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Cyprus - Who's to Blame - Brussels? The US Navy?
If you listen to the likes of Jeroen Dijsselbloem, (LINK) you might conclude that the problems in Cyprus were all about the big offshore depositors who flooded the local banks with cash. It you start with the 'logic' that the depositors are to blame, then it's not hard to reach a 'solution' with haircuts of 40-80%. I think that whole line of reasoning is bullshit. Brussels and Berlin were more responsible for Cyprus than those evil depositors. I believe the US Navy also had a hand in the collapse.
When were the problems with Cyrpus's banks made public? Eh, that would be in August of 2011. Why was this situation allowed to run totally amok for so long after that? Brussels ignored the warning signs.
Okay, give the technocrats some slack. They were busy with other problems in the summer of 2011. But Brussels ignored this request for help too:
The folks in Brussels sat on their hands for eight more months before they finally came around to a fix for Cyprus. That delay cost everyone. It cost Brussels - it put all depositors at risk, including the small ones. If Brussels had acted decisively after the official request for a bailout the +100k depositors would not be feeling the 40-80% gouging they are getting today.
Is it possible for depositors to file a suit against the Troika? Why not? There's plenty of evidence that suggests it's the likes of Jeroen Dijsselbloem who are responsible for the extraordinary losses. They fell asleep at the switch. (or it was deliberate - triple damages for that!) The folks who have their fingers burned have a reputation for not "rolling over". I wouldn't be surprised if someone tries to get Brussels to kick in some cash to soften the blow. At a minimum, Jeroen Dijsselbloem should shut up. He's making the case for the lawsuit.
Separately
I spoke with a friend in Athens today. He has family who live in Cyprus. Nothing new to report - the country is a shambles. These people live well south of Nicosia - no access to money, stores running out of goods - no credit cards allowed.
My friend contacted me in July 2011 after his relatives had their windows blown out by a huge explosion on a military base. They were miles away, but still felt the blast. At the time, he stressed that this was a very big deal, a game changer for the country. I wrote about it (Link).
Short story: In January 2009 the US Navy intercepted a cargo ship filled with munitions. The vessel had come from Iran, and was headed to Syria. The Navy confiscated the munitions and brought them to Cyprus for "storage". There was a brush fire, and the whole damn thing blew.
The head of the Central Bank of Cyprus had this to say about the July 22, 2011 explosion:
There is an imminent threat of Cyprus joining the European Union Support Mechanism, with everything bad that this entails.
Every day of inaction increases the problems and risks. We must act today, not tomorrow.
Brussels totally ignored this cry for help. Cyprus was forced to go begging to Moscow for an emergency E2.5B reconstruction loan. This was a strategic mistake by both Washington and Brussels.
In preparation for this article I spoke with my friend regarding who he thinks is to blame for the cock-up in Cyprus. He's biased; he and his family have lost money (there was Greek money involved in the +100k accounts). So he blames Brussels. He also blames the bankers who made the bad loans/investments; he lamented that bankers always make bad loans and never pay. He thinks the depositors ignored all the evidence, including the high yielding deposits, so don't feel so sorry for them either.
But he also included the US Navy as one of those who must share some responsibility. He may have a point. Those munitions should not have been brought to Cyprus. It was an accident left to happen. Thousands of tons of explosives were stored under a tent. There was huge damage to the infrastructure; the blast leveled a power plant.
Would Cyprus have collapsed if the explosion did not take place? Probably, but the accident made it a sure thing. Is the Navy responsible for accidents? Sure it is:
Is there a lawsuit in this story? I don't know. Connecting the dots between the Navy's decision to dump confiscated Iranian munitions in Cyprus, to the losses depositors have felt is a bit of a stretch. But then again you stretch when there's the odd billion at stake. And then there's the fact that the Navy has some very deep pockets.....
Notes:
- Navy - Don't blame me. Someone was going to write this one, just happened to be me.
- Readers from Cyprus, others - do you think the Navy had a hand in what you face today? How? Why?
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Never mind mate. This just isn't your day/month for posting articles. It happens.
