

“First Cyprus has to make sure Putin’s ‘KGB Money’ has left the country, so that only the sheeple get screwed and not the Russian bear …”

The following article is a must-read!

– Have The Russians Already Quietly Withdrawn All Their Cash From Cyprus? (ZeroHedge, March 25, 2013):

Yesterday, we first reported on something very disturbing (at least to Cyprus’ citizens): despite the closed banks (which will mostly reopen tomorrow, while the two biggest soon to be liquidated banks Laiki and BoC will be shuttered until Thursday) and the capital controls, the local financial system has been leaking cash. Lots and lots of cash.Alas, we did not have much granularity or details on who or where these illegal transfers were conducted with. Today, courtesy of a follow up by Reuters, we do.

The result, at least for Europe, is quite scary because let’s recall that the primary political purpose of destroying the Cyprus financial system was simply to punish and humiliate Russian billionaire oligarchs who held tens of billions in “unsecured” deposits with the island nation’s two biggest banks.

As it turns out, these same oligrachs may have used the one week hiatus period of total chaos in the banking system to transfer the bulk of the cash they had deposited with one of the two main Cypriot banks, in the process making the whole punitive point of collapsing the Cyprus financial system entirely moot.

From Reuters:

While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.

No one knows exactly how much money has left Cyprus’ banks, or where it has gone. The two banks at the centre of the crisis – Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus – have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia’s Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks’ largest depositors.

So while one could not withdraw from Bank of Cyprus or Laiki, one could withdraw without limitations from subsidiary and OpCo banks, and other affiliates?

Just brilliant.

Read moreHave The Russians Already Quietly Withdrawn All Their Cash From Cyprus? … YES!!!

The Russians Are Outtahere: ‘The Cypriots Killed Their Country In One Day’

by

– The Russians Are Outtahere: “The Cypriots Killed Their Country In One Day” (ZeroHedge, March 25, 2013):

It appears the Cypriots (or more clearly the European leaders) do not appreciate the extent to which Russia has propped up the local economy. “When the Russians leave who is going to stay at the Four Seasons for $500 a night? Angela Merkel?” one wealthy Russian asks rhetorically, as The FT reports, they are receiving a deluge of overseas phone calls from helpful Swiss bankers looking to swoop up the deposit transfers. “The locals should understand: as soon as the money leaves, the people who go to restaurants, buy cars and buy property leave too. The Cypriots’ means of living will disappear,” and there are signs that the locals are getting how drastic this situation is, as a large billboard has sprung up at Larnaca Airport with a Russian flag and the words “Brat’ya ne predaite nas!” – “Brothers, don’t betray us!” Many Russian businessmen appear to have one foot out of the door already and are considering whih jurisdiction to move to as they await to see if Medvedev follows through on his threat to dismantle the double tax treaty with Cyprus.

And now the rumors are that billionaire Russian tycoon Roman Abramovich, owner of Chelsea Football Club, has been arrested in the USA.

Via The FT,

…

One Cypriot lawyer with Russian clients said he had already been approached by half-a-dozen European banks in locales ranging from Latvia to Switzerland to Germany, some of them promising they could open new bank accounts for his clients in under an hour.

…

“The Cypriots killed their country in one day,” says Mr Mikhin, referring to Friday March 15, when President Nicos Anastasides accepted the EU’s proposal to seize €5.8bn in emergency funds from Cyprus’s local and foreign depositors.

Read moreThe Russians Are Outtahere: ‘The Cypriots Killed Their Country In One Day’

Eurogroup Head Jeroen Dijsselbloem Says He Did Not Say What He Said

by

– Eurogroup Head Says He Did Not Say What He Said (ZeroHedge, March 25, 2013):

That thing Diesel-BOOM very, very clearly said earlier? He did not say it. After all, can’t have the market getting any ideas that reality may be slowly coming back to the basket case that is Europe:

  • EU DIJSSELBLOEM SPOKESWOMAN: DIJSSELBLOEM DIDN’T SAY CYPRUS A TEMPLATE FOR BANK RESTRUCTURINGS – DOW JONES

So not only are European depositors still impairable, because sadly Dijsselbloem was dead serious in his Reuters interview, but the new Eurogroup head pulled a Juncker and confirmed “it is serious” in the process losing all credibility too.

