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JPMorgan Asks "Has Europe Bazookaed Itself In The Foot", Answers "Yes"

Tyler Durden's picture




 

When even JPM says to panic, it may be time to panic. And then we ask why is all of this happening right now, why is even JPMorgan advocating a risk-off posture, and then we recall that every single year in late March, early April Europe comes back front and center with a bang, just as we forecast in "It's Deja Vu, All Over Again: This Time Is... Completely The Same" and then everything becomes very clear.

From JPM's Alex White:

Significant near-term risks after flawed Cypriot deal

  • Significant chance that Cypriot Parliament votes ‘no’ (30%) or has to further delay the vote (40%)
  • Either outcome would be highly problematic, highlighting regional stresses
  • President to address MPs on Monday at 9.00am GMT. Earliest likely time for vote late afternoon GMT.
  • This could be pushed back significantly
  • A delayed vote could require an extended bank holiday in Cyprus to avoid broader bank run
  • Regional contagion impacts should be containable, but risks unclear with new precedents set

It is difficult to over-state the extent of popular anger in Cyprus over the bailout deal which was pulled together on Friday evening. The deal includes €10bn of support from the Troika, as well as a depositor haircut, to be implemented through the introduction of a ‘stability levy’ of 9.9% on deposits over €100,000 and 6.75% on smaller deposits. Cypriot depositors with savings nominally below the European deposit guarantee threshold (€100,000) appear to have been squeezed between the policy interests of their major external partners; including Germany and Russia.
 
In insisting on a depositor haircut, the Eurogroup appears to have reflected the realities of German domestic politics (where the Cypriot package has been turned into an electoral battle-ground, in part as a consequence of SPD pressure). In agreeing to a levy on small depositors, as opposed to simply those with deposits above the guarantee threshold, the Cypriot Government also appears to have bowed to additional political pressure from those constituencies with large Cypriot deposits (including Russia). The total quantum of insured deposits in Cyprus is around €30bn, while uninsured deposits (i.e. deposits above €100,000) total €38.4bn. It would therefore have been possible to raise the total required (around €5.8bn) with a levy of 15.4% on the uninsured deposits; a path which the deal avoids in favour of more socialised pain. The result is highly problematic in the near-term, in our view.
 
Cyprus could vote ‘no’

As with other packages, the Cypriot bailout proposal needs to be approved by the ESM members, through a parliamentary ratification process, which could present some difficulties in Germany and elsewhere (with votes likely in April). The near-term challenge - securing domestic Cypriot approval – appears far more potent however. The parties which nominally provide support to President Anastasiades have a majority of one in parliament, and the opposition Communists (AKEL) have already given a clear indication that they will vote against. The extent of depositor pain, and the strength of public reaction, has pushed other parties in AKEL’s direction. We think the Government can be reasonably confident of only around 26-28 votes at the most (with risks to the downside), while the opposition may be confident of around 26. In total, 29 votes are needed for a majority in the 56 member parliament. Our best estimates of a potential vote have it too close to call at this stage (Evroko, a pro-European centrist group which has given differing indications, may be the swing party).

The ECB, and others within the Troika, have put intense pressure on the Cypriot Government to vote on the measures before the market opens on Monday; only to have President Anastasiades make clear that he does not yet have the numbers. We think there is a material risk of the vote failing if brought before parliament. Given the small size of the Chamber, parliamentary managers are likely to have a good idea of a potential result and might choose to delay a vote still further if they don’t have the numbers by Monday evening. Given the importance of having an agreement in place before Cyprus’ banks open their doors, this leaves open the possibility of an extended bank holiday (possibly through the week).
 
What if?

A ‘no’ vote, or a failure to bring the package before parliament in the immediate term could have significant regional implications. Germany has made clear that it won’t bring any measure which does not include depositor haircuts before the Bundestag. The extent to which the region has played hard-ball with Cyprus was indicated in Anastasiades' claim that he was threatened with an immediate withdrawal of ELA support if he did not commit to the deal as it stands. In the event of a need to renegotiate, the path of least resistance in our view would probably see an amendment of the existing deal, such that the pain is redistributed to impact uninsured depositors (we think there is a chance of the Cypriot Government seeking to amend the terms in this direction before bringing measures to parliament if it faces the prospect of failure). In effect however, the damage would already have been done if Cyprus sees significant deposit flight, absent a deal. In the context of the Troika’s current disagreement with Greece on further disbursements, and the likelihood of political dead-lock in Italy, a return to a more stressful episode of the European crisis cannot be discounted, in our view. Should these hurdles be passed, longer-term we think there is a possibility of legal challenge to the package, under both Article 23 of the Cypriot Constitution, and under the European Convention of Human Rights (ECHR) given the requirements of both in respect of property rights.
 
Has Europe bazookaed itself in the foot?

Even if we avoid a negative outcome this week, events in Cyprus invite broader questions about the region’s commitment, repeated ad nauseum since June to ‘break the feedback loop between sovereigns and banks’. The IMF warned as recently as Friday that the Euro area lacked an effective deposit guarantee framework (before agreeing to a haircut that adroitly proves its point). The Cypriot package reinforces the fact that existing deposit guarantee schemes are only as strong as the sovereign which backs them; something which is unlikely to go unnoticed in the rest of the region (although we think specific contagion risks are limited near-term). Other EU member states will likely be affected, there are significant numbers of UK depositors in Cypriot banks, some of whom the UK has now promised to protect (with echoes of the Icesave situation), and some potential contagion channels may not be obvious. It is notable that German policy-makers have been insisting on Cyprus’ significant ‘systemic relevance’ over recent days while pushing a package that may test it.

 

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Sun, 03/17/2013 - 10:56 | 3338075 SoundMoney45
SoundMoney45's picture

The ECB, IMF, and EU order Cyprus to confiscate 7 to 10% of bank deposits in exchange for a carriage return from the ECB.  

Sun, 03/17/2013 - 11:06 | 3338110 toys for tits
toys for tits's picture

If every person in Europe pulled 1000 Euros from their accounts, that is a 3.33 trillion dollar hit.  