Perhaps gentlemen like Bruce still believe in the rule of law, justice, and fairness exercised by men with the conscience to do the right thing even if it leads to the punishment of own's own government. But I'm afraid he is under the mistaken impression that anything remotely resembling justice exists in the US, particularly for foreign complainants who have been deemed "Non Persons" by the US supreme court in cases involving the Alien Tort Statute. You can be bombed, maimed, tortured, and kidnapped by agents of the government mistaking your identity for somebody else and you can expect no recompense if you're a "foreigner". Ask the Yemenis, Vietnamese, Pakistanis, and even the Brits.
Even commercial law involving intellectual property is so skewed, there's no point in pursuing American companies for theft in US courts, because they will just countersue with bullshit, and win billions. Just ask Samsung. The same goes for Americans seeking fairness and the rule of law. The courts don't even pretend to dispense justice any more, but behave like protection rackets that favour the parties with the deepest pockets.
damn Bruce, i coulda swore it was the fault of the Social Security Trust Fund.................what am i missing?
I heard it was the sequester...
The real burning question on the nations mind right now is, will the lone traffic controler at Jack Murtha Airport lose his job?
He's got two or three flights a week coming in there!
That's a lawsuit that might take a while.
The US Navy looks prety harmless compared to the Bankers ruling the world.
Those munitions had to go somewhere. We'll probably never know why they went off. Deliberate? Stupid storage? Superior Iranian design? Clearly the Navy is responsible for the damages.
Nobody saw the "Best if Used by Date" stamped in Farsi on the bottom of the ammo box.
the US Navy has sovereign immunity, there's a much better case under RICO against private banks/finance, and they could use the Corrupt Foreign Practices Act to go after US companies/financiers working in collusion with the Greek/Cyprus extorsion/bribery ring.
Or do they think backstopping a bribe of foreign govt officials to steal depositors money in an effort to protect foreign bond holders is NOT a violation of the Corrupt Foreign Practices Act?
Is it the official US position to support this banker theft or not?
If it is then we should impeach, it it isn't then we should prosecute some bankers.
Umm..prosecute more bankers? Sorry, but the courts are allready tied up for years prosecuting them for the 2008 crisis.
Oh, wait..
I think the Ikea monkey did it.
Ikea has a monkey? Wait, who is Ikea?
.
Bruce I see the point you are trying to make..Cyprus had the explosion and Greece had the forest fires that greatly reduced agriculturural exports....Coincidence?....Food for thought
Bruce I see the point you are trying to make..Cyprus had the explosion and Greece had the forest fires that greatly reduced agriculturural exports....Coincidence?....Food for thought
Bruce Krasting did indeed write, way back then, about the economic significance of that tragic munitions explosion in Cyprus that killed some dozen people ...
As far as Bruce Krasting's 'lawsuit' ideas, about 'suing the troika' etc. ... it shows what happens when someone like Bruce, a Swiss citizen, becomes 'Americanised', growing up and living in the USA ... Even he is now conditioned into thinking that the courts should be a venue to resolve complaints about political policy questions
Two gigantic problems with this American 'oh, yeah, file a big lawsuit' fantasy -
First is that, as the US example shows, the nature of oligarch corruption is that the oligarchs wind up owning the courts ... Americans always have these crazy ideas that a 'lawsuit' will get them 'justice', when it is 100% clear that US judges almost always rule arbitrarily in favour of American political millionaires, and against common people
Look at MF Global customers getting $1.6 billion stolen, all approved by US judges ... 2.3 million prisoners in the US gulag, lots of them innocent, and no US judge gives a shite about them ...
All those many 'lawsuits' filed in America, however well-backed by facts, evidence, and the 'law', go nowhere when US judges dismiss them on some flimsy excuse.
The second problem is that the habit of relying on lawsuit-fantasies, like in the USA, helps get the public into a passive mode of submissiveness.
Like the Russians recently said, the Americans will 'wait eat dust in courtrooms waiting for justice', instead of moving toward the people-in-the-street political action, the demonstrations and national general strikes, that in Europe actually do collapse and bring down governments
Americans, on the other hand, stay at home indulging in their Hollywood-movie courtroom fantasies, where the 'little guy' or 'little gal' wins in some courtroom with some magically honest judge that shows up on the movie screen ... but there seem to be few honest US judges outside of Hollywood movies
Seems like an honest US judge faces the fate of US federal judge John Roll ... shot to dead on the street a few days after ruling against the Obama government. Of course a drugged-up 'lone gunman' was briefly trotted out to 'confess' and then disappeared into the American gulag.
