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Cyprus: The World’s Biggest "Poker Game"

Tyler Durden's picture




 

While this kind of 'wealth tax' has been predicted, as we noted yesterday, this stunning move in Cyprus is likely only the beginning of this process (which seems only stoppable by social unrest now). To get a sense of both what just happened and what its implications are, RBS has put toegther an excellent summary of everything you need to know about what the Europeans did, why they did it, what the short- and medium-term market reaction is likely to be, and the big picture of this "toxic policy error." As RBS summarizes, "the deal to effectively haircut Cypriot deposits is an unprecedented move in the Euro crisis and highlights the limits of solidarity and the raw economics that somebody has to pay. It is also the most dangerous gambit that EMU leaders have made to date." And so we await Europe's open and what to expect as the rest of the PIIGSy Banks get plundered.

 

Authored by Harvinder Sian and Michael Michaelides of RBS,

Cyprus: the world’s biggest “poker game”

The deal to effectively haircut Cypriot deposits is an unprecedented move in the Euro crisis and highlights the limits of solidarity and the raw economics that somebody has to pay. It is also the most dangerous gambit that EMU leaders have made to date.

  • What did they do? Hit depositors.
  • Why did they do it? Politics, economics, and because they think they can get away with it.
  • Cyprus needs to vote on this and any delay of opening the banks on Tuesday is more risk-off.
  • Short term market reaction: Risk-off. The situation is fluid but watch politics, Cyprus bank runs risk, weak periphery banks impact and rating agencies. Worst case scenario? EMU exit talk. The Best case scenario? Germany is correct and the ECB bridges the time to when this is clear.
  • Big picture: This is toxic and a policy error.
  • Long bunds, sell the euro, sell periphery, Spain could underperform Italy, but nobody in the periphery wins.

1. What did they do?

In the early hours of this weekend, the Troika decided to impose an effective haircut to both uninsured and even more interestingly insured (<€100k) Cypriot bank deposits. More precisely, the €10bn bank rescue in Cyprus will end up with a bail-in on junior bondholders and a one-time tax on depositors. Deposits below €100k will be taxed 6.75%, and those above at 9.9%, for a total contribution of €5.8bn. Depositors will receive bank equity as compensation and the Cypriot President has offered Gas-linked notes if deposits are kept in the country for two years.

In addition, the Eurogroup expects the Russian government to come to an agreement with Cyprus soon to make a contribution to the rescue.

The Eurogroup head, Dutchman Jeroen Dijsselbloem, has refused to rule out that Cyprus will be the last instance where deposit holders get hit. Olli Rehn however has ruled this out by saying Cyprus is unique. The difference is that Mr Dijsselbloem represents the views of national finance ministers and leaders.

2. Why did they do it?

There is an excess debt problem and somebody has to pay. The division of costs is a policy choice.

The typical choices beyond growth and inflation, are via (a) getting friendly foreigners to pay such as Germany/EFSF/ESM etc; (b) getting wealthy domestics to pay (c) forcing the debtor nation to make good the loans over time through austerity; and (d) force losses on creditors such as the expropriation of SNS Reaal subordinated bonds, losses on Anglo Irish senior bonds, OSI, and of course PSI.

The signal is on the limits of core solidarity

The haircut on the deposit base in Cyprus is unique in hitting the most secure ladder in bank capital, when Cypriot government bonds and senior bank paper are still planned to be made whole. That policy choice was unexpected. One key message is that the decision represents visible evidence of the limits of core EMU solidarity. In truth, this was already evident via the ESM’s seniority and the CACs in 1y+ new government bonds.

...and the limits of the economics

According to media reports (FT) the Cypriot leaders were felt to be left with little choice. We discuss this below but why should Germany, other core countries and even the ECB threaten to take down the Cyprus’ largest banks or threaten full bail-in of depositors? The answer is that resources are limited. Core EMU is not large enough to bailout the periphery risk and so default has to be part of the solution.

Politicians are taking on the prospect that Cyprus is not systemic

Behind this political and economic backdrop is also another crucial factor: The implicit gambit here from the Troika is that the actions in Cyprus will not have systemic consequences. For instance, UK Sky television sources reported that this was indeed the message to the Cypriots over the weekend.

Is that true? Yes, on a myopic level this is correct. Cyprus has special features which include the size of the banking sector with assets of €126.4bn, or over 7-times GDP. The deposit base is €68bn, of with over €20bn is by non residents, mostly Russian. Moreover, there was little else in the banking sector to haircut with around €2bn in senior and sub, and PSI in Cypriot government bonds is was always problematic given that a large share of the debt is under English law where the CACs mean 25% holdings can provide a block while 55% domestic debt ownership implies PSI would necessitate further bank recapitalisation.

  • In other words, breaking the taboo on hitting depositors, was a deliberate policy on politics, economics and a ‘bet’ from the Trokia that Cyprus’ problems will not radiate into more widespread Euro risk concerns.
  • Very clearly, the OMT announcement effect coupled with the moderate reaction to SNS Reaal, Anglo Irish, and Italian elections have helped to embolden political ‘poker-like’ tactics with the markets.

3. Cyprus needs to vote on this and any delay of opening the banks on Tuesday is even more risk-off

The decision to hit depositors is a surprise to the markets but also Cypriot leaders, some of which had very recently described the idea of hitting depositors as ‘stupid’. So what happened? According to the FT and other media, a creditor group led by Germany & Finland and supported by the IMF, had been pushing for depositor haircuts to limit the overall size of the rescue loan. There was seemingly no appetite to recreate the fudges in the Greek debt sustainability analysis. The Cypriot leadership were stunned by this move but were cornered by news the ECB would otherwise pull the plug on Cyprus’ Laiki bank, which rather fortuitously, apparently no longer qualified for ELA. This in turn would have meant the sovereign would be on the hook for all insured deposits, which according to the FT would be some €30bn or 175% of GDP, as well as ushering in social upheaval.

This explains the fact that Cyprus – which had planned to vote for deal on Sunday 17th March – has had to delay the vote to Monday 18th March.

