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Post by unlawflcombatnt on Mar 17, 2013 17:27:50 GMT -6
Cyprus banking customers will now have 10% of their bank account funds confiscated, as per a new EU directive. www.freerepublic.com/focus/news/2997662/posts?page=76CHAOS IN CYPRUS: “Thousands” Are Withdrawing Their Money
Sat., March 16, 2013 by alexmark " People with Cyprus bank accounts will lose up to 10% of their savings as the price of a 10 billion euro (£8.6 billion) rescue package for the cash-strapped country from its European partners and the International Monetary Fund.
The bailout was agreed early on Saturday in a bid to keep the island nation from a bankruptcy that could rekindle the region’s debt crisis.
But in a major departure from established policies, the package also includes a one-off levy on the money held in bank accounts in Cyprus. Analysts have warned that making depositors take a hit threatens to undermine investors’ confidence in other weaker eurozone economies and might possibly lead to bank runs.
In return for the rescue loans Cyprus will trim its deficit, shrink its troubled banking sector, raise taxes and privatise state assets, said the Netherlands’ Jeroen Dijsselbloem, presiding over meetings of the 17-nation eurozone’s finance ministers. “The assistance is warranted to safeguard financial stability in Cyprus and the eurozone as a whole,” he said, speaking after nearly 10 hours of negotiations.
People with less than 100,000 euro (£86,000) in their Cypriot bank accounts will have to pay a one-time tax of 6.75%, those with more will lose 9.9%. The measure is expected to net 5.8 billion euro (£5bn) in additional revenues, Mr Dijsselbloem said, greatly reducing the country’s financing need."
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Post by unlawflcombatnt on Mar 17, 2013 22:32:44 GMT -6
from Ireland (SinnFein) Cyprus loan terms will instil fear in bank depositors across Europe - Doherty
March 16, 2013 " Responding to released details of the Cypriot loan deal, Sinn Féin Finance Spokesperson Pearse Doherty TD said the imposing of an up to 10% levy on ordinary depositors in the country would instil fear on bank depositors across Europe. He said the move made a mockery of the deal agreed last year to separate sovereign debt from banking debt. He added that the Irish Government needed to report what progress they have made on securing a deal on Ireland's banking debt.
Deputy Doherty said: "The decision last night to impose a levy of 6.75% on ordinary Cypriot deposit holders under €100,000 and a 9.9% levy on those over €100,000 is madness. From what we are hearing no bank bondholders are to suffer losses in this 'deal', but savers are going to be burnt, at a time when Europe needs depositors and needs to offer depositors real security to get them. Already there are reports of people queuing outside Cypriot banks to try to withdraw their money. Europe has caused a bank run in a eurozone country.
"This move makes a mockery of the deal agreed last year on separating banking debt from sovereign debt. One year on, here we have a sovereign and its people again being told to pick up the tab for a banking mess. Where is the ESM and direct capitalisation of the banks in all of this? In addition, we have Europe instructing a sovereign to increase its corporation tax, something which will send a shiver throughout this state.
"I would also like to know what progress the Irish Government has made on separating our banking debt from sovereign debt in the last 24 hours. Are we to get a banking deal, or is this Government just stringing us along and trying to distract us with other, weaker measures?""
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Post by unlawflcombatnt on Mar 17, 2013 22:37:31 GMT -6
from efg-bnusfoodreserves.blogspot.com Sun, March 17, 2013 America Warning 3/17/2013: 'EU Steals Nations PRIVATE BANK ACCOUNTS - Bank Raids Beginning'March 17, 2013 " Info-Wars and Alex Jones has issued a very serious warning to every American citizen who has secured financial savings in US Banks.
If they can get away with this in the European Union countries, they will try to do the same thing here in the United States.
According to reports, citizens living in the nation of Cypress have lost 10% of their financial wealth from their bank accounts."
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Post by unlawflcombatnt on Mar 17, 2013 22:47:10 GMT -6
from Naked Capitalism Cyprus’ Bank Deposit Bail-inSat, March 16, 2013 by Edward Harrison " Ed Harrison here. I haven’t been on NC in a while now but Yves asked me to cross-post this one because the issue is important. Let me note here that Tyler Cowen asks some troubling questions on this. And Ed Conway raises some good issues as well. I recommend reading those posts too. Below is my cross-post. If I have any updates, go to the CW version for those.