To summarize Diesel-BOOM: “If the market is red, you have to lie.“

Eurogroup Head Jeroen Dijsselbloem Sends Europe Tumbling: ‘Cyprus A Template For EU’

by

Update:

– Eurogroup Head Jeroen Dijsselbloem Says He Did Not Say What He Said

– A Word Out Of Place Sends Europe Tumbling (ZeroHedge, March 25, 2013):

Perhaps the best example of a “word out of place” comes from the new Eurogroup head, Dijsselbloem, also phonetically known as Diesel-BOOM, who just may have ushered in the next, next wave of the Eurozone crisis:

  • “Cyprus a Template For EU“

Er… wasn’t it a special case, inside a unique case, wrapped in a one-time case? We will ignore the rather hilarious Freudian slip, and focus on what he was explicitly talking about with Reuters, which is the resolution model which was just put in place in Cyprus:

A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors, the head of the region’s finance ministers said.

Read moreEurogroup Head Jeroen Dijsselbloem Sends Europe Tumbling: ‘Cyprus A Template For EU’

Cyprus Church Loses EUR100 Million, Curses Those Responsible

by

– Cyprus Church Loses EUR100 Million, Curses Those Responsible (ZeroHedge, March 25, 2013):

Perhaps it was their comment last week that “with the brains in Brussels… the Euro can’t last,” but the Orthodox Church of Cyprus has lost over EUR100 million reacted to its holdings in Bank of Cyprus. Church leader Archbishop Chrysostomos II, in comments on TV, noted that “Cyprus asked for ‘crumbs’ compared to large size of Europe’s budget,” and that those responsible in Cyprus should be punished (he blames the outgoing government, Ministers of Finance, the Central Bank, and the Executive Directors of Banks) – “those that brought the place into this mess, should sit on the stool.” He noted that people will lose jobs and the state will be poorer but that the Church is prepared to help; and his first step – to send invitations to the heads of various Russian companies on the island.

Via Church of Cyprus,

Heads of Russian companies operating in Cyprus will call a working lunch, next Thursday, March 28, 2013, His Beatitude Archbishop Chrysostomos Mr. to encourage them to remain in Cyprus.

Read moreCyprus Church Loses EUR100 Million, Curses Those Responsible

Merkel ‘Very Happy’, Russian PM Furious: ‘The Stealing Of What Has Already Been Stolen Continues’

by

– Merkel “Very Happy”, Russian PM Furious: “The Stealing Of What Has Already Been Stolen Continues” (ZeroHedge, March 25, 2013):

First, it is Merkel’s turn, which last week was furious at Cyprus for daring to reject the first flawed Eurogroup plan impairing insured depositors, only to praise it for now… rejecting said plan. To wit: Chancellor Angela Merkel, “as well as the government, is very happy that the troika, the euro group and Cyprus were able to reach an agreement,” German government spokesman Steffen Seibert says in Berlin. He added that difficulties will arise in the short term because of measures aimed to scale back Cyprus’s banking sector, “but in the long run it will lead to a healthier” industry. That remains to be seen, especially when factoring in the Russian response.Which wont be pleasant.

The official Russian line is one of a typical professional chess player – calm, cool, collected: Russia doesn’t see need to take any additional steps now, may still agree to restructure loan, First Deputy Prime Minister Igor Shuvalov told reporters earlier. Shuvalov, unlike Merkel and ECB’s Mersch who sees nothing but green shoots (literally) everywhere in Europe, said that Russia is concerned Cyprus crisis may have negative effect on euro. The deputy PM says that he has no estimate for Russian losses in Cyprus but added that Russian money in Cyprus is “legal.”

