Former Cyprus Central Bank Head Slams 'Blackmailing' European Leaders

Tyler Durden's picture

In a brief 30-second clip during a Bloomberg TV interview, none other than Anthanasios Orphanides, the former Central Bank of Cyprus Governor, explains the terrible reality of what just happened in Europe: "What we have seen in the last few days is a very serious blunder by the European governments that are essentially blackmailing the government of Cyprus to confiscate the money that belongs rightfully to the depositors in the banking system in Cyprus." He then concludes quite clearly, "It is not clear how this can affect in a positive manner the European project going forward." The Cypriot then goes on to explain how the EU is making a mockery of the idea of a banking union...

If embed is not working click image for link...

On Cyprus being blackmailed.. - link

and on the EU making a mockery of the banking union - "In order to keep the European Union together, they needed to form a banking union, which meant they needed to have a common credible deposit insurance guaranteed for everybody in the euro area..." - link

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news printer's picture

"On the streets there is some nervousness. 400 euros per customer and not a cent more. Exactly the same amount per day can now remove depositors Cypriot banks. Therefore the crowd in line makes no sense. No rush. Yet at ATMs Cypriots follow each other every minute."

Racer's picture

It is about time this is shown clearly for what it really is  .... BANK ROBBERY

helping_friendly_book's picture

So is was, also, for Greek debt holders. Coming to a Credit Union near you. I just called my credit union and they said I could not keep cash in the safe deposit box.

Time to hide you money in your shoe.

hapless's picture

they said I could not keep cash in the safe deposit box

Did you ask or did they volunteer that information?

helping_friendly_book's picture

They volunteered. Doesn't matter. When the bank holidaies come you won't be able to get at the box anyhow. When they rush the bank, the bank will close and you will be waiting a long time to get your xx cents/dollar.

Where are all the gun nuts when you need them?

mdtrader's picture

It is amazing that the markest hold up so well, I mean in recent weeks the situation in Italy has deteriorated significantly and now you have Cyprus and a confiscation of deposits. The point is that the Germans are fed up with paying for southern europe and that's a game changer for the euro project. How on Earth anybody buys the euro now is beyond me, it should be trading at parity with the dollar,  with a distinct possibilty of going to zero in due course.

magpie's picture

Counterintuitively, the Euro gets stronger should Cyprus, Greece and Italy abandon it. It becomes 'markier'.

nope-1004's picture

If you believe markets are free, then ya, it's amazing.  If you believe the Fed is complicit in shaping perception, then it is no surprise.


Sandmann's picture

Have you been on vacation in outer space for the past 6 years ? "The Germans". Who exactly are they ? are they the people who go to work and go home and pay TAXES and get shafted by the Elites ?  Or are they the Beamte who take the 'phone calls from Josef Ackermann, now Paul Achleitner asking Merkel to make sure their portfolios don't need marking to market over at Allianz or Deutsche Bank ?

I mean "the Germans" don't like the Solidaritaetszuschlag but they are in Year 23 of that..........they don't like the Euro but they are in Year 14 of that........they don't like E10 petrol either. They are screwed by their Euro-Elite CDU-FDP-SPD Block Party that will expropriate their bank accounts too when the time comes. Good Old Schauble the man who handles suitcases of illegal party donations from Schreiber so they can go into the Swiss Bank Account Slush Fund for the CDU.

"The Germans" are NOT paying for Southern Europe. they are being forced to underwrite the Bad Debts of THE BANKERS who BRIBED the Elites in Southern Europe to take on Debt - just like Chase and Citi BRIBED Argentinians and Brasilians and Venezuelans and Chileans to take on RECYCLED PETRO_DOLLARS last time around.

This is simply another SCAM. We have it on a regular cycle from the New York-London-Frankfurt MAFIA and they always get their Puppet Governments to send in the strong-arm gangsters of the IMF to get their money


helping_friendly_book's picture

Martin Bormann's clone is behind all of this chicanery. 

shovelhead's picture

How droll,

A central banker in a dry cleaning country crying about blackmail.

You thought you were hanging out with a prayer group?

helping_friendly_book's picture

I must say Kevin Henry, the market, is doing a spendid job supporting this shit. I must say that this shit will turn to mud-butt soon enough and that will just slip right through his fingers.

