ECB Gives Cyprus March 25 Liquidity Ultimatum

Tyler Durden's picture

As reported yesterday, Cyprus banks are now expected to reopen next Tuesday. We would boldly go ahead and take the under following overnight news that the ECB has once more escalated its political interventions (remember the lies about "apolitical, independent" Central Banks - good times...), and following a Reuters report yesterday that the ECB is prepared to let Cyprus go, the FT now has doubled down on the propaganda, reporting (in an article with no less than five authors) that the ECB has issued an ultimatum to Cyprus to agree to a bailout by Monday (which is a holiday), or the free liquidity ends.

"The European Central Bank raised the stakes in the Cyprus crisis on Thursday, telling Nicosia it had until Monday to agree a bailout with the EU and International Monetary Fund or it would cut off emergency liquidity provision to the country’s banks. The hardline stance from the ECB sets a clear deadline for Cyprus to agree to a plan after its parliament rejected a bailout negotiated at the weekend that would have taxed the deposits of account holders in the country’s banks." Which means yet another weekend of ad hoc choices and spontaneous decisions awaits, only this time with a key non-Euro actor involved in the face of Russia, whose interest just in case there is any confusion, is to see Cyprus crushed, so it can swoop in later and "acquire" the assets on the cheap, or preferably free, while the local population welcome the second coming of the glorious Red Army with open arms, delighted to be free of European slavery. Well played Putin.

From the FT:

The ultimatum came as EU leaders maintained pressure on Nicosia to come up with a new plan on its own and Russian prime minister Dmitry Medvedev told a visiting European Commission delegation that a solution had to include Russian participation.

 

“It is now up to the Cypriot authorities to come up with proposals,” Jeroen Dijsselbloem, chair of the committee of 17 eurozone finance ministers who negotiated the bailout, told the European Parliament on Thursday morning.

 

In a short statement the ECB said its 23-person governing council had agreed to maintain emergency liquidity provision to Cyprus’s banks until Monday. “Thereafter, Emergency Liquidity Assistance could only be considered if an EU-IMF programme is in place that would ensure the solvency of the concerned banks,” it said.

 

The country’s two biggest banks, Bank of Cyprus and Laiki, are believed to be reliant on Emergency Liquidity Assistance provided by the Central Bank of Cyprus. The ECB’s governing council can terminate ELA if it believes the banks receiving it are no longer solvent.

 

The move, however, raises the prospect of the ECB having to make good on its ultimatum on Monday, which could leave the banks unable to honour their obligations. Some analysts have speculated that the collapse of the banks could trigger a series of events that lead to Cyprus leaving the euro, with unpredictable consequences for the rest of the eurozone.

Will the ECB really be so stupid as to force the Cypriot bluff? Does Draghi really want to put the OMT into operation, which would inevitably happen once Cyprus is kicked out of the Eurozone, and a pan-European deposit run, which has so far been spared due to lack of tangible evidence that there is an actual "credibility" event in Cyprus due to what may be a permanent bank closure, becomes inevitable?

Most importantly, will the ECB truly shoot itself in the foot once again, and destroy all the so-called confidence it has rebuilt in the past four years on the back of endless promises, threats and urgings?

Tune in this time Monday to find out.

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GetZeeGold's picture

 

 

They'll give you their answer now if you'd like. Their offer is nothing.

http://www.youtube.com/watch?v=wPmTp9up26w

zorba THE GREEK's picture

Russia gets the smart president, the U.S. gets the corporate lackies.

Zer0head's picture

LOL

JPMorgan clamps down on fees from payday lenders

http://online.wsj.com/article/APbd6d41e7fb574e18abdc7b893fc0824b.html

 

"JPMorgan Chase is taking steps to protect its customers"

ziggy59's picture

The P stands for Pathological Liar, right?

TerminalDebt's picture

In Soviet Russia banks close you

TJ00's picture

The P stands for Psychopath, right? - FTFY

sunnydays's picture

Putin is playing his hand as long as possible.  I have no doubt he has a plan in place for Cyprus.  He is controlling the situation.  He can come in and save Cyprus and help them leave the EU by getting their gas deposits and a Naval base.  A little revenge upon the EU?  This is high stakes poker not for the weak handed. 

disabledvet's picture

You mean the Russians or the "Euro group"? if it's the latter that strikes me as striking Anglo Saxon actually. if it's the Russians..."commence the bombing of Egypt" next? well played? really? seems to me France is the big winner here and the ghost of "Emperor Napoleon" and his still existing "Napoleonic Codes." but hey...we're just the one's who've been fighting this war for twelve years straight. what could the Americans possibly have gleaned from all that? clearly our protection is not wanted by anyone anymore save Japan it would appear. oh, well then...