  • The reason is that Cypriot President Anastasiades did not have a mandate a move to haircut deposits.

Moreover, Anastasiades’ calls for all political parties to support the Eurogroup decision in parliament, to avoid an uncontrolled collapse of financial system; job losses and Euro exit, is a signal that a Yes vote is not assured.

As for the vote count in Parliament, the main governing party will likely say Yes but the junior coalition partner has set three conditions for support, (i) written confirmation this is a one-off, (ii) the ECB must provide unlimited liquidity to make up for any deposit run and (iii) no new austerity measures beyond those already agreed. We do not know whether these conditions can be met. Note all opposition parties are against. It is possible that the vote could be with abstentions. In addition, note the initial read of popular opinion is overwhelming against the deal with 71% of respondents to an early survey saying Parliament should reject the deal.

Bank runs and bank holidays

The local Cypriot media report that bank ATM machines have run dry and that there is general anger about a freeze in electronic transfers

The move by the Eurogroup is unprecedented but the fear is rather obviously that a bank run may be in the offing. This is behind the rationale of President Anastasiades’ statement that depositors keeping their money in Cyprus for 2-years will receive securities linked to future profits from natural gas revenues. It remains to be seen whether the confidence trick of paying Cypriot taxpayers with their own resources works.

  • The situation is rather fluid and there is enough concern on the political backlash in Cyprus that it has been mooted that Cypriot banks will stay closed beyond the Monday bank holiday. If this is the outcome (probably from political paralysis) then risk markets are likely to take even greater fright.

4. Short term market reaction

a) This is risk-off but how far it goes is too fluid to pin down with markets initially focused on bank risk, and related political risk, but also be watchful for ratings risk.

b) Worst case scenario: EMU exit debate.

c) Best case scenario: Cyprus swallows the medicine and this looks like a policy error at the next crisis... But even here we have a period of darkness to get through first.

The OMT announcement effect has been very powerful in reducing investor sensitivity to event risks in the European periphery. The fact the ECB can stand conditionally behind a sovereign is important in helping markets to differentiate between tail risks and this reduces contagion. This is part of the explanation behind the muted reaction to Anglo Irish Seniors, SNS Reaal subs and the Italian election. Nonetheless, wiping out depositors is at another level of concern.

What we are watching near term

  • Cypriot politics will dictate the most immediate reaction and obviously the local bank runs. A delay to the vote for the deal (which means extending the bank holiday) or a ‘No’, will heighten market concerns. Conversely, a ‘Yes’ vote could materially reduce near term risk as the ECB can stand behind the Cypriot financial system with ELA to compensate for lost deposits. The hope here will be that confidence and deposits eventually return as they have done in other countries such as Greece.
  • Cross border bank contagion - most likely to weaker periphery banks. The Cypriot banking system is sufficiently unique to mean that we are not looking at wholesale cross border contagion.
  • Ratings agencies: The sheer guile in taking haircuts to deposits means there is less EMU solidarity than initially thought and one could also make the argument that Loss-Given-Default is materially higher now. This combination means in our view that there is downside rating risk to the periphery.

How bad could it get? If Cyprus rejects the deal, there is a political vacuum, and uncertain funding vacuum in who will fill the gap when the Cypriot banks eventually do open, and net this means speculation on EMU exit.

The best scenario? The Parliament swallows the medicine fearing financial collapse and/or EMU exit, and in time the one-off promise of the deposit tax is seen as more credible, meaning that deposits flow back into Cyprus. In the meantime, the ECB ELA keeps the banks alive.

5. Big picture, this is toxic and policy error

Our view has been that debt restructuring is a necessary albeit painful component of the crisis resolution. This stems from the fact that creditor nations are simply too small to absorb debtor risk and because sovereign EMU states will still exist for many years. That means a line has to be drawn under the available cross-border assistance and in practical terms this means (a) sovereign debt restructuring risk is higher than the consensus believes and (b) private sector and intra-country wealth transfers would have to be forced.

The decision to hit depositors was however much bolder than we expected – and we think this has two major influences.

Firstly, game theory the future where a country such as Italy is reaching the limits of debt sustainability. The analogue here is to get wealthy Italians to finally pay tax via perhaps a one-time solidarity tax on sovereign bond coupons/principal, given that domestic residents and the ECB own 71% of the market. Alternatively, getting the locals to make a sacrifice by extending the debt maturity is also feasible under the concept of ‘you broke it – you pay for it’.

  • In a sense, the more domestic financial architecture, including ownership of government bonds, makes such local burden-sharing solutions more politically viable. One could even say that the ownership moves in markets aids some type of Paris Club and London Club workout.

Secondly, even if the Eurogroup wins on the idea that Cyprus wants the Euro so much that it takes the medicine, and Cyprus’ banks are unique enough to mean limited contagion effects, then that would only be phase one of the impact.

  • We think the very fact that deposit haircuts have been put on the table means the cost of future bailouts will be higher as banks (at a minimum the weak banks) will be destabilised.

6. Markets

This is risk-off, and we think that the most likely scenarios involve more political wrangling where Cyprus tries to fight for a better deal – and waits to see if there is contagion to force the hands of core EMU. That means, the odds are on the banks remaining closed for a few more days and more local political wrangling. We are also attentive to any deal with Russia. Moreover, once the banks do open, markets will be attentive to the scale of deposit flight. As we mentioned above, we are also alert to ratings risks and that even in a best case scenario, there is a period of turmoil to pass through.

This is a recipe for long bunds, sell the Euro FX, selling periphery risk in general. The focus on banks and deposits could see Spain underperform Italy.

 

(h/t Steve)

 

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Sun, 03/17/2013 - 22:07 | 3340705 khakuda
khakuda's picture

I'm sorry, but this is insanity. We live in a fractional reserve, over levered debt based monetary system. Fucking the tiny bit of deposit capital that you are levering on, first with no interest and money printing and now with confiscation, means it will leave the system and the great unwind will occur. This will be the market reasserting control over the central planners who have botched this all the way by not letting the losses go where they should have in 2008. Depositors are ultimately in control and will prove that this week, barring full capital controls. Then, expect violence.

