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Next Up For Cyprus: Depression

Tyler Durden's picture


From SocGen:

Depression for Cyprus: Our Cypriot GDP forecast entails a drop of just over 20% in real GDP by 2017. This forecast had already factored in much what was agreed, but did not account for the additional uncertainty shock generated by the past week’s appalling political mess. Risks are clearly on the downside and Cyprus will in all likelihood require additional financial assistance further down the road. Accounting for less than 0.3% of euro area GDP, any downward revision to Cyprus will be barely visible on the euro area aggregate.

So much for the hope of recreating Iceland, and actually growing in 2-3 years. Congratulations Cyprus - you may have a depression for the next four years, but at least you have the (and helped Merkel win the September election).


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Mon, 03/25/2013 - 08:42 | 3371668 Holleyman
Holleyman's picture

They will still have deposits less than 100,000 to raid for next time

Mon, 03/25/2013 - 08:45 | 3371680 eigenvalue
eigenvalue's picture

Do you think anybody with a brain would still put his money at a Cypriot bank? 

Mon, 03/25/2013 - 08:49 | 3371701 mayhem_korner
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Delete "Cypriot" and you have yerself a viral bumper sticker, amigo.

Mon, 03/25/2013 - 09:15 | 3371827 Urban Redneck
Urban Redneck's picture

Not wise to park a car with such a bumper sticker in front of your own house...

Mon, 03/25/2013 - 08:50 | 3371706 ziggy59
ziggy59's picture

Yes, Gray matter can be present without much function...
Just ask the Honey Boob cheerleaders, watchers, etc. BTW shes being exported... Her retarded show is being sent to Europe..

Its more funner to be walking, talking brain dead

Mon, 03/25/2013 - 08:54 | 3371730 kaiserhoff
kaiserhoff's picture

I was a small town CPA before I started teaching, and always maintained a few tax clients.

This will destroy all small business on the island.  It's only a matter of time.  Cash is just another form of inventory for many of us.

The companies not caught in the initial rape, will die a slow death from no demand and uncollectible receivables.

JUST SAY NO, CYPRUS,  Or better yet, tell them to go straight to hell.

Mon, 03/25/2013 - 09:25 | 3371875 NoDebt
NoDebt's picture

They can't say no.  There won't even be a vote.  It's done.

Agreed, they're toast.  As their economy shrinks they will have less tax base to support the debts they owe on the bailout and..... well, this won't be the last bailout for Cyprus, just as Greece had multiple rounds.

Mon, 03/25/2013 - 10:03 | 3371983 TheBird
TheBird's picture

Well you get the prize today. It is about time that people wake up and realize that when they put ("place") money in a bank account they are in effect lending it to that bank to use in any manner of ways.

I was very glad to read this: "Cyprus Popular Bank, 84 percent owned by the government, will be wound down. Those who will be largely wiped out include uninsured depositors and bondholders, including senior creditors. Senior bondholders will also contribute to the recapitalization of Bank of Cyprus. "

That is a definite step in the right direction and is what should have been done in Greece. Bond holders should not be bailed out. Depositors in excess of the "insured" limit likewise knew their money was at risk.

I remind any of you with brokerage accounts with large sums of money to verify exactly who is insuring your account, their credit worthiness and up to what dollar amount they are insuring. Flee first, ask questions later.

Mon, 03/25/2013 - 10:32 | 3372093 Bunga Bunga
Bunga Bunga's picture

Correction: Do you think anybody with a brain would still put his money in a bank?



Mon, 03/25/2013 - 08:53 | 3371721 laomei
laomei's picture

Anyone with half a brain is draining out those accounts the instant the banks reopen.  

Mon, 03/25/2013 - 09:03 | 3371781 Super Broccoli
Super Broccoli's picture

they can't : cap control !

Mon, 03/25/2013 - 09:07 | 3371793 mayhem_korner
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Secondary markets might get around those.  A little sugar (or a loaded Glock) goes a long way to having the keepers look the other way.  That's how Congress 'works'.  :D

Mon, 03/25/2013 - 09:48 | 3371928 laomei
laomei's picture

Euros is euros, there's always ways around it, even easier when you don't have to exchange.  Fake invoices are easy as hell, even easier is using cards and merchant accounts to move money around (while taking a hit on fees of course)

Mon, 03/25/2013 - 08:57 | 3371752 tonyw
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Plus anything else they can raid or tax, such as pensions & property....

Mon, 03/25/2013 - 09:08 | 3371794 King_of_simpletons
King_of_simpletons's picture

Too bad. Cyprus doesn't have the Fed. They would at-least have a depression where the stock market keeps going up and the media cheerleads a "growing economy" and fake employment news.

