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I have no idea why though. The amount of money involved is peanuts in the grand scheme of things.
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Dr. Paul Craig Roberts: “The reason that the EU is redefining depositors in banks as lenders is so their deposit is seen as an investment and is subject to risk in the same way as the banks. So if a depositor is reclassified as a lender, it means they cannot expect to receive back the full value of their deposits in case the bank experiences difficulties.”
Eric King: “This attempt to redefine the nature of bank deposits, isn’t this being done so that the governments can engage in outright theft of bank deposits?”
Dr. Paul Craig Roberts: “They don’t want to call it theft. But they do want to make the depositors have their capital at risk as an investor would. Of course it comes down to theft, given the traditional nature of a depositor. But they are trying to get around that so that the cost can be imposed on depositors. So, yes, it is theft.”
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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.
Following is the detail of the deal in a statement from euro zone finance ministers.
1. Laiki will be resolved immediately - with full contribution of equity shareholders, bond holders and uninsured depositors - based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework.
2. Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time.
3. The good bank will be folded into Bank of Cyprus (BoC), using the Bank Resolution Framework, after having heard the Boards of Directors of BoC and Laiki. It will take 9 billion Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalization has been effected, and may subsequently be subject to appropriate conditions.
4. The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.
5. BoC will be recapitalized through a deposit/equity conversion of uninsured deposits with full contribution of equity shareholders and bond holders.
6. The conversion will be such that a capital ratio of 9 % is secured by the end of the program.
7. All insured depositors in all banks will be fully protected in accordance with the relevant EU legislation.
8. The program money (up to 10 billion Euros) will not be used to recapitalize Laiki and Bank of Cyprus.
Cyprus agreed to the outlines of an international bailout, paving the way for 10 billion euros ($13 billion) of emergency loans and eliminating the threat of default.
The accord between Cyprus and the “troika” representing international lenders was reached in overnight talks in Brussels and ratified by finance ministers from the 17-nation euro area.
“It’s in best interest of the Cyprus people and the European Union,” Cyprus President Nicos Anastasiades told reporters.
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Deposits below the EU deposit-guarantee ceiling of 100,000 euros will be protected, and a loss of no more than 40 percent will be imposed on uninsured depositors at the Bank of Cyprus, two EU officials said. Uninsured depositors at Cyprus Popular would largely be wiped out, two other officials said.
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An explosion has occurred outside of a Bank of Cyprus branch in Limassol, according to sources enikos.gr and SigmaLive.
The blast was caused by an "improvised explosive device," according to an English translation of the SigmaLive report. ...
Depositors in the Bank of Cyprus, the biggest bank on the island, will reportedly lose 30 percent on their holdings above 100,000 euros, the chairman of the Cypriot parliamentary finance committee said on Monday.
"I haven't heard a formal announcement about the haircut, but this is the figure I heard," Irish radio quotes Nicholas Papadopoulos as saying.
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"The result is a fair one for everybody involved,” German Finance Minister Wolfgang Schaeuble told a news conference after the 11th-hour talks ended with a deal.
"I think it's a good one" and it will "serve as a basis for negotiations with the troika" of international creditors, he stressed.
It will help "stabilize the situation in Cyprus and help Cyprus back onto a path of sustainable consolidation. I think the solution can help win back lost confidence for and in Cyprus," he said.
"It is the best path possible even if it isn't an easy one."
Russia doesn’t appear so optimistic. "I think they continue stealing what's already been stolen. We need to understand what this story will finally lead to," Russian Prime Minister Dmitry Medvedev commented on the move during a meeting with his aides on Monday.
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For Fedor Mikhin the deluge of overseas phone calls began on Wednesday, just five days after the EU first proposed the ill-fated tax levy on Cypriot depositors.
There were the two Andorran bankers who called offering to open bank accounts for the Cyprus-based businessman in the Pyrenees, and then Mr Mikhin's Swiss bank, which announced it would be sending representatives to Limassol to poach Russian clients on Tuesday, the day Cyprus is due to reopen its banks for the first time in over a week.
While last week saw dozens of well-heeled Russians and their representatives fly down to Cyprus to check on bank accounts and confer furiously with Cypriot officials, they are being closely followed by another wave of visitors: the European bankers who hope Cyprus' loss will be their gain.
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.
In Limassol, a lawyer for a Russian oligarch described receiving a call from the tycoon's Swiss bank, which offered to open bank accounts for all the oligarch's Cyprus-based employees as a favour, as well as emails from a dozen local Cypriot consulting firms imploring him to use their services when opening new accounts abroad.
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While some Russian businesses are feeling the pinch in Cyprus, Prime Minister Medvedev has voiced the idea of offshore zones in Russia at a regular meeting of the government, where a state project to develop Russia's Far East was discussed.
"If there is so much fuss going on, may be we should think of creating a kind of zone of our own in the Far East. We have bunch of good places there -- Sakhalin, the Kuril islands," Medvedev said, referring to the ongoing economic turmoil in Cyprus.