Note, too, the scapegoating. We're just getting the "bad" Russians. Hitler would be proud.

And dammit ZH. You scooped yet again with coverage. CNBC just posted their first story late this afternoon. You guys rock.

Sun, 03/17/2013 - 22:09 | 3340719 hooligan2009
hooligan2009's picture

its 50 : 50 between domestic v gangsters

how many gangstersin russia would have parked <100,000 in cyprus? i would hazard a aguess at double O, triple O fuck all blank.

note that the percentage haircuts were worked out so that the domestic cypriots have to pay more with their haircuts than the banksters with their cuts for over 100,000

wait, does anyone know hwo the formula actually was worked out?????

Sun, 03/17/2013 - 23:50 | 3341026 AynRandFan
AynRandFan's picture

I thought >100,000 got the worse hit, at 9.9% proposed.  Maybe I'm missing your point.

Mon, 03/18/2013 - 00:56 | 3341104 hooligan2009
hooligan2009's picture

my understanding is that the bulk of the tax is being raised by those with less than 100,000...russian gangstas light cigars with 100 euro bills; they would not get out of a gulag for less than 500,000 let alone put it in a cypriot bank.

the highest value is being raised by those millions with less than 100,000; those with more than 100,000 will yield the lower total amount

Mon, 03/18/2013 - 06:36 | 3341545 sumo
sumo's picture

"Note, too, the scapegoating. We're just getting the "bad" Russians. Hitler would be proud."

Put your hand up, Bruce Krasting.

 

Sun, 03/17/2013 - 22:08 | 3340710 Cabreado
Cabreado's picture

2. Why did they do it?

You missed the criminal part.

You missed the self-preservation part, too.

And you even missed the cowardice part.

You did, however, go above and beyond describing how it works when you neglect all-of-the-above.

So then, we've earned our demise, eh?

 

Sun, 03/17/2013 - 22:15 | 3340736 Bingfa
Bingfa's picture
Now Spain is pushing for a new bailout from the EU Get your money the hell out of Spanish banks..NOW

Whole lots of tweets going around....

Sun, 03/17/2013 - 23:43 | 3341006 AynRandFan
AynRandFan's picture

Spain is definitely the most interesting situation to watch tomorrow.  It is like a big Cyprus.  Banks with no liquidity, money with no velocity, bunch of tax-avoiding citizens most of whom don't have a job.

Mon, 03/18/2013 - 15:20 | 3343875 auric1234
auric1234's picture

Link please.

 

Sun, 03/17/2013 - 22:15 | 3340740 palmereldritch
palmereldritch's picture

Looks like instead of a shot across the bow the Banksters decided to target the Russians' wallets in an attempt to sour them from the game called Syrian Interference.

Unfortunately for the Globalist Banksters and their Anglo-American Israeli MIC Orcs, Russia has decided instead to double down with warships in a game looking increasingly less like Poker and decidedly more like Risk.

Sun, 03/17/2013 - 23:41 | 3340995 AynRandFan
AynRandFan's picture

That's a stretch, but creative.

Mon, 03/18/2013 - 01:07 | 3341204 palmereldritch
palmereldritch's picture

Of course....a stretch not unlike the string, so obvious to the cat, dragging the toy mouse across the floor...but for that next instant, combining his short term memory and impulse to deny obvious connections in favor of embracing distraction and the “programming of nature”

Sun, 03/17/2013 - 22:18 | 3340750 q99x2
q99x2's picture

From the nypost.com

In a groundbreaking study, University of Pennsylvania professor, Alexandra Michel, takes a chilling look at the dark side of life for a modern financier: Six out of 10 investment bankers suffered serious stress - emotional and physical problems abound - with many abusing prescription drugs.

Right. and with heroin still at $10 the above quote is likely not the whole truth of what banksters really are. They got their start first on money and then went on to the harder stuff..

Mon, 03/18/2013 - 01:37 | 3341172 dogbreath
dogbreath's picture

what?  is she implying they need sypathy, fuck them.  we are all fucked anyway

Mon, 03/18/2013 - 06:17 | 3341543 CaptainObvious
CaptainObvious's picture

They keep this shit up, and 10 out of 10 bankers will be suffering rope burns around the neck and extreme deadness.  That beats "serious stress" any day.

Sun, 03/17/2013 - 22:26 | 3340751 Downtoolong
Downtoolong's picture

I actually resent the idea of looking at this event to find a money making opportunity in it. When the currency war escalates to physical war, the banksters will not even entertain the question of whether they saw it coming.

Cowardly Bastards.

Sun, 03/17/2013 - 22:21 | 3340761 icanhasbailout
icanhasbailout's picture

There's a lesson here: If you're going to steal the money of a whole nation, do it through money printing, not outright confiscation - there's not enough smart people to get mad about the former to matter.

Sun, 03/17/2013 - 23:39 | 3340991 AynRandFan
AynRandFan's picture

Bang!  Nailed it.

Mon, 03/18/2013 - 02:32 | 3341304 seek
seek's picture

They know this.

Because of this, something else is at play where making this move makes sense. Maybe they're trying to spook the herd into causing a banking crisis, maybe velocity is plunging and they think this will help it back up, who knows? I know they are masters at incompetence, but to thing they didn't game the consequences of this move stretches credulity.

Either they're desperate beyond belief, or someone is manipulating a crisis into existence.

 

Mon, 03/18/2013 - 05:17 | 3341481 lakecity55
lakecity55's picture

Well, over here, they have billions of ammos, tanks, and "self-defense rifles" aplenty, so I guess it's Game On!

The Civilian Army more powerful than the military is here (to "protect" you).

**********

(on his prayer rug, casting a thoughtful eye)

"Frank Daddy, I just wish you were here. I finally made Dictator!"

Sun, 03/17/2013 - 22:23 | 3340764 chasman
chasman's picture

Hey, I hear that Russia mofia has a very good memory .... anyone want to bet a few bankers and politicians disapear in a few weeks....just askin?

