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Cyprus, Why Now? Follow The Money

Tyler Durden's picture


Authored by Steve Hanke of the Cato Institute,

While the Cypriot Parliament may be dragging its feet on a proposed rescue plan for Cyprus' banks, the country ultimately faces a choice between Brussels' bitter pill... and bankruptcy. Cyprus' newly-elected President, Nicos Anastasiades, has quite accurately summed up the situation:

"A disorderly bankruptcy would have forced us to leave the euro and forced a devaluation."

Yes, Brussels and the IMF have finally decided to come to the aid of the tiny island, which accounts for just 0.2% of European output -- to the tune of roughly $13 Billion. But, this bailout is different. Indeed, the term "bail-in" has emerged, a reference to the fact that EU-IMF aid is conditional upon Cyprus imposing a hefty tax on its depositors. Not surprisingly, the Cypriots, among others, are less than pleased about this so-called "haircut".

Still, the question lingers: Why now? The sorry state of Cyprus' banking system is certainly no secret. What's more, the IMF has supported a "bail-in" solution for some time. So, why has the EU only recently decided to pull the trigger on a Cyprus rescue plan?

One reason can be found by taking a look at the composition of Cyprus' bank deposits...


There are three main take-aways from this chart:

1. European depositors' money began to flow out of Cyprus' banks back in 2010.


2. Indeed, most European depositors have already found the exit door.

3. Over that same period, non-Europeans (read: Russians) have increased their Cypriot exposure.

If the proposed haircut goes through, Russian depositors could lose up
to $3 billion. No wonder Vladimir Putin is up in arms about the bail-in. Perhaps a different "red telephone" from Moscow will be ringing in Brussels soon.


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Mon, 03/18/2013 - 21:50 | 3345466 Iwanttoknow
Iwanttoknow's picture

Rape of cvyprus

Mon, 03/18/2013 - 21:56 | 3345487 DJ Happy Ending
DJ Happy Ending's picture

Nice article Mr. Henke.

Mon, 03/18/2013 - 22:18 | 3345527 icanhasbailout
icanhasbailout's picture

I know the Cyprus haircut is a disaster, people, but relax - Miley can grow it back.

Mon, 03/18/2013 - 22:35 | 3345613 AlaricBalth
AlaricBalth's picture

Just 20 months ago Cyprus's 3 big banks passed the EBA/ECB stress tests to much acclaim. In July 2011 the Cyprus Finance Ministry issued a statement saying: “The measures which the banks are taking or planning to take will further increase solvency.”

Flash forward to present day. Due to a prolonged downturn in Europe, these banks are now in need of 10-13 billion dollars. My question is, if these banks are in such sorry shape so soon after passing tha stress test, how many other European banks are insolvent and how soon until they also need bailouts.

IMO, The unraveling of Europe is beginning to accelerate and in the coming months wealth taxes and capital controls will become the norm.

Mon, 03/18/2013 - 23:05 | 3345702 IridiumRebel
IridiumRebel's picture

13 billion? Is that all? Ben will print that by Saturday....Prepare the Helicopter!!!

Tue, 03/19/2013 - 06:38 | 3346092 negative rates
negative rates's picture

Oh yea, get that blue phone hooked up to Putin right away.

Mon, 03/18/2013 - 23:13 | 3345723 Rakshas
Rakshas's picture

Stress test?  Is that the same as a BLS NFP report??  Hmmmmmmm smells the same when you step in it.........

how do you spell DEXIA again??


Man when these guys proclaim how strong a bank is based on the "stress test" results Run Forest RUN!!!!

(Or go short either way it all be big bag o bullshit)  

Tue, 03/19/2013 - 02:57 | 3345936 All Risk No Reward
All Risk No Reward's picture

It's all fraud, people.


Debt Money Tyranny is a financial restraint on society, the same way the BTK serial killer might bind his victim before torturing and snuffing the life out of the person.

Unlike that person, this financial restraint is sufficiently abstract so that the societal victims don't realize they are being restrained en masse as they are being set up for their societal torture session and societal death at the hands of these mass murderers.

This is a slow motion financial snuff film.

Debt Money Tyranny

I'm not kidding - that's what it is and millions, if not billions, will die because of these criminal mass murders and their monetary fraud.

Biggest Finance Capital may well want to create a world war as a pretext to create their totalitarian "utopia" with you and yours as the fertilizer or servants.  You won't accept it now, but you might if they can cause orchestrate the deaths of 100 million Americans.

Tue, 03/19/2013 - 07:51 | 3346223 css1971
css1971's picture

We know. You're preaching to the awakened here.

Tue, 03/19/2013 - 02:20 | 3345938 All Risk No Reward
All Risk No Reward's picture


If the Cyprus banks are leveraged 10-1 and have 10% capital requirements...  how can they afford to give 6.7% to 10% to the ECB?

That would leave 2-3% capital and 30 times leverage.

Is anyone actually receiving money here, or are they just cutting down the money banks owe while nobody actually receives the money that, quite frankly, DOESN'T EVEN EXIST AT THE BANK?

It sounds like nation state bond holders were spared this haircut.

Tue, 03/19/2013 - 03:19 | 3345977 Boris Alatovkrap
Boris Alatovkrap's picture

Screw wrong Russian, is come for Boris with pliers.

Mon, 03/18/2013 - 21:50 | 3345471 whotookmyalias
whotookmyalias's picture

Yes, let's tax the Russians for our poor decisions. What can they do?

Mon, 03/18/2013 - 22:26 | 3345580 Ident 7777 economy
Ident 7777 economy's picture

Cut off the nat gas flow in pipelines, quite literally, "to the west"  ...

Tue, 03/19/2013 - 02:33 | 3345948 Joe A
Joe A's picture

No gas to Europe means no money for them. And they just cannot build a new gas line to China overnight.

Tue, 03/19/2013 - 02:48 | 3345957 laomei
laomei's picture

Why cut it off when you can just jack up the prices overnight and cripple the entire EU economically?

Tue, 03/19/2013 - 02:49 | 3345958 laomei
laomei's picture

Seriously, taking the ball and running home is so childish. Adults just buy out the court in the first place and jack up the usage fees.

Mon, 03/18/2013 - 22:41 | 3345633 FieldingMellish
FieldingMellish's picture

Visit you with a gun, an axe and some plastic bags.

