Europe Scrambling With Last Minute Revision To Cyprus Deposit Confiscation Plan

Tyler Durden's picture

If initially Europe came out as utterly deranged in its Cyprus deposit-confiscation scheme, at least it was consistent. Now, it appears that Europe is desperate to appear not only completely incompetent but also unable to even make a simple decision and stick with it, following news from both the WSJ and the FT that the original confiscation thresholds of 6.75% and 9.9% for deposits below and over €100,000 is about to be revised.

From the FT: "a revised deal being discussed in Nicosia, with the blessing of the European Commission, would shift more of the burden on to deposits larger than €100,000, according to officials involved in the talks. Under a controversial deal struck with international bailout lenders in the early hours on Saturday, a 6.75 per cent levy would be imposed on all deposits under €100,000 while accounts over that threshold would be hit with a 9.9 per cent levy. The depositor levy was demanded by a German-led group of creditor countries to bring down the bailout’s price tag from €17bn.... Officials involved in last night’s talks said the changes in the levy’s rates were in flux, but they could see the higher rate increase to as much as 12.5 per cent while the smaller deposits could be about 3.5 per cent."

Elsewhere, according to the WSJ, the deposit "tax" would be under 5% for deposits under €100K, under 10% for deposits between €100 and €500K, and over 13% for deposits greater than half a million.

While this idiotic last minute revision will only infuriate Russian oligarchs even more, it will achieve absolutely nothing to streamline the passage of the bill through Cyprus parliament where it appears to have hung without enough support: the damage has already been done, and it is a virtual guarantee that Cyprus banks will suffer a full blown bank run the second banks reopen, which may be Tuesday, Wednesday, or never, at the current pace. That line around the block at your local neighborhood Nicosia ATM: that is not, and will not, be for people seeking to make a deposit, that much we can guarantee, no matter what the final confiscation percentage is.

What is worse, however, is the painful demonstration of the absolutely and completely arbitrary decision-making process out of Europe. Sure: the ECB and the European Commission may decide to fully unwind the deposit confiscation scheme before all is said and done, but the genie is now out of the bottle, and it is very clear that in the European Disunion, a few unelected oligarchs will now determine until such time as the Eurozone finally implodes, just whose wealth and deposits are ripe for the taking. That not even Germany can make a decision and stick with it is just icing on the cake of the European Titanic.

In the meantime, what happens in Cyprus tonight, or tomorrow, and what the final confiscation schedule looks like, is merely bitter sweet victory for all those who have claimed that the European monetary experiment is finally coming to a long overdue end.

Finally, we can only hope that the next European (in whatever Monetary Union or Disunion format it is then) winter, is mild. Because Gazpromia may just decide to hike gas costs by 5%... or 6.75%.... or 9.9%.... or 99.9%.... Who knows? After all, Gazpromia Russia - which just happens to be Europe primary external source of crude and gas, has a green light to make up its own rules on the fly.

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nope-1004's picture

Did the trial balloon fail?  There will be smaller line-ups for cash if skewed toward the larger savings pool.



MsCreant's picture

Stalking horse is already out of the barn door, there is no getting him back in the stable now. As in "economic STABILITEEEE."

max2205's picture

1st plan was droned. Lol

kaiserhoff's picture

THE EURO:  Giving a bad name to Chinese Cluster Fucks since 1999.

DJ Happy Ending's picture

Europe the great socialist utopia has no FDIC? LOL

knukles's picture

Well of course they do. 
You see it works like this...
The banks take deposits from customers.
The banks then make investments
In stuff like European sovereign debt
The Banks also made a buncha other bad loans
Which go bad along side the soverign debt getting sketchy
So they gotta be bailed out.
The countries in which the bad banks reside gotta bailout those bad banks which otherwise would fail
So the country has to raise MORE money from the banks to get the money to bail out the banks who made the bad loans in the sovereign debt in which they invested that went bad.
See, the Bank's insured by the country who's financed by the bank which is insured by the country.
So when all else fails the country takes the innocent bystander depositor's money as a tax to raise money for the country to bailout the bank so that the depositor's money will be safe.
And the politician doing all this shit keeps saying it's fixed.

Fucking amazing, no?

And this is why there are Bank Runs, money is kept under the mattress, gold and silver are preferred medium and why people really will probably start hanging bankers and politicians from lamp posts some day somewhere. 

TwoShortPlanks's picture

The 2013 Euro [Hegelian] Dialectic......Bank Runs!

A Green Light for the EU's plans for outright dictatorial powers, effectively expanding Monetary Union into Politico-Fiscal Union, is nothing less than a Euro-Wide coup d'état led by the IMF, WB and their parent entity, the BIS.