Mon, 03/25/2013 - 08:43 | 3371669 ziggy59
ziggy59's picture

Depression contagious... Im depressed no banksters paid...but some Light shines since
The Ferryman is ALWAYS paid..

Mon, 03/25/2013 - 09:08 | 3371796 Beam Me Up Scotty
Beam Me Up Scotty's picture

Bullish for big pharma!! They have lots of pills you can pop to "cure" depression!!

Mon, 03/25/2013 - 08:43 | 3371670 MFLTucson
MFLTucson's picture

It doesnt matter, they got Gold lower and that was the plan of these fucking gangsters all along.  Print money, add debt and play fucking games, they call that a fix?

Mon, 03/25/2013 - 08:44 | 3371673 Its_the_economy...
Its_the_economy_stupid's picture

90% reduced to beggary.

Mon, 03/25/2013 - 08:53 | 3371726 machineh
machineh's picture

Cyprus will in all likelihood require additional financial assistance further down the road.

Bailout II, bItCHeZ!

Didn't anyone read the minutes of the last meeting in Greece?

Mon, 03/25/2013 - 08:44 | 3371675 fonzannoon
fonzannoon's picture

Where are all the boots on the ground reporters in Cyprus interviewing their citizens?

CNBS announced they now feel it's best to "move on" from Cyprus and discuss more important things. Thank god they only skanked uninsured deposits. Anything else could have created a stir.

This may be the last time we see gold at these prices. You know damn well people are now scrambling for real assets.

Mon, 03/25/2013 - 08:50 | 3371708 mikla
mikla's picture

They only came for the Cypriots, so I said nothing.

Mon, 03/25/2013 - 09:01 | 3371768 kito
kito's picture

Which people fonz?? The uber wealthy already have lots of islands to escape and the rest of the world is swimming in debt......ask the average American if they would rather spend 3000+ bucks on a down payment for a new car lease or two gold coins, they will choose the new debtmobile....tptb are following classic ray dalio deleveraging scheme and they intend to pull it off .........and it is all on the backs of the average citizen.......these citizens are not running out to buy real assets....they will continue to get sheared.......

Mon, 03/25/2013 - 09:09 | 3371802 fonzannoon
fonzannoon's picture

You are probably right Kito. This is one of the few times where they left the slaughterhouse doors open while the rest of teh sheep were grazing a few feet away.

Most of the sheep probably did not bother to even look up.

I do believe the wealthy people are scrambling to get their hands on Cash, metals and land.

I think the media will successfully twist people's minds into accepting that anything that is not government insured, has open season on it.

There also is no doubt in my mind that wherever this money flows (cash,metals, land etc) will be next up for confiscation because in the end it is all just dirty money. The sheep should rest assured that the governments are on top of it.

Mon, 03/25/2013 - 09:46 | 3371924 kito
kito's picture

for what its worth....i know several people who make mucho bocu bucks in the financial industry.............they have owned real assets for years and years regardless of the current situation.......and they dont see this ending badly........they see it as classic playbook economic downturn strategy......and i dont sense any urgency in them to do anything else but to profit from the bernank......................

Mon, 03/25/2013 - 09:54 | 3371943 fonzannoon
fonzannoon's picture

So those guys own real assets. If there is some major collapse, they will be fine. If there is no major collapse, they will be fine. I'd rationalize the whole thing and just continue to play along if I was them as well.

Mon, 03/25/2013 - 09:56 | 3371958 kito
kito's picture

egg-actly......wealthy people have always had a diverse portfolio of real estate, art, wine, etc......they are protected regardless.............they also have a rock solid faith in the way things are being carried out........................PLAY ON!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Mon, 03/25/2013 - 09:59 | 3371964 fonzannoon
fonzannoon's picture

How about the people out there lucky enough to have a few bucks, but certainly are not at that wealthy level?

What to do?

Mon, 03/25/2013 - 11:15 | 3372289 kito
kito's picture

pray? :)

Mon, 03/25/2013 - 11:17 | 3372302 Rentenmark
Rentenmark's picture

I agree with much of what you say kito.  However, we must remember that the rules will be changed to suit the needs of TPTB, just as they were in Cyprus.  Think you are safe in land?  They will tax it.  Think you are safe in PMs?  They will confiscate and make them illegal.  Think your acres of crops are yours?  Not unless the good of the people comes first and it is confiscated.  Think your stash of cash is safely out of the bank?  Not if they go electronic and install capital controls.