The idiot Euro leaders have just triggered a run of epic proportions, IMO. We'll see in on Monday.

Sun, 03/17/2013 - 11:18 | 3338160 thisandthat
thisandthat's picture

If every person in Europe had 1000 € disposable, Europe wouldn't need that money to start with...

Sun, 03/17/2013 - 11:30 | 3338215 bania
bania's picture

I'd expect JPM to ask if "...Europe has Harpooned Itself..." but I guess that's just semantics.

Sun, 03/17/2013 - 11:44 | 3338273 Long_Xau
Long_Xau's picture

No wonder the ones who use the noob tube are noobs and self-pwn themselves spectacularly every time by shooting themselves in the foot. This is not Quake, there's no rocket jumping here.

Sun, 03/17/2013 - 12:00 | 3338358 bonderøven-farm ass
bonderøven-farm ass's picture

(AHEM).....   SILVER BITCHEZZZZZ    !

 

Sun, 03/17/2013 - 12:29 | 3338476 Lost My Shorts
Lost My Shorts's picture

One thing no one seems to mention, not even JPM -- who are the bond holders who should have been wiped out before haircutting deposits?  How big are the bond holdings, and how much could that have contributed to the bailout gap?

Sun, 03/17/2013 - 13:11 | 3338675 fuu
fuu's picture

The Cyprus debacle kicked off within 48 hours of the US Senate saying JPM is a bunch of liars.

Just saying.

Sun, 03/17/2013 - 18:25 | 3340009 tooktheredpill
tooktheredpill's picture

what was that quote from The Usual suspects again?

Sun, 03/17/2013 - 13:18 | 3338703 smlbizman
smlbizman's picture

im guessing its the oil guys...with the ....9.9/10ths......

 

Sun, 03/17/2013 - 13:20 | 3338718 sunaJ
sunaJ's picture

JPM would like to cash in some of its CDS, please.  Owning markets can get expensive, you know.

Sun, 03/17/2013 - 22:36 | 3340801 andrewp111
andrewp111's picture

The bond holdings in Cyprus are too small, only 2 billion total, vs deposits of 68B. And they might get hit as well, as their participation is unclear.

Sun, 03/17/2013 - 13:12 | 3338681 Piranhanoia
Piranhanoia's picture

Isn't it ironic that JPM would say this?   Isn't it more likely they were in on the decision making to take the action?

Sun, 03/17/2013 - 11:22 | 3338179 SafelyGraze
SafelyGraze's picture

everybody just slow down and take a deep breath.

"euro zone officials said it was the only way to salvage Cyprus's financial sector.

European officials said it would not set a precedent.

officials were quick to say Cyprus was a unique case.

The crisis is unprecedented in the history of the Mediterranean island.

Anastasiades, elected only three weeks ago, said he had no choice but to accept the euro zone's aid terms."

http://www.reuters.com/article/2013/03/17/us-cyprus-parliament-idUSBRE92...

That should settle it.

- it's the only way
- will not set a precedent
- is a unique case
- is unprecedented
- they have no choice

now eat your vegetables

 

Sun, 03/17/2013 - 11:25 | 3338191 SafelyGraze
SafelyGraze's picture

the article continues "The proposed levies on deposits are 9.9 percent for those exceeding 100,000 euros and 6.7 percent on anything below that."

pfft

hey editors! try again!

"the proposed levies are ONLY 9.9 percent over 100k e and A MERE 6.7 percent on the rest."

fify

also please call them "voluntary levies"

 

Sun, 03/17/2013 - 11:29 | 3338204 toys for tits
toys for tits's picture

 

 

Like being charged sales tax without buying anything.

Sun, 03/17/2013 - 13:04 | 3338641 All Risk No Reward
All Risk No Reward's picture

Except you did buy something - debt based money issued by a private cartel of itnernational bankster h*ll bent on robbing, looting and controlling the world!

Just because society doesn't know they bought it,doesn't mean they didn't buy it!

Debt Money Tyranny

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

BTW, "Europe" didn't do anything - see how slick the social engineer's are?  They want to hide the blame for this latest fiasco under a completely meaningless term "Europe."

Let me be accurate - Biggest Finance Capital, the definers and controllers of debt based money, did this to every day Cyprus citizens through the intermediary government they control to a very large degree.

The MAJORITY OWNERS of JP Morgan are one and the same, so a subdivision of Biggest Finance Capital, JP Morgan, is reporting on what another subdivision of Biggest Finance Capital, the Cypress government, is doing to the Cyprus people prey, all the while blaming it on "Europe."

Got that?

The con only works so long as you agree to let the establishment set the rules.

Thu, 03/21/2013 - 04:34 | 3356052 Pseudolus
Pseudolus's picture

The Governor gave a nicely understated, but full forewarning of the "debt for equity swap" last December

His call for the bale-in is on page 19: "people who lend to such institutions know that theyre not lending to government with a guaranteed loan"

Otherwise:

1. "Central Bank cooperation is alive and well"

- As it should be, they're nearly all subsidiaries. So I think he's referring to political impediments to cooperation

2. "my pension is safe with Roger in charge"

- Cryptic. I'm still thinking on this one

3. Ben & Mervyn are BFF's

 

Sun, 03/17/2013 - 13:19 | 3338707 ISEEIT
ISEEIT's picture

What  everyone is missing though is the fact that these persons who make the contribution actually retain over 90% of what they had and so I'm pretty sure they actually got a good deal and hopefully at this point FORWARD the earth shall begin to heal and whatnot.

 

Sun, 03/17/2013 - 14:50 | 3339097 toys for tits
toys for tits's picture

 

 

Better yet they get stock in the struggling bank that they can trade around town for gas, groceries, and clothes.

 

 

I hope you were being sarcastic, because I was

Sun, 03/17/2013 - 11:23 | 3338184 DoChenRollingBearing
DoChenRollingBearing's picture

Might not be a bad idea for Americans either to have $500 or $1000 more in CA$H on hand outside the banks.  Monday morning (USA time) indeed promises to be interesting.