Mon, 03/18/2013 - 23:07 | 3345706 jeff montanye
jeff montanye's picture

polonium 210 

Tue, 03/19/2013 - 00:00 | 3345819 Coke and Hookers
Coke and Hookers's picture

It's clear that the EUbanksters waited until their people had gotten away with their money and then decided to go after the Russian cash. I think the EU elite should check their office chairs for polonium in the future before their teeth start falling out.

Tue, 03/19/2013 - 00:41 | 3345866 El Oregonian
El Oregonian's picture

polonium 210

Wasn't that "Pull-one-over-on-'um 2.0"?

Mon, 03/18/2013 - 23:39 | 3345791 Real Estate Geek
Real Estate Geek's picture

Yes, let's tax the Russians for our poor decisions. What can they do?


Seriously?  Russian oligarchs?  I’m betting that they would do something along the lines of strangling you with your kid’s intestines. 

Mon, 03/18/2013 - 21:52 | 3345474 kito
kito's picture

wait heres an idea!!!.............let the banks suffer for their stupidity.................they go under...........the altruistic european union overlords, who are SO CONCERNED for the well being of their union, can protect the depositors, who have no involvement with the idiocy of the bank they rely on to safeguard their money, by covering them.......this would renew confidence in the banking system by all european citizens............................


and then we can have peace on earth........

and a cure for all diseases...............

and the earth will flourish..........................

Mon, 03/18/2013 - 21:58 | 3345494 fonzannoon
fonzannoon's picture

"the depositors, who have no involvement with the idiocy of the bank"

I'd say they are involved the minute they deposited their money. That's the problem on a bigger scale. Deposit insurance has created a monster because people could give a shit what the bank does with their money as long as it is "insured" and by now everyone knows the insurance is worthless in a crisis.

Mon, 03/18/2013 - 22:10 | 3345534 kito
kito's picture

yes fonz, but you understand i meant that depositors have no decision making or any say in what the bank invests in.............most are simply depositing their money with the crazy idea that it will be there to withdraw when needed.............forget receiving interest....thats a pipe dream that most depositors have let die.......all they ask is that their money be not sure deposit insurance has created a monster.............rather its the fed/ecb that has created a monster by putting the well being of banks ahead of the people that give them their money...........................when banks know there is nobody to bail their asses out, then you will see banks acting differently...............its the banks that need to learn their lesson, not the simple people who just need a "safe" place to park their money..................

Mon, 03/18/2013 - 22:15 | 3345551 Ness.
Ness.'s picture

.......................... end scene.

Mon, 03/18/2013 - 22:17 | 3345557 kito
kito's picture



merkel, take a bow!!!!

Mon, 03/18/2013 - 22:28 | 3345593 Jena
Jena's picture

Then people can be robbed in their homes.  The way it was intended!

Mon, 03/18/2013 - 23:05 | 3345701 BeansBulletsBandaids
BeansBulletsBandaids's picture

At home they have a chance of defending themselves. It's kinda hard to protect your assets when they're 0's and 1's in some bank's computer. Got physical Fishes?

Mon, 03/18/2013 - 23:12 | 3345719 jeff montanye
jeff montanye's picture

however in a larger sense, the ability of outside parties, even those with savvy and computational resources far beyond those of the small depositor, to understand the "reality" of bank balance sheets (and "off balance sheets") is part of why this massive control fraud continues to prevent organic economic recovery.

Mon, 03/18/2013 - 22:29 | 3345596 Element
Element's picture

Given the FED and ECB are Banks it's a bit of a no-brainer that they are going to favor banks over people.

Given this, the question is, why do they have any power or capacity to do so at all?

Basic civil checks and balances should have totally eliminated that sort of possibility or abuse from ever arising.

The people who set that up and enabled it and keep enabling it are those who need to be hung drawn and quartered in the town square.


Mon, 03/18/2013 - 22:38 | 3345623 nmewn
nmewn's picture


Tue, 03/19/2013 - 08:58 | 3346437 sdmjake
sdmjake's picture

+ 2

Tue, 03/19/2013 - 08:59 | 3346438 sdmjake
sdmjake's picture

+ 2

Tue, 03/19/2013 - 03:53 | 3345993 Tapeworm
Tapeworm's picture

drawn and quartered first, and then hanged.

Tue, 03/19/2013 - 00:14 | 3345843 mumcard
mumcard's picture

Don't bend over in front of these guys.

Mon, 03/18/2013 - 22:26 | 3345559 fonzannoon
fonzannoon's picture

The banks can only learn that lesson when people deicide to yank their deposits and walk with the cash and be their own bank. However, like you pointed out today, people are either too ignorant or too apathetic to see reality. So as far as I am concerned, let them take a haircut every once in a while. Shit they are practically begging for it at this point. They should all get a "beat me hard" t shirt upon opening an account. How the rest of the PIIGS could be so silent today with regards to depositors was fascinatingly awful to see.

edit - I'm sure Elizabeth Warren is working on a disclosure form that Shiela Bair was almost done with that says

"By depositing your funds with our institution, you are giving our bank permission to utilize your funds to purchase credit/equity/derivative instruments. We may use substantial leverage purchasing these instruments. Any losses that occur could result in our bank seeking a government bailout because we all know the fdic ain't got shit"

I heard it should be out by summer. It's going to be a game changer....


Mon, 03/18/2013 - 22:33 | 3345610 kito
kito's picture

well, yes, that would be one way for the banks to learn a lesson, and i agree that the herd has nobody but themselves to blame when their country is next on the list of account confiscation......they shouldve seen the writing on the wall......but no fonz, no haircut for the depositor (i assume thats who your haircut reference was directed at)....that is their money, their property, and NOBODY has the right to reach into their account and grab it..................the haircuts need to be with the bondholders, the shareholders, the ones who invested in the bank itself..................that is when banks really learn a lesson, when they fail and others see their stock prices crumbling and big ben isnt there to pick them up...........the wildfire can no longer be surpressed or new trees will never sprout................

Mon, 03/18/2013 - 22:40 | 3345625 fonzannoon
fonzannoon's picture

Of course I agree with you that nobody has the right to reach into their account. But it is glaringly obvious that that right got trampled along with the rest of our rights. I also don't wish these haircuts to happen to any depositors...I just no longer have any sympathy for them.