This has been an announcement by the friendly team at Agenda21: Your future, is OUR future, so may the odds be forever in your *scoff* favour!

FEDbuster's picture

Why would anyone, anywhere keep more than a month's worth of expense money in a bank?  I don't trust brokerage accounts anymore after MF Global, let alone the Too Big To Jail banksters.  Stupid is, as stupid does.

kentmills's picture

Knuckles: +1 Meant to hit up arrow - sorry about junking ya. Quite a Gordian knot "we" have going. (Must. Invest. In. Stylus.)

shovelhead's picture

Thanks Knucks,

Whew! I guess I had it right after all.

I wasn't sure...because, ya know, It sounds, crazy.

francis_sawyer's picture

Jew vs. Jew = "all hilarity ensues'...



Note: Don't try to be clever here and pretend 'Cypriot' muppets are actors in this game... Don't buy that sandwich...

smlbizman's picture

somebody is very fuckskeed....were are you boris...i dont speak russian like you...

francis_sawyer's picture

Oh look... No 'JUNKS' on this thread until the word JEW appeared...


Quel surprise!

DeadFred's picture

Don't be so humble. There were no red arrows until you appeared. You got the power!

Deacon Frost's picture

Sarris was employed at the World Bank starting in 1975.

TruthInSunshine's picture

The running meme amongst VSP (very silly people) like the Krugmans of the world is that the Cypress Job/Great Bank Heist was perpetuated because many large bank accounts in Cypress belonged to naughty Russians (expats living in Cypress or elsewhere) & those bank account balances were essentially the byproduct of ill-gotten gains (while Krugman doesn't bother to cite a single shred of data on this, economic or legal).

Krugman and his kind don't come out and explicitly state this, but it's absolutely implicit in what they've written on this topic, as is the implication that "this makes this EU imposed measure [i.e. complete textbook definition of the outright confiscation/taking of private property without an ounce of due process] that was backed by Cypress's joke of a government somewhat okay/understandable/sympathetic/non-egregious/maybe-even-commendable, etc."

For those who think I'm way off base, or even slightly off base for that matter, in thusly paraphrasing Krugman's views & opinions on this matter, whereby the Krugmans and VSPs bend over backwards to "sort of justify" grand larceny by the EU and the "government" of Cypress, I refer all to:

 The Cypriot Haircut' or what I like to simply refer to as Exhibit A of a long list of incontrovertible proofs that Krugman and others like him are total & absolute statists who only believe in "due process" or "property rights" when convenience serves the state, as nothing more than a trivial "privilege," and not anything remotely reflecting any "right," to be be suspended or revoked partially or completely at the whim of the state. In other words, little to nothing separates Krugman, despite his inevitable denials, for an absolute socialist even to the extent that he openly defends socialist practices carried out via communistic methods.

"OK, I didn’t see that one coming. With all the problems in Greece, Italy, Spain, and Portugal I wasn’t watching Cyprus. But that’s where the big euro news is this weekend; in return for a bailout, Cyprus is supposed to impose a large haircut — that is, loss — on all depositors in its banks.


You can sort of see why they’re doing this: Cyprus is a money haven, especially for the assets of Russian beeznessmen; this means that it has a hugely oversized banking sector (think Iceland) and that a haircut-free bailout would be seen as a bailout, not just of Cyprus, but of Russians of, let’s say, uncertain probity and moral character."



Element's picture

I think we can see why they wanted it rubber-stamped by the parliament so bad before markets opened. They thought they could just ram it through, damn democracy, ramming speed!! ... failed ... freaked-out ... realized they were now caught with their draws around their ankles ... with Austral-Asia about to open ... so they went full-retard ... and ...


C O M P L E T E L Y   P A N I C K E D



asteroids's picture

Dont YOU feel nervous right now? I suspect the markets feel a little sick to their stomachs.

Element's picture

Nope ... completely in my ... er ... Element.

Acceptance will come to you friend, and you'll feel a lot better once it finally does, good luck.

TruthInSunshine's picture

I'd be shocked if there wasn't some version of an Animal Farm exemption from this state-enforced-for-the-benefit-of-private-bank-outright-theft for those who have a certain minimum of wealth also deposited at JP Morgan, Goldman Sachs, HSBC, USB, et al., by the way, since "some animals are more equal than others."

shovelhead's picture

Quite possible, nay , most probable.

However, what we are witnessing here has more elements of Animal House rather than Animal Farm.

"We gotta take these bastards. Now we could do it with conventional weapons, but that could take years and cost millions of lives. No, I think we have to go all out. I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part"

"We're just the guys to do it!"


Poor Grogman's picture

Perfect timing too

Some of the sheeple were getting confident in the system again.