Speaking about the project, Medvedev called the budget for it as "unprecedentedly big" -- more than $323 billion. The money will be mostly spent on transport infrastructure in the two remote regions.
In offshore zones non-residential companies are treated to a number of privileged rules and undergo light registration, licensing and taxation. The Bahamas and British Virgin islands are among such zones and local officials pay little interest in the activities of international companies. Dmitry Medvedev hopes, some of the money, parked there, would "move" to a Russian offshore region, if created.
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Speaking after the meeting, First Deputy Prime Minister Igor Shuvalov said losses to Russian investors in Cyprus were not yet clear.
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"What is happening is a good signal to those who plan to move their capital to ... Russian banks," he was quoted as saying. "We have very stable banks."
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http://kingworldnews.com/kingworldn...Roberts_-_Cyprus_May_Dwarf_2008_Collapse.html.
Dr. Paul Craig Roberts: “The reason that the EU is redefining depositors in banks as lenders is so their deposit is seen as an investment and is subject to risk in the same way as the banks. So if a depositor is reclassified as a lender, it means they cannot expect to receive back the full value of their deposits in case the bank experiences difficulties.”
Eric King: “This attempt to redefine the nature of bank deposits, isn’t this being done so that the governments can engage in outright theft of bank deposits?”
Dr. Paul Craig Roberts: “They don’t want to call it theft. But they do want to make the depositors have their capital at risk as an investor would. Of course it comes down to theft, given the traditional nature of a depositor. But they are trying to get around that so that the cost can be imposed on depositors. So, yes, it is theft.”
Hey fam! Things are getting pretty crazy over here in Cyprus. I don’t know if you guys have been watching the news or seen things online, but Cyprus is on the verge of economic collapse.
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As it stands now, nowhere in Cyprus accepts credit or debit cards anymore for fear of not being paid, it is CASH ONLY. Businesses have stopped functioning because they cannot pay employees OR pay for the stock they receive because the banks are closed. If the banks remain closed, the economy will be destroyed and STOP COMPLETELY. Looting, robberies and theft are already on the rise. If the banks open now, there will be a massive run on the bank, and the banks will FAIL loosing all of its deposits, also causing an economic crash. ...
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.
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.
The Cypriot finance minister has ordered all the country's banks to remain closed until Thursday, the country's central bank announced.
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http://www.zerohedge.com/news/2013-...ready-quietly-withdrawn-all-their-cash-cyprus
I was wondering why the media keeps saying that the death of Boris Berezovsky removes a stumbling block to UK/Russian relations and that things should be a lot more positive from now on.
Meanwhile now I'm pretty sure a big part of the reason we will have better relations in future is because we let them get their money out of Cyprus last week.
On Monday we reported ... Russian Oligrachs had found ways to bypass the ringfence and pull their money out quickly and quietly. We said that, if confirmed, "If we were Cypriots at this point we would be angry. Very, very angry." Turns out the Cypriots did become angry, and the questions are finally starting. As Spiegel reports ...
Here we go again:
•EUROPEAN PARLIAMENT TO PUSH FOR DEPOSITORS WITH ABOVE 100,000 EUROS TO FACE BAIL-IN UNDER NEW BANK RESOLUTION LAW - EU LAWMAKER - RTRS
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In spite of the fact the Maastricht Treaty under which the eurozone was formed mandates a free flow of capital, Cyprus unveils severe capital controls.
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But What about those advertised losses of 30% on large Cyprus depositors?
Glad you asked. "Laiki depositors holding more than €100,000 may lose up to 80 per cent of their funds, and only get the remaining 20 per cent back over a period of years, Cyprus’s finance minister said on Tuesday."
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When the world's leading expert on Sovereign debt restructurings believes that the endgame for Cyprus might be another round of restructuring, adding that "I'm not sure this is over," it is important to listen. With the calmness in Cyprus today more reflective of paralysis than confidence, Lee Buchheit senses that the parameters of how much money will be needed to recapitalize the banks have changed. He tells Bloomberg TV's Lee Pacchia in this brief clip, "the situation is spiraling down... they'll need more money because the economy is worse, tax collections less, deposits will flow out when they can flow out." As for which European nation will be next in need of assistance with its sovereign debt burdens? Buchheit agrees with us that while many are looking to Slovenia, he sees real economic and political problems in both Italy and Spain remaining especially since the EU "have certainly changed the rules of the game."
So, Medvedev was right?
Also, it appears that Cypriot banks had record outflows all through January and February before this confiscation deal penetrated the news media here in the USA.