The unofficial line comes from former president, and current PM and Putin mouthpiece, Dmitry Medvedev. From Reuters:

Moscow reacted with anger on Monday to a European Union bailout of Cyprus that will result in heavy losses for foreign depositors at the Mediterranean island’s banks, many of which are Russian.

“The stealing of what has already been stolen continues,” Prime Minister Dmitry Medvedev was quoted by news agencies as telling a meeting of government officials.

Read moreMerkel ‘Very Happy’, Russian PM Furious: ‘The Stealing Of What Has Already Been Stolen Continues’

Société Générale: Depression For Cyprus – 20% Drop In Real GDP By 2017

by

– Next Up For Cyprus: Depression (ZeroHedge, March 25, 2013):

From SocGen:

Depression for Cyprus: Our Cypriot GDP forecast entails a drop of just over 20% in real GDP by 2017. This forecast had already factored in much what was agreed, but did not account for the additional uncertainty shock generated by the past week’s appalling political mess. Risks are clearly on the downside and Cyprus will in all likelihood require additional financial assistance further down the road. Accounting for less than 0.3% of euro area GDP, any downward revision to Cyprus will be barely visible on the euro area aggregate.

So much for the hope of recreating Iceland, and actually growing in 2-3 years. Congratulations Cyprus – you may have a depression for the next four years, but at least you have the € (and helped Merkel win the September election).

Cyprus Reaches Bailout Deal: Deposits Above €100,000 Will Be Frozen And Used To Resolve Debts – Laiki Bank Will Be Shuttered, With Thousands Of Job Losses

by

From the article:

Deposits above 100,000 euros, which under EU law are not guaranteed, will be frozen and used to resolve debts, and Laiki will effectively be shuttered, with thousands of job losses.

…

The revised bailout plan may not require further parliamentary approval since the idea of a levy was dropped.

The tottering banks hold 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros – enormous sums for an island of 1.1 million people which could never sustain such a big financial system on its own.

– Cyprus Reaches Bailout Deal With International Lenders (Huffington Post/Reuters, March 25, 2013):

* Deal to shut Laiki bank, transfer insured deposits

* Clinched hours before Monday deadline to seal EU bailout

* Without deal banks faced collapse, possible euro zone exit

BRUSSELS, March 25 (Reuters) – Cyprus clinched a last-ditch deal with international lenders on Monday for a 10 billion euro ($13 billion) bailout that will shut down its second largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians.

The agreement emerged after fraught negotiations between President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund – hours before a deadline to avert a collapse of the banking system.

Read moreCyprus Reaches Bailout Deal: Deposits Above €100,000 Will Be Frozen And Used To Resolve Debts – Laiki Bank Will Be Shuttered, With Thousands Of Job Losses

Cyprus Bailout: Deal Reached In Eurogroup Talks

by

– Cyprus bailout: Deal reached in Eurogroup talks (BBC News, March 25, 2013):

Eurozone finance ministers have agreed a deal on a bailout for Cyprus to prevent its banking system collapsing, officials say.

Reports suggest the deal will include a levy on deposits of more than 100,000 euros in Cyprus’ two biggest banks.

The levy on accounts in Laiki Bank – the country’s second-biggest – could be as high as 40%, correspondents say.

Read moreCyprus Bailout: Deal Reached In Eurogroup Talks

Rampapalooza As Cyprus-Troika Reach Deal (Updates)

by

– Rampapalooza As Cyprus-Troika Reach Deal (Updates) (ZeroHedge, March 24, 2013):

UPDATE: It appears the ‘deal’ to default/restructure the banks has been designed to bypass the need for parliamentary votes, since it is theoretically not a tax.

While we have little color on what kind of carnage the President of Cyprus had to accept to his fellow countrymen, the news is that :

  • *CYPRUS, TROIKA REACH AGREEMENT IN PRINCIPLE, EU OFFICIAL SAYS
  • *DEAL MADE AT DINNER WITH DRAGHI, LAGARDE, VAN ROMPUY, BARROSO

The terms, unsurprisingly what zee Germans wanted, are:

i) Laiki to be wound down;

ii) Bank of Cyprus to survive but with deposit haircuts, and

iii) deal would see secured deposits in Laiki moved to Bank of Cyprus.

