Posted on 03/24/2013 7:11:45 PM PDT by blam
LIVE: Deal Reached On Cyprus Bailout
Matthew Boesler
March 24, 2013
The Eurogroup of euro zone finance ministers met in Brussels tonight to approve a plan to bail out the Cypriot banking system.
The new deal will see uninsured deposits at the country's two largest banks take a substantial haircut, but insured depositors – those with less than 100,000 euros in their bank accounts – will be spared from the one-off "tax" that was being considered just a week ago.
Reports of a deal between Cypriot and EU officials being reached prior to the Eurogroup meeting caused the euro and the Australian stock market to spike.
Now, the Eurogroup has signed off on the deal as well.
CNBC's Kelly Evans tweets that Cypriot President Nicos Anastasiades is pleased with the outcome:
Below are more details from Reuters on the plan:
It will mean that Popular Bank of Cyprus, the island's second largest bank which is also known as Laiki, will effectively be shut down.
Deposits below 100,000 euros in Laiki will be transferred to Bank of Cyprus, the country's largest bank. Deposits above 100,000 euros, which under EU law are not insured, will be frozen and will be used to resolve debts. It remains unclear how large the writedown on those funds will be.
No charges will be incurred against any Cypriot bank account with less than 100,000 euros in them, the officials said.
Because the process will be treated as a bank restructuring as opposed to a nationwide "tax" on bank deposits, it seems that the plan will not be subjected to another vote in the Cypriot parliament, which on Friday passed new laws enabling them to navigate the restructuring process more easily.
The Eurogroup press conference is now underway.
Dutch Finance Minister Jeroen Dijsselbloem,
(snip)
(Excerpt) Read more at businessinsider.com ...
Anyone with money needs to put a good percent of their wealth into hard assets. Land (waterfront lots, farmland), gold/silver etc. REIT's are also a good place to be. You need some cash but you need to look average to almost poor. Hide your wealth. That's the great lesson here.
“Person said the ‘rich’ would pay. Looks correct from here.”
Except for those privileged ‘rich’ insiders connected to the ECB who somehow managed to transfer their funds ahead of their accounts being frozen, no doubt.
I also think there will still be a run on the banks for those under 100K euros.
Think of the example this sets. If I was rich in another EU country, my money is gone tomorrow.
My viking blood is starting to tingle.
“Because the process will be treated as a bank restructuring as opposed to a nationwide “tax” on bank deposits, it seems that the plan will not be subjected to another vote in the Cypriot parliament”
That’s because ones and zeros on spinning hard drives are even more fungible than physical money. In fact, spinning ones and zeros are about as fungible as something can get.
Yes, but it’s even worse than that. No property right is safe in EU now. They can simply confiscate your property without recourse. No due process of law. This will come to be seen as a watershed event.
Might not be a sure safe haven. They were already considering seizing real estate of foreigners. In fact, waterfront lots on the Mediterranean.
True, and by un-elected bureaucrats from another country. I concur with your last sentence completely.
Their political thieves are not as creative as ours. All they need to do is say you have to vote on the bill to find out what is in the bill.
Now that is an incredible video. He stated that 7 years ago ? Kinda explains why socialism is trying to take over everywhere. The Soviet Union was replaced by the European Union. Same globalist socialist thieves, just speaking different languages.
Putin is poutin’ and Obama won’t be able to sleep tonight: “Soak the rich bitterly clinging to their money. It’s a win-win! First thing in the morning, why ....”
It’s a little unclear from the article, but... Did they say that if you had 95,000 Euros in the bank, the account was safe. But, if you had 105,000 Euros in the account, you lost everything?
Vive La difference! Vive La France! USA don’t go “gay”! To many urban “sweet things” are oh so metro-sexual, yuck; hay pal, don’t let that bulge in my pants turn you on because it ain’t what you think (it’s my .38). Just seeing guys kiss makes me want to puke...
My guess is if you had 95,000 Euros, they are going to make a bank error correction to your account and you will actually have 100,001 Euros. Then comes the Devil's Haircut.
