Europe

Cypriot Youth Rise Up In Pictures: ‘They Just Got Rid Of All Our Dreams’

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– Cypriot Youth Rise Up In Pictures: “They Just Got Rid Of All Our Dreams” (ZeroHedge, March 26, 2013):

There is a reason we think of youth unemployment as the ‘scariest’ thing in Europe as we have discussed here and here. After a few months of relative calm, it appears the youth are once again finding their hopes dashed and are protesting. As Reuters reports, thousands of students and bank workers protested in the Cypriot capital Nicosia today. “They’ve just gotten rid of all our dreams, everything we’ve worked for, everything we’ve achieved up until now, what our parents have achieved,” is how one young protester exclaimed his feelings, as a bank worker added, “we are scared.” It appears President Anastasiades comment that, “the agreement we reached is difficult but, under the circumstances, the best that we could achieve,” is not reassuring an increasingly volatile people.

Read moreCypriot Youth Rise Up In Pictures: ‘They Just Got Rid Of All Our Dreams’

The Great British Cash EUxodus Begins

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– The Great British Cash EUxodus Begins (ZeroHedge, March 26, 2013):

UK’s deVere advisory group reports, “more and more expats in Spain, Italy, Portugal and Greece are now not unreasonably worried for their deposits in these countries,” and are seeing a “surge” in the number of British expats seeking advice about moving funds out of eurozone’s most troubled economies. As EUBusiness reports, “Whether the institutions like it and accept it or not, there is a real risk of a major deposit flight from these countries as people feel their accounts could be plundered next.” It is hardly surprising obviously (as we noted earlier the bid in German bunds) but we fear this escalation in cash exodus from the periphery will increase the need for a broader EU capital control scheme sooner rather than later.

Via EUBusiness,

Read moreThe Great British Cash EUxodus Begins

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

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– 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!!!

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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’

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– 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

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– 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’

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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

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– 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’

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– 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

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– 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).

El Pais Retracts Article Alleging “Merkel, Like Hitler, Has Declared War On Europe”

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– El Pais Retracts Article Alleging “Merkel, Like Hitler, Has Declared War On Europe” (ZeroHedge, March 24, 2013):

What does it take for the Spanish “first amendment” journalistic override to kick in? Apparently, in the case of local media leader El Pais, putting up the following in print: “Merkel, como Hitler, ha declarado la guerra al resto del continente, ahora para garantizarse su espacio vital económico.” For the Spanish-challeneged this translates as follows: “Merkel, like Hitler, has declared war on the rest of the continent now to secure their economic living space.” Ah yes, the touchy verboten topic of German “Lebensraum” – its invocation, and ostensibly the unflattering Merkel comparison (seen so often in Greece) were enough to get the article by Juan Torres López in the Andalusia version of El Pais titled simply enough “Alemania contra Europa” taken down.Is it perhaps because unlike in Greece, where articles like that are a daily occurrence, Spaniards still have something to lose should they also lose the good graces of the German chancellor? Something that is more than one Spiderman towel per depositor in the nation’s just as insolvent banking system, where apparently unlike in Cyprus, the ESM actually does work to preserve liquidity and stability?…

A cached version of the article:

In its place one only now sees the following:

Read moreEl Pais Retracts Article Alleging “Merkel, Like Hitler, Has Declared War On Europe”

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

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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

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– 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)

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– 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

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– 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

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– 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

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– 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)

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– 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)

Former Cyprus Central Bank Head And Senior Fed Economist: “The European Project Is Crashing To Earth”

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– Former Cyprus Central Bank Head And Senior Fed Economist: “The European Project Is Crashing To Earth” (ZeroHedge, March 22, 2013):

Back in August 2011, one of the most prescient European (ex) central bankers, Cyprus’ very own Athanasios Orphanides was optimistic, but with a caveat: “I am optimistic that with the right actions and effort by all we will pull through this,” Orphanides told reporters after a meeting with Finance Minister Kikis Kazamias. They were Orphanides’ first public comments since warning authorities in a July 18, 2011 letter that Cyprus ran the risk of requiring an EU bailout unless urgent action was taken to shore up its finances.”

Two years later, following endless dithering and pretense that just because the ECB has stabilized the markets, all is well, and “action was being taken” when none was (because in the New Normal the lack of market collapse is somehow supposed to represent structural changes are taking place, which never actually happen), Cyprus is beyond the bailout stage – it is now quite literally on the verge of total collapse. This is also why Orphanides, who recently (and perhaps prudently) quit as Central Banker of Cyprus following a clash with the new communist government (and was replaced by a guy named Panicos), no longer is optimistic. “The European project is crashing to earth,” Athanasios Orphanides told the Financial Times in an interview. “This is a fundamental change in the dynamics of Europe towards disintegration and I don’t see how this can be reversed.”

It can’t. Which is what we have been saying all along. But it apparently takes a former Federal Reserve senior economist to say the perfectly obvious, and for reality to finally hit front and center.

More from the FT’s interview with Orphanides:

This week’s events had made “a mockery” of EU treaties, he added. “It suggests that in Europe not all people are equal under the law.”

“We have seen other eurozone countries, the Netherlands, for instance, put national interests ahead of the European interest by trying to bring down the economic model of countries such as Cyprus or Luxembourg.”

Read moreFormer Cyprus Central Bank Head And Senior Fed Economist: “The European Project Is Crashing To Earth”

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

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– 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

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– 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

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– 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’

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– 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

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– 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

Cyprus: Food, Basic Goods And Gas!

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– New Cyprus bailout plan met with skepticism (The Globe and Mail, March 22, 2013):

Cyprus’s parliament on Friday partly approved a revised formula for obtaining an international bailout to avert a default, amid strong signals that the plan would not pass muster with international lenders.

But they put off voting on a crucial new proposal until later this weekend – one that would confiscate a stunning 22 per cent to 25 per cent of uninsured deposits over €100,000 through a new tax to be placed on account holders in one of the nation’s most troubled banks.

And so, going into the weekend ahead of a Monday deadline imposed by the European Central Bank, it appeared there was still no immediate path to a lifeline of €10-billion that Cyprus needs to keep its banks from collapsing.

Monday is a national holiday, but banks are supposed to reopen on Tuesday for the first time in more than a week, and there is widespread fear of a classic bank run, as investors of all sizes drain their accounts.

Meanwhile, Cypriots jammed into supermarkets Friday to fill up on food and basic goods, after lining up all day Thursday at teller machines to withdraw as much cash as possible. Gas stations were only taking cash payments, and some retailers reported that they would no longer accept credit.

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