In other words, a deal far worse then the original on proposed by the Eurogroup last week – when the banks still existed. The key appears to be the ‘saving’ of the insured depositors (crucial to avoid a pan-European bank run) and the crushing of the ‘whale’ depositors.

Read moreRampapalooza As Cyprus-Troika Reach Deal (Updates)

Cyprus Bailout Needs Rise By €2 Billion As Conditions Deteriorate Rapidly

by

– Cyprus Bailout Needs Rise By €2 Billion As Conditions Deteriorate Rapidly (ZeroHedge, March 24, 2013):

A week of closed banks, depositor angst, and economic malaise is creating an increasingly vicious circle for Cyprus (and implicitly the European Union). As Die Welt notes, because the economic data of the tiny ‘irrelevant’ island could be considerably worse than previously thought (or forecast by Troika) thanks to the distortions created this week by bank closings, several people around the Troika said the exact amount of the bailout remains uncertain and could amount to EUR2bn more than expected. With the Troika capping their handout at EUR10bn of the current EUR17bn needed (and the deposit levy reportedly filling EUR6bn of that EUR7bn hole), the need for a bigger bailout – which seems increasingly likely – will fall on Cyprus banks’ depositors (or taxpayers) leading to a hard-to-beat downward spiral. Simply put, the more deposits are pulled, the more deposits need to be confiscated; and with retailer stocks running low (“will last another 2-3 days”) and cash-on-delivery demanded, the real economy will “have a problem if this is not resolved by next week.”

Via The Guardian,

Retailers, facing cash-on-delivery demands from suppliers, warned stocks were running low. “At the moment, supplies will last another two or three days,” said Adamos Hadijadamou, head of Cyprus’s Association of Supermarkets. “We’ll have a problem if this is not resolved by next week.”

Via Die Welt (and Google Translate),

Cyprus needs a lot more money than expected

A few hours before the emergency meeting of the situation seems to capture from bankruptcy Cyprus to deteriorate: From Troika says that money could not exceed the estimated range.

Cyprus needs for information of the “world” more money to bail out its banks and the stabilization of its national budget. Not initially agreed 17 billion euros were enough states in the field of negotiations. The exact amount is not certain. Several people around the troika said the “world” that the increased demand would amount to around two billion euros.

Read moreCyprus Bailout Needs Rise By €2 Billion As Conditions Deteriorate Rapidly

With Russia “Demanding Cyprus Out Of The Eurozone” Here Is A List Of Possible Russian Punitive Reprisals

by

– With Russia “Demanding Cyprus Out Of The Eurozone” Here Is A List Of Possible Russian Punitive Reprisals (ZeroHedge, March 24, 2013):

As has been made abundantly clear on these pages since the breakout of the latest Cyprus crisis, the Russian policy vis-a-vis its now former Mediterranean offshore deposit haven-cum-soon to be naval base, has been a simple one: let the country implode on the heels of the Eurozone’s latest humiliating policy faux pas, so that Putin can swoop in, pick up assets (including those of a gaseous nature, much to Turkey’s chagrin) for free, while being welcome like the victorious Russian red army saving Cyprus from its slavedriving European overlords (a strategy whose culmination Merkel has very generously assisted with).

Curiously there had been some confusion about Russia’s “noble” motives in Cyprus (seemingly forgetting that in Realpolitik, as in love and war, all is fair). We hope all such confusion can now be put to rest following the clarification by Jorgo Hatzimarkakis, the German Euro deputy of Greek origin, who told Skai television on Sunday morning that Russia did not want Cyprus to stay in the eurozone.