Mon, 03/18/2013 - 22:42 | 3345636 kito
kito's picture

you know, the red pill works in strange ways..........i used to think of "haircuts" as a positive know.....trip to the barber........a little trim on top...some shaping....a good i cant help but think of defaults and central banks and now scared of the barber........................I DONT WANT A HAIRCUT!!!!!!!

Mon, 03/18/2013 - 22:47 | 3345651 fonzannoon
fonzannoon's picture

I hear you man. I am going to sleep. These ten point moves in the dow are wearing me out lately.

Mon, 03/18/2013 - 23:37 | 3345783 James_Cole
James_Cole's picture

The banks can only learn that lesson when people deicide to yank their deposits and walk with the cash and be their own bank.

Or how about some laws are enforced??

This logic is so's like you take your car to a mechanic and someone there steals it. And you're like, 'that settles it! Never going back to that mechanic again!!' That's great, but you still lost your fucking car!

People need to get together and demand some good old fashioned justice!

Just because the cops left the beat the solution isn't to run and hide in the forest. 

Tue, 03/19/2013 - 00:09 | 3345836 new game
new game's picture

Webster dictionary update submission:

Corzined, the act of putting funds in an institution for safe keeping, investment, or otherwise self directed investmentonly to have it seized, stolen or vanish with no further explanation or be properly investigated much less a prosecution by laws and governing bodies. a more simplier definition is as of 2013; you stupid fuck-you get what you deserve.

Tue, 03/19/2013 - 08:11 | 3346263 Sean7k
Sean7k's picture

Actually, in America at least, they do have the power to do so. You see, banks are "agents" of the federal government (read your contract), therefore, when you deposit money into a bank, you have placed it into an area where your constitutional protections for private property no longer exist. You are now in a "contract" environment and the Constitution cannot impair contracts.

The People, unfortunately, have been put into a situation where having a legal education has become paramount, if they are to preserve their rights and their wealth. The vast majority of the people have no idea just how bad their situation is, brecause the State has not decided to push the point. However, as the debt explodes, that day draws nearer and nearer. 

Having our money in a bank is our first mistake.

Tue, 03/19/2013 - 12:18 | 3347576 phalfa5
phalfa5's picture

they grow up so fast ...  with dreams and the best intentions ...  then comes reality.

grab a pitchfork Kido  (Kito)


Mon, 03/18/2013 - 22:27 | 3345587 SDShack
SDShack's picture

The problem is the line between retail banks and investment banks is gone. Investment banks continue to make risky leveraged bets, just like they always have, only now they use insured depositer money to do it. Add the fact that there is effectively no oversight or regulation, and this forces the taxpayer to backstop the risky bets as we careen from one bank crisis to the next.  It's just one big mess, and won't get any better until some country says enough and brings down the whole house of cards. Only when that happens, when the people can't be raped anymore, will the banks stop feeding on the people and start feeding on each other.

Mon, 03/18/2013 - 23:06 | 3345705 Antifaschistische
Antifaschistische's picture

the problem is...there are lots of problems.  fascism, socialistic imperialism using the facade of capitalism, greed, etc.

however, at the real core is the philosophy of money.  what it is, and what it represent.

In the long run, it is economically impossible to store wealth by storing little pieces of fiat.  Whether it's physical cotton fiber fiat...or digitized fiat.  

But as commenters have stated here, TPTB have convinced the sheeple that saving and storing fiat is a riskless and in fact a 'guaranteed' proposition.  The economic events around the world, current events surrounding the EU, and coming soon to Uncle Sam's theater will show that saved fiat is not a means of preserving wealth.  And when the music stops, and people rush to squeeze value out of their fiat...crazy things will happen.

the show will go on... 

Tue, 03/19/2013 - 07:33 | 3346195 Mesquite
Mesquite's picture


Tue, 03/19/2013 - 03:08 | 3345969 All Risk No Reward
All Risk No Reward's picture

The Fed is the Trojan Horse of the Biggest Finance Capital monster - the private interest people who define and control the monetary system.

The plan was to make people uber productive by tricking them, but only for a time, into thinking their chit was actually theirs.  Since money is debt and government / society is beholden Biggest Finance Capital the minute they sign up for Debt Money Tyranny...

...the people have to be in debt in order to have a money supply,  The minute the banksters restrict credit, well, all that chit the debtors thoguht was theirs is suddenly not theirs anymore - it belongs to a TBTF&Jail Biggest Finance Capital front corporation (tax free, of course).

"If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."
~ Robert Hemphill, Credit Manager of Federal Reserve Bank, Atlanta, Ga.
Source: In the foreword to a book by Irving Fisher, entitled 100% Money (1935)

Monetary Reform Talk, 4.09, Part 7: Robert Hemphill quote


Thu, 03/21/2013 - 04:02 | 3356017 Pseudolus
Pseudolus's picture

I've read all your posts on here tonight (insomnia). I'm very much afraid your audience comes here to be dogmatic, not enquiring. It typically considers itself 'awakened'

The good trumps the bad of that: its part of what makes ZH uniquely brilliant

We all have our limits, usualy t the point where, as Wittgenstein wrote, we just 'stop digging'. Few apart from CD here gives a though to their own cog diss...:-)

Personally, I think you should start your own blog as your message merits a more substantial presentation

You'd have a bookmark from me. Best of luck


Mon, 03/18/2013 - 22:42 | 3345634 fnordfnordfnord
fnordfnordfnord's picture

 insurance is worthless in a crisis.

But, but, isn't that the only time it's needed? I'm confused.

Mon, 03/18/2013 - 23:14 | 3345722 Captain Benny
Captain Benny's picture

Historically, only the Jews really "get" the benefits of insurance....


Hey - Its not anti-semitic to point out the most insurance operations have been under the control of Jewish people.  Don't down vote for fact.

Sat, 03/23/2013 - 22:14 | 3345980 All Risk No Reward
All Risk No Reward's picture

Insurance is worthless in a societal level crisis.

FTFY.  Does that explain it a bit better?

