Next: Capital Controls

Tyler Durden's picture




 

As is painfully clear to even the most naive observer, the biggest threat for Europe from this point on, now that Cyprus is officially "unfixed" is what happens when... if the Cyprus banks reopen - will the deluge of bank withdrawals drain 10% of the savings as the country's central banker warned earlier today, 20%, 50% or all of it? It is certain that any and all foreign "oligarch" accounts will be promptly pulled never to be heard of again, and after being treated like third grade European citizens, we doubt the locals will care much for having their cash in a banking system that Europe has shown is equal to all the other "united" banking systems, which however also happen to be just that much more equal. And once foreign TV crews show lines of people scrambling to pull money in Cyprus to the local viewers in Greece, Italy and Spain, will those countries also get comparable ideas? That is precisely the Pandora's box that Europe has now opened, and which it is scrambling to close. How? With the dreaded "contingency plans", among which are such last ditch efforts as capital controls, including "imposing limits on daily withdrawals from bank accounts; capping the amount of money that can be electronically taken out of the country and making these transactions slower to clear; and introducing border checks to cap the amount of cash leaving in the country," most recently utilized in the banana-est of republics such as Argentina.

From WSJ:

The contingency measures, described by three European officials, may not need to be implemented if the deposit outflow looks containable. But the plan includes imposing limits on daily withdrawals from bank accounts; capping the amount of money that can be electronically taken out of the country and making these transactions slower to clear; and introducing border checks to cap the amount of cash leaving in the country.

 

One official also said the IMF had been tasked with developing a plan to merge the country's two biggest banks—Laiki Bank and Bank of Cyprus—putting their healthy assets into a smaller entity and the nonperforming assets into a "bad bank," which wouldn't do any new business.

 

A spokeswoman for the IMF had no immediate comment. European officials have repeated that the goal is to shrink the island's banking sector over time.

 

After the Saturday morning meeting where finance ministers presented the bank-deposit tax plan, Jörg Asmussen, the German member of the ECB's executive board, said the Cypriot central bank and treasury have "prepared a contingency action plan, they are monitoring deposit flows, even on an intra-daily basis and will take the necessary actions if appropriate."

 

The officials said neighboring countries had been instructed to be on the ready to fly euro bank notes into Cyprus should the need arise, but one official said this hadn't yet happened.

In a sign that even worse is to come, is the use of the most dreaded comparison in modernity: Cyprus is now Greece:

He said the ministry was "proactively approaching personnel to ask if they want their March and future months' salaries paid into U.K. bank accounts, rather than Cypriot accounts."

 

The officials said such planning shouldn't be a surprise.

 

"This is exactly what is to be expected and exactly what was in place for Greece last summer," one official said, referring to the critical Greek elections in June 2012, during which depositors were removing large sums of cash out of Greek banks, spooked by the prospect of a euro exit.

 

Spokesmen for the European Commission and the ECB declined to comment on the contingency plans. ECB officials have said it is a matter for the Cyprus government. A spokeswoman for the Central Bank of Cyprus didn't respond to calls for comment.

All that said, please don't worry: Cyprus is small and thus meaningless, the benign despots of the Europas say it is a "very special case", Europe is solvent, its banks are overflowing with cash and Spiderman towels, all people in Europe are equal but those who share bank vaults with Russian billionaires in places like Cyprus, or Switzerland, are less equal than others, and general there is nothing to be afraid of: because if bank runs haven't started by now, they certainly never will. Ever. Promise.

Remember - Europe is fixed: every European politician has already said so. Twice.

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Tue, 03/19/2013 - 19:43 | 3350244 Cult_of_Reason
Cult_of_Reason's picture

Cypriot Govt MP Mario Mavrides tells BBC Newsnight if a deal with the Troika can't be found or Cyprus can't raise 6bn, they'll leave the Euro.

https://twitter.com/BBCNewsnight/status/314141114380730368

Tue, 03/19/2013 - 19:46 | 3350271 smlbizman
smlbizman's picture

keisers site is down....it looks down , not troubled...anyone else?