The point being we must do what we can to protect ourselves and hope that they cannot get all of which was taken out of the system.  Good luck to all!

Mon, 03/25/2013 - 10:08 | 3371998 MachoMan
MachoMan's picture

The slaughterhouse analogy is a bit off...  I'll posit that they simply have an "open door" policy at the slaughterhouse...  and the sheep simply come to them.  Granted, the folks at the slaughterhouse let a few dogs loose every once and a while to rile them up...  maybe even conjure a coyote...  or let the mean kid pester them with a bb gun...  but make no mistake, the final decision to enter is with the sheep...  there is no direct force necessary.

Mon, 03/25/2013 - 10:12 | 3372014 fonzannoon
fonzannoon's picture

good point. Agreed completely.

Mon, 03/25/2013 - 12:36 | 3372748 MachoMan
MachoMan's picture

Simplified down to that one single point, it's the scariest aspect of everything, economic and political... 

Mon, 03/25/2013 - 09:11 | 3371807 smlbizman
smlbizman's picture

rt has people on the street...if u just watched cnbs all you saw was a nice set of tits and a bent face.......but they are making noise in the streets...

Mon, 03/25/2013 - 08:45 | 3371679 toys for tits
toys for tits's picture

I'm depressed for Cyprus.

They stated that the Troika's goal is for the banking sector to come in line with the rest of EZ by 2018.  It'll be down to that level by the end of this year.

Mon, 03/25/2013 - 08:51 | 3371707 fonzannoon
fonzannoon's picture

Toys you were right that this was a big deal. The markets may not ever react to anything consequential again. Right now as the sea looks nice and calm on the surface you can't tell that there is a tsunami racing along underneath.

One thing these announcements have absolutely proven to me is this. When the time comes there will be no major selloff in the market. None. Anyone patiently shorting these markets for years now will not be rewarded. The market, like these banks, will just close on Friday and not open again.

Mon, 03/25/2013 - 09:28 | 3371865 toys for tits
toys for tits's picture

That is an important observation about banks and markets. Just keep on saving for you and yours.

It is nice to see these headlines in the MSM, even if it's on the opinion page.

Euro Bailouts: Savers Be Warned - Your Money's Not Safe

Mon, 03/25/2013 - 10:09 | 3371999 MachoMan
MachoMan's picture

The markets do react to everything...  It's just that on the worst days, we break even...  and then the remainder is irrational exuberance/fluffing.

Mon, 03/25/2013 - 08:45 | 3371683 Mercury
Mercury's picture

How does their banking sector not go to zero here?

Mon, 03/25/2013 - 08:48 | 3371695 mayhem_korner
mayhem_korner's picture



The same way everything else works...MAGIC.

Mon, 03/25/2013 - 09:48 | 3371930 SmallerGovNow2
SmallerGovNow2's picture

that's a great question.  capital controls will just make it go to zero slower...

Mon, 03/25/2013 - 09:54 | 3371949 kito
kito's picture

ultimately they will allow the release of larger amounts of money, but only for the purchase of domestic real estate and/or big ticket items.....this allows the flow of money out of the banks to appease the people but into the cyprus economy.................................if you have some extra spending cash....your best bet is to be on a plane to cyprus to purchase real estate.....because prices will go up once the bidding begins....................

Mon, 03/25/2013 - 08:46 | 3371686 Racer
Racer's picture

And if only they had had the courage to do an Iceland if could have all been soooo different.

Mon, 03/25/2013 - 08:54 | 3371729 valley chick
valley chick's picture

you are joking right?  Did you see all those people lined up in front of ATM machines?  They are the willfully ignorant and confident the result will be the same in other countries as people are raped of their cash. 

Mon, 03/25/2013 - 08:55 | 3371735 Ghordius
Ghordius's picture

I wonder if the protesters on the Cypriot streets would agree - remember, they were led by bank employees. further, Icelanders were presented with a way more painful set of options, if you look into the details

Mon, 03/25/2013 - 10:10 | 3372004 MachoMan
MachoMan's picture

Death or Ungabunga?

Mon, 03/25/2013 - 08:47 | 3371692 mayhem_korner
mayhem_korner's picture

Risks are clearly on the downside and Cyprus will in all likelihood require additional financial assistance further down the road.


Show me the list of countries, apart from our heady comrades in Reykjavik, that wouldn't correctly complete the sentence.

Mon, 03/25/2013 - 08:55 | 3371739 machineh
machineh's picture

That's today's big question:


Nominations are now being accepted.