Tue, 03/19/2013 - 01:37 | 3345913 dunce
dunce's picture

The idea of insurance is a number of people pooling their risk, but deposit insurance does not have the same rules as, say auto insurance. If you do not have a car, you do not pay a premium. With deposit insurance the banks pay a token amount but they are always underfunded and when the financial institution goes under the tax payer makes up the difference. People with no money in the banks are forced to pay into a pool they were not part of. The govt. sets the level of so called insured deposits, but never mandates that the risks be fully funded.

Tue, 03/19/2013 - 00:10 | 3345839 FrozenOut
FrozenOut's picture

You mean deposit insurance should protect the depositors, but show the management the door? Now there's an idea...

Mon, 03/18/2013 - 21:52 | 3345475 RmcAZ
RmcAZ's picture

Why don't these retards just print the money? Serious question. That's what they've been doing all along... Not that printing money is a solution.

Mon, 03/18/2013 - 22:10 | 3345540 Al Huxley
Al Huxley's picture

That's the trillion dollar question, isn't it?  Why the line in the sand now, over 5.8 billion, after the trillions that have been tossed around so casually over the past 5 years.

Mon, 03/18/2013 - 22:20 | 3345565 fonzannoon
fonzannoon's picture

Al my theory is a bank run has to be started for that exact reason. It gives Draghi the ability to twist Germany's arm and print their asses off, first to stem a crisis...then just to print more. It gives Germany cover to finally say "we did not want to do this, but it was a crisis".

Mon, 03/18/2013 - 22:26 | 3345585 ekm
ekm's picture

Not at brent $120

Mon, 03/18/2013 - 22:31 | 3345605 fonzannoon
fonzannoon's picture

that's the catch ekm, I have no argument except the alternative was worse. Although if Russia turns out the lights that may be even worse than that.

Mon, 03/18/2013 - 22:27 | 3345589 Al Huxley
Al Huxley's picture

It could be - there has to be an ulterior motive.  Still, you have to question the judgement as far stealing from the Russians...  I can see that being intentional too, but seems dangerous.

Tue, 03/19/2013 - 00:24 | 3345851 Opinionated Ass
Opinionated Ass's picture

This engineered crisis and ensuing Euro bank runs will also give cover for "fair" capital controls...maybe in USSA too.

"We are with you dear sheeple. It is not fair for the rich to be draining cash from your neighborhood banks and taking it out of the country. We can help. Capital controls are your friend."

Mon, 03/18/2013 - 22:23 | 3345573 american eyedol
american eyedol's picture

your missing the point of the euro or u don't understand it

Mon, 03/18/2013 - 22:28 | 3345594 Al Huxley
Al Huxley's picture

Please elucidate, help me understand better.

Mon, 03/18/2013 - 22:32 | 3345602 NoDebt
NoDebt's picture

I'm not sure anyone understands the point of the Euro at this point, least of all the people that created it.

What an unbelievable clusterfuck.

Mon, 03/18/2013 - 22:38 | 3345627 dick cheneys ghost
dick cheneys ghost's picture

To my limited knowledge and please correct me if I'm wrong, the ECB will only print to fight deflation

Mon, 03/18/2013 - 22:26 | 3345584 Bizaro World
Bizaro World's picture

The Rooskie Mafia ain't in the inner circle...Therefor, they can afford to be given a haircut...The only mistake was assuming that Rooskie Mafia is somehow separate from Rooskie Government....Vlady KGB ain't happy, and has an itchy trigger finger...

Mon, 03/18/2013 - 22:41 | 3345626 Element
Element's picture

If they'll do that to Russian money they will do it to ANY foreigners money held in a Eurozone bank. Any foreigner with cash in a eurozone bank is not going to just leave it there. If they can get it out quick they will. If it is a term deposit they will take it out later, but it will be leaving. No way that green-shoots schtick is going to work now.

Mon, 03/18/2013 - 23:00 | 3345681 fudge
fudge's picture

So then ,, any idea how much Chinese money would be in EU accounts ? Taking from China would be as good as Russia , in fact any BRIC at all would do.

Tue, 03/19/2013 - 00:40 | 3345863 Element
Element's picture

+1 .. a fricken great question, ain't it. ;-)

Tue, 03/19/2013 - 06:43 | 3346100 negative rates
negative rates's picture

Yea he's got a lot of great questions.

Tue, 03/19/2013 - 12:32 | 3347683 phalfa5
phalfa5's picture

a lot  (just fudging)


Mon, 03/18/2013 - 22:41 | 3345619 SDShack
SDShack's picture

My understanding is that the ECB can't just print money to give to the insolvent bank directly, The ECB can only print money to buy bonds against the bank or Central Govt. So there has to be a mechanism in place to generate the bonds first. In the case of the Cyprus banks, they are insolvent, so there is no way to issue more bonds. And the Cyrpus govt will be insolvent if the Cyprus banks default, so they can't issue bonds either. it's all semantics, but there it is. That's why this convoluted Cyprus scheme involves stealing deposit accounts and giving insolvent bank bonds in return for the stolen money. The only mechanism available is bankruptcy or a "voluntary" bond write down like Greece did. At least, that is what the powers that be want you to think. The same was true of AIG, but the powers that be found a work around for that. So I predict the bankers will find a work around for this too IF Cyprus says "no" you can't steal the accounts.

Tue, 03/19/2013 - 06:38 | 3346091 falak pema
falak pema's picture

This is the same situation in Spain and maybe Italy; whence the wealth tax thingie. 

EU is going after tax evasion by wealthy corporates and people IN EVERY COUNTRY OF PIGS, who liabilities weigh on the core bank viability. 

According to the Citi-Buiter's article thats the way to go, whatever legality may be its the only shock therapy now; its the urgency of the situation that dictates it. Better to lose a leg for the EU private oligarchy (as the NON EU oligarchy) than to lose the whole shooting match.

Lets face it the Club Med private banks, and therefore governments, are under water, to the same extent as Cyprus (or Greece).

Merkel's pitch is very clear : No joint n several bank guaranties in your backyard with my country's money! (It is election year in Germany).

So your rich people pay for those bank debts restructuring. No more ECB sterilised debt to fight bad debt....we don't have enuff good collateral to do that...neither in periphery nor here in core (Ger/Fr/Holl/AUs).

Who can argue with that logic?

The ringer-dinger is it makes a lot of innocents pay; but who like in Cyprus would pay anyway, if the banks and the country subsequently goes totally belly up!