Tue, 03/19/2013 - 19:48 | 3350279 smlbizman
smlbizman's picture

and can somebody tell me how to get the hedge if they take it down...will i need special skills beyond click click? will i need to be a computer geek?

Tue, 03/19/2013 - 19:55 | 3350302 seek
seek's picture

in theory it could be accessed directly at its ip address (http://178.209.48.14) but it currently redirects that to "zerohedge.com" so it would still break if someone did the usual DNS tricks like DHS does. I'd imagine if they were formally blocked that Sacrelidge would reconfigure the IP to work or come up with another domain name outside of US jurisdiction. (The servers were relocated outside the US years ago, so DNS is the only real vulnerability short of an internet kill switch.)

It'd be great if ZH had a presence of Tor.

 

Tue, 03/19/2013 - 20:01 | 3350328 francis_sawyer
francis_sawyer's picture

CAPITAL CONTROLZ BITCHEZ!

~~~

[aka: the JOOBUX endgame]...

Enjoy your 'politically correct' life [& all it earned you, or what it will be worth to you going forward]...

Tue, 03/19/2013 - 20:13 | 3350353 CClarity
CClarity's picture

EU general principles of capital movement within the EU Treaty Provisions - let's just say there are lots of loopholes (exceptions) and so many things that could be considered "prudential measures"  or "defense"  or public security or myriad other things. http://ec.europa.eu/internal_market/capital/framework/treaty/index_en.ht...

Tue, 03/19/2013 - 20:25 | 3350427 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

this francis sawyer dude would make it good in Nazi germany

Tue, 03/19/2013 - 20:38 | 3350482 Ima anal sphincter
Ima anal sphincter's picture

-1000...... Actually his views are quite correct. He doesn't play the "politically correct" game either.

We need more just like him.

Tue, 03/19/2013 - 22:12 | 3350781 francis_sawyer
francis_sawyer's picture

I'm not a jew hater...

~~~

I'm a fiat ponzi paper [FRANCHISE] hater...

All candidates [who DON'T overwhelmingly represent a 'tribe' at large]... may APPLY for status at will...

I've only received one application thus far... That was from the EVIL EPISCOPALIAN cult... [It's under consideration by the JUDICIARY COMMITTEE as we speak]...

 

Wed, 03/20/2013 - 01:50 | 3351171 Element
Element's picture

 

 

"I watched a snail crawl along the edge of a straight razor. ... That's my dream; ... that's my nightmare. ... Crawling, ... slithering, ... along the edge of a straight razor... and surviving."

Capital controls

Wed, 03/20/2013 - 02:33 | 3351204 Dooud
Dooud's picture

Apocalypse NOW,,,,man!

Wed, 03/20/2013 - 04:51 | 3351299 Mentaliusanything
Mentaliusanything's picture

Capital controls? well if the Pope is a Catholic, a fishes ass is watertight, wild bears shit in forests and one legged ducks swim in circles, thenThat little island is going to get them. Talk about stating the bleeding obvious. Banks that levitate on levergage can do no more. Malakas

Tue, 03/19/2013 - 20:12 | 3350363 SMG
SMG's picture

You misassign the blame. HORUSBUX (Lucifer) would be more accurate.

Tue, 03/19/2013 - 20:33 | 3350463 NoDebt
NoDebt's picture

What a clusterfuck.  I suppose we all knew something would trigger the next wave.

At this point a quick exit from the Euro by Cypress might be the LEAST damaging thing they could do to themselves.  It'll be bad for a while but 3 years later Greece will be looking at them with envy.

Still, making nicey-nice with the Russians..... oofah!  No matter what they do they're gonna have a tough time with that.  Maybe offer the gas fields to Gazprom and hope that's enough to appease them.

Could be worse, I suppose.  Could be me.  (Will be sometime in the future, I know, but thankfully not today)

Tue, 03/19/2013 - 21:48 | 3350713 Eireann go Brach
Eireann go Brach's picture

Francis Sawyer, you deserve to have your head placed in a vice and pulled tight until your eyes pop out you ignorant bastard!