So everyone is a winner when there is no hope? Your paen to reality is duly noted. Ready to get a gun and stand at post then? It is ALSO very American to look after people we don't even know. I find nothing wrong with offering an open door policy to the Cypriot people and see if there is some benefit under EU rules they might be entitled to. Obviously you would have to enlist the Russians and Brits. It's more than a little ridiculous to think of Cyprus as some "geo political flashpoint." obviously if you're a Cypriot you don't want to be seen this way. But hey...why not just piss them the he'll off and see how ridiculous we can make them look is always an option too. Clearly we don't need to sue stupid.
Judge Roll was indeed killed by Jared Loughner (at a leftist campaign event), but you need to be a little careful in assessing him.
Judge Roll could not be correctly called “objective” or “honest” or “fair minded” in any sense of those words because of his ruling against AZ border ranchers.
He was the one who ruled that they cannot protect & defend their private property, even when the federal government failed to fulfill its obligation there:
http://articles.latimes.com/2011/feb/04/nation/la-na-arizona-rancher-20110205
Roll allowed a lawsuit against the rancher (for unlawful detainment) by the illegal immigrant to go forward. I believe that rancher later lost his ranch as a result of the lawsuit.
Karma?
Well played. Thought SCOTUS made that utterly clear when they made corporations into people. Excuse me, special people.
Bank guy, we got justice:
Amish Sect Leader Sentenced to 15 Years in Hair-Cutting Attackshttp://www.nytimes.com/2013/02/09/us/amish-sect-leader-gets-15-years-in-...
See, shave off someones beard and get 15 years in the slammer! True, the serial killer is out in 2 years but at least we caught that beard cutter!
Flash: Ben steals 4 trillion of savers income and gets zero time.
Roll was shot along with 18 others at a leftist political event.....
No a "fantasy" would be seeing Draghi, Lagarde, Dieselboom and Schauble gracefully blowing in the wind whilst hanging from the Viaduc de Vilvorde at sunrise.
There is a more serious problem in what happens when the traditional pressure relief mechanism of bringing down the local government fails to bring resolution for the masses left destitute by the kleptocrats of Brussels?
Ignoring the larger and quite long history of State-level conflict in Europe, leaves with one with some rather unpleasant and much more recent examples from the destitute serfs who fled Kosovo, Albania, et al... then again, since all European men are nothing but pussy sheeple there should be nothing to worry about... right?
Bringing down a government is not the same as overthrowing a government which has not happened in the US since Lincoln overthrew the Confederacy....but Europe has been the source of major conflict which outside powers have found hard to control. Terrorism has a stronger tradition from Jewisg suicide bombers in Czarist Russia or Baader-Meinhof and Red Brigades and IRA and even Anders Breivik
The gap between bringing down a government and overthrowing a government, is about as far as the gap between the ECB saying it will fix everything (while instead perpetuating the status quo) and the ECB actually fixing both depositor safety and bank capitalization.
In the last 20-30 years the PIGS+C have all experencied terrorism and similar troubles, even if the kids aren't old enough to have to fully grasp what was going on at that time, but unless the fascist fat cats actually step up and start producing solutions to PEOPLE's very real problems it seems like the most likely model of European "integration" isn't just pre-1/1/2002 but perhaps a few years earlier.
Wow! And I thought I was ranting....
It's all organized crime, Bruce. Pretend all you want that the state is legitimate, but it will only make things worse, as you're covering for them.
As George Carlin said, "whenever I hear a person talking about political solutions, I know I'm not talking to a serious person."
Quite simply, your POV is highly immature. Sure, it got you this far, but did you ever expect to get called out for it by those who properly recognize criminal activity?
Well let's see here, no military solution, no politicial solution, no sound solution(s). You might be barking up the wrong tree here.
Bruce Kasting, a former(?) banker, blames everyone but the bankers.