Cyprus thus becomes a test case for periphery restructure.

Total collapse of capital markets...that is, as it was since 2008, the looming Iceberg in front of us. And these shills only made it worse since 2009; by doing sweet fanny annie! 

Tue, 03/19/2013 - 06:46 | 3346108 negative rates
negative rates's picture

If they aint fuming by now, I'll eat my short positions.

Tue, 03/19/2013 - 12:35 | 3347715 phalfa5
phalfa5's picture

US is next ....   lots of "articles" on individs/corps that don't pay taxes  ...  of course the landed nobility (pols/connected individs/corps) will still be above the fray


Tue, 03/19/2013 - 07:40 | 3346205 css1971
css1971's picture

Funnily enough, printing makes the rich richer and the poor poorer. Merkel is correct, this is fairer... You are also correct, it is completely retarded. What's fair, is to kill the banks, bondholders get wiped out. Same story it's been since 08.

Germans are more cognisant of what printing is than most nationalities. The UK for example maybe 1 in 1000 have any clue what money is. Germany the proportion is higher. Coin stores for example are quite common here. This is why monetary policy in the EU is harder than the UK or US.

Mon, 03/18/2013 - 21:53 | 3345477 Hedgetard55
Hedgetard55's picture

It will be for their own good. 

Mon, 03/18/2013 - 21:54 | 3345481 lolmao500
lolmao500's picture
"A disorderly bankruptcy would have forced us to leave the euro and forced a devaluation." GOOD. DO IT.
Mon, 03/18/2013 - 22:01 | 3345509 smacker
smacker's picture


Mon, 03/18/2013 - 21:56 | 3345484 Charles Nelson ...
Charles Nelson Reilly's picture

This is like stealing money from the mafia... Not a wise move unless you enjoy a bullet in the back of your head?

Mon, 03/18/2013 - 22:00 | 3345499 lolmao500
lolmao500's picture

I'm sure if you told the Cypriot people to pay 1% of their money in exchange for Merkel's head on a pike, they would agree to it.

Mon, 03/18/2013 - 22:23 | 3345578 wee-weed up
wee-weed up's picture

Vlad P. is supposed to be good at that.

Mon, 03/18/2013 - 22:00 | 3345504 smacker
smacker's picture

"No wonder Vladimir Putin is up in arms about the bail-in."


I think one may find these are crocodile tears, little more.

Mon, 03/18/2013 - 23:15 | 3345732 fudge
fudge's picture

"I think one may find these are crocodile tears, little more."

Maybe so,but I think he wanted to bring the money back home on his terms,not Merkels.


Mon, 03/18/2013 - 22:00 | 3345505 hampsterwheel
hampsterwheel's picture

the Russian response will never find its way to the front page - there will be a lot of Cypriani politicians that we will discover have been into erotic asphyxia.. how stupid can you be to steal $3b from the X-KGB? seriously -


Mon, 03/18/2013 - 22:03 | 3345517 ekm
ekm's picture

did you read my mind?

Mon, 03/18/2013 - 22:07 | 3345533 lolmao500
lolmao500's picture

Yep I hope a bunch of these Eurocrats end up having ``accidents`` like drowning in their tub or their plane having a malfunction or having a rare case of radioactive sickness or suicides with 3 bullets in the back of the head... it'll all be a coincidence... just like it's a coincidence when good people looking into government black ops have the same kind of ``accidents``...

Mon, 03/18/2013 - 22:28 | 3345592 stant
stant's picture


Mon, 03/18/2013 - 22:45 | 3345642 IridiumRebel
IridiumRebel's picture


Mon, 03/18/2013 - 22:03 | 3345511 ekm
ekm's picture

I'm trying to understand what kind of money is banked in cyprus.

The answers I find on the internet are: Russian Mafia, ex-KGB.


ZHers, let me tell you something: THOSE PEOPLE NEVER LOSE MONEY.

Asmusen thinking that he's got a knife in his hands, may have declared war to people with bazookas.

Mon, 03/18/2013 - 22:05 | 3345525 fonzannoon
fonzannoon's picture

ekm I truly thought this whole thing was to spark a selloff in piigs bonds and watch your theory of a PD blow up becuase they were stuffed with them. I am amazed at the total lack of reaction to this in the markets, unless it is still coming.

Mon, 03/18/2013 - 22:18 | 3345545 ekm
ekm's picture

Selloff can't happen because it's the ECB and major banks who hold those bonds.


Selloff will occur only when the Fed stops paying for swap losses which are usually done quarterly. Then banks will be forced to sell whatever they have, margin call.


Fed will do that on order from the White House, or whoever is behind WH, military complex people. My only indicator is crude oil price.

Everything, literally everything, depends on a order from Obama, either by free will or forced. Obama has the power LEGALLY, PERIOD.

Mon, 03/18/2013 - 22:21 | 3345566 ekm
ekm's picture

Something similar happened when the decision was made not to pay for MFGs margin calls. They let MFG go, and then.........they changed their mind......IRAN and came up with the global bailout, Fed swaps with ECB and BOE.

It was Nov 2011.

Mon, 03/18/2013 - 22:33 | 3345549 ekm
ekm's picture

I have started to follow FOOD in general very closely.

Discovered this one:


As Bush's hand was forced, not to allow the Fed to pay for Lehman's margin call, same way Obama's hand will be forced, either by crude oil or food.

Mon, 03/18/2013 - 22:23 | 3345577 Water Is Wet
Water Is Wet's picture

My question is, and I'm assuming the Fed knew about the Cyprus stuff in advance to some degree, did the Fed plan for it to go smoothly, or is the bank holiday extention to Thursday going to turn into some bigger announcement involving the Fed on Wednesday?

Mon, 03/18/2013 - 22:29 | 3345599 ekm
ekm's picture

I think they want to crash the system so badly, but they are looking for somebody to blame.

I don't know what they were thinking, if they really thought that ex-KGB would fall for it.

Mon, 03/18/2013 - 22:42 | 3345635 IridiumRebel
IridiumRebel's picture

They may not be reacting, but I surely am.

Tue, 03/19/2013 - 07:26 | 3346177 css1971
css1971's picture

Cypriot banks are still on holiday, it hasn't happened yet.


Patience... Either way there will be a portfolio "reblance".