SDShack's picture

No, France will be the biggest loser in a EU implosion. When it all starts to unravel, the EU will split into 2 factions, North and South. Hell, it's almost there now. The North will see the writing on the wall and will start the exit party. Probably Germany after the September election as Merkel is finished after this fiasco. She has managed to screw this up royally by looking like a jack booted Nazi thug on one hand with her proposal, and a weak pawn on the other with the proposal being shot down so utterly. After Germany, other strong Northern countries will follow. France will try to exert themselves as defacto leader in the power vacuum, like they always do. The other South countries will look to France and France will provide token help, but fail...like they always do. France will be much worse off when the dust settles because those that leave last, will be the bag holder.

thisandthat's picture

I read about such possible future north/south split scenario maybe about two decades ago!

Culturally and historically it makes sense for north and south Mediterranean countries more closely relate between themselves, and could eventually be a solution for many of their current problems, some of which were created by the EU, itself, in benefit of northern countries.

Bangin7GramRocks's picture

Blah, blah, blah. By Monday, the Fed, ECB, Russians, Chinese or Santa Claus will miracle them a "loan" and all will be fixed. Europe is saved and the markets can rise by 10% next week. Now lets get ready for the tournament!

Panafrican Funktron Robot's picture

Yeah, that did seem to be the dominant theme on public radio news this morning.  The theme today was "Cyprus is going to Russia to get a bailout from them".  Something tells me this isn't too terribly fucking likely.  ECB pulled the "grim trigger" threat, which doesn't tend to work when you've shown yourself to be a complete fucking vagina.  Either the ECB capitulates here, or they decide to "show them who's man" and let Cyprus fail, which will, for sure, turn into a Lehman-scale contagion problem.  Honestly, this is probably going to happen regardless, but the scale will depend on what the ECB decides to do.  Russia is very much looking forward to it either way, they won big the last time there was a global financial crisis.  

Groundhog Day's picture

ECB:  We're not going to take this anymore, you have until march25th or else!

On March 25th: Cyprus does nothing

ECM: We meant MARCH 25th 2014

permafrost's picture

I looked up what holiday March 25 was: Greek Independence Day.  Way to go ECB.

css1971's picture

Tuesday morning, the banks open they say.

Tuesday afternoon, the banks close again permanently.

Wednesday morning, CDS trigger all over the place.

swissaustrian's picture

ISDA is going to call it a voluntary act, not a default.

pods's picture

I don't care how many times you use the paddles.  Time to call TOD.

pods

css1971's picture

I've been rethinking this. They've caved every time previously. Why do I believe they won't fold like a piece of paper this time too?

I'm positioned as if they won't cave... It's starting to look stupid...

chindit13's picture

No to the CDSs.  There's a total of $2 billion gross notional on the Cypriot Government, and none of its banks are in the top 1000 traded CDS issues, which means that if they have CDSs outstanding, the amounts are small.  They have plenty of problems without turbo charging it with CDSs.

Panafrican Funktron Robot's picture

"There's a total of $2 billion gross notional on the Cypriot Government"

Right, but how much gross notional on their banking sector?  Ah, see, this is the real problem.  And we're not just talking Cypriot banks.  Consider the Greek banks as well.

If you get the ebola virus because of a small cut in your pinky toe, guess what?  You still have ebola virus in your body.  

I agree that this is mostly going to be a crisis for the financial sector outside the TBTF, and probably intentionally designed for them to swoop in and acquire assets on the cheap, it's still going to be a crisis. 

SDShack's picture

Wednesday afternoon, the Bernak boards the helicopter.

mdtrader's picture

Kind of ironic really because the Germans have fought so hard to save and prop the euro and eurozone, now they may actually cause the breakup.  For those people who think the weak countries dropping out of eurozone would be bullish for the euro. What would be the total losses for Germany on all this crappy paper. A trillion euros?  Anybody know?

Dr. Richard Head's picture

Much of it depends on the synthetic derivatives Goldman, JPMorgan, et al decide to create between now and then.

All hail Blankfein. All hail Dimon.