Sun, 03/17/2013 - 12:02 | 3338198 fonzannoon
fonzannoon's picture

Wait till Europe closes and watch that magic levitation settle in.

Or, this was needed to give us that 5% pullback so everyone can get in on Priceline and Facefart.

I don't see this being the real deal. Unless Italian/Spanish debt sell off hard and a big PD chokes on it. Then we get a nice whopper of a correction.

EDIT

Freakin coincidence or what?

http://www.zerohedge.com/news/2013-03-08/goldman-closes-spanish-5-year-bond-long-trade-recommendation

Sun, 03/17/2013 - 11:30 | 3338212 Deo vindice
Deo vindice's picture

DoChen - It might be a better idea for Americans to operate as much as humanly possible outside the banking system, period. Savings deposits earn no interest so you might as well keep the cash on hand.

Sun, 03/17/2013 - 12:05 | 3338378 Ancona
Ancona's picture

I'm with the Bearing on this one. This is extremely sketchy shit and looks bad for folks in Europe. What happens in Europe tends to shape the things to come in the USA, so get ready.

Sun, 03/17/2013 - 11:45 | 3338289 WVO Biker
WVO Biker's picture

If the € dives big time on Monday, isn't that what will make the eurocrats happy?

Sun, 03/17/2013 - 12:28 | 3338472 Mario55
Mario55's picture

Do your math, I think you are messed with the zeros. There are roughly 300 million people in Europe, not 3 billion 

Sun, 03/17/2013 - 22:32 | 3340788 andrewp111
andrewp111's picture

If every person takes out 10K Euros, that is a 3 trillion Euro hit.

but

Most EU citizens probably don't have 1000 Euros to withdraw, let alone 10000.

Sun, 03/17/2013 - 11:07 | 3338116 kaiserhoff
kaiserhoff's picture

Governments have a million ways to steal from ordinary people.  They use and abuse them all.

But when governments behave like gangsters, they should be treated like gangsters.

Sun, 03/17/2013 - 11:49 | 3338266 augustus caesar
augustus caesar's picture

I always felt the Mafia acted just like miniature territorial governments. If you accept the premise that governments are organizations with monopolies on violence, then whose to say that when a group of men take that power for themselves and start extracting wealth through rent-seeking behaviour they are not acting as the sovereign of that street corner? I view the conflict between organized crime and government as a spat between competitors using violent means. If you remove the veneer of respectability and authority from government by concluding that it does not truly operate according to the people's wishes but instead in it's own self-interest then the conflict between organized crime and government is similar to the conflict between rival warlords looking to take possession of the land and more importantly the people's wealth.

Sun, 03/17/2013 - 17:56 | 3339892 bigyimmy007
bigyimmy007's picture

I've always thought the same thing about the gangs. Imagine, if government completely collapsed you'd still have different groups of thugs fighting for control. Sociopaths are always abound to aquire believers and control territory.

http://www.youtube.com/watch?v=NSTct2FFamw

Sun, 03/17/2013 - 11:10 | 3338134 SafelyGraze
SafelyGraze's picture

the problem is that "bank accounts" have a feel of immediacy and access. even if you are limited to withdrawals of 100 euros or less.

a better way is to create pension accounts (like 401k) that don't allow you to withdraw from or to manage.

once you accept that you will be the passive recipient of some future "annuity", the funds have already been positioned for confiscation [that is, re-investment].

wise up, emu. call it a "future individual future financial security vehicle". announce that bank accounts will be re-invested in the vehicle, to safeguard the future financial security of all europeans.

then you can spend it as you want

hookerznblo! 

 

 

Sun, 03/17/2013 - 11:18 | 3338158 So Close
So Close's picture

Fuck you Bernake....  Texas Style...   http://www.youtube.com/watch?v=943QYiY1g48

Sun, 03/17/2013 - 12:01 | 3338360 icanhasbailout
icanhasbailout's picture

Call it a Future Investment Security Time Interval National Guarantee.

Sun, 03/17/2013 - 11:34 | 3338234 newworldorder
newworldorder's picture

These institutions have brought European Fascism out into the open. Let there not be any illusions going forward. The unelected Euro-Bankster elites are all wearing the fascist armband under the guise of European solidarity and collectivism.

We will have our answer in a few days as to whether the European continent lives under the rule of law or the rule of the banksters.

 

Sun, 03/17/2013 - 11:37 | 3338246 Nussi34
Nussi34's picture

Let´s just bomb Cyrus!

Sun, 03/17/2013 - 13:02 | 3338632 machineh
Sun, 03/17/2013 - 10:57 | 3338077 fonzannoon
fonzannoon's picture

Thank god for JPM and their prudent investment team. I am sure they are hedged out the ass, or up their ass.