Tue, 03/19/2013 - 07:47 | 3346213 Mesquite
Mesquite's picture

What 'markets'..?

Oh, you mean the fed pumping..?

Well, it's about time for some pull-back anyway..

Help's maintain 'legitmacy'..

Mon, 03/18/2013 - 22:37 | 3345514 Phroneo
Phroneo's picture

Question is, why not?

Mon, 03/18/2013 - 22:06 | 3345524 newengland
newengland's picture

Bottom line:

Don't fight the Fed.

Putin will.

Game on if you must.

Nincompoops: write on, as per usual. Pets.

Mon, 03/18/2013 - 22:10 | 3345541 goldenbuddha454
goldenbuddha454's picture

Is this East Germany getting back USSR for the post WWII Era?

Mon, 03/18/2013 - 22:11 | 3345544 goldenbuddha454
goldenbuddha454's picture

Like China to Japan for the rape of Nanking?

Mon, 03/18/2013 - 22:21 | 3345561 Element
Element's picture



Stournaras assures Greek depositors Cypriot tax is a one-off , Monday March 18, 2013 (23:34)
Finance Minister Yannis Stournaras attempted to assure Greek depositors on Monday night that their savings will not face a tax similar to the one Cyprus is set to adopt.
“I can assure you that there is absolutely no danger for Greek depositors, regardless of whether they have their money in Cypriot banks in Greece or Greek banks or any other banks here,”


Whew, that must be quite a relief! I'd maybe keep that quote handy though. Something tells me this may turn out to be not quite entirely so.

Mon, 03/18/2013 - 22:27 | 3345588 seek
seek's picture

Nothing is true until officially denied. Cyprus proved that yet again with a denial of theft followed by the theft denied.

If I were greek, I'd be liquidating as fast as I possibly could after hearing this.

Mon, 03/18/2013 - 22:19 | 3345563 Dagny Taggart
Dagny Taggart's picture

OT: Chase Bank down - see twitter #chasebank, #chase

all customer balances appear to be zero - wow... and oops

Mon, 03/18/2013 - 22:27 | 3345590 Water Is Wet
Water Is Wet's picture

This is just not true.  I checked a balance, and it was not 0.  Fucking twatterverse.

Mon, 03/18/2013 - 22:31 | 3345603 Water Is Wet
Water Is Wet's picture

I think the uproar on twitter can be explained by the fact the chase bank runs the ebt program, and that got some people worried.

Mon, 03/18/2013 - 22:34 | 3345612 Cognitive Dissonance
Cognitive Dissonance's picture

Looks like Chase is up and down, hit or miss.

Mon, 03/18/2013 - 22:51 | 3345662 fnordfnordfnord
fnordfnordfnord's picture

Fuckin A man! Chase has my mortgage :D 

Mon, 03/18/2013 - 22:19 | 3345564 hamstercheese
hamstercheese's picture

Let's all just have some damn waffles and wine.

Mon, 03/18/2013 - 22:21 | 3345568 lolmao500
lolmao500's picture

While a quite bullish situation is developing too in Japan...

Workers at the tsunami-damaged Fukushima Daiichi nuclear plant in Japan are trying to fix a crucial part of the plant that stopped working today.

The system that cools hundreds of spent fuel rods that are stored at the facility has stopped working, which could have dangerous consequences, CBC News producer Craig Dale has learned....

Nuclear Expert: Fukushima spent fuel has 85 times more cesium than released at Chernobyl — “It would destroy the world environment and our civilization… an issue of human survival” -Former UN adviser

"The amount of caesium-137 in the fuel in the pools is equivalent to 5000 times the amount that was spread by the Hiroshima atomic bomb," says Koide. "The government has said that the amount of radioactivity released by the three affected reactors following [last year's disaster] was 168 times that of Hiroshima, so it is clear that we would be looking at a considerably worse outcome should the [reactor number 4] structure be compromised."

RT @W7VOA: TEPCO says with power cut to #Fukushima-1 NPP Unit 4 spent fuel pool temp rising ~0.4°C/hr.
RT: @W7VOA: #TEPCO: No major changes in radiation levels from nearby monitoring posts amid extended power cut to #Fukushima-1 #nuclear plant.

If you're on the west coast or in Japan... prepare your bunkers just in case.

Mon, 03/18/2013 - 22:57 | 3345676 kito
kito's picture

what about napa wines??????? what will i do for a good cab or merlot?????!!!!! this is horrible!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Mon, 03/18/2013 - 23:04 | 3345697 Rusty Trombone
Rusty Trombone's picture

Plan A washed out to sea 2 years ago. Plan B of pretend nothing happened ended when units started exploding hours later. Plan C seems to be repairing a fried switchboard. Plan D is to fabricate a new switchboard on site before the water hits 65 and the pretty colors start sparking.

Tue, 03/19/2013 - 00:26 | 3345854 Seer
Seer's picture

Bioaccumulation means we're ALL fucked, as a species...

Have to wonder what the grand design was to have Japan get so fucked by radiation.  I think that Karma kind of over-did itself here...

Tue, 03/19/2013 - 00:30 | 3345855 TNTARG
TNTARG's picture

It seems they're delivering some athomic news these days.

Let's tell Brussels' residents to leave and then blow on some of Fukushima's nice winds over Brussels. Troika may take it as they're unplugged from the real world and people.

After all, they just started an athomic chain reaction.

Mon, 03/18/2013 - 23:00 | 3345684 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Speaking of following the money.

From the original deal, I haven't checked updated info yet but I assume the basics still apply here regardless of what type of deal is ultimately agreed upon or if no deal happens.

"..However, Greek Finance Minister Yannis Stournaras said that depositors with money in Cypriot banks based in Greece would not be affected by the deposit tax. “The branches of Cypriot banks in Greece are totally excluded from the Eurogroup’s decision on Cyprus,” said Stournaras. “The stability of the Greek banking system is safeguarded.”..

The Greek branches of Bank of Cyprus and Cyprus Popular Bank have an estimated 13.5 billion euros in loans and 20 billion euros in loans."



Mon, 03/18/2013 - 23:04 | 3345700 Kastorsky
Kastorsky's picture

choice between Brussels' bitter pill... and bankruptcy. 

the choice is between bankruptcy now and bankruptcy later.