Mon, 03/25/2013 - 08:58 | 3371756 Super Broccoli
Super Broccoli's picture

France ! that's when you'll first hear "to big to bail" :-)

Mon, 03/25/2013 - 09:04 | 3371782 mayhem_korner
mayhem_korner's picture



The 'too big to_ail' meme is such propaganda.  Whether you're treading water in a 8' pool or 20,000 feet of deep sea, the fate is the same.  The debt waters are rising in every country..."bigness" is simply the perception of what the sheep think can be absorbed, but it's all a sleight of hand. 

Time is the enemy of the ponzi - always was, always is.

Mon, 03/25/2013 - 09:41 | 3371912 LawsofPhysics
LawsofPhysics's picture

"Energy is the enemy of the ponzi" - fixed it for you.  It takes energy to do anything, period.  Eventually people must accept what their "lying eyes" have been saying all along.  Working harder for a lower standard of living. "Winning"

Mon, 03/25/2013 - 10:02 | 3371977 Anglo Hondo
Anglo Hondo's picture


And the answer is:

Slovenia - within a month.

Mon, 03/25/2013 - 08:49 | 3371696 lindaamick
lindaamick's picture

Putting on my PR/Social Media glasses judging the situation from this perspective I see:

1) Great news that the little guy's deposits are saved and the big, bad, wolf deposits are repatriated.

2) Great news that the Eurozone is kept intact.

3) Great news that the Cyprus situation COULD be contained successfully.

Taking off those glasses and looking behind the scenes I see an alternate story of reality for the citizens which will NEVER make the press reports.

1) There will be food shortages and other necessity shortages for the people constantly.

2) There will be full blown depression for the people lasting many years.  

3) There will be limits of bank withdrawls deterring movement of people.

This situation reminds me of the situation in the US where the Poor are hidden.   The real situation for MOST of the people is ALWAYS HIDDEN.

Mon, 03/25/2013 - 08:59 | 3371758 Ghordius
Ghordius's picture

I beg to differ - the situation in Iceland, Ireland, Portugal, etc. is widely reported on, here in europe. further in your second set of points 1) and 3) are quite debatable

Mon, 03/25/2013 - 08:51 | 3371713 Josephine29
Josephine29's picture

I see that from the available research and data that Cyprus was already in a depression

Industrial production


If we look for perspective we see that industrial production has been in a long term decline in Cyprus. An example of this is the way that employment in this sector fell from 38,460 in 2005 to 37,123 in 2011. Unfortunately things then took a turn for the worse. The level of output in 2011 was 92.9% of that in 2005 and this fell to 83.3% in 2012 as a whole. If we examine the most recent available numbers which are for December 2012 we see that the number had fallen to 75. This was 16.5% lower than in December 2011.

So as the author points out what can we expect next?

So we see that Cyprus was already facing an economic depression and now prospects are worse. I fear that the 20% economic decline that has been inflicted on Greece will be exceeded and would not be surprised if the Cypriot economy shrank by ten percent over the next year alone.


Mon, 03/25/2013 - 08:55 | 3371744 IamtheREALmario
IamtheREALmario's picture

It just occurred to me that the only way for Cyprus to fix the ECB imposed depression is to unwind globalism and become independently capable of supplying its own needs. This may be difficult for and island nation, but this is what we will all be facing in the not too distand future.

Austerity will unwind globalism. Brilliant!

Mon, 03/25/2013 - 09:00 | 3371763 mayhem_korner
mayhem_korner's picture



Yes...and as dependence gives way to independence across the board, the "fairness" imposed by the statist regimes will become excruciatingly painful, particularly to those currently in receivership.

Mon, 03/25/2013 - 09:02 | 3371771 Ghordius
Ghordius's picture

you are asking this from an island that made off-shore banking a mainstay of it's economy? that's quite an U-turn. btw, you know that what you are asking from them is not terribly far as what the French PM asks?

Mon, 03/25/2013 - 08:57 | 3371746 Super Broccoli
Super Broccoli's picture

no shit ? :-)

if i'm correct greece needs another bailout by june and spain has totaly raided the pension funds and has to issue over 200 billions in bonds this year so i think we'll all be depressed for a little while !

Mon, 03/25/2013 - 08:57 | 3371751 NoWayJose
NoWayJose's picture

If the Cypriot Parliament allows this to go through without changing laws to stop it, they will be allowing Cyprus to become an island prison for its people. Of course the EU likes this deal - it gets to use the same stick to poke at both Russians and Brits.

