The domino”s are falling !
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.
Dutch Finance Minister Jeroen Dijsselbloem, after chairing some 10 hours of talks to strike the deal with counterparts including International Monetary Fund head Christine Lagarde and the European Central Bank‘s Mario Draghi, said the “upfront, one-off” tax is expected to raise 5.8 billion euros on top of the loans still to be finalised by eurozone parliaments.
The levy will see deposits of more than 100,000 euros in Cypriot banks hit with a 9.9 percent charge when lenders re-open their doors on Tuesday after a scheduled bank holiday on Monday. Under that threshold and the levy drops to 6.75 percent.
Read more: http://www.businessinsider.com/cyprus-bailout-deal-2013-3#ixzz2NkUfUopl
It is difficult to describe the weekend bailout package to Cyprus in any other way. The confiscation of 6.75 percent of small depositors’ money and 9.9 percent of big depositors’ funds is without precedence that I can think of in a supposedly civilised and democratic society. But maybe the European Union (EU) is no longer a civilised democracy?
I heard rumours about this when I visited Limassol last week, but dismissed them as completely outlandish. And yet, here we are. The consequences are unpredictable, but we are clearly looking at a significant paradigm shift.
This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere – not that it would have mattered much as the trust is gone anyway. It is now difficult to expect any kind of limitation to what measures the Troika and EU might take when the crisis really starts to bite.
Why today’s Cyprus bailout could be the start of the next financial crisis
It is a bad day to have your money deposited in a bank in the Mediterranean island nation of Cyprus. And it may just mean some bad days ahead for the rest of us.
Early Saturday, the nation reached an agreement with international lenders for bailout help. Part of the agreement: Bank depositors with more than 100,000 euros ($131,000) in their accounts will take a 9.9 percent haircut. Even those with less in savings will see their accounts reduced by 6.75 percent. That’s right: Anyone with money in a Cypriot bank will have significantly less money when the banks open for business Tuesday than they did on Friday. Cypriots have reacted with this perfectly rational reaction: lining up at ATM machines to try to get as much money out in the form of cash before the money they have in their accounts is reduced.
Cypriots jeer and shout at a govt representative outside presidential palace
Europe Does It Again: Cyprus Depositor Haircut “Bailout” Turns Into Saver “Panic”, Frozen Assets, Bank Runs, Broken ATMs
Cyprus bailout comes at a cost to bank depositors
CYPRUS PRESIDENT: Nation Faces Total Financial Collapse And Euro Exit Without Bailout
In the early hours of Saturday, Cyprus agreed to a “bailout” with the EU and IMF that is very controversial because it imposes an immediate one-time tax on everyone with money in a Cypriot bank before banks reopen on Tuesday (Monday is a holiday).
The deal still needs to be passed by Parliament and that’s not a sure thing.
The Cypriot government is now sweating over a possible rejection by the island’s parliament of the shocking set of measures imposed on Nicosia for the eurozone to bail its economy out of a likely default, announced in the early hours of Saturday.
The Cypriot government is preparing the bill to be tabled in Parliament probably on Sunday in an emergency session, as everything will have to be voted by Monday night for Cypriot banks to open on Tuesday.
Read more: http://www.businessinsider.com/cyprus-bailout-statement-by-the-president-of-the-republic-mr-nicos-anastasiades-2013-3#ixzz2NkVZaUiQ
IMF: Eurozone Banks Are In Trouble, Trample Taxpayers and Democracy To Bail Them Out!
Why is it that 17 nations have to fundamentally reorganize themselves and shift sovereignty away from national parliaments to new layers of centralized bureaucracies beyond democratic controls that can decide at will to extract untold wealth from taxpayers—just to save the banks?
That’s what the Eurozone has to do, according to the “first ever European Union-wide assessment of the soundness and stability of the financial sector,” released Friday by the institution that the world couldn’t do without, the IMF.