Sun, 03/17/2013 - 11:17 | 3338156 francis_sawyer
francis_sawyer's picture

They've got their Greek turned Jew man Jamie Douglas NeiderDIMON on the case...

~~~

He's a sneaky little shit...

Sun, 03/17/2013 - 11:20 | 3338164 fonzannoon
fonzannoon's picture

"Doug Kass of Seabreeze Partners on Twitter predicted European stock markets could fall 3 to 4 percent on Monday, while the S&P 500 could fall 1.5 to 2 percent and Spanish and Italian 10-year yields could jump 15 basis points."

Oh nooees!!!!! The S&P would only be up 8% ytd!!!!

Interest rates drop!!!! whocodonone????

The great rotation? The bernak farts in the great rotation's face.

Nirp bitches. Eat it.

Sun, 03/17/2013 - 10:58 | 3338081 buzzsaw99
buzzsaw99's picture

Translation: they have no printing press.

Sun, 03/17/2013 - 11:03 | 3338102 derek_vineyard
derek_vineyard's picture

spx will open at all time highs

Sun, 03/17/2013 - 11:08 | 3338122 fonzannoon
fonzannoon's picture

exactly right. I have emailed this to a few friends. They all say "they better not try that shit here".

I say, "they don't have to, they will not literally steal your money. They will just print away it's value, it's the same thing."

"well as long as they don't try to pull that shit over there"

Whatever

 

Sun, 03/17/2013 - 11:20 | 3338166 thisandthat
thisandthat's picture

Tastes just like the real thing!

Sun, 03/17/2013 - 10:59 | 3338086 silvertrain
silvertrain's picture

I wouldnt worry, didnt we just go through stress tests for all the banks and they passed with flying colors?

We are going to have to all get along if were going to make this one world currency thingy work...

Sun, 03/17/2013 - 11:01 | 3338097 toys for tits
toys for tits's picture

I continue to go back to the 24 hour run on US banks in 2008 that would have decimated the economy if the account limit for insurance wasn't raised to 250k.

It is all about trust and the Euro leaders broke that trust.  It won't matter how their parliamant votes now.

Sun, 03/17/2013 - 11:16 | 3338145 fonzannoon
fonzannoon's picture

This may sound weird but I am calling bullshit on this whole thing.

This was a consciously made decision. This was not some huge bank run out of nowhere or some "event" that was completely unforseen. This was a manufactured crisis masked to look like an unforseen event.

I'm not saying this was not a big deal, but I can somehow see this being digested. I still hear Maria telling me "we're coming off the lows" tomorrow afternoon.

 

Sun, 03/17/2013 - 11:22 | 3338178 Waterfallsparkles
Waterfallsparkles's picture

Or Maria saying would you put new Money to work here.

She is like a broken record.  Saying the same things over and over again.

Sun, 03/17/2013 - 20:00 | 3340336 Stanley Lord
Stanley Lord's picture

That is funny. Maria is such an assclown with her cow udder tits (she has big cans when you see her on the street) this is why I love ZH, the comments crack me up, it is like writing on the bathroom wall-

Sun, 03/17/2013 - 11:31 | 3338219 NoDebt
NoDebt's picture

Maybe.  Germany could offer no other soution, politically speaking.  So they offered it.  The Cypriot negotiators stupidly agreed and now we're where we are.  If there was a mistake it was that nobody seriously considered the possibility of a good old-fashioned bank run happening as a result (top brass NEVER thinks about things from the perspective of the ordinary grunt in the trenches which is why they never see themselves over-stepping until it's too late).

Agreed, however, this is only Act 1 of this saga.  There is some MASSIVE back-pedaling and renegotiation to come.

Sun, 03/17/2013 - 11:47 | 3338285 squid virtuous
squid virtuous's picture

Exactly... Maria B "as we enter the final shhhtretch, shtocks are well off the lows we shaw thish morning ... letsh go down to the floor where Gay Bob has the pulsh of this reshilient market"

Sun, 03/17/2013 - 11:20 | 3338168 NoDebt
NoDebt's picture

Nailed it.  If you're going to run a fractional reserve banking system it's TRUST that is the most important collateral.  They just shredded whatever was left of trust (faith in depsit insurance).  

Fire has just been yelled in the crowded movie theatre. 

Sun, 03/17/2013 - 11:23 | 3338185 fonzannoon
fonzannoon's picture

Nodebt I gotta take the other side of that one. I totally hear you but Treasuries etc. are about to get bid bigtime.

The day this happens and the core of Europe and Treasuries get sold off is the day that trust is shredded. This is just some theatre to boost some ratings.

Sun, 03/17/2013 - 11:35 | 3338232 NoDebt
NoDebt's picture

Oh, agreed, agreed.  I'm talking more along the lines of "regional" trust across southern Europe in their bank deposits.  Whether it spreads or not (or how quickly) depends on how they respond to this situation of their own making.

Sun, 03/17/2013 - 11:42 | 3338268 fonzannoon
fonzannoon's picture

"LOS ANGELES (MarketWatch) — The Federal Reserve will meet this week, and with the consensus that it will keep its ultra-loose monetary policy in place at least through year’s end, a hint that stimulus measures will be tapered sooner than later could trigger a downshift in U.S. stocks.

"We were just about to cease QE....we swear we were...but this....this whole thing in Europe....well we are just gonna keep printing for just a little while longer"

 - the fed.

Sun, 03/17/2013 - 11:45 | 3338283 toys for tits
toys for tits's picture

 

fonz,

I respect your opinions, but remember what happened when the US imposed that stupid 10% luxury tax on yacht makers.  The entire industry left the country.

It is a lot easier and cheaper to withdraw money from a bank account (assuming they let you) than it is to relocate company and personnel.

Sun, 03/17/2013 - 12:03 | 3338312 fonzannoon
fonzannoon's picture

Toys I hear you. I am so cynical at this point I may open a greek bank account Wednseday.

I am posting this in a few places..

http://www.zerohedge.com/news/2013-03-08/goldman-closes-spanish-5-year-bond-long-trade-recommendation

Sun, 03/17/2013 - 11:29 | 3338205 max2205
max2205's picture

Now you know why ben looked so terrible during the recent hearings.   Print bitch!

Sun, 03/17/2013 - 10:58 | 3338087 toys for tits
toys for tits's picture

 

 

Thanks ZH for extensively covering the beginning of the 4th stage of the Euro crisis.