This morning we learned that after hours of tense negotiation, Europe has hammered out a 10bn euro “bailout” of Cyprus. I put the term bailout in quotes because the key feature of this deal is the bail-in of Cypriot depositors to the tune of 5.8bn euros, about a third of Cyprus’ GDP. This means that depositors went to sleep on Friday night and woke up Saturday to find that their money, deposited safely in Cypriot banks, had been seized and used to “bail out” the country.
While the bail-in became official EU bank rescue policy during the Spanish crisis last summer, bank depositors were never mentioned at that time. I see this as an extreme measure which, if the European banking crisis continues elsewhere, will have very negative implications for bank depositor confidence in other European periphery countries.
The mitigating factor in terms of preventing a loss of confidence in the European banking system is that the bail-in will happen principally via a one-time 9.9% levy on deposits over 100,000 euros. This is a bank holiday measure that means that Cypriot bank account holders with funds over 100,000 euros will have 9.9% of their account holdings deducted from their accounts when banks open on Tuesday. However, importantly, an additional 6.75% levy is going to hit deposits below that 100,000 euro level. As a bank depositor, given a one-day national holiday to decide what to do with your now shrunken savings, what would you do?
Cyprus’ finance minister Michalis Sarris said large deposit withdrawals would be banned. Jörg Asmussen, a German member of the ECB board and a key ally of Angela Merkel, added that the part of the deposit base equivalent to the actual bail-in levies would be frozen immediately so the funds could be used to pay for the “bailout”. The Financial Times has the best immediate write-up on this. The finance minister is quoted this way in that article:
“I am not happy with this outcome in the sense that I wish I was not the minister that had to do this,” Mr Sarris said. “But I feel that the responsible course of action of a minister that takes an oath to protect the general welfare of the people and the stability of the system did not leave us with any [other] options.”
Some of the bailout lenders like the IMF had actually been calling for Cyprus to seize all deposits larger than 100,000 euros. So this falls well short of those demands. Nonetheless, a rubicon has been crossed. Not only are senior bank debt lenders now on the hook before a single penny of European Union loans or guarantees flow to busted eurozone countries, but so are subordinated debt holders and so are even depositors. As an EU citizen, you must now believe that any lending exposure you have to a bank whether as a bond lender or deposit lender can be seized and confiscated by government, no matter how small the exposure. The FT notes that “[e]ven Ireland, whose banking sector was about as large relative to its economy as Cyprus’ when it was forced into a bailout in 2010, never considered such a measure.”
Bailout fatigue is the driving force behind the Cyprus bank deposit bail-in. The logic here is the same logic that was at work in the confiscation of subordinated debt holders’ money in the Dutch bank SNS Reaal’s bankruptcy. The principle is that the direct lenders of banks will now become the main parties to lose money in any future EU bailout deal. Significantly, sovereign balance sheets will not take a hit unless nationalized banks’ direct lenders do first. No loans and no guarantees will flow before appropriate haircuts are given to the direct bank lenders. And we can see now that this includes depositors. This approach was first adopted as principle during the Spanish crisis last year. European policy makers see bail-ins as critical in breaking the sovereign-bank nexus which has been so destructive during the European crisis.
At that time, I wrote:
My suggestion is that preferreds be converted first, wiped out if the capital is insufficient before moving to the debt holders. The debt holders should have an option of writedowns or equity conversion especially because some debt holders from funds are specifically limited in the types of investments they can hold. And senior debt is the stickiest wicket because haircuts here could create contagion. Nevertheless, the outline here is clear: set specific guidelines on how much bailing in one can anticipate will need to occur and this will go a long way toward relieving market funding worries for euro banks.
To the degree that Europe devises a bank resolution scheme along these lines, they will need to use it because bank recapitalisation will be an issue outside of Spain as well.
I hadn’t even considered bank depositor bail-ins. But apparently that’s what was meant as there are few senior and sub bank debt funds to get in Cyprus. To keep the bail-in principle, the EU was forced to bail in depositors then. This is problematic because no clear standardized EU-wide framework was worked out regarding how and when debt holders would be bailed-in as I suggested last July. Moreover, bailing in depositors brings up the spectre of bank runs again. In Spain, angry depositors were aghast when the money they were coaxed into switching out of deposits into preferreds was bailed in when Spanish banks were nationalized. Can you imagine the reaction if depositors actually lost money?