I wonder if we can get them in the USA on visas?

Sun, 03/17/2013 - 22:24 | 3340769 doggis
doggis's picture

DID GERMANY JUST SIGNAL THEIR EXIT FROM THE EURO? UH HUH...YES IT SEEMS THEY DID.....

Sun, 03/17/2013 - 22:25 | 3340772 AU5K
AU5K's picture

May be I'm a little slow.... they are simply taking money???  Just taking people's deposits and calling it a "tax"???

Sun, 03/17/2013 - 22:29 | 3340779 khakuda
khakuda's picture

Yes. Outright theft.

Sun, 03/17/2013 - 22:39 | 3340776 macroeconomist
macroeconomist's picture

 

Everyone will fold tomorrow and leave the game..

 

Sun, 03/17/2013 - 22:31 | 3340786 mberry8870
mberry8870's picture

Does anyone beleive that the average Joe on the street will understand this statement: The Cypriot banking system is sufficiently unique to mean that we are not looking at wholesale cross border contagion.

 

I doubt it. Panic, runs, violence and blood coming to a US city near you.

Sun, 03/17/2013 - 23:02 | 3340865 palmereldritch
palmereldritch's picture

 Electronicb.o.l.a.*

*b.o.l.a: banksterorchestratedliquidationofassets

Sun, 03/17/2013 - 22:32 | 3340789 GoldForCash
GoldForCash's picture

Liquidated our 401k last week. Bought bright shiney metal....and lead....

Sun, 03/17/2013 - 22:36 | 3340796 jim249
jim249's picture

If I got this right,Cyprus lost their ass from Greek bonds that went bad. Greece got into trouble with the help of Goldman Sachs hiding their true debt so they could join the Euro. Is all this being set up by GS to protect against  potential losses?

Sun, 03/17/2013 - 22:38 | 3340811 tony bonn
tony bonn's picture

the cypriots will accept the forced measures because they do not want to leave the euro....in some ways it forces them to accept responsibility for their profligacy...but the actions of the eu were treacherous and will serve as a lesson for a select minority to get the fuck out of the banks.....the solution will cascade through to other piigs because cyprus is NOT the only country will bankrupt banks....once cyprus is proven for the nazi banksters, greece will take it up the ass next, then spain, then italy.......so you can pass a tax or just go straight to the deposits as nazi policy prescribes....

Sun, 03/17/2013 - 22:43 | 3340826 monopoly
monopoly's picture

It is amazing to me how little of this is being broadcast on MSM. I guess we need the DOW to drop 1,000 points before they stop talking about the next great movie, or which state is best to live in or the new Italian cars coming to market. Thank God for Zero Hedge and its brothers and sisters. Beyond words.

Mon, 03/18/2013 - 05:11 | 3341473 lakecity55
lakecity55's picture

Comrade, the state organs of information are under full control.

Back to your cubicle.

/r

(the NKVD).

Mon, 03/18/2013 - 05:22 | 3341487 The Heart
The Heart's picture

"Thank God for Zero Hedge and its brothers and sisters. Beyond words."

Thank God for those who recognize this and highlight it.

United...the light/knowledge force is strong. In that force are real answers to these real well planned unfolding situations. Are we watching this money magicians hand, and the other one too? What is happening in the ramp up to attack innocent Iran? And how about N. Korea warning it's citizens to evac the border areas? And, if we really want to think out of the box and beyond the horizontal distractions, look up! What is incoming? What would a asteroid strike do to the markets? And a solar flare taking out some whole countries electrical grid systems?

All in all, no matter what comes, united we stand, divided we fall.

Family and community...will save us all.

Sun, 03/17/2013 - 22:49 | 3340848 Downtoolong
Downtoolong's picture

Of couse, it helps when you're the Central Bank and can magically turn any and every card into a Joker.

Sun, 03/17/2013 - 22:52 | 3340858 chindit13
chindit13's picture

One has to consider the possibility that what several trillions in printing could not do for inflation, $7.5 billion in eradication might be able to do for deflation.

It always comes back to this question:  assets to ashes or debts to dust?

Be open to any and all possibilities.

Mon, 03/18/2013 - 00:13 | 3341113 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, I have gotten out of the prediction game and now think more about my risks and vulnerabilities.

Mon, 03/18/2013 - 01:23 | 3341233 Kirk2NCC1701
Kirk2NCC1701's picture

"All roads of fiscal heat lead to fiscal entropy."

Only charlatans and fools proclaim otherwise.

Sun, 03/17/2013 - 23:06 | 3340901 Cacete de Ouro
Cacete de Ouro's picture

Limassol, new improved kgb cleaning formula - tougher on rouble dirt and inbuilt stains, please read label carefully, wash inside out, note load may shrink by about 10% or even 13% on first wash.

Sun, 03/17/2013 - 23:16 | 3340931 tunnelvizn
tunnelvizn's picture

Seems the IMF is proud of their support :

The IMF managing director, Christine Lagarde, who attended the meeting, said she backed the deal and would ask her board in Washington to contribute to the bailout.

"We believe the proposal is sustainable for the Cyprus economy," she said. "The IMF is considering proposing a contribution to the financing of the package. The exact amount is not yet specified."

Source : http://www.guardian.co.uk/world/2013/mar/17/cyprus-savings-levy-uk-compe...

Sun, 03/17/2013 - 23:28 | 3340966 hooligan2009
Sun, 03/17/2013 - 23:35 | 3340981 AynRandFan
AynRandFan's picture

The IMF is a rolling international cocktail party that signs things during the day.

Mon, 03/18/2013 - 05:36 | 3341500 Awakened Sheeple
Awakened Sheeple's picture

Lagarde: The woman who lampooned the Bush administration for letting Lehman fail. If Cyprus causes the dominoes to fall, it will not be without irony.

Sun, 03/17/2013 - 23:28 | 3340968 Imminent Crucible
Imminent Crucible's picture

Why now? I guess, anything to get the Jamie Dimon perjury and insider trading story off the front page of the financial section.