Sun, 03/17/2013 - 11:06 | 3338109 HD
HD's picture

EURO CRISIS 4: Revenge of Reality

"This Time it's Personal"

 

 

Sun, 03/17/2013 - 11:43 | 3338274 Water Is Wet
Water Is Wet's picture

What early reviewers are saying:

"What the fuck was that?  I want my life back."

"That shit was so gay, I think it gave me AIDS."

"I mean, it started off kind of dumb, with the government of Cyprus robbing the people, but that shit blew over in a couple days like it didn't even happen.  And then they made a movie about it?"

Sun, 03/17/2013 - 11:01 | 3338096 falak pema
falak pema's picture

Dimon grasping for Euro strands to avoid self drowning?

Sun, 03/17/2013 - 11:13 | 3338146 Crash Overide
Crash Overide's picture

Who do you think ordered the hit?

Sun, 03/17/2013 - 11:31 | 3338220 fonzannoon
fonzannoon's picture

I think Jamie Dimon wanted the spotlight moved a bit. The room was getting warm. Now we can all read JPM telling us about someone else's profligacy.

Sun, 03/17/2013 - 11:37 | 3338245 Jugdish
Jugdish's picture

The Merovingians.

Sun, 03/17/2013 - 11:03 | 3338104 Holleyman
Holleyman's picture

It would be interesting to see how many Cypriot MPs moved their money out last week

Sun, 03/17/2013 - 11:45 | 3338287 thisandthat
thisandthat's picture

And even more, how many didn't - those are the ones likely to vote no...

Sun, 03/17/2013 - 11:04 | 3338105 Savyindallas
Savyindallas's picture

This is how revolutions get started - if you think this is a hostile reaction  -wait until they come after our guns. 

Sun, 03/17/2013 - 11:05 | 3338108 Seasmoke
Seasmoke's picture

Looks like they will have the 29 votes.

Sun, 03/17/2013 - 11:06 | 3338111 thorgodofthunder
thorgodofthunder's picture

I assume there's no coverage of the SAC settlement because Zerohedge idiotic and racist owners and management are afraid of getting sued?

Sun, 03/17/2013 - 11:10 | 3338131 toys for tits
Sun, 03/17/2013 - 11:07 | 3338115 tony bonn
tony bonn's picture

i don't understand - draghi, monti, schauble, and every important pooh-bah in europe, and talking head in america assured us that the banking crisis was over. what happened?

Sun, 03/17/2013 - 11:14 | 3338151 fonzannoon
fonzannoon's picture

CNBC ratings. That's what happened.

Sun, 03/17/2013 - 11:08 | 3338120 razorthin
razorthin's picture

Forget depositor haircuts.  I propose neck-cuts for the ECB.

Sun, 03/17/2013 - 11:10 | 3338123 Waterfallsparkles
Waterfallsparkles's picture

No matter what they do now, it will be in the back of everyones mind that their Money is not SAFE in the Banks.  If this can happen there it could happen anywhere.

If they now vote on not giving a hair cut to depositors everyone will withdraw their Money to keep it safe.  If they do give a hair cut fear will spread thruout Europe and possibly to the US and cause major Bank withdraws.

Invest in Companys that make Steel Safes.

We all know what they say about letting the Cat out of the Bag.

Sun, 03/17/2013 - 11:10 | 3338132 Crash Overide
Crash Overide's picture

Wait until you see what happens on March 21st.

Sun, 03/17/2013 - 11:30 | 3338214 Edward Fiatski
Edward Fiatski's picture

Spring Equinox?? :) SEX ANAL PARTIES ON THE BEACH IN THE MED!!

Sun, 03/17/2013 - 15:56 | 3339395 rehypothecator
rehypothecator's picture

Ok, I'll bite:  What are you expecting to happen on March 21st?  

Sun, 03/17/2013 - 11:11 | 3338138 Number 156
Number 156's picture

I think they just shot a hellfire onto their foot.

 

In regards to the move to steal depositor money, they will have to look for other sources of money to rob, and I think institutions like the Vatican better be prepared.

Europe has been working to uncover the sources of their funding for quite some time now. And I think after the latest event was basically a probe when the central bank stopped Deutsche Bank Italy from providing electronic payment services. With all these pushes for transparency, they probably now know where a lot of those pipelines lay.

Unfortunately for the Vatican, they do have an issue with mob money before and ever since one of their bankers was found hanging by his neck from a bridge.

Sun, 03/17/2013 - 11:15 | 3338152 toys for tits
toys for tits's picture

+100

 

That makes a lot of sense if you believe that organized religion is about to be destroyed.

Sun, 03/17/2013 - 16:51 | 3339636 Lost Word
Lost Word's picture

Jews and Freemasons versus Christianity.

Sun, 03/17/2013 - 11:12 | 3338141 midtowng
midtowng's picture

Eventually this will lead to a global revolt against the bankers and the mainstream politicians. There can be no other outcome. The only questions are how much will be stolen before it happens and what will replace the current system?

Sun, 03/17/2013 - 12:06 | 3338387 petolo
petolo's picture

How is China going to react to this.? 

Sun, 03/17/2013 - 12:20 | 3338441 Number 156
Number 156's picture

With Laughter.

 

Sun, 03/17/2013 - 13:07 | 3338657 machineh
machineh's picture

'The tears on her face were from laughter.'

-- Bob Dylan

Sun, 03/17/2013 - 12:28 | 3338475 slightlyskeptical
slightlyskeptical's picture

The way out of this is pure fiat backed by the production of each soveriegn country.The fate of each country will be based it's ability to put the "right amount" of money into their economies. Those that do so responsibly will prosper and those that don't will have hardship. We need to eliminate the bankers acting as a siphon on every unit of money in existence. No debt based money, no fractional reserve banking.

Sun, 03/17/2013 - 11:14 | 3338149 thisandthat
thisandthat's picture

 

A delayed vote could require an extended bank holiday

Yeah, give them more motives (and time) to get to the streets and start raising barricades - because that's just what you want...

Sun, 03/17/2013 - 11:16 | 3338154 MoreLiver
MoreLiver's picture

I posted a linkfest to articles on the bailout of Cyprus. It will be one helluva next week...

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

Sun, 03/17/2013 - 11:17 | 3338157 Waterfallsparkles
Waterfallsparkles's picture

What about Brokerage Accounts?  Most Brokerage Accounts put Customers Money with the Big Banks Overnight or on Weekends. 

Will this hair cut affect cash in them as well?  What about Stock Positions.  Hair cut on those could cause Major Margin Squeeze.

Sun, 03/17/2013 - 11:26 | 3338194 Winston Churchill