Details are still sketchy. However, if there is a debt for equity conversion instead of just a clear-cut confiscation of funds, that would certainly mitigate the downside. I will have more to say at a later date but this doesn’t look good to me. It’s another ad-hoc solution that will lead to panic and talk of contagion, bank runs and a eurozone breakup. The EU can get away with this in Cyprus because the country is tiny. Would the same approach work in Spain?
What is clear now, however, is that this draconian solution – with even depositors bailed in – was driven by core European countries’ need to tell their own taxpayers that they would not be paying for the mistakes of others, that no German money would flow to bail out the so-called profligate periphery in a German election year. And that’s what matters most as far as EU policy goes.
If you are an investor, clearly relative value-wise, sovereign debt versus bank debt or sovereign CDS versus bank CDS is going to be a good play.
Editor’s note: Reuters mentions that half of Cypriot savers are thought to be non-resident Russians. So this policy will definitely get a response from Russia (though it is alleged that many of these deposits are tax dodges and that the Russia state would be pleased with the policy response as it would shift deposits back to Russia.
Update: Apparently, a condition of the bailout is that Cyprus raise its tax rate from 10% to 12.5%, the same (low) level as in Ireland. This pre-condition changes the tenor of the bailout somewhat as it makes clear that Cyprus is being forced into a corner and forced to alter macro policies in order to prevent its banking system from collapsing. Every European peripheral nation needs to understand that is what loss of currency sovereignty and inclusion in the euro zone means." Update 2: The IMF now supports capital controls. This shift in policy occurred in December. I believe the shift will matter if the Cyprus bank bail-in scheme destabilizes deposit bases in periphery countries. See here for the wording of the Cyprus bank deposit guarantee. It is not clear what protection this provides and what the implications are for other deposit guarantees in the EU.
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Post by unlawflcombatnt on Mar 17, 2013 22:58:59 GMT -6
Asian Stocks Dive on Cyprus bank depositor confiscation planfrom Marketwatch: Asia stocks dive on Cyprus deposit levy plan U.S. stock-index futures, euro also fallingMon, March 18, 2013 By Sarah Turner " Asia stocks reacted badly on Monday to plans by Cyprus for an unprecedented levy on private bank deposits as part of its European bailout program — with U.S. stock-index futures and the euro also sharply lower.
Japan’s Nikkei Stock Average (TYO:JP:100000018) tumbled 2.1%, South Korea’s Kospi (KRX:KR:SEU) lost 0.6%, and Australia’s S&P/ASX 200 index (ASX:AU:XJO) fell 1.4%.
Reuters
In Chinese trading, Hong Kong’s Hang Seng Index (HSI:HK:HSI) dropped 2.2%, while the Shanghai Composite Index (SHA:CN:000001) gave up a more modest 0.7%.
U.S. index futures also took a hit, as the Dow Jones Industrial Average (DJI:DJIA) contract traded 133 points, or 0.9%, Nasdaq (NASDAQ:COMP) futures fell 33 points, or 1.2%, while those for the S&P 500 (SNC:SPX) lost 19.30 points, or 1.2%.
In the currency markets, the euro (ICAPC:EURUSD) fell sharply to $1.2908 in Asian trading hours Monday, down from $1.3076 in late North American trading Friday.
The losses for Asian stocks and other securities came after Cyprus announced plans for a one-off levy on bank deposits in exchange for equity in the banks. The measure was part of a deal that would have international creditors provide 10 billion euros ($12.9 billion) to shore up the island nation’s finances.
The move would mark the first time in the euro-zone debt crisis that private citizens’ bank deposits would be tapped, and Morgan Stanley said the introduction of the levy “seems to have broken another taboo.”
The strategists went on to question whether “senior bank debt is the next taboo to be broken, given the linkage with deposits.”"
