Cyprus Parliament To Delay "Rescue" Vote Due To Lack Of Support, Despite ECB Pressure For Pre-Trade Open Decision

Tyler Durden's picture

The painfully shortsighted Cyprus bail-out, pardon bail-in (also known as wealth tax to those who are actually doing the in-bailing), plan is going from bad to worse. Because in addition to all the previously discussed macro-implications, all of which are adverse and have the full potential of destabilizing the Eurozone once more and lead to bank runs across not only the periphery but the core as well, especially by offshore (read Russian) depositors, there is now a risk that the entire hurriedly-cobbled together "plan" may be on the verge of failure as it may not get a majority vote in domestic ratification.

Today, at 4pm local (2pm GMT) the Cypriot parliament was scheduled to meet to vote through and ratify the tax levy plan, presented as a fait accompli at least by the Eurozone FinMins. A few hours ago, this meeting was delayed until 4 pm local on Monday "after signs lawmakers could block the surprise move.... If [parliament fails to ratify the bail-in], President Nicos Anastasiades has warned, Cyprus's two largest banks will collapse." And so the late hour scramble to procure enough vote to pass the depositor impairment begins as the alternative is simply "or else." 

The problem is that while for Cyprus tomorrow is a national bank holiday (yes, ironic), the EUR opens for trading in a few hours, with the global equity futures markets, and Japan cash to follow shortly thereafter. And with absolutely no clarity on what the "pre-determined" outcome from the Cyprus bailout will be heading into Monday open, where one of the outcomes is the possible collapse of the country's entire banking system, which would certainly have contagious effects on all of the mainland, Europe is starting to freak out.

Bloomberg clarifies the precarious math situation which nobody in technocrat Europe apparently considered when they assumed that they have acquired some 10% of Cypriot sovereignty:

With his Disy party holding 20 seats in the 56-seat legislature, he needs at least nine more votes to secure approval and avoid the financial collapse of the region’s third- smallest economy. If he doesn’t get backing for the plan, the banks may stay shut starting March 19, state-run Cyprus Broadcasting Corp. said. Tomorrow is a bank holiday in Cyprus.

 

“If tomorrow Cyprus’s Parliament rejects the bill, Cyprus opens the road to chaos,” said Afxentis Afxentiou, who was governor of the Central Bank of Cyprus from 1982 until 2002, said on CYBC. If the bill is rejected, “Cyprus will turn into Libya. Even with the pain, we need to follow a normal course, with hope we’ll see better days.”

For now, said European pressure is only coming form the ECB, although expect chaos to break out and a full on media onslaught seeking to sooth and calm the markets to result if there is no movement, and no sign of a majority emerging before the first trades hit the EUR pairs. As ANA reports,

More from Bloomberg:

Anastasiades rejected pressure from an ECB representative to bring a vote on depositor losses to Parliament today, Greek state-run Athens News Agency reported, without saying how it got the information. An unnamed ECB representative pressured Anastasiades to open banks on March 19, the news agency said.

 

Anastasiades met with leaders of the nation’s political parties yesterday. While he may get support from the third- biggest party, Diko, which backed Anastasiades in the election, Diko’s eight seats won’t assure him a majority.

Yet even without a complete market collapse, the damage to Cyprus', and by implication Europe's banking system is done, as the question of who will keep their deposits in European banks after this stunning episode (especially for the Russian billionaire oligarchs who are booking flights into Zurich, Geneva and Basel to shut their accounts immediately) will remain unanswered until we get the March European deposit outflow data, some time in May.

George Perdikes, a lawmaker from the Green Party who sits on Parliament’s finance committee, said ways were being examined to soften the blow to depositors. These include giving them bonds linked to profits from the country’s gas reserves, he said in comments broadcast on CYBC after a meeting of the committee’s members with Anastasiades.

 

“This is a lose-lose situation,” he said. “Whatever happens there will be a massive outflow from Cypriot banks, with or without a haircut.”

