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A Word Out Of Place Sends Europe Tumbling

Tyler Durden's picture





 

Perhaps the best example of a "word out of place" comes from the new Eurogroup head, Dijsselbloem, also phonetically known as Diesel-BOOM, who just may have ushered in the next, next wave of the Eurozone crisis:

  • "Cyprus a Template For EU"

Er... wasn't it a special case, inside a unique case, wrapped in a one-time case? We will ignore the rather hilarious Freudian slip, and focus on what he was explicitly talking about with Reuters, which is the resolution model which was just put in place in Cyprus:

A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors, the head of the region's finance ministers said.

 

"What we've done last night is what I call pushing back the risks," Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, told Reuters and the Financial Times hours after the Cyprus deal was struck.

 

"If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'. If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders," he said.

 

After 12 hours of talks with the EU and IMF, Cyprus agreed to shut down its second largest bank, with insured deposits - those below 100,000 euros - moved to the Bank of Cyprus, the country's largest lender. Uninsured deposits, those accounts with more than 100,000 euros, face losses of 4.2 billion euros.

 

Uninsured depositors in the Bank of Cyprus will have their accounts frozen while the bank is restructured and recapitalised. Any capital that is needed to strengthen the bank will be drawn from accounts above 100,000 euros.

 

The agreement is what is known as a "bail-in", with shareholders and bondholders in banks forced to bear the costs of the restructuring first, followed by uninsured depositors. Under EU rules, deposits up to 100,000 euros are guaranteed.

The punchline:

The approach marks a radical departure for euro zone policy after three years of crisis in which taxpayers across the region have effectively been on the hook for resolving problem banks and indebted governments via multiple rescue programmes.

 

That process, with governments and taxpayers bearing the costs and providing the back stop, had to stop, Dijsselbloem said. Recent financial market calm meant now was the time to make the change, although he conceded there was some concern that it could unsettle markets again.

 

If adopted by the euro zone, Dijsselbloem's template could also sound a death knell for a plan hatched nine months ago when the euro zone debt crisis was threatening to blow the currency area apart.

 

Then, euro zone leaders agreed that the bloc's future rescue fund should be allowed to recapitalise banks directly, thereby breaking the debilitating link between teetering banks and weak governments forced to bail them out. That may now never happen.

 

Asked what the new approach meant for euro zone countries with highly leveraged banking sectors, such as Luxembourg and Malta, and for other countries with banking problems such as Slovenia, Dijsselbloem said they would have to shrink banks down.

 

"It means deal with it before you get in trouble. Strengthen your banks, fix your balance sheets and realise that if a bank gets in trouble, the response will no longer automatically be that we'll come and take away your problem. We're going to push them back. That's the first response we need. Push them back. You deal with them."

Translation: it now officially sucks to be an unsecured creditor in Europe. In other words: an uninsured depositor.

Why this ad hoc dramatic shift in the European approach to bank solvency, which if anything makes the link between bank and sovereign closer than ever, and crushes all that Draghi achieved in the summer of 2012?

Simple: because what Cyprus allowed was the effective usurpation of democracy - the only reason the Cypriot bailout "passed" (at least so far) is because it was structured as a bank restructuring, a financial system "resolution", not a tax, and thus not in need of a parliamentary, democratic vote. Because as Cyprus also showed, votes to deprive depositors of cash, whether insured or uninsured, simply won't fly.

Hence the shift.

However, there is a problem: it means that depositors are now fair game everywhere, and that the ESM or EFSF, with their unlimited scope but "democratic" impleention pathway, are on the backburner.

And now, the scramble to pull uninsured deposits out of banks everywhere begins. Thanks to the new Eurogroup head.

"You ask for miracles, Theo. I give you Diesel-BOOM"

And now, every European depositor is going to their local financial dictionary to look up the definition of General Unsecured Claims, only to see a picture of... themselves.

 


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Mon, 03/25/2013 - 11:09 | Link to Comment km4
km4's picture

you mean Cyprus a Template For EU and FU

Mon, 03/25/2013 - 11:11 | Link to Comment medium giraffe
medium giraffe's picture

Yup.  Welcome to Fuckyounomics in SuperMarioLand.

Mon, 03/25/2013 - 12:01 | Link to Comment defencev
defencev's picture

Simple: because what Cyprus allowed was the effective usurpation of democracy - the only reason the Cypriot bailout "passed" (at least so far) is because it was structured as a bank restructuring, a financial system "resolution", not a tax, and thus not in need of a parliamentary, democratic vote.

What a bullshit! Not only the restructuring law has passed their parliament but (to indicate the incredible hypocracy of local comments): the very same Tyler praised Icelandic government for refusing the bail out of local banks (and allowing huge losses of account holders in UK and Netherlands) and now blaming Cypriot government and EU doing exactly the same. Do you think we are total idiots?

Mon, 03/25/2013 - 13:25 | Link to Comment Terminus C
Terminus C's picture

Do you think we are total idiots?

No, just you...