Winston Churchill's picture

Bend over,you have just been MF'ed.

Sun, 03/17/2013 - 11:20 | 3338163 gould's fisker
gould's fisker's picture

When a too big to fail conglomerate makes off with invested money--whether by conspiracy, fraud, or dumb-ass incompetence the State says it must make the banks whole again or the economy will crash.  When the State doesn't want to bail out member states anymore it takes depositors' money to restore the economy to a healthy state.  But when the State is asked to cut back that is bad, unallowable, verbotten--because it must have moar.  So a "bank holiday" is declared, which though it sounds like a jolly time, translated it means, "go away!, you can't have your fucking money!!" This will all work out very well--anyone seen pandora lately?

Sun, 03/17/2013 - 11:22 | 3338171 dobermangang
dobermangang's picture

An instant classic youtube rant:

The Great Cyprus Bank Robbery by Financial Terrorists

http://www.youtube.com/watch?v=YDXtHsz2q6Q&list=UUGThM-ZZBba1Zl9rU-XeR-A...

Warning: Not safe for fucking work.

Sun, 03/17/2013 - 11:34 | 3338233 gould's fisker
gould's fisker's picture

Long Soup Line--you better start selling franchises before you lose your copyright--cause i have a feeling that your style is going viral.

Sun, 03/17/2013 - 11:39 | 3338257 marcusfenix
marcusfenix's picture

now that was a rant...

thanx for giving that link.

Sun, 03/17/2013 - 11:21 | 3338176 JPMorgan
JPMorgan's picture

Cyprus is screwed.

1. They either do a deal with the devil and get even further indebted and give even greater control over to outside influences.

Or

2. They let the banks fail and rise up from the ruins and ashes.

Both options are tough calls and lead to pain. 

Sun, 03/17/2013 - 11:27 | 3338196 Quinvarius
Quinvarius's picture

Option two includes public executions of bankers and maybe some politicians.  That will ease the pain.

Sun, 03/17/2013 - 11:25 | 3338192 OutLookingIn
OutLookingIn's picture

News blackout on the Cyprus bailout?

Just been through all the MSM feeds for news. Only one thing new; -

British PM Osborne says "will compensate British military and government workers if Cyprus bank deal passes."

Other then the above from the BBC World Report, there is nothing.

ZH is on the cutting edge here. Keep up the good work.

Sun, 03/17/2013 - 11:32 | 3338224 Edward Fiatski
Edward Fiatski's picture

It's being contained. No news is good news.

BTW, Limassol Atsiki harbour has the Bri'ish MP base - do they get paid a lot? :) Is it 6.75% or 9.9% - are there any winners?!

Sun, 03/17/2013 - 11:56 | 3338342 gould's fisker
gould's fisker's picture

Certainly the press will likely downplay the story, and part of that will be because they don't understand, it's been awhile since we had a multi-continent bank run.  And no one, not even on ZH, should want to relive it.  People have mostly forgotten the psychology, because the thing about big runs is that they are practically impossible to stop short term.  And with the number of swans out there right now the responsible people--responsible for this fucking shitty idea--better get their fucking heads together and do a "never mind".  You don't punsih some Russian oligarchs by lighting a fuse on the whole fucking kabob.  Morons.

Sun, 03/17/2013 - 12:24 | 3338462 slightlyskeptical
slightlyskeptical's picture

You are correct that no one wants to relive it. Unfortunately we have to relive it. It couldn't be clearer that we need a new financial system. Debt based money will always lead to this because the interest accrues faster than the ability to make profits off borrowed funds. Ultimately we all become Ireland with more debt than there is money in existence.

The way out of this is pure fiat backed by the production of each soveriegn country.The fate of each country will be based it's ability to put the "right amount" of money into their economies. Those that do so responsibly will prosper and those that don't will have hardship. We need to eliminate the bankers acting as a siphon on every unit of money in existence. No debt based money, no fractional reserve banking.

Sun, 03/17/2013 - 12:15 | 3338428 void_ptr
void_ptr's picture

Well, at least a link to a reuters article made it to the top of Drudge.

Sun, 03/17/2013 - 11:26 | 3338193 MarcusLCrassus
MarcusLCrassus's picture

"Cypress' systematic relevance."  

Now that is one hell of a euphamism. 

 

Sun, 03/17/2013 - 11:29 | 3338209 Fiat agnostic
Fiat agnostic's picture

Of course with fractional reserve banking the amount of clients deposits actually maintained by the bank could be as low as the tax now payable. I wonder if they thought that one through...?

Sun, 03/17/2013 - 11:30 | 3338210 magpie
magpie's picture

Ah, if they had bazookaed only their foot

Sun, 03/17/2013 - 11:32 | 3338227 kito
kito's picture

seems that the cyprus govt will delay the vote to approve the raping of their citizens:

 

http://www.reuters.com/article/2013/03/17/us-cyprus-parliament-idUSBRE92...

 

on a positive note, should this move create total and complete disaster, its highly unlikely the u.s. govt would look to enact a similar blatant move.............the more likely scenario in the u.s. is for the govt to "secure" the retirement accounts of its citizens with "safe" treasuries...........................

Sun, 03/17/2013 - 11:35 | 3338239 fonzannoon
fonzannoon's picture

Don't be an alarmist Kito. The warm blanket of QE will keep us safe from bank runs. There are no consequences. Those silly German's and their Weimar memories.....how unfortunate for them to be anchored down to history.

Sun, 03/17/2013 - 11:59 | 3338329 khakuda
khakuda's picture

Unfortunately I think history shows that the only way to come out ahead is to be a debtor. All assets, even gold, could deflate in a global bank run.

Central bankers decision to suspend capitalism and not allow the free market to clear has fucked us all. Even the prudent.

Sun, 03/17/2013 - 11:37 | 3338244 toys for tits
toys for tits's picture

 

This is truly a case of the Euro leaders only seeing the forest and not the trees and cutting them all down a little.

No one will want to grow anything in that forest again with that wacky ranger on the loose.

 

The German mark will be back by the end of the year, IMO.

Sun, 03/17/2013 - 11:37 | 3338247 supermaxedout
supermaxedout's picture