Mon, 03/25/2013 - 09:02 | 3371776 Zer0head
Zer0head's picture

perhaps Tyler could repsond to this Twitterer



Cyprus going bankrupt, does that mean it's gonna be cheaper or more expensive in Ayia Napa!?

Mon, 03/25/2013 - 09:13 | 3371819 chindit13
chindit13's picture

Cyprus blew up because banks' international assets (lots of Greek Bonds) went bad.  My old notes from the time of the Greek bailout has Laiki as owning 1.9 billion euros of Greek sovereign paper, against which a 75% haircut was imposed (via retroactive CACs).  Up until this realization that the banks are dead and other deposits gone, most domestic assets were probably good.  Erase domestic uninsured deposits, and domestic bank assets will start going bad.  It's a downward spiral, and assuming the EU/ECB hasn't gotten any better anticipating future problems, Cyprus II is a virtual guarantee.

Mon, 03/25/2013 - 09:20 | 3371843 shovelhead
shovelhead's picture

This is like raiding every corp. registered in Delaware.

Red ink spill in the Med. Bad for businesses and the people who depend on them for wages, products and services.

Cyprus is now the failed state vassal of the EU.

Mon, 03/25/2013 - 09:22 | 3371856 FunkyOldGeezer
FunkyOldGeezer's picture

I'll say it again. If YOU had money deposited with a bank in Iceland, would YOU have been happy with what they did????

Iceland aren't martyrs here, they're not to be applauded, 'cos they stole other people's money too.

As for Cyprus, this just shows what a dirty game politics is. They've been made a sacrificial lamb. I just hope they can rebuild their economy relatively quickly.

Mon, 03/25/2013 - 09:22 | 3371858 Overflow-admin
Overflow-admin's picture



Sarc off: not remotely surprised.

Mon, 03/25/2013 - 09:24 | 3371871 Bicycle Repairman
Bicycle Repairman's picture

What was Cyprus doing in the banking business anyway?  That is the West's job.

And gas reserves?  If Cyprus has any, I imagine that they will now be offering a "blue light special."

The West is tired of high prices for energy.  No more paying to convert 3rd world regimes to 2nd world regimes.  No more man-made rivers.  No more strutting plumed dictators.  No more grandiose construction projects.

As they used to say on Star Trek: "Just give us the Xenite, dammit!!"


Mon, 03/25/2013 - 10:06 | 3371993 DaddyO
DaddyO's picture

BR, your "No More" statements are great expectations but who's going to enforce the "No More"?


Mon, 03/25/2013 - 11:54 | 3372488 Bicycle Repairman
Bicycle Repairman's picture

I believe the "enforcement" is being taken care of as we speak.  Does it look to you like someone just grabbed Cyprus by the balls?

And for my Peak Oil friends and their favorite subject EROEI:  this is how you get EROEI to go up.  You inform the locals that there will be no windfall.  That reduces "costs" substantially.


Mon, 03/25/2013 - 10:28 | 3372076 timbo_em
timbo_em's picture

Financial services account for more than one third of the nation's GDP. Eurocrats want to reduce that to "normal" levels which according to Schäuble is 10 percent. So basically roughly one fourth of GDP will be cut over the next five years, the majority of that piece within the next 12 months.

So either ths island will be swamped with tourists in the near future or it won't end well.

Tue, 03/26/2013 - 05:53 | 3375901 Mark Urbo
Mark Urbo's picture

Financial services (i.e., banking) will have a hard time attracting new customers...

I think GDP will fall off the map.

Mon, 03/25/2013 - 11:19 | 3372319 Rentenmark
Rentenmark's picture

So they chose slow death by a thousand paper cuts that will lead to a longer depression, versus a traumatic shock to the system but sooner to recover if they went Icelandic on them and said "get lost".  Take the pain, get it over with, and resume a normal life, poor bastards.

Mon, 03/25/2013 - 16:19 | 3374006 jmc8888
jmc8888's picture

"Downward revision will be barely visible"? So you mean the fact that the troika showed their hand that they will confiscate deposits and do so over the authority of a nation's gov't...i.e. they froze the deposits BEFORE they ever voted on jack shit, and even then it was defeated, only to have a unitary executive bypass their parliament/congress to enact the measure?

So if they did that with THIS, what will be "necessary" when the downward revision comes?  Will that be barely visible?  Because they would be showing again how they are willing to treat a Eurozone member which might be 'you' if that person happens to live in an economically distressed place of the Eurozone that isn't Cyprus.  But hey odds are before any revision happens they will enact similar measures on another country and the whole thing breaks apart.  But in such a case, the visibility of Cyprus has already shined like a supernova to other eurozone nations.


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