Tue, 03/19/2013 - 20:04 | 3350339 nonclaim
nonclaim's picture

Accessing articles via feed worked while the main page was "blank" today:

http://feeds.feedburner.com/zerohedge/feed

Wed, 03/20/2013 - 12:37 | 3352600 Georgiabelle
Georgiabelle's picture

Thanks for the link. Good to know.

Tue, 03/19/2013 - 21:09 | 3350583 smacker
smacker's picture

If ZH is mirrored in one or more other jurisdictions (currently it's hosted in Switz).

Mirroring is not uncommon with sites which the criminal elites dislike...

Tue, 03/19/2013 - 19:55 | 3350300 Cdad
Cdad's picture

It's a power outage.

Tue, 03/19/2013 - 21:05 | 3350569 JackT
JackT's picture

Shouldn't people already be lining up? Here in the states we line up at least 3 days prior to a retail discount

Tue, 03/19/2013 - 20:42 | 3350484 ChanceIs
ChanceIs's picture

I think the site is down becasue Max compared Jamie Dimon to a tapeworm once too often.  Or perhaps he made too convincing a case that Jamie is a tapeworm.

Probably it was because he had Josh Rosner on.  I have met Josh on several occasions.  Incredibly likeable, thoughtful, sincere human being.  His mere presence on the show gives Max a lot of credibility.  (Constrast that to what would happen to Max's credibility if Jamie actually accepted one of Max's invitations to be on the show.)  Rosner bashed the living s*&t out of JPM/Jamie.

As someone pointed out, the lastest Keiser report is available on YouTube.  I got it from my feed.  I am sure that if you did a search on "Keiser tapeworm" you would find the show.

Tue, 03/19/2013 - 22:25 | 3350828 ThaBigPerm
ThaBigPerm's picture

Dimon has an "off switch" of his own ...

http://abclocal.go.com/kabc/story?section=news/business&id=9032659&rss=rss-kabc-article-9032659

Someone accidentally installed the Cypriot patch on their production servers instead of the development servers... lol

Tue, 03/19/2013 - 19:46 | 3350272 McMolotov
McMolotov's picture

Paraphrasing The Breakfast Club: "If Cyprus leaves the Euro, they'll all leave the Euro! It'll be anarchy!!!"

Tue, 03/19/2013 - 20:13 | 3350376 Abraxas
Abraxas's picture

Save Feris! (in this case Cyprus)

Tue, 03/19/2013 - 19:47 | 3350275 max2205
max2205's picture

They all get euros with a little C Next to it. Not good out out country. Checkmate

Tue, 03/19/2013 - 19:50 | 3350278 Supernova Born
Supernova Born's picture

Inevitable.

Individual Registered Accounts will be taxed. Registration precedes confiscation.

Demographics are destiny and the demos spell FSA voting majority.

Tue, 03/19/2013 - 20:13 | 3350369 Gidas19
Gidas19's picture

On the positive note, Cyprian unemployment % should go down due to hiring of part time bank tellers for the busy season thats coming, right?

Tue, 03/19/2013 - 21:49 | 3350719 Joe moneybags
Joe moneybags's picture

Once again, the PTB demonstrate that power.  They can make or change about any rule that they wish, and leave the populace dazed, confused and compliant, like vicitims of the "Stockholm Syndrome".  That's the reality with which we must deal, not the fantasy of a day of reckoning, where we stackers become the new exulted Wise and Wealthy Men.

Wed, 03/20/2013 - 08:47 | 3351641 thewhitelion
thewhitelion's picture

But on a brighter note " its banks are overflowing with cash and Spiderman towels."

Tue, 03/19/2013 - 19:40 | 3350245 IamtheREALmario
IamtheREALmario's picture

We already have many capital controls in the US: 401Ks, IRAs, the 10,000 limit on cash movement, bank covenants, taxes, etc. Who is kidding whom?

Tue, 03/19/2013 - 19:49 | 3350282 Stoploss
Stoploss's picture

Any body remember the name of the european model who refused to be paid in dollars?