I suppose Cyprus will be the logical/safest place to put your money if they ever do take their tax. Once they do Cyprus the rest of the planet, w/ the exception of Iceland and Germany, is next.

I will go by the bank today to withdrawl all but, one dollar.

I'll start paying my bills by credit card and paying credit cards w/ postal money orders.

naitram's picture

A nation that lived for decades on stolen wealth - actually was on of the main enablers of it - knew fucking well where it is coming from, were never giving two shits as to who is paying for it... all I have to say is karma is a beyotch.  No pity.  Fukem. 

Mediocritas's picture

The stupidity makes me laugh so much it hurts.

1. Germany demands deposit clipping to make Cyprus pay.
2. The panic causes euros in Cyprus to flee elsewhere
3. TARGET2 counterbalances this by crediting Cyprus
4. Cyprus collateralises its TARGET2 debt with its own sovereign debt
5. Germany pays for it

So what has been achieved by this?

1. The Cypriot private sector has been smashed, counteracted by an expansion of government spending (nice one idiots, the government will misallocate spending even more than the private sector).
2. Confidence has been lost (nice one idiots, your entire scam depends on confidence).
3. The ECB's books have filled up with even more shit (nice one idiots, Germany will pay for that when it goes bad)
4. The ECB (Germany) now has an obligation to direct Cypriot spending (nice one idiots, that's guaranteed to increase nationalism, hatred and violence).
5. No net euros flowed yet systemic risk increased (nice one idiots, no detail needed).

I repeat, these people are not logical, they're not smart. What you are seeing is religious adherance to dogma, aka anti-thought.

shovelhead's picture

Nobody ever claimed that running a centrally planned Ponzi scheme wasn't going to have a few minor inconsistencies involved.

The main thing is grabbing the skim while it holds together.

The unraveling will take care of itself while presenting new opportunities for those with assets.

You can't equate duct tape and bailwire to a functional economic system.


Mediocritas's picture

The problem for Germany is that German industry took the skim, but German banks lent the money to pay for it. So, net, Germany is fucked too.

If they're smart then they'll leave the euro and pull an Iceland. Insure all depositors (of any size) in marks, let banks collapse, and collate euro debts with the Bundesbank with a promise to eventually make good on them in their own terms. Unlike the rest of the OECD, Germany still has the ability to produce things worth buying. It can easily run a current account surplus meaning that the initial shock will quickly pass.

Before too long, its euro debt will be erased by the current account surplus and the nightmare will be over (for them).

SDShack's picture

There's a lot of truth in that. Plus, West Germany was able to absorb East Germany with all it's problems and rebuild a unified nation that still dominates Europe. I think they could easily weather the storm of a pullout from the EU and return to the DM.

NEOSERF's picture

Like how the term European "project" is being used more like it is something that can be discontinued.  Also, war always is a good GDP pumper...

Catullus's picture

This is great stuff. It's exposing he One Europe thing as the bankrupt, autocratic socialist crap it's always been

toady's picture

This is taking too long... It's making me wonder if someone made a better offer. It would be too easy for China to offer bonuses rather than haircuts. Why? Why not!

If you must have reasons then the Russians could offer bonuses instead of haircuts. So many reasons ... military bases, stranglehold on the natural gas market, protect their money laundered operations.

Hell, the Russians would be stupid to not make a better offer.

Mediocritas's picture

And now would be a fine time to make that offer. Cypriots are so pissed off they'd probably take it. Probably not an improvement, but certainly makes sense from Russia's perspective.

RiotActing's picture

Jesus Christ fix the fucking link already....

Cone of Uncertainty's picture

Blackmail bitches!

When Cyrpus defaults they will be among the freest people on the planet, along with the Icelanders.

Dareconomics's picture

Cyprus Contagion Spreading: Greek Bonds Plunge Most Since Bailout | Zero Hedge.

The markets' reaction to the Cyprus crisis was a big yawn.  Moves were adverse but slight.  Today, Greek bonds dropped the most since everything was fixed back in July, and this is a taste of the future.  Each crisis country has a potential confiscation waiting to happen, and this factor will cause a run in this sector.