Mon, 03/25/2013 - 14:43 | Link to Comment Frank N. Beans
Frank N. Beans's picture

i think the difference is that Iceland itself did the dirty work to reset their banks, not the EU.

In the case of Cyprus, it was the EU banking committee that told Cyprus what to do. 

Mon, 03/25/2013 - 11:15 | Link to Comment takeaction
takeaction's picture

I never listened to Billy Corgan, or knew who he was (Never listened to Smashing Pumpkins).  Spend 19 minutes and listen to a very wise man...

#1 "Even if you are right it is so hard for your average American to believe it is true". 
#2 "Those people that don't react now...there will become a point when what is happening will touch them in a way such that they will have to do something about what is going on."

https://www.youtube.com/watch?v=SngRsxsHmCg

 

Mon, 03/25/2013 - 11:20 | Link to Comment McMolotov
McMolotov's picture

I've always thought 1979 is one of the best songs of the '90s:

http://www.youtube.com/watch?v=4aeETEoNfOg

Mon, 03/25/2013 - 11:25 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

1979 was after their peak. If you like that song, go back further.

IMO Siamese Dream - produced by the same cat who did Nirvana's Nevermind - was far more masterful a rock album than is widely known. 

Also, get the "Singles" soundtrack.  Although they were not a Seattle / NW band, SP's Drown cut is one of the most poetic tracks of the time and genre.

Mon, 03/25/2013 - 11:33 | Link to Comment gmrpeabody
gmrpeabody's picture

+1

Mon, 03/25/2013 - 11:59 | Link to Comment NotApplicable
NotApplicable's picture

That cat would be one Mr. Albini.

Mon, 03/25/2013 - 11:59 | Link to Comment Crash Overide
Crash Overide's picture

+1 for Siamese Dream & Singles

 

 

Now back to the bank runs and chaos...

Mon, 03/25/2013 - 15:42 | Link to Comment Cathartes Aura
Cathartes Aura's picture

dudes!  a Billy Corgan break, nice.

my vote goes to Gish, his first - Rhinoceros. although there's something on each release that can stop you in your tracks. . .

Siamese Dream's Silverfuck live (roadies nightmare, ha), still one of my all time faves.  I admire him for being so open about his abusive childhood, and supportive of his fans/charities, letting others know they're not the only ones, he gives back.

by the way, Billy's been clued up for a long time, though he can end up in a few blind alleys along the way, heh - check the covers of his albums Zeitgeist (2007), and his latest is called Oceania. . . yeah.

B-side cover to Disarm single, of Fleetwood Mac's Landslide, can't find anything but a live version - which always has numpties yeehawing all through, grrr - but if you can find the actual single, it's an amazing version.

kk, sorry, what can I say?  music geek. . . you guys started it!!

Mon, 03/25/2013 - 17:37 | Link to Comment chubbyjjfong
chubbyjjfong's picture

Never apologise for being music geek bro. Music, the emotional medium, keeps us sane in this mad world (shout out to Tears for Fears). Massive respect to you for the post!

Mon, 03/25/2013 - 18:01 | Link to Comment Cathartes Aura
Cathartes Aura's picture

ahh no, I occasionally get shit about this being a financial blog, stop with the music links - and I do respect the space for this, but occasionally my inner soundtrack just bubbles over!

music has always kept me sane, my constant companion.

have you heard the Gary Jules version of Mad World?  directed by one of my faves, Michel Gondry.  *goosebumps*

thanks mate.

Mon, 03/25/2013 - 12:50 | Link to Comment negative rates
negative rates's picture

Oh, but this one is much better, just one year after.

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

Mon, 03/25/2013 - 11:40 | Link to Comment Randall Cabot
Randall Cabot's picture

Corgan should stay away from the secret jew supremacist agent Alex Jones though.

Mon, 03/25/2013 - 13:37 | Link to Comment Meat Hammer
Meat Hammer's picture

It reminds me of a song that applies to all of us who are trying to expose the Matrix and are getting the "you're crazy" look.  

"Despite all my rage, I'm still just a rat in a cage."

Mon, 03/25/2013 - 15:56 | Link to Comment Cathartes Aura
Cathartes Aura's picture

Bullet with Butterfly Wings

just in case anyone else wants to hear it. . .

Mon, 03/25/2013 - 11:12 | Link to Comment nope-1004
nope-1004's picture

There appears to be no need for a government in Cyprus.

 

 

Mon, 03/25/2013 - 11:13 | Link to Comment medium giraffe
medium giraffe's picture

This is also part of the EU template.

Mon, 03/25/2013 - 11:29 | Link to Comment asteroids
asteroids's picture

No, what it has shown is that Cyprus has given up its sovereign right to deal with monetary and fiscal matters to unelected officials at the Troika. The Cyprus parliament should have taken over and nationalized every single fucking bank on the weekend and made whole every depositor. It should have done that by selling every single fucking ECB bond it was holding. It should have taken the Iceland route. It's still not too late. The Cypriot politicians screwed up. They were looking for a free ride. There ain't no such thing. Now they are broke and they still have to answer to the Troika.

