Cyprus Disaster May Cause Far More Damage Than The Frightening Turmoil The World Witnessed During The Collapse of 2008
Today legendary trader Jim Sinclair told King World News why Lagarde’s IMF Cyprus disaster may cause far more damage than the frightening turmoil the world witnessed during the collapse of 2008. Sinclair, who was once called on by former Fed Chairman Paul Volcker to assist during a Wall Street crisis, was also joined in this interview by Britain’s very popular MEP Nigel Farage, and former US Treasury Official, Dr. Paul Craig Roberts.
Sinclair: “The propaganda being put out in the mainstream media is a message that things are moving along in Cyprus, and there will be a positive conclusion. The mainstream media is saying this is a banking problem of minor significance….
In a new piece, Moody’s analyst Sarah Carlson argues that the financial crisis in Cyprus “will have profound long-term negative consequences for the sovereign,” and that “even in the best-case scenario, where the Cypriot parliament passes and implements measures that the euro area governments of the European Union, European Central Bank and International Monetary Fund (collectively known as the Troika) find acceptable, the sovereign will remain at risk of default and exit from the euro area for a prolonged period.”
(The Cypriot parliament actually doesn’t have to approve the measures agreed to tonight because they already did on Friday, but Carlson’s point still stands.)
The big problem is that the financial services sector has been a big growth driver in Cyprus in recent years, and the past week’s events will probably be a big negative for continuation of that trend….
Today a former Assistant Secretary of the US Treasury spoke with King World News about what he warned is “The biggest crisis.” Former Assistant of the US Treasury, Dr. Paul Craig Roberts, also told KWN that government leaders in Cyprus are now being actively intimidated by the West. This is taking place on the heels of a terrible defeat at the hands of Putin, and the deadly Russian ex-KGB agents. Below is what Dr. Roberts had to say in the first of two extraordinary interviews that will be released today.
we told investors to put up to 50% of their assets into physical gold & silver, also advised to store it outside of the banking system. The bottom line gold is guaranteed to reflect massive money printing we will continue to see worldwide.”
News hit the wires over the weekend that the Republic of Cyprus would begin stealing money from depositors in order to resurrect confidence in its flailing banking system. They want to avoid a crisis, in other words, by creating exactly the kind of uncertainty in which crises thrive.
“More likely,” observes Laissez Faire Books’ Jeffrey Tucker, “the plan to tax all Cyprian bank deposits 6.75-10% will trigger one. Or maybe just the talk of it already has. We can’t know for sure, because the government of Cyprus has declared a banking ‘holiday,’ a term that means that the robbers take a vacation from being held accountable for their actions.
“True to the nature of government propaganda,” continues Mr. Tucker, “the Cypriot head of state, Nicos Anastasiades, says this ‘stability levy’ is necessary to forestall ‘a complete collapse of the banking sector.’ It’s the same kind of language we heard in fall 2008 — an intimidation tactic used to shove through TARP and unending bailouts.”
BREAKING: Cyprus, Troika Agree On 40% Haircut On Wealthy Depositors!!! BANK RUN IMMINENT!! Russian Leader Warns, “Get All Money Out Of Western Banks Now!”
Cyprus told: take bank levy or leave euro
President, eurozone finance ministers and bailout troika hold emergency meeting as €100 limit imposed on ATM withdrawals
Wealthy Russians stand to lose billions of euros in Cypriot banks under draconian terms being hammered out on Sunday night in Brussels to prevent the Mediterranean tax haven becoming the first country forced out of the single currency.
Negotiations got underway amid a hardening of the stance held by the International Monetary Fund and Germany, who insisted that depositors must take the hit for bailing out the eurozone’s latest crisis economy.
SYDNEY (MarketWatch) — Cyprus and its institutional lenders have reached a bailout deal, according to reports citing European Union officials. As part of the agreement the country will impose a 40% haircut on Bank of Cyprus depositors holding more than 100,000 euros ($129,760) in their accounts, Agence France Presse reported.
FIERCE negotiations to resurrect a deal for the EU and the IMF to bail out Cyprus appear to have wrapped up early, President Nicos Anastasiades has indicated on Twitter.
“Efforts have culminated”, read a translation from the Greek, with EU sources subsequently stating that a preliminary agreement is in place to hit Bank of Cyprus depositors with a massive 40 per cent “haircut” on deposits of more than 100,000 euros pending endorsement by Eurogroup finance ministers.
Russian Leader Warns, “Get All Money Out Of Western Banks Now!”
40% is taking off everything above the eyebrows. This deal breaches a fundamental financial system contract. It’s bad, and we’re all at risk now.
If you still have money in European banks, you need to get it out. This is particularly true if you have money in southern European banks. As I write this, the final details of the Cyprus bailout are being worked out, but one thing has become abundantly clear: at least some depositors are going to lose a substantial amount of money. Personally, I never dreamed that they would go after private bank accounts in Europe, but now that this precedent has been set it should be apparent to everyone that no bank account will ever be considered 100% safe ever again. Without trust, a banking system simply cannot function, and right now there are prominent voices on both sides of the Atlantic that are loudly warning that trust in the European banking system has been shattered and that people need to get their money out of those banks as rapidly as they can. Even if you don’t end up losing a significant chunk of your money, you could still end up dealing with very serious capital controls that greatly restrict what you are able to do with your money. Just look at what is already happening in Cyprus. Cash withdrawals through ATMs have now been limited to 100 euros per day, and when the banks finally do reopen there will be strict limits on financial transactions in order to prevent a full-blown bank run. And of course anyone with half a brain will be trying to get as much of their money as they can out of those banks once they do reopen. So the truth is that the problems for Cyprus banks are just beginning. The size of the “bailout” that will be needed to keep those banks afloat will just keep getting larger and larger the more money that is withdrawn. Cyprus is heading for a complete and total banking meltdown, and because the economy of the island is so dependent on banking that means that the economy of the entire nation is going to collapse. Sadly, similar scenarios will soon start playing out all over Europe.
So if you hear that a “deal” has been reached to “bail out” Cyprus, please keep in mind that the economy of Cyprus is going to collapse no matter what happens. It is just a matter of apportioning the pain at this point.
According to the New York Times, it looks like much of the pain is going to be placed on the backs of those with deposits of over 100,000 euros…
The revised terms under discussion would assess a one-time tax of 20 percent on deposits above 100,000 euros at the Bank of Cyprus, which has the largest number of savings accounts on the island. Because the Bank of Cyprus suffered huge losses on bets that it took on Greek bonds, the government appears to be taking depositors’ money to help plug the hole.
A separate tax of 4 percent would be assessed on uninsured deposits at all other banks, including the 26 foreign banks that operate in Cyprus.
Does that sound bad to you?
Well, if a deal is not reached, there is a possibility that those with uninsured deposits could lose everything. According to Ekathimerini, EU officials are telling Cyprus to choose between a “bad scenario” and a “very bad scenario”…