The root of the problem is that Cyprus bankers loaned a lot of their depositors' money to people who couldn't pay it back. If Cyprus wanted to be a banking center like Switzerland, its bankers would have had to exercise the same care over their depositors' money as the Swiss. They didn't.
There is no reason to believe that the timing of the bailout affected the overall size of the losses suffered by the Cypriot banks.
Of course, depositors who were earning more than 10% interest rates on money in uninsured accounts should have known that money was at risk. Uninsured means that no one will compensate you for your losses if the bank loses your money.
Cyprus had a brief, wild party fueled by wishful thinking and stupid money. Now comes the hangover.
Bennie, the Big Winners who got the piles of loans probably knowing they would never have to pay back. I mean why pay back given the "No Consequences" environment we live in?
It's the entire Western mentality nowadays as fraudsters walk away scott free.
Why pay your mortgage?
Why pay back your student loan?
Why pay your credit card bills?
...and so on...
It's a cultural thing. Our Western society has changed. Too bad (reltively) innnocent depositors are paying for it. Too bad for Western civilization.
My up arrow isn't working (randomly, for whatever reason) or you'd be + another. So, plus another anyway. I think the lefties of the 40's- present have succeeded in rotting away the values that made the USA and others great. It is all of western civilization as you stated. I have seen a big slide in the quality of citizens in our neighbor to the north in my aprox 20 years of travel there. Let's not even bring up Europe.
It is in how people live for themselves and don't give a hoot about anyone else- money, marriage, career, sports, education, driving- forget about it. Selfishness and stupidity rules. The media glorifies it all. Daily, I see drivers cut each other off, tailgate, stop abruptly in the inside lane to make a quick left turning exit everyone else be damned. And this in a relatively uncongested part of the world.
I had neighbors (loose term) who moved back in with the elderly, cancer ridden mother and proceeded to gut the interior of her house only to not finish the job when the money ran out. The son in law thought she had money and said he wasn't going to pay to finish what he wrecked. Their kids ran all over the neighborhood with zero supervision. Baby momma spent her day on facebook and sunning and bragging about all the neat restaraunts she and hubby went to while sick granny was stuck home with the kids in the basement. The reason they where in the basement is that the daddy boy and baby momma abandoned their house in the middle of the night and let it be foreclosed on because the value dropped. Granny's basement was free to them. Granny passed away and guess what? This fine family abandoned this house also in the middle of the night. At least now they are some other neighborhood's problem. But, those two young boys don't stand much of a chance as they have NOTHING to show them how to be responsible citicens and men. Some days, it feels like we are all oozing down into the abyss...
In America, If you have a party and knowingly allow minors to drink, you are in big trouble. If a minor is injured, you lose everything and go to jail. I think Brussels supplied the "booze" for the the "teenagers" in Cyprus.
You say, "There is no reason to believe that the timing of the bailout affected the overall size of the losses".
I had the quote from Fitch that it could add up to E6b from 6/2012. You don't accept the Fitch numbers? To think it did not grow in the past 8 months is just wrong.
OFFS Bruce that's just complete bullshit.
Brussels is a mature adult capable of informed consent and Cyprus is a minor, incompetent to be bound to a contract?
Really, really demeaning, patronizing and insulting to the Cypriots.
If someone insinuated something like that against my people and my culture I'd be friggin' pissed.
Bruce - you are a promoter not a truth teller ! one more piece of bullshit - i guess Peterson gave you the day off.
ONLY the banker is at fault - its his responsibility to get more than one way out - his lack of prudence with OTHER PEOPLES MONEY is a recurring theme as we go around the world
bankers are scum bags in a strict NY sense - which means: THEY CANT BE REDEEMED!
ONLY FAULT SINCE DAY ONE - FOR EVERY COUNTRY IS THE BANKERS - KILL THEM AND SOLVE THE PROBLEM
This is one of the many problems we face in the USSA. Minors aren't responsible, someone else is. Bankers aren't responsible, someone else is, or ends up with the responsibility because the bankers are so important to our economy. Let failures fail. Let minors go to jail. Send Banksters to jail. Where I live there are so many police that every time there is any "event", two squad cars show up. Any chance we have twice as many police officers as is needed? Welcome to Beaufort, SC. Now they want to raise property taxes, no doubt to hire more police. Government run amok.
