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Sunday, March 17, 2013

The bank raids begin

It would be reasonable to assume that the bank runs will be next:
£8.7billion EU bailout imposes tax on ALL bank accounts in Cyprus.  Under the deal, all bank deposits over €100,000 will be hit with a levy of 9.9 per cent. Those with smaller savings will pay 6.75 per cent.

The raid will raise €5.8 billion, which will be added to a €10billion bailout from Brussels. But financial experts said the raid – designed to stop Cyprus crashing out of the euro, potentially destroying the currency – would send shock waves through the eurozone.

If savers in other troubled nations fear their accounts might be next, they could withdraw their money and spark a catastrophic run on the banks.
Tell these people, who are losing between 7 percent and 10 percent of their savings, how vitally important it is for Cyprus to remain in the euro.  Especially when there isn't even the remotest prospect for this blatant theft to repair the situation or do anything more than buy a little more time.

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36 Comments:

Anonymous Idle Cypriot March 17, 2013 3:02 AM  

It is vitally important!

Anonymous dh March 17, 2013 3:06 AM  

Did you leave out the link?

Anonymous ENthePeasant March 17, 2013 3:22 AM  

Let's not forget that everyone lost 20% coming in the Euro. it's like Magic. What a scam.

Anonymous marenostrum March 17, 2013 3:25 AM  

Search for "tax bank accounts Cyprus" and you'll find some articles, in New York Times one, in two Greek or Cypriot publications.

Anonymous ENthePeasant March 17, 2013 3:27 AM  

"It is vitally important!"

For who? Human dynamics at work. Something's not working and the assumption is we need to do more of it. It's the only way.

Anonymous ENthePeasant March 17, 2013 3:30 AM  

And of course the magic has already begun. And as I look at the people in front of that bank I'm guessing most of them want Britain into the EU...

http://www.dailymail.co.uk/news/article-2294388/ATMs-emptied-Cyprus-savers-learn-10billion-euro-bailout-agreement-includes-levy-bank-accounts.html

Anonymous Roundtine March 17, 2013 3:51 AM  

Jim Sinclair said that the 10% tax hits about 80% of Russian "black money," held by Putin's supporters. No idea if that is accurate, but if it is, Sinclair may be right that Russia will respond.

Blogger Crude March 17, 2013 4:24 AM  

My favorite part of this coverage was how A) previously the greek PM apparently swore this sort of thing would never happen, and B) Spain's economic minister assured the Spanish that this sort of thing will never happen to them.

I never expected to see something like this outside of some South American dictatorship.

Anonymous Anonymous March 17, 2013 4:40 AM  

Depositors taking a hair cut? How come it's not the bond holders?

Thats right, I forgot the ECB is a bond holder.....

Anonymous Roundtine March 17, 2013 5:12 AM  

Here is a WSJ on the Russian black money. Money-Laundering Suspicion Stalls Europe's Latest Bailout

Anonymous dh March 17, 2013 5:25 AM  

Depositors taking a hair cut? How come it's not the bond holders?

Thats right, I forgot the ECB is a bond holder.....


I don't think there are any bond holders to speak of. I am trying to find a good source, but the original article stated that the banks are largely capitalized via deposits, not bonds.

Any tips where to find this? Everything going to the ECB appears to be slowing to a crawl right now..

Anonymous zen0 March 17, 2013 6:37 AM  

“As it is a contribution to the financial stability of Cyprus, it seems just to ask for a contribution of all deposit holders,” Dijsselbloem, who chaired the ministerial meeting, told reporters.

There is the problem right there. Government does not know the difference between "ask" and "tell". All we need to clear this up is get them a dictionary.

Problem solved.

Anonymous zen0 March 17, 2013 6:42 AM  

The real economy relies on the financial system, and the financial system depends on trust. The widespread loss of trust in banks has both “deepened the cost of the crisis and is restraining the pace of the recovery,” said the Governor.
Mark Carney, Temporary Governor of Canada, Feb. 25, 2013

Blogger Remo March 17, 2013 7:44 AM  

Vox - you reside in Italy no? I would suggest a strategic withdrawal of assets before the infection heads there (in about 15 minutes).

Blogger JACIII March 17, 2013 8:04 AM  

A 10% handling charge. They should do that to withdrawals, too.

It's for the people, of course.

Anonymous ChelmWiseman March 17, 2013 8:16 AM  

That is evil. There has got to be more to this. I find it incredible that the banks would allow something like this - if only because it is suicidal.

Since you get less of what you tax and more of what you subsidize - then we will see fewer banks in the future? Certainly fewer savings.

Or perhaps we are at a point (with direct deposit and debit cards) where there is not a credible alternative to storing your money in the banks?

Trial ballon to see how badly people react and what they will actually do?

Not really my area of expertise, so I am not sure how to interpret it.