The Cypriots are not idiots. It is clear since months, if not years that a saving account in a Cypros bank might be worthles out of a sudden. Im sure, they have it already in cash or in gold at home under their matress or in a safe box.

So what money is there left. Answer:  the big grey or even black money. The money which can not be withdrawn because its simply not there anymore in the bank. I wonder why Brits do have bank accounts in Cyprus banks.  are they complete idiots? No. It must have other reason - unknown but serious reasons.

Sun, 03/17/2013 - 11:39 | 3338253 thewayitis
thewayitis's picture

  I can't get a call through to the Bernank.....Hmmmm MUST B OVER IN CYPRESS RUNNING THE MACHINE .....OMG

           Back up the truck James. Need us some more of that GOLD.......

Sun, 03/17/2013 - 11:44 | 3338279 Ourrulersknowbest
Ourrulersknowbest's picture

Wakey wakey sheeple!the wolf is in your paddock!!!

"BAaaaa no problem here.have another iPhone.buy stocks cos the market is up.hey why not buy another house.its all good in the land of chocolate.if the wolf was here our media would surely let us know.BAAaaaa"

Sun, 03/17/2013 - 11:55 | 3338304 void_ptr
void_ptr's picture

Translation: "When we banks win with risky bets that payoff big, we'll book the accounting profits and use them to pay ourselves billions in bonuses. When the bets go bad, you sovereigns/central banks should take the bad bets off our balance sheets and give us freshly minted pallets of cash in exchange. Otherwise the depositors will lose their deposits, and confidence in the system."

And for those who think this is a pathology of capitalism: no, it's not even an unintended consequence of statism. It's right there in the FDIC charter [only in the US case, obviously, but same principle applies elsewhere]: "to create confidence in the banking system". Why is it a good thing for people to have confidence in an insolvent bank? It guarantees losses will be socialized.

 

 

Sun, 03/17/2013 - 11:58 | 3338349 khakuda
khakuda's picture

Nicely put.

Sun, 03/17/2013 - 11:54 | 3338328 cristo
cristo's picture

what are the gun laws like in Cyprus ?

Sun, 03/17/2013 - 12:13 | 3338406 Vooter
Vooter's picture

http://www.gunpolicy.org/firearms/region/cyprus

The rate of private firearm ownership in Cyprus is 6th out of 179 countries--in other words, the Cypriot people own a lot of guns...

Sun, 03/17/2013 - 22:18 | 3340749 andrewp111
andrewp111's picture

Good luck putting any Eurocrat within range of those firearms, as they are a few thousand miles away and you can't take firearms on planes. The money in Cyprus is gone anyway, thus those deposits aren't really there. They are taxing phantom deposits and providing real Euros. Anyone with brains will withdraw all their Euros the moment the banks reopen (if they ever reopen).

Sun, 03/17/2013 - 12:00 | 3338341 khakuda
khakuda's picture

Where the hell is Bernanke to tell us it will be contained, kind of like the Thai Bhat or subprime?

Sun, 03/17/2013 - 11:58 | 3338346 Buyemall
Buyemall's picture

any comment from Goldman yet?

Sun, 03/17/2013 - 12:04 | 3338372 lolmao500
lolmao500's picture

Whoever votes for this needs to HANG.

Sun, 03/17/2013 - 12:13 | 3338404 Threeggg
Threeggg's picture

Can you imagine what the Bernanks is assembling right now? For the Monday morning open of the markets.

Check list:

1. Bearings greased on every printing press available.  check

2. Triple redundancy on every financial HFT financial server and console including data backup to AOL dialup exchanges (even at baud rates below 2400 ).   check

3. Red lines / Hot lines to the desks of every large primary dealer on the planet.  check

4. Replacement of every ctrl and P key on every keyboard that they control.  check

5. Direct real time communications to all media outlets to telegraph the headlines that "it's not that bad"        check

6. Recheck items 1 thru 5       check

 

 

Sun, 03/17/2013 - 12:13 | 3338417 khakuda
khakuda's picture

He might even drop rates to zero and hold them there for 20 years, all the while printing money!

Oh, wait...never mind...

Sun, 03/17/2013 - 12:22 | 3338448 sudzee
sudzee's picture

OT: aren't PM shorts not an all time high as of Friday.

Sun, 03/17/2013 - 12:23 | 3338454 ak_khanna
ak_khanna's picture

The foreign banks and lenders being backed by politicians of bigger and stronger countries and global financial institutions are insisting that the Cyprus banks repay them in full even though this is likely to push the Cyprus economy in recession in the foreseeable future.

Moneylending to Cyprus by the foreign banks and lenders was a commercial decision whereby they received a higher interest rate to compensate for the risk they took in lending to Cyprus. The losses of this mess ought to be borne by lenders who enjoyed supernormal profits in good times and knowingly took the decision to lend to Cyprus banks. The losses should not be borne by the depositers and taxpayers of Cyprus or the taxpayers of other European countries by funding endless bailouts.

The best way out of this mess for the citizens of Cyprus is default.

http://www.marketoracle.co.uk/Article35345.html
www.letstalkmoney2012.in

Sun, 03/17/2013 - 18:26 | 3338562 WallowaMountainMan
WallowaMountainMan's picture

'The best way out of this mess for the citizens of Cyprus is default.'

agree and disagree.

i agree the hammer is the default. use that threat to change the % back to the over 100k express rule. (one could raise the rate as amounts over 100k increase).

the trouble with using the hammer is that the hammer is then gone. i think the people of Cyprus would be bettor off keeping the hammer as a threat for their own safety.

they're gonna need it.

 

from the article:

'The extent to which the region has played hard-ball with Cyprus was indicated in Anastasiades' claim that he was threatened with an immediate withdrawal of ELA support if he did not commit to the deal as it stands.'

the bad guys used their 'hammer' and got called and now it is time for a raise. people of cyprus, vote down the deal and watch the ecbelaimfetc fold like a house of cards.

 

added to this post later today, from zh:

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.

Sun, 03/17/2013 - 12:25 | 3338463 Impotent_Smurf
Impotent_Smurf's picture

They will take your deposits in order to save your deposits.