Hello America, this is Portugal, where the drinking age is... yes, sweet 16 (or was, it seems it was/will be raised to 18 - for liquors)!
Wtf you talking about, getting in trouble for underage drinking? Can't remember anyone being arrested for those hidden cam tv reports about minors (as in under 16) partying out at night at local discos in minors-only parties, in the very capital of the nation...
Either way, how old those Cypridiots are, anyway? Binge away - as the say went, back in dictatorship days, drinking wine feeds a million Portuguese!
"If a minor is injured, you lose everything and go to jail."
unless you're a Kennedy, Cheney, Banker, or have anything to do with military exercises and carbon rich nations
Wow! Fitch, a ratings agency! Do you truly accept Fitch as a reliable source of information?
And even among the ratings agencies, Fitch was well behind the curve in downgrading Cyprus. Just look at the waterfall chart that Tyler posted yesterday.
What happened is that Fitch was slow to recognize what even the other ratings agencies saw. Namely that the money was already gone. And in fact, the loss estimates will almost certainly continue to rise as more of the Cypriot loans go into default.
You say: "I think Brussels supplied the "booze" for the the "teenagers" in Cyprus." That is wrong. The booze was supplied by the dumb money Russians and others who kept pouring money into Cypriot banks.
I think you missed the part about the trouble. Dumb money does NOT get into trouble. Minds such as yours are a shoo in for the denile trick, which leads you to the sea in a pile of garbage.
Oh, cry me a river!
Blame Bush, the perennial scapegoat. Obama blames him for everything that went wrong. Why not Cyprus? Easy peesy.
Everyone should blame Bush for the damage he caused. Everyone should blame Obama for the damage he caused(es).
To each assign the responsibilities, actions good and bad, belonging to them.
Eh?
Obama should blame his mother
How is the U.S. Navy responsible? Someone agreed to let them dump the munitions there...
It wasn't. That whole thing was caused by a prison guard, convinced the entire defence dept to keep the amno close by for quick action. The nightwatchman tossed a lit cigar and it hit a defective round causing the bloody explosion. And no there no insurance, cause we could never admit there enough of a problem to begin with.
Well.. there is this little issue of moral hazard..
Force majour
Correction, being Navy it's "force captain"
Geeze, not this shit again.
No, it's a strategic mistake for anyone who believes that the actions of fairies can fulfill a facade of legitimacy in governing.
Bruce, which part of CON GAME escapes you? All you do is to provide cover for criminal activities by pretending there are other forces at work for "the greater good."
I realize you're an old dog, but really, this isn't a new trick to learn.
Bruce's insights seem to be impaired by his "moral cataracts"
Just 10 days ago he was telling us:
Let me first (try to) give you a justification for the seizure of bank deposits in Cyprus.
Everybody who knows any thing about Cyprus also knows that the domestic banks were a parking lot for Russian hot money. I wrote about this back in 2011 (Link). There are a gazillion other articles saying the same thing.
That being the case, the seizure of some of the black Russian money as part of a bailout for Cyprus is not really a surprise. With dirty money flowing in, the stupid banks in Cyprus used the deposits to buy crappy assets like the sovereign bonds of Greece. To a significant extent, the hot money caused the problem – and therefore the E5.8b ($7.5b) hit to depositors is justified.
And he doubled down in his response to the first comment:
Yes, but most of those widows and orphans don't have much by way of a bank account. Of the $7.5b that was stolen, a small portion will come from the actual citizens in Cyrprus.
Oops! Turns out that Cyprus households had twice as much net money on deposit as the Russian accounts.
Further adding to his "Oops!" ... it turns out billions were siphoned out of the two Cyprus banks while the banks were closed by subsidiary banks based in London and Russia - hmmmm, I guess that further shifts the burden onto the back of the average Cypriot.
Has Bruce written a mea culpa post that I misssed???
Nope! Bruce has found a new villain ... the U.S. Navy ... and someone new to suck Money For Cyprus out of ... the U.S. taxpayer.
Anyone surprised Bruce went in that direction?