I think this was in 08 or 09.

Wondering how that's working out so far.  LOL!!

Tue, 03/19/2013 - 19:54 | 3350299 JohnG
JohnG's picture

Gisele Bündchen

Tue, 03/19/2013 - 20:00 | 3350317 Supernova Born
Supernova Born's picture

Asset forfeiture will come to those who merely try to preserve post-tax savings, but run afoul of new reporting/levy/taxation requirements.

Tue, 03/19/2013 - 20:18 | 3350398 Town Crier
Town Crier's picture

By keeping interest rates artificially low the US Gov steals the money of savers every day, and has been doing so for years. They are just more clever about it.

Thu, 03/21/2013 - 15:06 | 3350305 Supernova Born
Supernova Born's picture

Speaking of demographics...

The Free Shit Army thanks you for your work and your delayed gratification. It shall be their pleasure to gratify themselves at your expense.

Tue, 03/19/2013 - 20:13 | 3350370 Tijuana Donkey Show
Tijuana Donkey Show's picture

If it was on the border to Canada, then yes.....

Tue, 03/19/2013 - 19:58 | 3350303 Winston Churchill
Winston Churchill's picture

Damn right.As of Jan 1st there iss a new Treasury report for any

overseas transfer in any ammount from a bank.Money seems to take two

days instead of two hours to arrive.

Long smugglers.

Tue, 03/19/2013 - 20:25 | 3350428 nonclaim
nonclaim's picture

FX netting if you find a trade partner.

Tue, 03/19/2013 - 21:44 | 3350704 Oldballplayer
Oldballplayer's picture

You can move any amount of cash you want. It just gets reported. If your answer to the question is that you don't trust the banks and you want your cash....it's not illegal.

Wed, 03/20/2013 - 05:09 | 3351320 Mesquite
Mesquite's picture

And the folks were told the TSA were looking for ....

Tue, 03/19/2013 - 19:41 | 3350246 lordbyroniv
lordbyroniv's picture

4th Turning..........BITCHEZ !!!!!!!!!!!!!!!!!!!111111111

Tue, 03/19/2013 - 19:43 | 3350250 slightlyskeptical
slightlyskeptical's picture

I'm not so sure. If the banks get recapped it may be the safest place in the world for your money. The politicians have made it clear that the rule of law still exists in Cyprus.Would you trust the US congress to vote such a measure down?

Just playing devil's advocate here. I would guess about 30%.

Tue, 03/19/2013 - 19:45 | 3350260 Tijuana Donkey Show
Tijuana Donkey Show's picture

CON-gress would never get to vote on it. Cue the Fed mandate................

Tue, 03/19/2013 - 21:14 | 3350595 CaptainObvious
CaptainObvious's picture

Doesn't matter what Congress does or doesn't do since Obomber has made it abundantly clear that he'll just do an end run and write one of those executive orders.  Sort of like executive order 6102.

Tue, 03/19/2013 - 19:43 | 3350252 OptionNinjaNYC
OptionNinjaNYC's picture

Capital Controls: Coming soon to a Chase bank near you.

Need more Synthetic CDOs.

 

http://wallstreetfool.com/

Tue, 03/19/2013 - 19:44 | 3350253 Tijuana Donkey Show
Tijuana Donkey Show's picture

CHASEing the dream BABY! http://www.infowars.com/chase-customers-see-bank-balance-reduced-to-zero...

Just a fluke while they cook the numbers?

Tue, 03/19/2013 - 19:45 | 3350267 El Viejo
El Viejo's picture

Pardon my ignorance, but what's the diff between Iceland and Cyprus?

Tue, 03/19/2013 - 19:47 | 3350276 Coke and Hookers
Coke and Hookers's picture

The euro. There is no danger of any sort of currency crisis or capital controls if you have the euro. That only happens in countries with their own currencies, like Iceland.

/sarc

Tue, 03/19/2013 - 19:53 | 3350291 El Viejo
El Viejo's picture

And the US,Japan etc  /sarc

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