... Yiannakis Omirou, Cypriot House of Representatives President, ... today, as Cyprus' Famagusta reports, he believes the 'Troika-imposed' responsibility will, "turn Cyprus into a colony of the worst possible type." His 'Icelandic' solution is to "leave the Troika and EMS behind," to ensure "national independence, national sovereignty, moral integrity, and economic independence." He may have a point; judging from the chart below of the Troika's poster-child Greece, relative to Iceland, things are not going so well. As Omirou ominously concludes, "if we remain bound by the Troika and the memorandum Cyprus’ destiny is already foretold and there will be no future."
http://www.zerohedge.com/news/2013-...ll-€400-million-gold-finance-part-its-bailoutHere We Go: Cyprus To Sell €400 Million In Gold, About 75% Of Its Total Holdings, To Finance Part Of Its Bailout
Curious why every bank and their grandmother, and most recently Goldman today, has been lining up to push the price of gold as low as possible? Here's why:
CYPRUS TO SELL 400 MLN EUROS WORTH OF GOLD RESERVES TO FINANCE PART OF ITS BAILOUT - TROIKA DOCUMENTS - RTRS
Or about 10 tons of gold. But... the bailout was prefunded and there was no need to provide any additional cash? What happened: was the deposit outflow discovered to have been even greater than the worst case scenario and thus Cyprus needed even more cash? As for the buyers? We will venture a guess: central banks buying at the lows.
Finally: congratulations Cypriots. You are now handing over your gold for the one time, unbeatable opportunity to remain a vassal state to the Eurozone. But at least you have your €.
The good news: Cyprus will have at least another 4 or so tons after selling the 10 demanded now, before the Troika kindly requests that Cypriot citizens sell a kidney or two to pay for the ongoing deposit outflow from its insolvent banks, and indirectly, the endless bailout of the Euro.
First they purloin the savings and bank deposits in Laiki and the Bank of Cyprus, including the working funds of the University of Cyprus, and thousands of small firms hanging on by their fingertips.
Then they seize three quarters of the country’s gold reserves, making it ever harder for Cyprus to extricate itself from EMU at a later date.
The people of Cyprus first learned about this from a Reuters leak of the working documents for the Eurogroup meeting on Friday.
It is tucked away in clause 29. "Sale of excess gold reserves: The Cypriot authorities have committed to sell the excess amount of gold reserves owned by the Republic. This is estimated to generate one-off revenues to the state of €400m via an extraordinary payout of central bank profits."
This seemed to catch the central bank by surprise. Officials said they knew nothing about it. So who in fact made this decision?
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Cyprus may not be a “template” but it is clearly a warning to any other EMU country that needs help from now on. The creditor powers will go to extraordinary lengths to avoid sharing the costs.
We now learn that one of those lengths is to seize gold reserves. So what will happen as Portugal’s economy slides deeper into its contractionary vortex, and its deficits remain stubbornly stuck near 6pc of GDP despite the fiscal cuts, and its public debt hits 124pc of GDP this year?
Portugal holds 382 tonnes of gold, the 14th largest holding in the world, and more than either Britain or Spain. For the sake of delicacy, I will skip over the methods by which Salazar acquired that gold.
So will the Troika order Portugal to hand over these reserves if the country requires a second bail-out, as deemed likely by a great number of analysts in the City?
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Yet this escalating assault on bank savings and on the state assets of victim nations is gradually taking its toll. Throw gold into the mix and you touch an atavistic nerve. The Cypriot gold confiscation of April 2013 may matter more than first meets the eye.
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So we have a standoff yet again. Cypriot president Nicos Anastasiades says the country needs "extra assistance", and indeed it does since the extra demands on Cyprus are a further 28 percent of GDP.
If the eurozone refuses to offer any further help, there must surely be a greater temptation to withdraw from the euro and default on sovereign debt in a classic restructuring deal with the IMF.
That is what the IMF is there to do. Such restructurings have been done countless times across the world over the last 50 years. It is traumatic, but countries usually recover after a couple of years.
The crucial point for the Cypriot people is that the cost-benefit calculus is moving in that direction. Whether they have understood this is another matter. They may in due course as the ghastly reality of Troika policy hits them.
And just to clarify, the reason why the rescue costs are shooting up is because the Troika has finally recognised that its treatment of Cyprus is pushing the economy over a cliff. The depressionary spiral itself is causing the numbers to spike.
So Cyprus is very far from being solved, and so is Portugal. A fresh Troika leak, this time to the Pink Sheet, has confirmed what anybody following Portugal already suspected. The country is stuck in a debt-compound trap. The economic slump is proving much deeper than forecast. The deficit has been rising not falling, in spite of austerity cuts.
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http://blogs.telegraph.co.uk/financ...rom-bad-to-worse-by-the-day-so-does-portugal/
Anyone think Cyprus or Portugal will have any gold left after all is said and done?
http://ransquawk.com/headlines/cyprus-parliament-will-have-to-vote-on-bailout-deal-16-04-2013Cyprus parliament will have to vote on bailout deal
Full article (translation):
- The memorandum and the loan agreement will be submitted for approval and before the Cypriot Parliament, according to a letter from the Attorney General Petros Clerides to the President of the College Giannakis Homer.
- In the letter, the Attorney General shall attach the opinion according to which no power can not have any agreement that binds the Republic without first approved by the House of Representatives.
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