Sun, 03/17/2013 - 15:21 | 3339253 NoTTD
NoTTD's picture

Because they have to.

Sun, 03/17/2013 - 12:36 | 3338467 PUD
PUD's picture

If you're a banker pos this is awesome!!

1. Steal peoples money while they sleep

2. close banks so they run out of cash and can't buy food

3. send courtesy checks to all tied to credit card at 30% interest using depositors own money you stole

4. give self bonus

 

You all have to remember that it is the system itself that is flawed. A banks mission statement is as follows..

Get as many as possible in as much debt as possible for as long as possible at as high a cost as possible

This is the system of debt money the world operates under

All money is in fact debt. It all carries interest. That interest has to be created by ever more debt. It is a flawed system...it cannot be fixed. It will mathematically fail. Nothing anyone can do about it except delay the day of reckoning 

Sun, 03/17/2013 - 12:42 | 3338517 marcusfenix
marcusfenix's picture

do the eurocrat banksters not realize the near limitless amount of ammo they just provided to Nigel Farage?

I fully expect the next time that man opens his mouth, flames will issue forth and devour the bankster scum...

ok maybe that's just wishful thinking, but after what just happened, his next rant will be epic.

can't wait for that.

Sun, 03/17/2013 - 12:42 | 3338521 Fail2Deliver
Fail2Deliver's picture

Are those two banks toast anyway? As soon as those banks are open to the public there will be a bank run and NO money left in those banks. How much time does 10% of depositors money buy? How does one run a bank with NO money? They are done.

 

Sun, 03/17/2013 - 12:44 | 3338528 WallowaMountainMan
WallowaMountainMan's picture

'The total quantum of insured deposits in Cyprus is around €30bn, while uninsured deposits (i.e. deposits above €100,000) total €38.4bn. It would therefore have been possible to raise the total required (around €5.8bn) with a levy of 15.4% on the uninsured deposits; a path which the deal avoids in favour of more socialised pain. The result is highly problematic in the near-term, in our view.'

and there it is.

the strong arm of money displayed in all its 'glory'.

a graduated rate on the over 100k limit seems like an equitable solution to this episode of the rich writing rules ex post-facto to serve their interests.

but hey, 'equitable' left town long ago.

the good news is that there is one small chance that the blackmailers will get what they deserve. vote the deal down, people of Cyprus.

the bad news...they're only people.

Sun, 03/17/2013 - 13:48 | 3338810 Threeggg
Threeggg's picture

Whats keeping uncle benny from giving them 16 Trillion again ?....................................

Nothing !

Sun, 03/17/2013 - 14:13 | 3338927 WallowaMountainMan
WallowaMountainMan's picture

?

give who....the bankers i supposed are the them to whom you refer....

that boat sailed with the ultimatem to sign now or lose ela et al money. the ball is in the court of the people. or as close as it will ever get.

say cyprus says no deal. tax only the accounts over 100k as the rules say. what is the response of ela et al to that?

ela et al have to cave or... have cyprus default?

my bet is ela et al have no choice but to cave. once their bluff gets called, ela et al are shown for what they are. impotent. classic mistake of bullies.

no amount of benny dollars can put that genie back into the back. (why do you think the imf is 'offering' to pony up some buy some time electronic currency?)

methinkist there is fear is creeping into the house of cards....

prisoner's dilemma anyone?

just my guess.

:)

 

 

 

Mon, 03/18/2013 - 17:22 | 3340004 WallowaMountainMan
WallowaMountainMan's picture

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.

 

3/18 update

http://www.zerohedge.com/news/2013-03-18/eurogroup-folds-telld-cyprus-sa...

Sun, 03/17/2013 - 12:46 | 3338532 earleflorida
earleflorida's picture

government elected by the people,

government for the people,

 buy the people,

... and a preamble writ by said banks insuring obfuscated usury independence in a fair and equitable machiavellian constitution!?

the new norm... what more can a liberated serf ask for?!

Sun, 03/17/2013 - 12:48 | 3338549 Byte Me
Byte Me's picture

Troika- how to snatch defeat from the putrefying jaws of victory.

Just DIE you incompetent fuckers. Do the planet a favour and DIE.

Sun, 03/17/2013 - 13:02 | 3338631 bluskyes
bluskyes's picture

This should turn out to be a good time to buy some PM - espescially for those holding USD. If we are patient, we could see gold drop a couple of hundred bucks, as the herd moves into the "safety" of the USD

Sun, 03/17/2013 - 13:47 | 3338802 ArrestBobRubin
ArrestBobRubin's picture

Oh, I see.... JPM and Goldman and their henchmen yid-fuck the entire Eurozone in the ass for years, then ask if Europe has just "bazookaed itself".  Now THAT is rich.

Jamie, I see your holed foot and raise you a wrecked rectum.

Sun, 03/17/2013 - 14:11 | 3338912 JamesBond
JamesBond's picture

... and where are stock futures at this moment?

 

jb

Sun, 03/17/2013 - 15:17 | 3339229 NoTTD
NoTTD's picture

Interesting that this analyst considers the big problem to be the chnace that this won't be approved.  I would think the opposite.

Sun, 03/17/2013 - 15:26 | 3339280 Jim B
Jim B's picture

Agree, Can you say massive bank run!

Sun, 03/17/2013 - 22:10 | 3340721 andrewp111
andrewp111's picture

Unlikely. If the deal isn't approved, the bank holiday will be permanent, and the loss will be 100%.

Sun, 03/17/2013 - 15:58 | 3339405 suckerfishzilla
suckerfishzilla's picture

The levy imposed upon Cypriot depositers is completely arbitrary.  Everybody keeps a different proportion of their cash reserves in the bank.  Some savers will get hit harder than others.  How these bastards at the banks have developed this sense that they can just reach into your piggy bank and take out what they need is beyond me.  Some of those bankers in Cyprus might develop a conscience over all of this and jump off a tall building.

Sun, 03/17/2013 - 22:34 | 3340794 epi_tis_thalassis
epi_tis_thalassis's picture

I really wonder: has not anybody yet noticed that the governor of the Central Bank of Cyprus since last May is Mr Panicos Demetriades?

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