Anonymous Salt March 17, 2013 8:24 AM  

How much of that confiscation will be kicked back to Russia to smooth it over?

Blogger Rantor March 17, 2013 8:41 AM  

State sponsored theft to reward corrupt bankers... That is going to inspire global confidence.

Really we all need WDID bracelets... What did Iceland Do?

Anonymous jack March 17, 2013 8:45 AM  

@CM Trial ballon to see how badly people react and what they will actually do?

I think this is insightfull. Cyprus has, what did Vox say, .2% of the EU action. A good place to run a balloon. If it works or at least produces a minimum of bodies hanging from lamp poles, then go for it system wide [the whole of the EU].

Did the rest of the world watch the USA over the decades and learn that fraud can be made systematic and legal? And, then decide why not? They are getting away with it.

Anonymous Roundtine March 17, 2013 8:52 AM  

I don't think there are any bond holders to speak of.

FTAlphaville has good roundup. Since the national governments are expected to bailout the banks themselves, if the banks have a problem it means the national government has a problem. Some people will make a lot of money on Cyprus national debt that was trading at a big discount. So even if there are no interbank loans from foreign countries, there are foreigners holding Cypriot government bonds.

Anonymous VD March 17, 2013 8:59 AM  

That is evil. There has got to be more to this. I find it incredible that the banks would allow something like this - if only because it is suicidal.

They're desperate. If Cyprus doesn't take the bullet, the international banks do. And, of course, we can't have that.

Anonymous Godfrey March 17, 2013 9:05 AM  

Get real assets in your physical possession ASAP.

Anonymous Godfrey March 17, 2013 9:11 AM  

@ChelmWiseman March 17, 2013 8:16 AM
"That is evil. There has got to be more to this. I find it incredible that the banks would allow something like this - if only because it is suicidal."


To the wealthy secular elites that run this planet, there is no good or evil, there is only POWER.

Why do you think they're so interested in disarming you right now? Nobody wants an armed victim.

Anonymous Godfrey March 17, 2013 9:18 AM  

The modern “Left” - Disarm the proletariat and bail out the big banks.

The historic “left” is nothing but an illusion. Did they ever exist? Or were they simply dolts funded and manipulated by the wealthy elites?

Anonymous rycamor March 17, 2013 10:03 AM  

Godfrey March 17, 2013 9:11 AM
Why do you think they're so interested in disarming you right now? Nobody wants an armed victim.


It's a little late to even consider this in the USA.

Anonymous ChelmWiseman March 17, 2013 10:10 AM  

They're desperate. If Cyprus doesn't take the bullet, the international banks do. And, of course, we can't have that.

Maybe, but I don't think it is that simple. My experience with business people is that they generally are rational about their decision making. You don;t get to be the head of a bank by making decisions emotionally.

I think that there are two possible explanations (again this is not my area of expertise, so I could be way off base here)

1. This is a trial balloon to see how the rest of the market reacts. If the reaction is bad enough, it will be repealed in favor of some other less direct tax.
2. This is hard ball by the cypriots - The politicians had to roll over for the bankers or suffer the same fate as Italy. So, instead of raising revenue in a general way to meet their demands, they went with a direct tax that would threaten the whole banking system. The bankers are now in a tough spot, because if they back down everyone else would do this as well. If they don't back down depositors might abandon the banks (at least the ones who are paying attention - re the ones the money.)

Just idle speculation on my part.

Anonymous rienzi March 17, 2013 10:25 AM  

The morons that thought it was a good idea to grab ten percent of the cash that the Russian Mob had stashed in Cypriot banks deserve every last little bit of the pain they are going to get when they are snatched off the street, and taken to a place where somebody named Dimitri is firing up his blowtorch.

Anonymous zen0 March 17, 2013 11:09 AM  

The Russians announced 30 minutes ago that they are sending a permanent fleet to the Mediterranean.

Just a co-incidence, eh?

Anonymous Anonymous March 17, 2013 11:35 AM  

In case any of you were wondering:

The Banksters are your government. The rest is theater.

Anonymous Susan March 17, 2013 1:43 PM  

Stealing money from the Russian mobsters? That never works out well. Will be interesting to see how many of these bankers wind up 'disappeared' over the next few months/years.

Anonymous E. PERLINE March 17, 2013 4:48 PM  

When I was younger and more naive, I invested in rental properties and financed them with mortgage loans. I thought this would be a profitable strategy for me and I almost felt sorry for the banks. Their earnings were limited to getting their principal back plus a modest interest, and nothing more. And now you tell me we can't even use banks to park money in...

Then I learned there were all kinds of additional charges on loans. For instance, a much inflated insurance fee was paid for the borrower, but the lender was the chief beneficiary. It took me a long time to realize it's almost impossible to make a profit with a mortgage.

Anonymous E. PERLINE March 17, 2013 4:53 PM  

And now you tell me we cant even use banks to park money in...

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