Is it time to offer our first born as a sacrifice to those doing god's work? Seems so......

pods's picture

I am cueing up "Creeping Death" atm.  Seems fitting?

pods

Panafrican Funktron Robot's picture

I tend to see something more active happening in the not to distant future.

http://www.youtube.com/watch?v=EpMuCrbxE8A

Propaganda death ensemble
Burial to be
Corpses rotting through the night
In blood laced misery
Scorched earth the policy
The reason for the singe
The pendulum it shaves the blade
The strafing air blood raid

infiltration push reserves
Encircle the front llines
Supreme art of strategy
Playing on the minds
Bombard till submission
Take all to their graves
Indication of triumph
The number that are dead

CHORUS
Sport the war, war support
The sport is war, total war
When victory's a massacre
The final swing is not a drill
It's how many people I can kill

CHORUS

Be dead friend from abve
When darkness falls
Descend into my sights
Your fallen walls
Spearhead break through the lines
Flanked all around
Soldiers of attrition
Forward their ground
GRegime prophetic age
Old in its time
Flowing veins run on through
Deep in the Rhine
Center of the web
All battles scored
What is our war crimes
(Era forever more...war)

Propaganda war ensemble
Burial to be
Bones shining in the night
In blood laced misery
Campaign of elimination
Twisted psychology
When victory is to survive
And death is defeat

CHORUS
Sport the war, war support
The sport is total war
When victory's a massacre
When victory is survival
When this end is a slaughter
The final swing is not a drill
It's how many people I can kill 

disabledvet's picture

yeah well...if the Dmark (massively devalued) suddenly re-appears it's "all bail Blankfein, all Bail Dimon." http://www.youtube.com/watch?v=pVa0v0Ay_Pg

IamtheREALmario's picture

The next judgment day is in September of 2015 unless they/we repent and follow God's laws ... which means, amongst other more important things a jubilee must take place. I don't know if they will be able to implement the great communist jubilee by 2015, but certainly by 2022 or 2029 at Apophis fly-by time... otherwise it may be "goodnight Irene"... hand of God and all.

How's that crazy talk for ya, eh?

ZeroPoint's picture

I read Germany's exposure is at least 2 trillion. They will go down just as hard as any of the smaller countries.

CustomersMan's picture

 

If it were possible to add up the market losses so far, it would dwarf the bailout sum in spades, and it isn't over by a long shot. in addition the psychological cost in lost confidence and mis-trust is many times higher. So who have they screwed?

debtor of last resort's picture

That would be a relief. Not losses.

847328_3527's picture
These Banks Are Likely to Fail This Year

 

Hanging by a thread

This year’s five banks most likely to fail are based on Texas Ratios determined by bank data as of the third quarter of 2012. (In last year’s list, all five of the previously listed banks have failed — the lowest Texas Ratio was 544 percent.)

 

http://www.mybanktracker.com/news/2013/01/09/5-banks-are-likely-to-fail-...

Cookie's picture

If the banks fold, the Russians lose everything. Putin will not let that happen to his mates from the security services

Dr. Richard Head's picture

Wait banks fold? The stress test of 18 months ago said everything was ice cream with a fucking cherry on top.

falak pema's picture

And...they tested 14 banks in the US and said they were all clean...hmmm/

reload's picture

Do they?

What if this is all theatre - and the deal is already done.

Russia Gets Cyprus, some nice ports and a gass field.

In return it gets out of Syria & distances itself from Tehran a bit.

Obama, the MIC and Isreal get a much cleaner run and the resources in the ME.

Germany looks stupid and vindictive - but has lit the fuse to have to hopelessly broke southern Euro states break away from `the core`

In the ensuing chaos - (throw in a sudden halt to printing, a bust PD (or 2) a collapse in asset prices) the people who really matter, and who are ready and liquid, swap the recently printed they hold for hard assets.

Populations beg for government support - more printing etc etc, and accept further losses of freedom without question.

Where is James Bond when you need him? 

IamtheREALmario's picture

Yes, all tactical and possible ... but that is not the goal and strategy. The endgame is globalization under a communist regime. Obummer and Merkel are both commies put in place from a 50 year old plan. I like your thinking. Only it is too short-term.

ElvisDog's picture

Umm, I would say the "50 year old plan" is failing miserably. Spain, Italy, Greece, Cyprus, are all moving away from centralization. Do you read the fucking news or just stick with the One World Order bullshit? Kunstler may have his own blinders on, but he's correct that the future will be less (effective) centralized control, not more.

falak pema's picture

you can thank the likes of Julian Assange who have pulled the wool from in front of our collective eyes, the heretic spokeman against Western "we save the world in pax americana" gang religion.

Thats why keeping the Internet under 'Hippocratic' oath of transparency, under no evil Empire control, to allow the truth to emerge at the flash of an eyelid, is so important. Google big data world control is not the paradigm that should unfold.  

Be bold, take hold and never kneel to the new Bernard Gui's; always cherish memory of Bernard Delicieux the man who defied the Inquisitory fold even to life imprisonment cell; Assange's role model. 

These guys never die like Spartacus or Leonidas. As for James Bond, lol...he is what John Le Carre would call a Tailor from Panama, who needs to go lie in the cold and never come back unless called by Moneypenny for some xtra time lovey dovey; thats fine as he always drinks Dom Perignon afterwards like a good fellow.