“Financial stability has not been assured,” the report stated flatly about the fiasco in the Eurozone, despite ceaseless hope-mongering by Eurocrats and politicians, and banks remain “vulnerable to shocks.” The report, which never mentioned banks or countries by name, discussed a number of “risks” that could topple these banks, with some of these “risks” already having transitioned to reality:
The Cyprus Bank Bailout Could Be A Disastrous Precedent: They’re Reneging On Government Deposit Insurance
There’s a little detail in the just announced bailout of the Cypriot banks (and Cypriot economy as a whole) that could be setting an entirely disastrous precedent for the entire European banking system. Please note the “could be” here, it depends upon how people react next.
That Cyprus and its banks need bailing out is beyond doubt. The banking sector is absolutely vast as compared to the size of the economy (largely as a result of a couple of decades of use as a secure location for Russian deposits) and the banks are indeed bust. Largely because they were heavily invested in Greek Government bonds which then, as we all know, suffered two substantial haircuts.
European economy struggles under debt and staggering unemployment: EU unemployment at record while nations pile into massive levels of debt. Inflation censorship.
After Cyprus, Who Is Next?
17 Signs That A Full-Blown Economic Depression Is Raging In Southern Europe – Is The U.S. Next?
When you get into too much debt, eventually really bad things start to happen. This is a very painful lesson that southern Europe is learning right now, and it is a lesson that the United States will soon learn as well. It simply is not possible to live way beyond your means forever. You can do it for a while though, and politicians in the U.S. and in Europe keep trying to kick the can down the road and extend the party, but the truth is that debt is a very cruel master and at some point it inevitably catches up with you. And when it catches up with you, the results can be absolutely devastating. Greece, Italy, Spain and Portugal all tried to just slow down the rate at which their government debts were increasing, and look at what happened to their economies. In each case, GDP is shrinking, unemployment is skyrocketing, credit is freezing up and manufacturing is declining. And you know what? None of those countries has even gotten close to a balanced budget yet. They are all still going into even more debt. Just imagine what would happen if they actually tried to only spend the money that they brought in?
Chaos In Cyprus: Biggest Bank Run In History Starts Monday
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.
Here’s the domino effect that I foresee over the next 72-120 hours:
-First, Cyprus is no longer the story. What’s happened there has already happened. For Cypriot(Cyprian? Whatever) savers, it’s all over but the cryin’.
-Next, starting tonight and tomorrow, there will be bank runs in Spain and Italy. Possibly Portugal and Ireland as well, though their circumstances are different. I’d include Greece, but no one in Greece has any money to steal anymore. France may be affected too. If France sees ATM runs this weekend, things will be even worse than I predict
-Cyprus has an ordinary holiday on Monday. But if there are runs over the weekend, affected countries will also declare bank holidays.
-On Monday, European markets will get monkey-stomped. US Markets will open up down 2% or more. It gets uglier from there.
-EUR/USD tanks. USD Spikes. US Treasury yields plummet.
-Gold/Silver could go either way. They could tank on USD strength or rise in the face of it on a flight to safety. We’ll know the real state of things by watching online dealers for ‘sold out’ products this weekend.
-This doesn’t pop up on the MSM radar or the American public’s overall consciousness until the market impact on Monday. I do not predict any significant US bank runs. MSM will be working overtime to calm the sheep down. The market drop will be labeled as “the long-awaited pullback. Buy the dip!”. Cramer will be in rare form on Monday night.
-If PMs spike, CME will respond by Tuesday with a margin hike on futures contracts. They will hike margins as high as necessary to crush the surge. One way or another, any potential spike will reverse by the end of the week due to blatantly coordinated, repressive manipulation. CFTC will look the other way. The biggest threat to the status quo in this situation is that a surge in PMs is allowed to go unanswered, so it will not be. Don’t step in front of this steamroller. There will be better buying opportunities when the dust settles.
-The part I’m chewing on right now is Russia’s reaction. This is a little less clear to me. this is obviously a shot across the bow at Russia from the EU. Russia may:
a. Threaten military action by staging “exercises” with their fleet in the med.
b. Retaliate economically via natural gas supply rate hikes.
I think ‘b’ is more likely, but I’m not sure. What’s clear is that Russia was left in the dark about this move, and right now they are PISSED.
More to follow. Strap in for a fun week ahead.