Mon, 03/18/2013 - 23:15 | 3345728 Cabreado
Cabreado's picture

More fodder...

Little children with no grand plan, but if it services their personal delusion, they're all in.

It simply had to come to a head.

So now that it becomes exposed; the simple and pathetic nature of this giant hairball...

stay classy, as we cough it up.

Mon, 03/18/2013 - 23:27 | 3345762 Edward Fiatski
Edward Fiatski's picture

Interesting ramp in European foreign deposits starting around Sept-Dec 2008 for obvious reasons, and a huge spike in Summer of 2010 - remind me what happened back then, something related to Greece? 

Cyprus safe haven FTW. :) And the ECB is hammering that - can't have plebs across the EU accumulating wealth, can you?

Mon, 03/18/2013 - 23:32 | 3345774 roadlust
roadlust's picture

Worth it just to see Putin get pissed.

Probably got a couple billion in there himself.

Tue, 03/19/2013 - 00:08 | 3345833 aka Gil
aka Gil's picture

Wait a minute Steve. Does this really sum up the situation?

"A disorderly bankruptcy would have forced us to leave the euro and forced a devaluation."

Are we to believe that it's either the ECB/IMF "bail-in" or a disorderly bankruptcy? Why not an orderly bankruptcy, aka liquidation? Is that out of the question? Considering what happened after Lehman was flushed, any type of bankruptcy (liquidation) would be unacceptable to TPTB due to the fact that a potentially fatal OTC derivative meltdown could be triggered by any liquidation, even tiny Cyprus.

Tue, 03/19/2013 - 00:15 | 3345845 Seer
Seer's picture

A "bankruptcy" would pretty much mean Cyprus is OUT of the EU.  This would signify the end to any notion that the EU can "rescue" anyone.  It would also signify the end of the EU.

The EU put guns to the heads of the Cyprians and demanded money, and in return they'd allow their banks to keep fucking them.

"Russia" has a gun to the heads of Cyprus and says to give them contract rights for developing the NG fields, and in return Cyprians get banks (non-EU) with actual money IN them!

This could explain why Anastasiades (is said to have said) essentially "fuck you" to Merkel (the Power behind the EU).

Tue, 03/19/2013 - 00:50 | 3345871 Element
Element's picture

Which naturally begs the question, where's the ECB bazooka? ... looks like the tube was pointed in the wrong direction if they fired it.

Tue, 03/19/2013 - 09:00 | 3346446 hardcleareye
hardcleareye's picture

The ECB  bazooka is in the same place as the fairy god mother's wand.

Tue, 03/19/2013 - 03:02 | 3345966 hooligan2009
hooligan2009's picture

seems the bail in is pretty disorderly to me!!! the actions of transferring capital to europe to get it back via a loan will bankrupt the country, causing a massive exodus of capital and people.

cyprus has been a retirement haven (70,000 retirees out of 900,000 people; equivalent to, say, 8 million germans retiring to france - no big deal if their money isn't stolen!!)

not sure how much worse a disorderly bankruptcy would be compared to this move which collapses the economy


Tue, 03/19/2013 - 00:08 | 3345834 Seer
Seer's picture

The "Russians" are up in arms over a measly $5 billion?  Are you serious?

You fucking think-tank wonks...

This is NOT about what's on the table today.  This is ALL about future revenues.

"Russia," if in fact this is a nationally orchestrated affair by the Russian govt (I'll accept it as it, though I have yet to see this proven in any legally recognizable form), ain't going to bail out a fucking EU puppet.  No, what they're doing is circling the waters.  WHEN Cyprus pukes, which it will (really, how is the EU banksters going to keep the people of Cyprus from completely going nuts?), "Russia" will be there.

The EU has no money.  It has no energy.  Tell me, again, WHO controls this situation?

Tue, 03/19/2013 - 00:22 | 3345850 Seer
Seer's picture

I'd like to add that "Russia" could make whole any such losses by increasing the gas prices on Europe.  This of course would be states as a one-time deal (so that the Russian oligarchs don't get too uppity and start acting like the US/European oligarchs and getting whatever they want whenever they want it  from their govts).

As I'd noted previously (in another thread?), Germany is WAY more fucked than people realize.

Russia Data Talk: A new natural gas pipeline, Nord Stream, was launched on 8 November 2011. The pipeline will deliver Russian gas to Germany via the Baltic Sea, bypassing the key transit countries of Ukraine and Belarus. Russia provides up to 25% of the gas consumed in Europe. Russian gas giant Gazprom, which holds 51% of the Nord Stream pipeline, has already signed long-term contracts on gas deliveries via the Nord Stream pipeline with several European countries, including Germany, Denmark, Netherlands, Belgium, France, and Great Britain.


Tue, 03/19/2013 - 08:51 | 3346403 hardcleareye
hardcleareye's picture

But they are not using the "capacity", and the way most gas contracts are structured, you pay for it weather you use it or not......  looks like they have to get out of that deal (I would bet they are "hemorrhaging" financially due to the take or pays) and the Russians that put the money in the ground to build the pipeline are going to insist on a return on monies invested......

I wonder what other "layers" there are to this "banking" issue....

Tue, 03/19/2013 - 01:15 | 3345896 skistroni
skistroni's picture


You might like to add to the set of equations the fact that the Russians are Christian Orthodox (just like Cyprus and Greece) and the church still has a lot of power there (just 40 years ago Archbishop Makarios was head of the church AND head of the state). 

And not to forget the wackos of (you probably won't understand the language, but just think of David Icke with a little less lizard reference and a lot more "Greeks as the dominant race" smoke) who, based on alleged prophecies of deceased Christian Orthodox saints and monks, claim that Putin is going to declare a war on Turkey, decimate the infidels, take Istanbul and offer it as a gift to the Orthodox of Greece and Cyprus. I would have a hard time to believe this, but honestly after this weekend, wouldn't many people start thinking "what if...?"

We're not very far from the moment when Russia will appear as the Saviour for Cypriots, with overwhelming popular support. And the British Royal Navy might want to start making relocation plans for their bases in the island, or strike a deal with the Russians. This wasn't an EU move against Russia only. UK is on their crosshair too. Alas, they probably missed their shot. 

Tue, 03/19/2013 - 01:41 | 3345917 Seer
Seer's picture

I'm sure that this can only add to it all.  People of Cyprus (those staying) will feel pretty good about being able to really give a big "fuck off" to the EU.

