Posted on 03/25/2013 9:24:39 AM PDT by whitedog57
The Cyprus banking crisis and a Cyprus default have been averted by the heavy hand of Northern Europe. That is, only tax depositors with EU100k or more in the bank.
March 25 (Bloomberg) — Cyprus dodged a disorderly default and unprecedented exit from the euro by bowing to demands from creditors to shrink its banking system in exchange for 10 billion euros ($13 billion) of aid. Cypriot President Nicos Anastasiades agreed to shut the country’s second-largest bank under pressure from a German-led bloc in a night-time negotiating melodrama that threatened to rekindle the debt crisis and rattle markets.
“It’s been yet another hard day’s night,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels early today. “There were no optimal solutions available, only hard choices.”
Funny, I heard a similar line in the movie Argo.
“Nobody knows where we are heading,” said Epifanos Epifaniou, 50, who used to drive a delivery truck in Nicosia and has been unemployed for six months. “People are playing games with Cyprus. We are alone. Nobody is supporting us.”
Not true, Epifanos. You and the rest of Cyprus are now like the other PIGS (Portugal, Italy, Greece, Spain) with your gruel bowls out and asking the EU, IMF and Northern Europe for more. What are your core industries? Like Greece, tourism. Banking for Russians? Well, the Eurogroup just killed that. And like Greece, liquor and wine. Yup, you are officially a dead economy.
The PIGS and Cyprus are in negative GDP growth mode with Hungary. Of course, the real problem facing the PIGS-CH is worsening economic prospects.
The Cyprus bailout is a template for the EU, according to
After 12 hours of talks with the EU and IMF, Cyprus agreed to shut down its second largest bank, with insured deposits – those below 100,000 euros – moved to the Bank of Cyprus, the country’s largest lender. Uninsured deposits, those accounts with more than 100,000 euros, face losses of 4.2 billion euros.
Uninsured depositors in the Bank of Cyprus will have their accounts frozen while the bank is restructured and recapitalised. Any capital that is needed to strengthen the bank will be drawn from accounts above 100,000 euros.
The agreement is what is known as a “bail-in”, with shareholders and bondholders in banks forced to bear the costs of the restructuring first, followed by uninsured depositors. Under EU rules, deposits up to 100,000 euros are guaranteed.
The approach marks a radical departure for euro zone policy after three years of crisis in which taxpayers across the region have effectively been on the hook for resolving problem banks and indebted governments via multiple rescue programmes.
That process, with governments and taxpayers bearing the costs and providing the back stop, had to stop, Dijsselbloem said. Recent financial market calm meant now was the time to make the change, although he conceded there was some concern that it could unsettle markets again.
“If we want to have a healthy, sound financial sector, the only way is to say, ‘Look, there where you take on the risks, you must deal with them, and if you can’t deal with them, then you shouldn’t have taken them on,’” he said.
There you have it. Yet another “tax the rich” solution to bad economic policy.
So the bailout of Cyprus has ended turmoil for the time being. The US Treasury market remains calm.
Hey, I hope China doesn’t try to make President Obama levy a similar tax on “the wealthy” in the USA to pay for our debts to China!
ARGO f**k yourself, Eurogroup.
The accounts are only insured for 100K (Euros). The order of precedence is first insured deposits under the insurance limit are paid off, if there is any residual, it goes to the uninsured portion of deposits, those over 100k. If there is anything left over, it goes to shareholders and bondholders. This is, indeed, the way it should be.
He always bragged about how wonderful the Communist system was... free health care, etc... Everything in Greece was better and more fair than here.
He'd bash the US over everything and couldn't have been more Anti-American if he tried.
Of course, he'd never dream of moving to Greece or giving all THIS up to go live in THAT system.
These Cypriots remind me of him. They have been Anti-American for donkey's years... they lorded it over the US all the time that THEIR system was better.... everything there was less expensive and BETTER...,
I guess the free health care wasn't REALLY free, was it? We're supposed to feel bad for them and the free ride they all had for so long?
In related news, the Cyprus Backhole and Shovel Company is racking up back orders.
If it’s based on stolen money, it’s a crime. It’s that simple.
Hopefully some of those big depositors are rich liberals.
And why is Cyprus in trouble ? Because they used all those foreign deposits to buy Greek bonds. Bad decision for Cyprus, but it was Northern Europe that destroyed the Greek Bonds when they bailed out Greece.
How did Northern Europe destroy Greek bonds? By asking to be repaid a fraction of what the Greeks promised to pay? Greece had become an international freeloader, living on easy credit. Remind you of any other country you can think of.
The main point being that the European Bailout of Greece, destroyed the Greek Bonds the Cypriots were holding. The bonds were not destroyed by Cyprus. And how in the heck can anyone blame the Russians with a straight face ? DC is full of nothing but clowns.
Crisis Averted???
WTF???
It hasn’t even begun... wait until tomorrow when the banks open and you’ll see what was averted. NOTHING.
Disaster looms...
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