“It’s really horrible. Banks have absolutely no ownership interest in their depositor’s money. To the extent that deposits are insured, the insurer would pay the banks and then go after the banks in subrogation. As to uninsured amounts, the depositor would proceed directly against the banks to collect. But under no circumstances does a bank have the right to simply take the property of another - i.e. the depositors - and use it to write down other debts it owes to other parties, including regulators. This is really the most lawless thing imaginable. They might as well have gone to every Cypriot who owns a car and taken their vehicle and sold it at auction and pocketed the money. It’s exactly the same thing - theft. This is larceny pure and simple.”
What you say is all true. But banks can still go bankrupt from making bad investments, which is what has happened in Cyprus.
What people don’t realize is that when they deposit money in a bank, it’s not for the purpose of the bank to hold on to your money for your convenience, but what you are really doing is LOANING your money to the bank! You are actually a lender and not a depositor. This is all spelled out in the account agreement one signs with a bank, and by loaning your money to the bank your are giving the bank permission to use your money pretty much as they see fit, and there is no real guarantee that you’ll get back any of the money you loaned the bank.
Prior to the illusion of FDIC insured deposits (loans) and it’s equivalent in other countries, banks used to go bankrupt all the time, completely wiping out ALL investors’ deposits. That was a big part of the death spiral of the Great Depression and why it was necessary for FDIC insurance to be invented, or otherwise no sane person would ever loan their money to a bank again.
And like in the EU, the FDIC actually only insures accounts up to a certain limit, and for anything over that there simply are no guarantees you’ll ever get the money you loaned the bank back. Period.
Now when banks DO go bankrupt, there are SUPPOSED to be lawful ways in which the remaining assets are distributed to the banks debt holder in an orderly, lawful fashion, the depositors being simply one class of debt holder. That process has worked pretty well in the U.S. recently, but given the propensity of the Obammunists to ignore the law and just do what they feel like, all bets are off for the future.
And in places like Cyprus, it sounds like they didn’t have ready-made procedures for bank bankruptcies anyway, so they had to make some up quickly. One could label such ex-post facto, ad hoc measure “theft”, but the net result to those foolish enough to make giant loans (deposits) to these crappy banks would probably be pretty much the same if Cyprus had a U.S.-like process in place prior to bank bankruptcy anyway, namely the depositors money has simply completely evaporated because the banks made really, really bad investments with their depositors’ loaned money, and they’d wind up with nothing anyway.
And most likely nothing criminal has been involved here either, except maybe criminal stupidity or maybe criminal greed by both the depositors and the banks themselves. Because the depositors were chasing unrealistic returns promised by the bank, and which they the bank delivered by “investing” their depositors money in Greek bonds. Greek bonds were paying extremely high interest rates, but the high interest rates were being paid because it was likely the bonds would fail, which is exactly what happened.
The takeaway lesson here, though, is simply don’t loan your money to a bank. Just keep enough money in your bank account to pay next month’s bills. Even better switch as much of your transactions as possible to cash. It’s actually easier to do than most people think. For example, I live in a small town and pay all of my insurance and property taxes by simply walking in and plunking down the cash. I could do the same thing for my utilities if I wanted. And I never use plastic except when I buy stuff on the Internet.
95 would be safe, 105 takes a 40% haircut. i.e. raping.
Let he who has wisdom read and understand...
It’s a little unclear from the article, but... Did they say that if you had 95,000 Euros in the bank, the account was safe. But, if you had 105,000 Euros in the account, you lost everything?
Your first 100,000 euros is proected, the amount above that is subject to confiscation.
At 105k euros, a 40% haircut is 2k euros.
From what I understand, Cyprus got in trouble after collecting a bunch of foreign deposits due to high deposit interest. Now how do you get in trouble from too much money ? Well if your Cyprus, you loaned that money to Greece to help your long time allies by buying their bonds. Then the EU Vikings from the North, came down in their dragon ships, and bailed out Greece by forcing a 75 % Devil's Haircut on the Greecian bondholders. So the Viking raiders from the north, stole the money from the Russians when they bailed out Greece. The Russians are just finding that out.
This will not end well.
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