Sun, 03/17/2013 - 23:33 | 3340977 AynRandFan
AynRandFan's picture

There's all sorts of humor in this.  

Cyprus banks are printing shares because they don't have the authority to print money.  Cyprus doesn't have a Fed, so it has turned all of its depositors into involuntary shareholders.  Part two of this liquidity plan is to get free money from other EU members who know they won't get it back.

In the U.S., the Treasury Dept sells shares and we involuntarily buy them with the value of our currency via Fed purchases with funny money, or through taxes.

Both systems are provided with liquidity at the point of a gun.  Ends justify the means.  Fairness.

 

Sun, 03/17/2013 - 23:42 | 3341003 yellowsub
yellowsub's picture

Americans need not worry, they got no savings!

Mon, 03/18/2013 - 00:04 | 3341081 kahunabear
kahunabear's picture

Penalizing savers to bail out debtors, hmm, exactly what Bernanke has been doing all along without a peep from the sheep.

Mon, 03/18/2013 - 00:14 | 3341089 medium giraffe
medium giraffe's picture

Russian bailout - Oppa Gazprom Style!

http://www.economicpolicyjournal.com/

 

Mon, 03/18/2013 - 00:07 | 3341095 chindit13
chindit13's picture

What this has done is to standardize all external storage points for currency, making them equal to an equity investment.  Put currency into equities and you risk getting Lehmaned.  Put it in a brokerage account and you risk getting Corzined.  Put it in a bank and you risk getting Merkelgeschafted.

Pick your poison.  Being the chump at a poker table seems the lesser of all evils.  At least you drink for free.

Mon, 03/18/2013 - 00:11 | 3341110 chindit13
chindit13's picture

It would be nice to have a webcam outside a branch of Unicredit or Bank Santander just to see how Europe might "open".

Mon, 03/18/2013 - 00:58 | 3341201 tip e. canoe
tip e. canoe's picture

scamcam

Mon, 03/18/2013 - 06:23 | 3341549 CaptainObvious
CaptainObvious's picture

It will be interesting to see how the American arm of Santander does in a few short hours...Santander was buying up bank chains in the US a few years back.

Mon, 03/18/2013 - 00:15 | 3341117 DoChenRollingBearing
DoChenRollingBearing's picture

Of course you could always buy gold, handling it seems non-toxic...

Mon, 03/18/2013 - 00:57 | 3341197 akak
akak's picture

 

What this has done is to standardize all external storage points for currency, making them equal to an equity investment

Well, not quite all storage points for currency.

I think you overlooked two or three, all physical in nature.

Mon, 03/18/2013 - 02:33 | 3341307 Sandmann
Sandmann's picture

There are simply NO financial assets or titles that have any value when Banks and Governments  work together

Wed, 03/20/2013 - 01:30 | 3351155 geekgrrl
geekgrrl's picture

"Merkelgeschafted"

Nice.

Mon, 03/18/2013 - 00:18 | 3341122 Freedumb
Freedumb's picture

I wonder if this is a Northern Rock moment, as in a moment of clarity to begin the process of moving off this insane bullishness.... the amounts of money involved are more or less the same. I think the Northern Rock bailout was around 3 billion GBP? The first rumbles of thunder before the storm? 

Mon, 03/18/2013 - 02:32 | 3341303 Sandmann
Sandmann's picture

Northern Rock however would have been taken over by Lloyds Bank if Brown had not stopped them and then turned around and rammed HBOS down their gullet. Cyprus may now be the Kreditanstalt Wien Moment

Mon, 03/18/2013 - 00:33 | 3341150 hooligan2009
hooligan2009's picture

russia is the next shoe to drop?

immediate loss of $50 billion in a 2.5 trillion economy = 2% of gdp growth ?

http://rt.com/business/russia-lose-billions-if-cyprus-default-257/

https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html

Mon, 03/18/2013 - 01:08 | 3341218 upb
upb's picture

Cyprus!!  just a little country, but some say its the end of the world as we know it!!  http://www.optionmillionaires.com/2013/cyprus-event-its-the-end-the-worl...

 

 

I  feel fine!!! 

Mon, 03/18/2013 - 01:17 | 3341227 Demogorgon
Demogorgon's picture

Well, I'm finally going to do my own bank run. Been putting it off for too long. Just going to keep enough in the bank for monthly payments. When this whole thing finally collapses they can go ahead and steal 6% of the chump change in my account.

Fucking criminals.

Mon, 03/18/2013 - 01:24 | 3341237 Mike Cowan
Mike Cowan's picture

As the man said: the Fed is doing it to savers in the U.S. It is just slower and a little less obvious. 

Mon, 03/18/2013 - 01:30 | 3341244 valkir
valkir's picture

Just hear this on european radiostation.Cyprus officials negotiating now,that this "tax"to be lowered for deposits less than 100 000 euro,to 3 %,how generous.Over 100 000,to be,12,5 %,not so generous.But i am amazed,all weekend,nobody say it,lets not forget it........

fuck you bernanke

Mon, 03/18/2013 - 01:46 | 3341263 IridiumRebel
IridiumRebel's picture

Hang Seng is down 500 pts.

Mon, 03/18/2013 - 02:00 | 3341275 kurt
kurt's picture

Absolutely Shameful! They found the littlest guy on the playground and stole his lunch money. Punk-ass pricks.

Mon, 03/18/2013 - 02:04 | 3341278 Dre4dwolf
Dre4dwolf's picture

This is a big deal, it threatens the confidence in all banks all around the world.

If they are willing to doit there, they are willing to doit anywhere.

 

Its only a matter of time before every American sees their Bank Account cut by 20% or more!

Mon, 03/18/2013 - 02:25 | 3341296 are we there yet
are we there yet's picture

It is hard to get my head around the idea that USD is the best FX in the near-term with our M2 and printing being so extreme. Cyprus is both a test ground, and a test message for collecting the PIIGS debt obligations.