Ironically, it was Cyprus' tiny position in the grand scheme of European things that allowed Europe to expose how it truly feels about all members- as it turns out everyone in Europe is equal, except for those deemed to be less important than others. So how high does the bar go: Athens next? Or Madrid? Or Rome?

Perhaps there is a very good reason why, contrary to the sell-side scrambling to assuage fears of a pan-European bank run, the new Dutch president of the Eurogroup Dijsselbloem declined to rule out further depositors haircuts in other Eurozone countries such as Greece, Spain or Italy.

And while readers contemplate that, we hope for the sake of Europe, that ATMs in the latter three countries are well-stocked, because all it will take is one photo of a cash dispensing machine in the periphery to be "temporarily out of service" to be the spark that reignites the European relapse into full outright contagion and panic.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
squid virtuous's picture

Needed another 24 hours of threats and blackmail I guess...

francis_sawyer's picture

It takes that long to get the jets warming up on the tarmacs [surrounded by a defensible perimeter]... Turns out ~ they were a couple of 'dozers' short...

Stackers's picture

Well I guess turning into Libya is not as bad as turning into Uganda ???

Popo's picture

The threats need to be countered very calmly: 

"Go ahead and collapse Cyprus' two biggest banks.  See what happens... Make our day."

GetZeeGold's picture

 

 

Double dog dare them.

 

Admitting failure is good.....plus it's cheaper.

francis_sawyer's picture

The Apartheid State of Israel, sooner or later, will run out of Palestinian lands to steal & occupy... And now, well, with nat gas discoveries for Cyprus... Well ~ aww nevermind...

Bicycle Repairman's picture

They already have the votes in hand.  Once enough "consideration" is placed in the other hand, the bailout will get a democratic seal of approval.

And remember, Cypriots, you voted for these guys.  It's YOUR fault.

Mactheknife's picture

Well...perhaps Cypriot Congressmen are taking a minute to think about this.  They vote for this and they have to live there...right?  Maybe it wouldn't be such a good thing to have a Russian mobster show up at your doorstep wanting his money back...just sayin.

rajat_bhatia's picture

I'm going all in long tonight. 1580 target tomorrow!

James_Cole's picture

One would think that for a gov to attempt something this insane they'd first make sure to have the votes to rubber stamp it. One would be wrong...

rambo1028's picture

Have to give them enough time to corzine their funds before the release the beast on the slaves.

 

Stacking (cans/lead/shiny stuff) bitchez!!!

NoDebt's picture

I'm afraid the cat's out of the bag on this one.  The threat was enough to start the panic.  Deposit insurance has been proven highly vulnerable, even if this plan is voted down.  And there are a LOT more people with less than 100K in the bank than there are with people over 100K.  With the banks already paying about nothing on deposits the mental calculus will be "Do I want to risk my measly $20K in a bank where it could evaporate, or do I put it under my mattress?"  That's how REAL bank runs start.

They may not be able to put this genie back in the bottle.

Still, I doubt the banks will fail on Tuesday, as was threatened.  They'll fail about 5 days later.

fockewulf190's picture

I, for one (more likely one of many) am not waiting for this bank rot to reach my bank here in northern Bavaria. Time to convert more fiat, place another order for more phyzz, and go rent a boat.

smlbizman's picture

once again it is proven...it is better to be 2yrs early than 1 day late....

 

fonzannoon's picture

As if Beppe Grillo did not have enough momentum.

This may boost him easily over everyone else.

Who is the spanish Beppe?

Who is the _ Beppe?

ArkansasAngie's picture

Let's be specific ... Who is America's?

machineh's picture

That's a profound question, actually. Who is the greatest Bain of the Banksters in America?

In the 1930s, one could have nominated Congressman Wright Patman, the Fed's fierce gadfly.

But today, who's doing the most to abolish the Fed? 

Really, we should endow a ZH 'Bain of the Banksters' prize, to recognize and reward our heroes.

Nobels have lost their cachet since Kurgman got his free with an order of shrimp tacos.