From Kathimerini:

Read moreWith Russia “Demanding Cyprus Out Of The Eurozone” Here Is A List Of Possible Russian Punitive Reprisals

Why Cyprus 2013 Is Worse Than The KreditAnstalt (1931) And Argentina 2001 Crises

by

– Why Cyprus 2013 is worse than the KreditAnstalt (1931) and Argentina 2001 crises (A View from the Trenches, March 24, 2013):

The Cyprus 2013, like any other event, can be thought in political and economic terms.

Political analysis: Two dimensions

Politically, I can see two dimensions. The first dimension belongs to the geopolitical history of the region, with the addition of the recently discovered natural gas reserves. The historical relevance goes as far back as 1853, the year the Crimean War began. The Crimean War took place in the adjacent Black Sea, but the political interest was the same: To avoid the expansion of Russia into the Mediterranean. The relevance of this episode was the break-up of the balance of power established after the Napoleonic Wars, with the Congress of Vienna, in 1815. From then on, a whole new series of unexpected events would lead to a weaker France, a stronger Prussia, new alliances and a final resolution sixty years later: World War I.  It is within this same framework that I see Cyprus 2013 as a very relevant political event: Should Russia eventually obtain a bailout of Cyprus (as I write, this does not seem likely) against a pledge on the natural gas reserves or a naval base, a new balance of power will have been drafted in the region, with Israel as the biggest loser.

The second political dimension refers to a point I made exactly a year ago, precisely inspired in the KreditAnstalt event of 1931. In an article titled: “On gold, stocks, financial repression and the KreditAnstalt of 1931” I wrote:

Read moreWhy Cyprus 2013 Is Worse Than The KreditAnstalt (1931) And Argentina 2001 Crises

Why Cyprus Matters (And The ECB Knows It)

by

– Why Cyprus Matters (And The ECB Knows It) (ZeroHedge, March 23, 2013):

WHEN THE RED QUEEN IS AFTER YOUR HEAD

When Zig turns to Zag and the Red Queen is after your head then extraordinary care is necessitated. To quote Holmes, “The game is afoot” on the Continent.

I have been asked, with some frequency, why the bondholders have not been tagged in the Cyprus fiasco. That answer is simple. Most of Cyprus’s bonds are pledged as collateral at the ECB or in the Target2 financing program. Then one may also ask why the bonds of the two large Cypriot banks are not being hit. The answer is the same; most are held as collateral at the ECB or Target2. In both cases, remember uncounted liabilities, the government of Cyprus has guaranteed the debt. Consequently if the two Cyprus banks default it is of small matter as the sovereign has guaranteed the debt. However if the country defaults and leaves the European Union then it will matter and matter significantly as the tiny country of Cyprus would wipe out the entire equity capital of the European Central Bank. While it is not a matter of public record it is estimated that Cyprus has guaranteed about $11.6 billion of collateral at the ECB.

Read moreWhy Cyprus Matters (And The ECB Knows It)

Cyprus Deposit Levy Vote Delayed, Will Go ‘Down To The Wire’ As Up To 70% Deposit Tax Contemplated For Some

by

– Cyprus Deposit Levy Vote Delayed, Will Go “Down To The Wire” As Up To 70% Deposit Tax Contemplated For Some (ZeroHedge, March 22, 2013):

While GETCO’s algos were poised to set off a buying tsunami yesterday the millisecond a flashing red headline hit Bloomberg with even the hint or suggestion that Cyprus is fixed, we said to sit back and relax because Cyprus “will get no resolution today, or tomorrow, and may at best be resolved on Sunday night following yet another coordinated global bailout, (although our money is on a last, last minute resolution some time on Monday when Cyprus is closed but the European markets are widely open).”As it turns out, we were right, following reports by major newswires that the vote on the deposit levy will only take place (if at all) on Sunday night, after the Eurozone finance ministers’ meeting on Sunday.

As it also turns out, and as noted previously, the votes taken yesterday were the easy ones – obviously Cyprus will now need capital controls in perpetuity to slow down the terminal unwind of its banking system which is now, for all intents and purposes, over and will only exist, if at all, entirely though ECB liquidity injections, but the difficult decision – to complete U-Turn on the Tuesday vote just saying no to deposit tax levy – has been delayed.