For example, n Greece, there is always the potential for yet another voluntary buyback or some other euphemism masking a default causing the Greek bond yields to rise.  As investors wake up to which instrument is likely to bear the brunt of the confiscation, more runs will happen.

Cyprus Bank-Levy Passage in Doubt as EU Shows Flexibility - Bloomberg.

Cyprus aims to let small savers out of deposit tax; veto still likely | Reuters.

Cyprus is delaying the confiscation vote yet again.  The deposit confiscation does not have enough support in the Cypriot Parliament even when exempting small savers.  This has set up yet another round of eurocrisis brinkmanship.  The troika can cut off ELA and allow the Cypriot banks to fail, but that action will probably force Cyprus to exit the euro and default on its debts.  The fear is that a Cyprexit would lead to other countries leaving the Eurozone, a.k.a the dreaded domino effect.

Will Cyprus or the troika blink first, or will another solution materialize?

Former Cyprus Central Bank Head Slams 'Blackmailing' European Leaders | Zero Hedge.

Cyprus is rallying its surrogates to argue against the troika deposit heist.  Ex-CCB head Anthanasios Orphanides characterizes the troika's actions as blackmail.  The troika issued an ultimatum to Cyprus early Saturday morning demanding the government to implement the deposit tax or suffer the consequences of the ECB removing ELA from Cyprus' two largest banks.  This action would have pushed Cyprus into immediate insolvency.

While the troika is blackmailing Cyprus, it would be improper for its top government officials to state this publicly; hence, the former central bank head is trotted out to make the point.

A Cypriot Nobelist Is 'Appalled' by the Proposed Bailout Bank Tax - Businessweek.

Another distinguised Cypriot, Nobel prize winning economist Christopher Pissarides opposes the deposit confiscation.  He claims that Germany is bullying the smaller members of the Eurozone and that Germany wants all of the Eurozone members to behave like Germany.  These claims are true to an extent.  The problem with the euro is that smaller members unwittingly accept a monetary policy fit for the eurozone's largest member.

Pissarides also points out that Cyprus is in crisis in part due to the ill-conceived bailouts forced on Greece.  The bulk of Cypriot bank losses are from Greek debt, both public and private.  Greek sovereign bonds have been written down by the troika, while the Greeks are defaulting on the private loans due to the ongoing depression.  In essence, the Greek bailouts forced Cyprus to request its own.

Cyprus braces for defeat on deposit levy -

This article is a little stale as the vote has been pushed back yet again.  All financial services are on holiday in Cyprus for at least another day with another extension likely.

The Russians are protesting the troika's deposit confiscation.  Will they use a natural gas embargo, implicit or explicit, as leverage? Will they wind up bailing out Cyprus? No one knows what the riddle, wrapped in a mystery, inside an enigma will do.  The key is Russia's national interest.  Moving Cyprus away from NATO's influence may be worth a few billion dollars or so.

Schaeuble says Cyprus, depositors must take responsibility | Reuters.

There is an upcoming election in Germany, and Schaeuble does not want his party to take the political fall-out for yet another bailout.  While Cyprus will receive assistance, it also must be punished and humiliated to assuage the resentment of German voters.

Cyprus is the victim of circumstances beyond its control, but Schaeuble spins the story into a morality tale:

    Whoever deposits their money in a country because it will be taxed less and controlled less runs a risks when the banks in these countries are no longer solvent. That is what happened in Iceland and in Ireland some years ago. European taxpayers should not be made responsible for this risk.

This characterization ignores the role the troika has played in causing Cyprus' woes.  Schaeuble is talking tough, but the question remains, will Germany or Cyprus blink first?

d_taco's picture

It is unfair.

We want German and Dutch to pay. We are sure Zerohedge could find a good reason for it.

I have got it. If you use the same currency than you hold the same debt.

 Sound pretty fair to me.


icanhasbailout's picture

It's pretty easy to make the case that those that took risks by buying bonds of bankrupt banks and governments should be the ones to eat the losses.

helping_friendly_book's picture

What you propose is a concept from ancient times known as "moral hazard". Moral hazard would only function in a market economy. Not here in the bennyjewbux economy!

Don't you know anything?