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Post by unlawflcombatnt on Mar 18, 2013 1:03:37 GMT -6
from Investmentwatch Blog BREAKING ALERT! CHAOS IN CYPRUS: “Thousands” Are Withdrawing Their Money; ALERT IN THE SOUTHERN EUROPEAN COUNTRIES – Cyprus-Rescue Shows, No Accounts Are Safe!Sat, March 16, 2013 " People with Cyprus bank accounts will lose up to 10% of their savings as the price of a 10 billion euro (£8.6 billion) rescue package for the cash-strapped country from its European partners and the International Monetary Fund.
The bailout was agreed early on Saturday in a bid to keep the island nation from a bankruptcy that could rekindle the region’s debt crisis.
But in a major departure from established policies, the package also includes a one-off levy on the money held in bank accounts in Cyprus. Analysts have warned that making depositors take a hit threatens to undermine investors’ confidence in other weaker eurozone economies and might possibly lead to bank runs.
In return for the rescue loans Cyprus will trim its deficit, shrink its troubled banking sector, raise taxes and privatise state assets, said the Netherlands’ Jeroen Dijsselbloem, presiding over meetings of the 17-nation eurozone’s finance ministers. “The assistance is warranted to safeguard financial stability in Cyprus and the eurozone as a whole,” he said, speaking after nearly 10 hours of negotiations.
People with less than 100,000 euro (£86,000) in their Cypriot bank accounts will have to pay a one-time tax of 6.75%, those with more will lose 9.9%. The measure is expected to net 5.8 billion euro (£5bn) in additional revenues, Mr Dijsselbloem said, greatly reducing the country’s financing need.
AND NOW, THOUSANDS ARE WITHDRAWING THEIR CASH, CHAOS IS SPREADING IN CYPRUS, AND THE ALARMS HAVE BEEN RAISED IN ITALY&SPAIN&GREECE&PORTUGAL AND IRELAND.
This is HUGE guys, I expect a “contagion effect” to Southern European Countries. The “mafia”(banksters, politicians, Rockefeller, Rotschild, IMF…) is stealing our saved money, so the people is going to answer soon!
Europe Announces Stunning Bailout For Cyprus — Bank Depositors To Get Instant 10% Tax Before Banks Reopen This Week
Eurozone leaders and the IMF on Saturday announced an unprecedented levy on all deposits in Cypriot banks as the sting in the tail of a 10-billion-euro bailout for the near-bankrupt government in Nicosia.
Intended to apply to everyone from pensioners to Russian oligarchs alleged to have billions stashed away in what officials say is a bloated Cypriot banking sector, the “stability levy” immediately raised a flood of concerns among finance experts over a possible bank run in bigger eurozone economies, where fragile public finances are also under scrutiny....
Cyprus-rescue shows, not bank accounts are safe
UPDATE – As is reported from Cyprus was a run on the banks by the “expropriation announcement” instead. Many people tried the morning their accounts with the banks to vacate the Saturdays are open. However, they were informed by bank staff, the computer system of the banks would be put out of operation. To forestall one bank runs, the corresponding amounts have been frozen all accounts of the night. The ECB executive board member Joerg Asmussen said after the talks in Brussels: “Before the banks reopened, the levy deducted. The rest of the money is freely available. ”
How gracious of the ECB, the European Bank forced expropriation. Because you can see how quickly something can go. In the evening you go to bed with the belief that savings are safe and belong to one, and in the morning we get up is no longer ran to his money and is dispossessed. How can one without a law condescendingly decide something simple, has chosen from people who no one? And then deny people the EU is a dictatorship!
The least thing you can draw a lesson from this “Konteneinfrierung” is, you should always have a cash reserve at home. Otherwise, one is as Stupid before ATM or bank receipt where it says, “Because too close!”"
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Post by jeffolie on Mar 18, 2013 12:05:03 GMT -6
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Post by unlawflcombatnt on Mar 18, 2013 21:30:18 GMT -6
The Dow lost 62 today.
If not for media propagandists and soothsayers, it would have dropped 562 points.
People believe what they want to believe--especially rich people.
In a reality-based society, there would be massive bank withdrawals everywhere--especially in the US.
This unparalleled totalitarian act WILL be repeated in a country near you.
Americans have been lulled into believing it couldn't happen here.
But it most certainly COULD happen here.
To quote prince-of-darkness Dick Cheney: "be very, VERY afraid."
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