All Risk No Reward's picture

One person can't change the establishment.  They can't even misdirect it a smidge.

The solution is an educated and active "We The People."

Learn how to think systematically - the Trivium is a good guide.

Buy local, buy small, pay cash, stop funding the enemy - and the enemy is EVERYTHING BIG.

Small pox took down the Americans back in the day.

Big pox is going to take down America in the present.

Croesus's picture

Yakov Smirnoff: "In Soviet Cyprus, bank robs you!"

Element's picture

The price of running the risk of becoming a kebab is on a moonshot rise me thinks.

francis_sawyer's picture

Didn't Kyle Bass mention he had 'OTM' calls on that?

GAAP is crap's picture

this just in:

"Russia nationalizes Cypress and their banks, turns out their oligarchs really like their money"

okay, not likey...but...

Let the game of chicken commence.

francis_sawyer's picture

looks like the BROOKLYN NETS are out of the running to be able to add Dwight Howard to the payroll...

knukles's picture

Hah ha ha ha ha
Fuck the technocratic thieves.  A collection of genuinely evil men, destroying the lives of the public, the well being of the populace, for eternal perpetuation of Krugmanesque ideals.
These are the people truly bringing the end nigh.

From chaos, order.

nmewn's picture

lol...I've got a gun to my head.

Do as I say or I'll shoot!

aphlaque_duck's picture

This kind of plan really doesn't work if you're debating it while the bank is STILL OPEN.

 

 

Water Is Wet's picture

The rescue isn't approved and they aren't taking anybody's money.  The banks are just going to stay shut indefinitely while they talk about what to do with the money.  But relax, the money hasn't gone anywhere.

machineh's picture

Correct. The vaults were already empty.

moroots's picture

Maybe but what of the fact that people may need or want that money?  Opportunity cost is what matters during a bank holiday.  Prices of goods/services adjust when people cannot access their deposits.

toys for tits's picture

 

 

Debit card shopping spree with cash back, bitchez.

Wile-E-Coyote's picture

My guess the Russian Mafia has been making some phone calls.

CrashisOptimistic's picture

It is a sort of accepted truism on ZH that all the financial maneuvering and contortions eventually mean nothing because things can be redefined by decree -- which means, in the end, nothing changes until bullets enter brains.

They pissed off the Russians?  They may have found the trigger finger.

Zero_Sum's picture

Can anyone name the last time that a euro-muppet parliament vote didn't (eventually) go the way that the troika puppetmasters wanted it too? This will pass the Cyprus parliament before market open on monday. As we speak, realities and consequences are quietly being made clear to any Cypriot legislators who may still cling to ideals or illusions for sovereignity.

Water Is Wet's picture

TARP was the king sabotage.  The euro muppets have nothing on Hank P.

JamesBond's picture

they're between a Troika Rock and a Mafia Hard Place as it were....

 

 

jb

Solarman's picture

Cyprus is a small country.  Would you vote to steal your neighbors money?  How would you like to be lookin over your shoulder the rest of your life?  Russian mobsters kill for far less than someone stealing their money, and the mobsters who kept their money there, they are probably too dirty to get into Switzerland.

 

Form me, if i was in the Parliment, I'd pull an Obama and vote present.

Pseudo Anonym's picture

there will be compromise.  locals will be exempted.  foreigners, who were until now benefiting from lax tax laws, will get a haircut.  larger one than planned to make up for the locals.

MarcusLCrassus's picture

Russian mafia will have no qualms about drawing up a death list of the 29 Cypriot legislators who vote yes on this. 

 

Long concrete galoshes. 

MS7's picture

If the Cypriot government is anything like the government in Athens, they could care less about upsetting the yogurt-throwing locals. But the Russian mafia is an entirely different matter. There is no way they are going to take money from them, no matter what the EU threats are.

itstippy's picture

+1 for the term "yogurt-throwing locals".  Har.

I've heard that Cypriots are an emotional people who will take things to the streets when unhappy, so it may be inaccurate, but "yogurt-thowing locals" is still damned funny.