Thank you for providing more insight (I'm no expert here, just good at seeing the Big Picture).

Tue, 03/19/2013 - 01:39 | 3345915 Seer
Seer's picture

Clearly someone doesn't agree, and they've got such a great rebuttal that they can't even bother to provide it.  Fucking punks..  Let's put a wager on this, shall we?  Step out of the shadows: or, feel free to contact me in private.

Tue, 03/19/2013 - 00:38 | 3345860 newengland
newengland's picture

Wrong. All wrong. 1985 is the start date.

Cyprus became the off shore money laundering conduit of all Russian oligarch money stolen from the former Soviet Union. If you do business with Russia, then  monies transit Cyprus.

Cypriats knew this. 

It is stupid to imagine that this EUSSR money grab in Cyprus is anything other than gangster bankstrers falling out among themselves, and Cyprus is merely a bargaining tool. 

Gas, much?

Tue, 03/19/2013 - 01:45 | 3345919 Seer
Seer's picture

I didn't down-arrow you, but I just don't buy this on the account that I believe that people see this as a turf war, and the entire notion is to protect one's turf.  The BIG players (think energy) ultimately control things, banksters are fast losing their power (and This is what makes this much bigger than most are getting- This IS the transition from paper/virtual to PHYSICAL).

Tue, 03/19/2013 - 08:34 | 3346331 hardcleareye
hardcleareye's picture

I wonder what the Big Players (energy sector) blow back will be? 

This from the IEA in reference to Europe, about 40% of the NG consumed in Europe is purchased from Russia. (first one I skimmed through)

"However, it collapsed in Europe, where it plummeted by 9% to levels even lower than in 2009."


"Gas consumption is hit by the triple whammy of 1) low economic growth translating into slow power demand increa ses and sluggish development of the industrial sector, 2) high gas prices, notably over the coming two years, and 3) the strong growth of renewables."

Most of these contacts have large "take or pays" in them, and the gas/transmission companies don't willingly renegotiate these.... hmmmm???.
Tue, 03/19/2013 - 01:42 | 3345918 sdmodiano
sdmodiano's picture

I read this on BBC's website.  Simultaneously unbelievable, hilarious, insulting, and par for the course.


"As more details emerge of how last Friday night's meeting on Cyprus progressed, it appears - rather astonishingly - that the structure of the deal was something of an accident.

The Germans and their allies were determined that the levy would raise 5.8bn euros to augment the bailout. They presumed that nearly all of it would be recouped from large unsecured depositors, many of them from Russia.

President Anastasiades was determined that no-one would have to forfeit more than 10% of their deposits. He wanted to protect Cyprus's reputation as an off-shore haven.

To meet both these conditions, and to make the numbers add up, the demands made of those with deposits under 100,000 euros - those who had been assured that their money was safe - were more severe than anyone had expected."

Accidental arithmetic, riiiiiight, epically idiotic reporting.  This was a trial baloon on a small island nation.


Tue, 03/19/2013 - 01:52 | 3345923 q99x2
q99x2's picture

Putin needs to get his drones all in a row.

Tue, 03/19/2013 - 02:05 | 3345930 ItsDanger
ItsDanger's picture

Not nearly detailed enough.  Show the type of the deposits (ie. investments).  Show the detail of loans to Cyprus banks, ownership and terms.  The domestic & Russian share is similar in trend.  Explain the 60+% drop in Euro in more detail.

Tue, 03/19/2013 - 08:17 | 3346277 hardcleareye
hardcleareye's picture

Concur, there is more to this and I think your comments/questions are on the right track.

This was no act of stupidity, they set this stage knowing the possible out comes and pulled the trigger.

Question is why?

Tue, 03/19/2013 - 02:14 | 3345935 Paracelsus
Paracelsus's picture

Much of the worry over the years has been whether the Credit Default Swaps on the different bonds would be activated and paid out.This is where the rubber hits the road systemic risk-wise.  I feel much of the bail out business to avoid default is certainly about stopping a chain reaction counter party shitstorm,but perhaps I would like to see more coverage about hedge funds "shorting" countries by diving into this huge CDS pool.They want these countries to default.The media doesn't seem to cover this much.Also,where tiny countries have a huge banking industry perhaps the RISK element should be clarified.

Tue, 03/19/2013 - 02:41 | 3345950 Kirk2NCC1701
Kirk2NCC1701's picture

Lena Komileva from G+ Economics made a rather respectable impression in her interview on Bloomberg TV's London office, today, 19.3.

The one troubling heads up was that some will require higher rates for riskier banks/regions.

Tue, 03/19/2013 - 03:45 | 3345973 hooligan2009
hooligan2009's picture

if... and a big if...ALL the russian money is illegal, then this CLAIM must be proven via a court of law which would mean co-operation between russian and cypriot regulatory authorities.

that is the way to fix that side of the argument.

if a crime has been comitted, then prosecute it for christ's sake, shit or get off the pot.

Tue, 03/19/2013 - 04:22 | 3346011 pcrs
pcrs's picture

Putin would love to know the names of those depositors, since the reason they are on Cyprus is to avoid Russian taxes going to his repression machine. 

Tue, 03/19/2013 - 05:09 | 3346030 poldark
poldark's picture

Anyone with money in a Spanish bank deserves to lose it.

Tue, 03/19/2013 - 06:09 | 3346072 CuttingEdge
CuttingEdge's picture

What makes you think Putin himself isn't one of those depositors?

Tue, 03/19/2013 - 15:38 | 3349095 pcrs
pcrs's picture

He does not need to avoid paying tax to himself. But he might consider a nest egg in case he is ousted.

Strange that people do not undestand that the tax eaters do not 'really' pay taxes.

Tue, 03/19/2013 - 06:40 | 3346075 falak pema
falak pema's picture

Exactly, Putin wields a two edged sword against his tax dodging oligarchs, and also sees Cyprus conundrum in a geopolitical context; foot in the mediterranean door to replace ex-brit presence.

THe Ruskis virtually own the island financially and in RE. Even if they take a hit, they WONT walk away from Cyprus.

Its their financial trojan horse into EU along with UK City, and its too important for them; especially if there is now Gas for Gazprom gravy. 

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