Orders for PMs running hot this morning, phone calls taking a little longer than normal.

mt paul's picture

book your Carnival cruse

to Cyprus now..


cost plus 9.9 % fee

auric1234's picture

It's not confiscation because it's not taking private property, only worthless shit paper.


McMolotov's picture

The worst part of a Krugman column (for me, anyway) is always the comments, and this one isn't an exception. You can see the poor little Krugman sycophants trying their best to rationalize government theft merely because Krugman gives tacit approval to the idea. It's an exercise in mental gymnastics.

These people are worse than sheep. The term "sheep" implies ignorance or a lack of thinking. These Krugman butthole-lickers believe they're intelligent simply because they 'follow' Krugman. It's basically a cult of personality at this point, and their entire worldview is dependent on their 'leader' being correct. These are usually the most dangerous people because they'll condone the most outlandish kinds of government tyranny as long as it comes with some sort of stamp of approval from the authority they trust.

"Those who can make you believe absurdities can make you commit atrocities." —Voltaire

NoDebt's picture

No, but you can smell him.  Take a good whiff and tell me you don't smell Krugman hiding out around here somewhere.

shovelhead's picture

I thought it might have been my dog.

MS7's picture

People on thise site have made up this fictitious person named "Krugman" who is not to be confused with Paul Krugman of the NY Times. After all, Paul Krugman has consistently been arguing against the idiocy of recent EU and EC policies. His blog from today warns of a bank run in various EU countries as a result of this action. But go ahead and just read selective quotes from his work and continue to believe in your fictitious character called "Krugman".

slightlyskeptical's picture

I agree that he has been very critical to the EU.

The problem here is that everyone disagrees with him on how the USA should handle things.

I agree that central banks should hold the countries debt. I disagree with them buying assets without providing the same relief to the people as they do the bankers.

Ms. Erable's picture

I believe the correct term for these Kruglickers is useful idiots.

Jena's picture

"Kruglickers"  Perfect! 

And McMolotov, the commenters are worse than the column for me as well, too.  Sometimes I read them just as I scratch a mosquito bite:  I know it's not a good thing to do but sometimes I can't help myself.

CompassionateFascist's picture

Krugman approves theft by the State because his Tribe, via the Federal Reserve, owns the State. If Anglo-Saxons still controlled the State, he would be a raging Bolshevik.

Antifaschistische's picture

I'm with you..but isn't there irony here.   The statist confiscator see's no problem with the haircut and finds it necessary.

Yet, the capitalist too will say, "you collected your fiat, handed it over to a banking institution and assumed it was riskless...shame on you, it wasn't"

q99x2's picture

That's right.

From Jung 1957

The State in particular is turned into a quasi-animate personality from whom everything is expected. In reality it is only a camouflage for those individuals who know how to manipulate it. Thus the constitutional State drifts into the situation of a primitive form of society--the communism of a primitive tribe where everybody is subject to the autocratic rule of a chief or an oligarchy.

MS7's picture

I really don't understand all the animosity on this site toward Krugman. Weird. Anyway, I wonder why you didn't quote the rest of the piece? Maybe because it contradicts what you claim Krugman believes? Here is the rest from his blog in the NY Times:


"The big problem, however, is that it’s not just large foreign deposits that are taking a haircut; the haircut on small domestic deposits is a bit smaller, but still substantial. It’s as if the Europeans are holding up a neon sign, written in Greek and Italian, saying “time to stage a run on your banks!”

Tomorrow and the days immediately following should be very interesting."


For those who don't know, Krugman has been a very strong critic against practically everything the EU and EC have done in recent times.


malek's picture

 For those who don't know, Krugman has been a very strong critic against practically everything the EU and EC have done in recent times.

I wonder why you didn't state the rest of his opinion?

It goes along the lines of "...instead the European central should print faster!" (Which is confiscation of everybody's assets, including small depositor's, by other means, but pssst - most won't notice!)

Augustus's picture

Krugman has been a very strong advocate for suggesting that the US follow the EU model, 100%.

Issue more debt.

Provide more handouts.

"Invest" in more Solyndras.

The man is a fool.

mt paul's picture

savings account

killing drones..

kaiserhoff's picture

On the basis of survivor reports, it seems that everyone who jumps off a bridge, regrets the decision about half way down.

That must be what these clowns are feeling now.  Good luck with those air brakes.

Pool Shark's picture



Exactly. The runs are likely to be bigger if they decide not to impose the haircuts. Once the haircuts are imposed, depositors might just assume the worst is over and leave their deposits put. But if they decide against haircuts, everyone will want out to avoid even the potential of a haircut.

Good luck un-ringing that bell...


machineh's picture

Greeks already know: they never haircut just once.

akak's picture

A 'haircut' is actually a scalping when one is already fully shorn.