ElvisDog's picture

Falak, I don't entirely follow what you wrote, but I'm pretty sure I agree with it. There is no group of evil geniuses who sit around a table somewhere and decide the world's fate. The world is run by a relatively small group of oligarchs who are no smarter than you or I. Each oligarch has their own fiefdom, and they do whatever is needed to protect that fiefdom. Their time horizon is short term. The only time they work together is when their interests align, but much of the time their interests do not. To think that 50 years ago some Dr Evil group thought "In 2008, we'll put a black, communist in as president of the U.S. to do our bidding, (bwaa-hah-hah-hah)" is a stupid, adolescent fantasy.

falak pema's picture

have one on me and the penny will drop, it always does once we feel good in our blue suede shoes! 

I agree these guys with Dr NO dreams and Bloefeld  schemes always end up like Droopy dog in the dog house.

Look at Dubya, he is painting poodles in his bathtub to forget what he did in Abu Graith...he has to get off that bottle! 

As for the grand ole plan to dominate the world its got Helicopter Ben printing toilet paper to save their NWO necks.

keep the bastards honest's picture

I hope not. I dont get your startement. the russians should get ther 5 trillion shifted to the bank they own in Cyprus.. Its all been setup subsequent to the 70% greek bondholder haircut.

Russians keep cruising. 

spine001's picture

We don´t know what happens if the banks fold. Let me play a simple scenario. The Russian mob has CDS (like an insurance protection) on those banks with some banks in Greece, Portugal, Italy and-or Spain. Once the Cyprus banks go, the CDS get triggered and some banks in the PIIGS fold, triggering more CDS, but this time they will go to banks like Deutche bank, UBS, Credit Suisse, Bank of America, JPM, Citibank...

Do you really need me to keep on playing the ¨contagion¨ scenario?

It can get very ugly and the Russian mob knows it and probably can help. Do you think that they were going to let the wealth tax pass to save those banks? No way, they will call the bluff and break up the world financial system if they possibly can. That would allow to win the cold war, after suffering a tactical loss a few years ago...

The key questin is if the ECB-EU-IMF will be stupidit enough to fall into this clear trap. This looks to me like a chess game between Kasparov and Bobby Fisher many years ago...

Until next time,

Engineer

Tango in the Blight's picture

Fisher never played against Kasparov. Maybe you are referring to Boris Spassky.

JOYFUL's picture

If the banks fold, the Russians win everything.

A collapsed Eurozone has the Germans heading for the eastern exit - finally free of the Atlanticist controllers - and and rest of the core countries scrambling to find a safety net. Stop and think why the Fed has been pouring money into the Eurozone to prop it up.

Heinz learned a big lesson from stopping the tanks short of Baku and then diverting back to Volvograd ...you don't get far without petroleum products. Commercial alliances with energy-rich, emerging middle class countries like Russia, Turkey*, and Iran beat the hell out of playing sugar daddy for dead beat neighbors whose import ability is tapped out long time gone.

What the Russians lose in fiat  is nothing compared to what they will gain in trade and influence. So a few mid-tier players lose their loot. Putin's got a lot of sugar-plums to hand out to the tios in the future.

*Turkey not energy rich you sneer>!???...don't kid yourself, once things get sorted, they intend to be brokers of every major landline deal between Europe and the energetic east. Petro Gold is just gettin started....as the tide goes out on ZATO's last gambit.

edit: that 'golden rocket' that just took off on the chart tells me that some of the trade is thinkin along the same lines...looks like it's gonna be a classic "Fast Heinz Guderian" breakout gents. You could just see that tight control zone this morning was gonna snap!

Fips_OnTheSpot's picture

Irony: Monday's holiday is "Greece Independence Day"

disabledvet's picture

again "the timing is too perfect and the gaming too precise." if someone has thought this one out they've thought out a lot of other contingencies as well. not a betting man (other than with my life) but my money is still on the French as "the trigger man" here.

swissaustrian's picture

The leaked conference call is quite an eye-opener:

http://uk.reuters.com/article/2013/03/21/uk-eurozone-cyprus-call-idUKBRE...

"Markets believe that we will find a solution and that we will provide more money and this might not be the case," one of the participants on the call said, according to the notes."

CustomersMan's picture

 

This whole saga surrounding Cyprus presents a unique opportunity for the BRIC Countries to step forward and intervene on behalf of Cyprus. Since it is a highly visible series of events, it could raise their profile around the world in ways marketers could only dream of. Why haven't we heard or seen any action from that corner?

disabledvet's picture

again "the French did it." Viva la France.