The reason for the delay? Deciding how to best bring the news to Russian, and other wealthy depositors, that not only will they not have access to their funds for a long, long time, the ultimate haircut on what they thought was safe, easily accessible cash as recently as a week ago, may be a stunning 70%!

From Xinhua:

Read moreCyprus Deposit Levy Vote Delayed, Will Go ‘Down To The Wire’ As Up To 70% Deposit Tax Contemplated For Some

JPMorgan On The Inevitability Of Europe-Wide Capital Controls

by

– JPMorgan On The Inevitability Of Europe-Wide Capital Controls (ZeroHedge, March 22, 2013):

With the Cypriot government still ‘undecided’ about what to ‘take’ and the European leaders very much ‘decided’ about what to ‘give’, the fact of the matter is, as JPMorgan explains in this excellent summary of the state of affairs in Europe, that because ELA funding facility is limited by the availability of collateral (and the haircuts applied to those by the central bank), and cutting the Cypriot banking system completely from ELA access is equivalent to cutting it from the Eurosystem making an exit from the euro a matter of time. This makes it inevitable that capital controls and a capital freeze will be imposed, in their view, but it is not only bank deposits that are at risk. A broader retrenchment in funding markets is possible given the confusion and inconsistency last weekend’s decision created for investors relative to previous policy decisions. Add to this the move by Spain, which announced this week a tax or bank levy (probably 0.2%) to be imposed on bank deposits, without details on which deposits will be affected or timing, and the chance of sparking much broader deposit outflows across the union are rising quickly.

Via JPMorgan,

Capital Control Risks

What was widely viewed as an ill-conceived Cyprus deal last weekend renewed fears of a re-escalation of the euro debt crisis. The original proposal to hit insured depositors below €100k caused a bank run and set a new precedent in the course of the Euro area debt crisis, with potential negative consequences for bank deposits not only in Cyprus but also in other peripheral countries. Once again, as it happened with the Greek crisis last May, the Cyprus crisis exposes the fragmentation of the deposit guarantee schemes in the Euro area and its inconsistency with a monetary union.

Read moreJPMorgan On The Inevitability Of Europe-Wide Capital Controls

Cyprus Officially Passes Capital Controls Into Law

by

– Cyprus Officially Passes Capital Controls Into Law (ZeroHedge, March 22, 2013):

While it is unknown if the Cypriot parliament will agree to, and enact into law, the Troika-demanded deposit haircuts, after the shocking vote of mutiny against Merkel earlier this week that saw not one politician vote for the Europe suggested deposit tax levy (and even the ruling party abstained), a vote which will once more take place tomorrow, moments ago Cyprus became the first Eurozone country to officially implement governmental capital controls into legislation. At this point it had no choice: whatever happens with the deposit haircut, or with everything else, it is now inevitable that the local Cypriots will do all they can to pull as much money from domestic banking system as possible following the complete loss of faith and trust in banks, which is why the government had no choice but to intervene with its own “controls.”

Sadly, this marks a milestone in the development of the Eurozone – it’s all downhill, and accelerating, from here.

There are various other proposals which are currently being voted on, all of which are secondary to the Capital Controls one (the restructuring of the broke banks is perhaps the next most important one), until tomorrow’s vote on deposit haircuts.

Read moreCyprus Officially Passes Capital Controls Into Law

Troika Hikes Cyprus Bailout Demands From €5.8 Billion To €6.7 Billion, Says ‘Conditions Worsened’

by

– Troika Hikes Cyprus Bailout Demands, Says “Conditions Worsened” (ZeroHedge, March 22, 2013):

Just when you thought you knew the rules, the Troika has changed them… (via MNI)

