Question Re Cyprus

Question: When does a one off event (the theft of depositors' accounts in Cyprus) become a template for future bailouts?

Answer: Ask Dutch Finance Minister Jeroen Dijsselbloem
 

The Cyprus Clusterfuck Continues

As the Cyprus clsuterfuck continues, and the country's "leaders" struggle to find a plan B, the mainstream media are still sticking to the line that the banks will re open this Thursday.

However, as I noted yesterday, the non official planned re opening is in fact Friday. That being said I note that next Monday is a genuine bank holiday in Cyprus (to celebrate Greek Independence Day), the Twittersphere is leaning towards the view that the banks will in fact remain closed until at least next Tuesday.

Other unconfirmed reports indicate that Cypriot MPs have been receiving calls from various Russian businessmen.

Meanwhile the people of Cyprus continue to withdraw cash from the ATMs.

Pension Payments To British Expats In Cyprus Suspended

The Telegraph reports that Greg Clark, a Treasury minister, has said pension payments to expats in Cyprus due today had been frozen to ensure that money from the Government reached its intended recipient.

However, recipients of these payments are able to switch the bank account into which payments are made with immediate effect by contacting the International Pension Centre.

International Pension Centre
Online enquiry form
Telephone: +44 (0)191 218 7777
Textphone: +44 (0)191 218 7280
Monday to Friday, 8am to 8pm

You can also write to the following address.
International Pension Centre
Tyneview Park
Newcastle Upon Tyne
NE98 1BA
United Kingdom

Retrospective Cypriot Legislation

The state sponsored theft of Cypriot bank deposits is retrospective.

The levy is on deposits as of last Friday, even though the agreement was made on Saturday and the legislation has yet to be ratified by Parliament.

As per the Ministry of Finance:

"Ministry of Finance Announcement Agreement for a Financial Assistance to the Republic of Cyprus 

On the 16 th of March 2013, an agreement has been reached by the Member States of the Eurozone, for granting financial assistance to the Republic of Cyprus. Financial assistance up to an amount of €10 billion is to be granted to cover fiscal needs , the restructuring of the banking system and for the support of the economy in general. 

With this financial assistance, the Government will proceed with structural changes in the public finances, in the banking sector and in the economy i n general. More specifically, t he urgent needs of the public sector will be financed, as well as the huge needs for the recapitalization and for the restructuring of the banking sector for the period 2012 - 2015. 

Due to the large banking recapitalization needs, as well as the urgent public finances needs, the Eurogroup agreed with the Cypriot authorities on the need to impose a one - off levy on the deposits. The levy , as agree d at t he Eurogroup level, is 6.75% on deposits up to €100,000 per account, and 9.9% on deposits over €100,000. Shares of banking institutions that will be recapitalized will be offered to depositors. Provided that the deposits are kept in the banking institutions for a period of at least two years, the shares can be convertible into bonds , the yield of which is to be backed by the expected natural gas revenues, in accordance with a scheme to be determined and issued by the Minister. Eurogroup’s decision supported by European Central Bank, European Commission and the International Monetary Fund, is, without any doubt, a one - off, extraordinary measure that will not be repeated under any circumstances. 

The levy will be imposed on the credit balance of deposits accounts as of Friday, 15 th March 2013. This effectively means that no new withdrawal or deposit will affect the levy that would have been imposed or collected until Monday 18 th March 2013. 

Admittedly, this decision is very difficult and painful for all of us. However, under the circumstances, the implementation of the decision is necessary in order to end the uncertainty in the economy and to ensure the rescue of the country. Without the levy, the sovereign debt would have undoubtedly be non - sustainable, and no financial assistance would have been given for the rescue of the Cyprus people. We do recognize the severity of the situation . 

In order to avoid more painful consequences, such as the foreseen collapse of the banking sector, we have decided, with a strong sense of responsibility, to accept the imposition of the levy on deposits for the rescue of the country. With the imposition of the levy, we ensure the country’s stability, the smooth operation of the economy and the return of Cyprus and its people to the path of growth and prosperity. Furthermore, the future generations will not be imposed with the unbearable burden of the re - payment of a loan similar to the ones granted in other member states of the Eurozone. 

At the same time, the chances of a possible second Memorandum of Understanding to deal with the pressing problems of the economy are minimized. The Cyprus people have, in the past, faced equally serious difficulties and challenges. We need to remain calm and united, so as to successfully face this challenge, in order to safeguard the security, prosperity and progress of our people. 

18 th March 2013"

Run On Cyprus Banks UPDATE

This morning I wrote that Cyprus's banks would remain closed until Thursday.

It seems that I was wrong.

The New York Times reports that the banks will now in fact remain closed until Friday, or maybe even beyond Friday!

Proof positive that there is a run on the banks in Cyprus.

Vladimir Putin is not best pleased with this and has described the state sponsored theft as "unfair, unprofessional and dangerous".

Russia has $60 billion exposure to Cyprus, which will be withdrawn once the levy is imposed. Thus, in one fell swoop this "plan" will destroy the Cypriot banking system

Meanwhile the ECB and Germany are falling over each other to wash their hands of having played any part in this clusterfuck even though the Cypriots claim that the "plan" was imposed on them.

This will not end well

Cyprus Vote Delayed Until Friday?

It seems that vote in the Cypriot Parliament, which in theory is meant to ratify the plan for state sponsored theft, may be delayed until Friday.

By then the Euro will have been wiped from the face of the planet and the Cypriot banking system will be but a "cherished memory".

Run On Cyprus Banks

Cyprus State TV RIK has confirmed (albeit obliquely) that a run on the banks in Cyprus has started, by announcing that banks will remain closed on Tuesday and Wednesday.

The idiots who put forward this absurd plan will soon realise that whatever cobbled adjustments that they may come up with today, they cannot put the genie back in the bottle.

They have in one fell swoop destroyed the Cypriot banking system.

In other news, the Russians will be adjusting the terms of their loan to Cyprus!

Oops Apocalypse!

The markets open for trading in but a few hours, yet Cyprus has delayed its vote on the "bailout" (state sponsored theft) plan until tomorrow afternoon.

Chaos will ensue, and the banks that this "plan" was meant to save will collapse.

The Wheels Fall Off Cyprus's State Sponsored Theft Plan

As George Osborne (clearly caught by surprise by the theft of people's savings in Cyprus) announces that the UK will compensate British troops and British government workers in Cyprus hit by the planned "bank levy", it seems that the wheels are already falling off this harebrained idea.

In order for the bailout, and planned state sponsored theft, to take place the Cypriot Parliament has to ratify it. The debate was to have taken place today. However, as a result of the not unsurprising outpouring of anger by Cypriot citizens over the smash and grab raid on their accounts, it has now been postponed until tomorrow.

I will wager that this odious plan will die a very painful death, as the politicians are made to realise that theft (especially when orchestrated by the state) will not be tolerated by the people.