Mon, 03/18/2013 - 02:30 | 3341300 Sandmann
Sandmann's picture

It is all to do with whose sh@t smells least

Mon, 03/18/2013 - 02:29 | 3341298 Sandmann
Sandmann's picture

Largest Shareholder in Bank of Cyprus is Russian

http://rt.com/business/cyprus-bailout-bank-tax-deposits-401/

Cyprus is currently deciding whether to raise the anti-crisis tax on savings larger than €100,000 to 12.5%, while reducing the levy on smaller amounts to 3 per cent, a source told Reuters.............

On Sunday, the Cypriot president addressed the nation claiming that this new tough decision was the only available measure to avoid default and subsequent separation from the EU.

“Those who hold on to their deposits for two years, will get back half of their deposit in bonds,” Nicos Anastasiades said, trying to avert an imminent wave of deposit withdrawals after the holidays.

 

It would have been so easy to let  Cyprus DEFAULT and test an Alternative Scenario. It is clear that Shroud-Waving Bankers continue to pile everyone and everything on their funeral pyre. The Endgame will be Euro-Terrorism and Dead Bankers and Politicians. Germany and Italy saw it in the 1970s and it could so easily return. They never solved the murders of Herrhausen or Rohwedder in 1989 and 1991.

 

Mon, 03/18/2013 - 06:28 | 3341553 CaptainObvious
CaptainObvious's picture

What a compromise, eh?  "Those who hold on to their deposits for two years, will get back half of their deposit in bonds"?!  So they steal about 10% of your money, and in two years you get back half of ten percent in worthless bonds and the other half is Corzined.  And this is a one-time event, suuuuuure. 

Mon, 03/18/2013 - 02:29 | 3341299 etresoi
etresoi's picture

The myopic eurocrats have lost the big picture, as usual.

Cyprus has a viable option of leaving the EU, dropping the euro and aligning with Russia.

Russia can afford to support Cyprus, can develop the gas fields at a substantial profit and as a bonus, gets a strategic deep seaport.

 

Game, set, and match !

Mon, 03/18/2013 - 04:59 | 3341461 falak pema
falak pema's picture

So be it! Let Cyprus do it; its a free nation and let it assume its consequences like Iceland did! 

They only have to lose 20-40 billion of Russian money all gone in smoke of past folly! Plus 5-10 billion of local money and an economy destitute. 

No problem, Cyprus can then build from scratch like after the Ottoman fall. 

Mon, 03/18/2013 - 05:41 | 3341506 nathan1234
nathan1234's picture

Of course.

Do you think the Myoprick Eurocrats HAVE ANY BRAINS IN THE FIRST PLACE !!!!

 

 

Mon, 03/18/2013 - 02:30 | 3341301 are we there yet
are we there yet's picture

Iceland has more kahunas then Cyprus.

Mon, 03/18/2013 - 02:34 | 3341313 Sandmann
Sandmann's picture

Iceland did not join the EU

Mon, 03/18/2013 - 05:31 | 3341497 nathan1234
nathan1234's picture

So now's the chance to leave the Euro.

 

Mon, 03/18/2013 - 02:34 | 3341312 Sandmann
Sandmann's picture

Can we please use the correct terminology in articles here.......E X P R O P R I A T I O N

Mon, 03/18/2013 - 06:37 | 3341560 CaptainObvious
CaptainObvious's picture

Let's just use the real correct terminology here...theft.  More people know what it means and it's easier to spell.

Mon, 03/18/2013 - 03:29 | 3341347 d_taco
d_taco's picture

RBS is talking nonsens. Most Uk investors already took an hit of more than 6% because POUND devaluation.

The solidarity of the Europeans taxpayers with the banking elite is unprecedented. This is the right move, free banking insurance came to an end.

RBS still hopes the UK peasants will be be solidar with RBS bussiness.

So Rusians oligargs have to look for an other save haven where Bankers gamble for a profit and peasants pay the loses.

 And the UK is a good alternative untill the UK collapse as a country.

Bail in restructuring is the only way to go. You can not keep on putting debt on debt to save your debtholders.

UK and the US are isuing amortization bonds while in the EU countries start at least with the painfull process of restructuring.

In the comming weeks the most simple investors will flee to fary-tale countries where they believ Mr Osborn compensate debt holders with his own saving money.

http://www.guardian.co.uk/world/2013/mar/17/cyprus-savings-levy-british-deposits

The UK has no money and again in this case it can only be paid by external investors.

 

Mon, 03/18/2013 - 03:02 | 3341348 d_taco
d_taco's picture

RBS is talking nonsens. Most Uk investors already took an hit of more than 6% because POUND devaluation.

The solidarity of the Europeans taxpayers with the banking elite is unprecednted. This is the right move, free banking insurance came to an end.

RBS still hopes the UK peasants will be be solidar with RBS bussiness.

So Rusians oligarchs have to look for an other save haven where Bankers gamble for a profit and peasants pay the loses.

 And the UK is a good alternative untill the UK collapse as a country

Mon, 03/18/2013 - 04:59 | 3341464 MeelionDollerBogus
MeelionDollerBogus's picture

Fool. When Russian Oligarchs get cut off so does gas to Europe.

Ya, the fucking pipeline.

Plus the bank run contagion where many people will expect across Europe banks will close all day every day forever.

Ya, that bank run.

1929 ? Remember that GLOBAL depression thing? It's back.

 

Mon, 03/18/2013 - 03:07 | 3341357 d_taco
d_taco's picture

BE AWARE!

This is RBS Pump and Dump spin.

The EURO will not colapse because of Cyprus. Go and look on wikipedia what Cyprus is and how it came in existence.

Euro short will be wiped out!

Today is a gift from heaven for RBS traders!

Mon, 03/18/2013 - 05:59 | 3341530 hooligan2009
hooligan2009's picture

you are right so far

Mon, 03/18/2013 - 03:25 | 3341379 Sid James
Sid James's picture

Don't you just hate those poker games where someone gets his cock out and starts waving it around just when you get your first decent hand?

Mon, 03/18/2013 - 03:32 | 3341386 devo
devo's picture

Futures just gapped up 60 points. Bet stocks are green again tomorrow.