  • TROIKA SAID CONDITIONS WORSENED, WANTS BILL TO REFLECT
  • TROIKA HIKED CYPRUS CONTRIBUTION TO E6.7 BN VS E5.8 BN:
    SOURCE
Moar Bigger Haircuts for the rich please – and following Schaeuble’s veiled threat (leave – we can handle it)…
  • *SCHAEUBLE: MARKET SEES EURO-ZONE BETTER PREPARED FOR TURBULENCE

As Cyprus Prepares For Total Financial Collapse, It’s A Race To The Mediterranean Gas Finish Line

by

– As Cyprus Collapses, It’s A Race To The Mediterranean Gas Finish Line (ZeroHedge, March 22, 2013):

Cyprus is preparing for total financial collapse as the European Central Bank turns its back on the island after its parliament rejected a scheme to make Cypriot citizens pay a levy on savings deposits in return for a share in potential gas futures to fund a bailout.

On Wednesday, the Greek-Cypriot government voted against asking its citizens to bank on the future of gas exports by paying a 3-15% levy on bank deposits in return for a stake in potential gas sales. The scheme would have partly funded a $13 billion EU bailout.

Read moreAs Cyprus Prepares For Total Financial Collapse, It’s A Race To The Mediterranean Gas Finish Line

Bilderberg Angela Merkel Is Furious: ‘Cyprus’ Decision To Test Europe Is Unacceptable’

by

– Furious Merkel: “Cyprus’ Decision To Test Europe Is Unacceptable” (ZeroHedge, March 22, 2013):

Europe’s paymaster – that would be Germany for those who have not paid attention to events over the past four years – is not used to being snubbed. It certainly is not used to being snubbed by what every empty chatterbox and their kitchen sink will tell you is a “small and irrelevant” country (all the more so in the aftermath of last summer’s embarrassing defeat in its head on confrontation with the ECB, in which the Bundesbank showed that sometimes the best offense is a gracious retreat). It most certainly is not used to not being invited to discussions involving the future of its precious mercantilist European union, especially when said union may no longer exist as we know it in 48 short hours. And Germany is angry.

From Bloomberg:

As Russia spurned the island nation’s bid for a loan, Merkel told a closed-door meeting of legislators in Berlin today that she’s annoyed the Cypriot government hasn’t been in touch with the so-called troika of international creditors for days, according to a party official who spoke on condition of anonymity because the briefing was private. Cyprus’s decision to test Europe is unacceptable, she told them.

“We’re not ready to accept solutions that are full of wind,” Michael Fuchs, deputy parliamentary leader of Merkel’s Christian Democratic Union, said after the meeting. “I don’t think it’s appropriate to play poker in this matter, especially when you think that there’s a risk that two banks will become insolvent next Monday.”

In other words, how dare the pesky Cypriots think a “union” is comprised of equal “units”, instead of being a despotic tyrrany in which the adjusted version of the golden rule (perhaps explaining why the Buba is pulling all its French and a lot of its NY Fed gold) applies.

Germany will have none of that nonsense.

Read moreBilderberg Angela Merkel Is Furious: ‘Cyprus’ Decision To Test Europe Is Unacceptable’

US Begins Regulating BitCoin, Will Apply ‘Money Laundering’ Rules To Virtual Transactions

by

From the article:

The WSJ reports that, “the U.S. is applying money-laundering rules to “virtual currencies,” amid growing concern that new forms of cash bought on the Internet are being used to fund illicit activities. The move means that firms that issue or exchange the increasingly popular online cash will now be regulated in a similar manner as traditional money-order providers such as Western Union Co. They would have new bookkeeping requirements and mandatory reporting for transactions of more than $10,000. Moreover, firms that receive legal tender in exchange for online currencies or anyone conducting a transaction on someone else’s behalf would be subject to new scrutiny, said proponents of Internet currencies.