Mon, 03/18/2013 - 03:34 | 3341389 The Shootist
The Shootist's picture

Not surprised.

Mon, 03/18/2013 - 04:29 | 3341439 HD
HD's picture

These fuckers don't even try to hide the manipulations. Everyday it's slam vix and metals, pump futures and bang the close.

 

 

Mon, 03/18/2013 - 03:33 | 3341387 Aristarchus of Samos
Aristarchus of Samos's picture

I'm buying 500 bars of gold-pressed latinum!

Mon, 03/18/2013 - 03:40 | 3341396 fukidontknow
fukidontknow's picture

Good morning Europe from NZ. Listen carefully, you only have a short time to get to the bank and withdraw all your money.

Mon, 03/18/2013 - 03:46 | 3341399 evernewecon
evernewecon's picture

 


 
This is a 2-for
The Rape Of Cyprus By The European Union & The IMF

as well as for
Cyprus: The World’s Biggest "Poker Game"

Billionaires create the adversity from which
to profit.

http://pages.citebite.com/r1d3s8s0f9wbs

http://hat4uk.wordpress.com/2012/08/30/greece-exclusive-sabotaging-the-other-troika-in-greeces-future/

???:
http://www.globes.co.il/serveen/globes/docview.asp?did=1000602575&fid=1725

http://pages.citebite.com/x1l0p8i2l1fuq

I’ve used poker games for analogy extensively.   ZH: too much to c-p practically.
For the one or two stumbling onto it and interested it might be interesting.
Hope you don’t mind as it’s simply perfectly on point.
http://evernewecon.weebly.com/suasion.html#sequesteranalogyblogblob

Mon, 03/18/2013 - 03:46 | 3341400 Hobbleknee
Hobbleknee's picture

So theft is open for voting nowadays?

Mon, 03/18/2013 - 03:49 | 3341403 MoreLiver
MoreLiver's picture

Again just updated my Cyprus linkfest. Would not post this if I didn't believe it is useful - got good feedback on it.

http://morelivers.blogspot.com/2013/03/16th-mar-special-bailout-of-cypru...

 

Mon, 03/18/2013 - 04:00 | 3341413 crash_davis
crash_davis's picture

I want to say that maybe people will wake up now that theft is a viable option for the banking cartels. I mean if they can steal money from Cypriot bank accounts then they can steal from Greek German or American accounts right? Most people don't care still. I tell it to my coworker and he shrugsit off. All he wants is to watch his net flicks. Most people will be corzined when it's all said and done. People just can't wake up.

Mon, 03/18/2013 - 05:56 | 3341526 The Heart
The Heart's picture

"People just can't wake up."

Hey, good morning Crash.

Take heart, it has always been said that to get the people to wake up, they had to be hit in the pocketbook. So what do we see everywhere today? Massive suffering and economic prisoners replacing jobs that are available. People are waking up, nearly too late. What we see here are lessons for all.

There is a great energy building up in Cyprus right now as they line up to get in first for the opening of the banks, IF they open on Tuesday. The potential for confrontation is strong, IF these Eu folks keep on the track of this big bankster heist. There are these politicians one has to suppose that are reputedly in charge, or in the leadership positions that in theory have the power to just say no to this, thus sparing the country of the possible negative energies of confrontation that are building. We should all be sending calming and sane energies there to Cyprus so cooler heads make the decisions for the betterment of the people, and not the banks. The bailing out of these evil banksters has to stop, and it does not have to come at the price of so much purposely caused and planned evil that comes form the orchestrated confrontations between people scrapping with the money changers in the temples.

 

Mon, 03/18/2013 - 04:16 | 3341426 Die Weiße Rose
Die Weiße Rose's picture

unbelievable !

the Governments now openly steals from law-abiding account holders and people like pensioners,

to bail out corrupt banks and corrupt out of control regulators and corrupt government organizations like the IMF central banks.

The IMF and Central Banks are corrupt, they steal from people to pay themselves.

what a comical tragedy, do you know where your money is going ?

Inflation, taxes, pay-offs and bail-outs for corrupt criminals,

that's where your money is going.

It's daylight Robbery and most fools just take it again and again -

something needs to be done about these criminals !

wr;)

Mon, 03/18/2013 - 04:31 | 3341441 crash_davis
crash_davis's picture

Didn't they just buy a bunch of tanks and ammo? I wonder what thats all about?

Mon, 03/18/2013 - 04:31 | 3341442 q99x2
q99x2's picture

Just my luck. Those  suckers may be triggering it early.

From CNBC:

Just as concerns over a hard landing in China seem to have faded, economists at Nomura sounded a warning that the world's second largest economy is exhibiting the same symptoms that triggered the 2008 financial crisis.

And markets in EU opened just like Jesse said they would. FX and Gold.

Maybe the banksters think they stole enough and are bringing it down now.

Possibilities of WWIII is kind of game changer.

Mon, 03/18/2013 - 04:34 | 3341443 JPMorgan
JPMorgan's picture

It's going to be a interesting week, lots going on, let battle commence!

Mon, 03/18/2013 - 04:40 | 3341449 Notarocketscientist
Notarocketscientist's picture

Anyone with cash in a bank account is a FOOL.    Keep it in a safe box or home safe - better still, buy PM

Mon, 03/18/2013 - 04:46 | 3341452 Die Weiße Rose
Die Weiße Rose's picture

what the world really really needs -

is another Lehmann moment

I hope that this will be it,

or at least the start of it.

wr;)

Mon, 03/18/2013 - 08:36 | 3341819 Peterus
Peterus's picture

Let's have ourselves a global bank run. We'll see how the pyramid of debt holds - with extreme leverage that is held down with hot air and empty promises.

Mon, 03/18/2013 - 04:52 | 3341455 falak pema
falak pema's picture

Oh the irony of it : Tiny Cyprus is where the stakes are highest...the heist is practiced in open daylight time!

But beyond the symbolism is the awaiting reckoning at WS/City's OK COrral :

Between the Statist Oligarchs, the neo-statist Wyatt Earps,  who in name of "we the people" meme will try and clawback rich man's wealth, against the wishes of the Ike Clantons, rustlers and cattle thieves of Caymanista land; men who know no borders and no constraints to their own hubris. 