– US Begins Regulating BitCoin, Will Apply “Money Laundering” Rules To Virtual Transactions (ZeroHedge, March 21, 2013):

Last November, in an act of sheer monetary desperation, the ECB issued an exhaustive, and quite ridiculous, pamphlet titled “Virtual Currency Schemes” in which it mocked and warned about the “ponziness” of such electronic currencies as BitCoin. Why a central bank would stoop so “low” to even acknowledge what no “self-respecting” (sic) PhD-clad economist would even discuss, drunk and slurring, at cocktail parties, remains a mystery to this day. However, that it did so over fears the official artificial currency of the insolvent continent, the EUR, may be becoming even more “ponzi” than the BitCoins the ECB was warning about, was clear to everyone involved who saw right through the cheap propaganda attempt. Feel free to ask any Cypriot if they would now rather have their money in locked up Euros, or in “ponzi” yet freely transferable, unregulated BitCoins.For the answer, we present the chart showing the price of BitCoin in EUR terms since the issuance of the ECB’s paper:

Read moreUS Begins Regulating BitCoin, Will Apply ‘Money Laundering’ Rules To Virtual Transactions

Europe, Russia Reject Latest Cyprus Bailout Plan Before It Is Even Voted By Parliament

by

Related info:

– ECB Issues Ultimatum To Cyprus: Come Up With €5.8 Billion By Monday Or Face Collapse Of Banking System And Get Kicked Out Of The Eurozone

– Europe, Russia Reject Latest Cyprus Bailout Plan Before It Is Even Voted By Parliament (ZeroHedge, March 22, 2013):

Yesterday, when we described the latest Cyprus bailout proposal being (belatedly) debated by the Cyprus parliament and soon to be voted, we wondered how long before the Troika rejects it outright.  After all the “Solidarity Bailout” Plan C (or whatever it is) did not do what Germany more than anything wanted to accomplish – punish Russian depositors as this entire farce has been nothing but a political gambit dictated by Germany from the onset. And so while GETCO’s entire army of algos awaits the flashing red headline with a touch of optimism to unleash robotic buying of ES and EURUSD, we fast forward to the inevitable denouement, which is, not surprisingly, bad news for Cyprus, because as the FT reports, confirming our initial skepticism, “European officials rejected Cyprus’ plans for an alternative package to save its banking sector and remain in the euro, starting a fresh round of talks with the island nation’s government on Friday.”

Full details:

The latest plan involved winding up Laiki, the island’s second-largest lender, and split it into a “good” and “bad” bank, with larger deposits over €100,000 folded into the latter. Deposits up to €100,000 would be guaranteed and bank jobs were to be safeguarded.

But several of its elements – such as raising €2bn by nationalising the state pension fund and issuing bonds based on future revenues from offshore gas deposits – continued to be seen as non-starters by Brussels and Berlin.

Read moreEurope, Russia Reject Latest Cyprus Bailout Plan Before It Is Even Voted By Parliament

EU Weighs 40% Haircut On Uninsured Cypriot Deposits In Bad-Bank Plan

by

– EU Weighs 40% Haircut On Uninsured Cypriot Deposits In Bad-Bank Plan (ZeroHedge, March 21, 2013):

More details are appearing on the latest and greatest plan in the shambles to solve Cyprus’ (and Europe’s unsolvable) problem. It appears the European Group is implicitly declaring economic war on the ‘wealthy’ depositors (we noted here non-domestic depositors dominated recent inflows) as these headlines hit:

  • *EURO AREA SAID TO WEIGH CLOSING CYPRUS POPULAR, BANK OF CYPRUS
  • *EURO AREA SAID TO WEIGH GOOD BANK, BAD BANK FOR CYPRUS BANKS
  • *UNINSURED DEPOSITS COULD GO TO CYPRUS BAD BANK, FACE 40% LOSS

We assume followed rapidly by some eurozone law-breaking capital controls to stop the remaining 60% flooding out instantaneously…

Related info:

– Cyprus ‘Haircut’: Germany And IMF Initially Demanded Stunning 40% Of Total Deposits!!!

– Reuters, March 6, 2013: Cyprus Finance Minister Says Bank Deposits Sacrosanct, Will Be Protected:

“The cornerstone of confidence in the banking system is the integrity of deposits.”
– Finance minister Michael Sarris