Yes, it is a topsy turvy capitalist world that now goes statist; the same leaders of first world that aided and abetted the cattle rustling in irrational exuberance and deregulation gone global are now prepared to turn coat and sing : we have no other solution but to tax the money where IT IS! And all hell breaks lose if you don't follow suit.

By the looks of it all hell breaks lose either way. We are in for rough times whatever may!

Titanic full steam ahead and Iceberg looming. This boat is made for rocking n rolling. 

 

Mon, 03/18/2013 - 04:54 | 3341459 MeelionDollerBogus
MeelionDollerBogus's picture

I feel extra mentally prepared for this entertainment having just finished watching Rounders.

Absolutely perfect timing.

Mon, 03/18/2013 - 04:58 | 3341462 lakecity55
lakecity55's picture

So, Socialism is finally running out of (others') money.

Mon, 03/18/2013 - 04:59 | 3341463 q99x2
q99x2's picture

March 17, 2013 - Loud Booms Today in Fort Knox

Where was Jamie Dimon?


Mon, 03/18/2013 - 05:27 | 3341494 nathan1234
nathan1234's picture

The Demon was consulting with Satan

Mon, 03/18/2013 - 05:05 | 3341468 The Heart
The Heart's picture

This gets more interesting as we now have news reporting Russia does have a stake in this also.

"Russian banks had about $12 billion placed with Cypriot banks and corporate deposits amounted to $19 billion at the end of 2012, according to Moody's rating agency."  

Putin said "that this decision, if taken, would be unfair, unprofessional and dangerous,"

http://www.reuters.com/article/2013/03/18/us-russia-putin-cyprus-idUSBRE...


Mon, 03/18/2013 - 05:34 | 3341472 Monedas
Monedas's picture

Fractional Reserve Deposit Insurance !   LOL    Sarc   Shart Risk:  off/ON

Mon, 03/18/2013 - 05:25 | 3341490 ebworthen
ebworthen's picture

The longer they keep the banks closed the bigger the bank run will be.

The more publicity this gets, and just the word-of-mouth, will cause people to withdraw cash.

Mon, 03/18/2013 - 05:36 | 3341501 Rock the Casbah
Rock the Casbah's picture

If the US government can legally force it's citizens to buy health insurance, it can legally force it's citizens to buy bank bonds.

Mon, 03/18/2013 - 06:43 | 3341567 CaptainObvious
CaptainObvious's picture

Let's hope there's an option to just pay the penalty for not buying bonds...unless of course the penalty is a drone strike.

Mon, 03/18/2013 - 05:48 | 3341502 Monedas
Monedas's picture

Run on wheelbarrows at Home Depot !    I lost my debit card .... I left it in a sneaky, quiet ATM .... new card in the mail .... my checking balance is $89 and my savings balance is $2 and I just got a $20 pay day advance on my direct deposit for $1.50 .... keep a low profile .... shuffle along like a poor negro .... who gets $2500 disability, $1500 HUD Section 8 rent check, food stamps, all utilities paid, Obama care and Obama phone .... and nets $5K a week selling coke and hookers .... pays no taxes .... except sales tax and lottery winnings !

Mon, 03/18/2013 - 05:42 | 3341509 Zappytrader
Zappytrader's picture

It does not really matter on the morailty of this, the central bankers do not care what you and i think. They will just keep on doing this and screwing people over and over. Accept it for what it is and just trade the heck out of it. Bring on the revolution!

Mon, 03/18/2013 - 05:53 | 3341524 Monedas
Monedas's picture

Why does the lefty media always portray the Russians as heavy hitters with gravitas .... they are a bunch of hicks !

Mon, 03/18/2013 - 05:54 | 3341525 goldenbuddha454
goldenbuddha454's picture

They should float a trial balloon into California and Illinois and see how the depositors in those two states react to the idea of a Cypriot-type 'bail-in'.  Should be an interesting exercise in current communist ideology.

Mon, 03/18/2013 - 06:06 | 3341534 Youri Carma
Youri Carma's picture

RBS: “Toxic Policy Error.” Or like said in the the infamous words of George Costanza: “It’s could have been an Huuuuge mistake!http://youtu.be/2LCggmsCXk4?t=2m18s

Mon, 03/18/2013 - 06:17 | 3341544 Thamesford
Thamesford's picture

"I am from the government and I'm here to help (myself to your savings)"

Mon, 03/18/2013 - 06:21 | 3341546 goldenbuddha454
goldenbuddha454's picture

At this moment, we are living through one of the most important, critical and monumental events in history.  How the masses react to it will determine the course of "free" societies for years to come.  Believe it.

Mon, 03/18/2013 - 06:37 | 3341561 CDNX fan
CDNX fan's picture

BUY VIX;BUY GOLD/SILVER - stocks on a dip.

 

Wall Street is having too much fun to let this rally die (although Barrons Sentiment numbers are scary beyond belief).

 

 

Mon, 03/18/2013 - 07:13 | 3341607 cooperbry
cooperbry's picture

theft

Mon, 03/18/2013 - 08:21 | 3341761 shovelhead
shovelhead's picture

"Godfather, I beg you, help me please. I'm in trouble."

"I can help you but there's something you have to do."

"Anything, Godfather. Name it."

"Take you sheep, cut off their tails and bring them to me."

"But Godfather, if I cut the tails, the sheep will run away and I will be poor again."

"Yes, this is true, but you are a bad sheeptrader. Maybe one of my friends can help you find a new business and take your troubles away for you."

"But my sheep have made me rich. The other sheeptraders cheated me."

"Don't worry, they too will be looking for a new career. Have a nice cannoli."

Mon, 03/18/2013 - 08:26 | 3341774 Nu Yawks hottes...
Nu Yawks hottest club is's picture

Did no-one catch the part of the deal where the money levied would be converted into bank shares ?

Do NOT follow this link or you will be banned from the site!