Mon, 03/25/2013 - 11:45 | Link to Comment pods
pods's picture

The plan that is being implemented reminds me of this:

 

“Everybody has a plan until they get punched in the face.”

 

English professor Mike Tyson

Wait until this one percolates down to the people.

pods

Mon, 03/25/2013 - 12:19 | Link to Comment collon88
collon88's picture

"And if that doesn't work, wait until I bite their ear off!"

Mon, 03/25/2013 - 11:31 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

It looks like gold and silver are also climbing on the news with gold nearing $1605.

But 321 Gold and Kitco are frozen, maybe due to heavy volume. They have done

this a couple of times lately.

Mon, 03/25/2013 - 11:48 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

A slip of the lip, could sink the EU ship.

Mon, 03/25/2013 - 12:13 | Link to Comment rotagen
rotagen's picture

I got all you need to know about economics right here.

 

http://www.youtube.com/watch?v=gL0gWaZS_5w

Mon, 03/25/2013 - 12:36 | Link to Comment Son of Loki
Son of Loki's picture

"Fast & Furious" some say.

Mon, 03/25/2013 - 11:14 | Link to Comment Capitalist
Capitalist's picture

FUCK YOU DIESEL BOOM

There's only so much Russian money one can steal before the Bolshies turn the heat off.

Mon, 03/25/2013 - 11:24 | Link to Comment Ratscam
Ratscam's picture

What strikes me as almost comical is the lack of shock and disgust in the media and among the majority of the people on the street outside of cyprus and greece.
They seriously believe the words of their overlords: stay calm, everything is ok, now obey.
In the meantime I got more money out of the bank, dug more holes in the garden and bought a vault

Mon, 03/25/2013 - 12:08 | Link to Comment PolishErick
PolishErick's picture

most people won't react at all untill they can't take anything out of the banks, the food won't get delivered for a week and they and their brats will get hungry. Thats when instead of getting angry at the government and banks they will come to Your house, to kill you, take your cash, bust the vault, and dig up your garden.

 

Sorry but thats just what they are.

Mon, 03/25/2013 - 12:28 | Link to Comment MsCreant
MsCreant's picture

What do you advise?

Mon, 03/25/2013 - 12:31 | Link to Comment HulkHogan
HulkHogan's picture

suicide

Mon, 03/25/2013 - 12:38 | Link to Comment PolishErick
PolishErick's picture

Nope... Just get the fuck out of the way of the mobs with pitchforks and torches... :)

 

Buy a shack in syberia or something... get crative... I dunno...

Mon, 03/25/2013 - 13:41 | Link to Comment mick_richfield
mick_richfield's picture

A job that you can work at remotely, and a house on 10 acres of land 50 miles from the nearest suburb, with good neighbors.  Stored food, firewood, & a fireplace.

The best way to win a battle is through manuever.

Go where the enemy isn't.

 

Mon, 03/25/2013 - 11:24 | Link to Comment machineh
machineh's picture

Diesel is one the most explosive substances known to man.

If a small tank of diesel could bring down WTC-7, just imagine what it can do to the global financial system!

 

Mon, 03/25/2013 - 11:26 | Link to Comment Ratscam
Ratscam's picture

in Oklahoma only half of the building came down, maybe the fertilizer mixture was a bad idea....

Mon, 03/25/2013 - 12:01 | Link to Comment NotApplicable
NotApplicable's picture

You'd think they could've done better given there were two explosions.

Mon, 03/25/2013 - 11:11 | Link to Comment TrumpXVI
TrumpXVI's picture

Sweeeeet.

Mon, 03/25/2013 - 11:14 | Link to Comment francis_sawyer
francis_sawyer's picture

Diesel-BOOM... Bubby!... I'm ya white knight...

Mon, 03/25/2013 - 11:11 | Link to Comment DavidC
DavidC's picture

"Cyprus a Template For EU" - what a fucking idiot.

I sat and watched the Eurogroup presentation last night. I-uh had-uh to-uh turn-uh the-uh volume-uh down-uh every-uh time-uh Olli-uh Rehn-uh spoke-uh. The smugness of Dijsselbloem made me want to kick the screen.

DavidC

Mon, 03/25/2013 - 11:18 | Link to Comment Capitalist
Capitalist's picture

lol Olli Rehn with the uh uh uh. I thought Diesel Boom was actually quite articulate for a European.

Mon, 03/25/2013 - 11:21 | Link to Comment DavidC
DavidC's picture

Articulate, indeed.

Smug, yes.

DavidC

Mon, 03/25/2013 - 11:54 | Link to Comment knukles
knukles's picture

Buncha class A fuckups. Epitome of some more equal than others.

Mon, 03/25/2013 - 11:27 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

@David

He is not a idiot.

Capital controls within the Euro (even more so islands) means a country cannot rebalance its external trade or function with any rational internal commerce.

The island fiefdoms transfers its oil & gas consumption to the core so that they can continue their global entrepot operations (think of the lowlands in the 1500 & 1600s )

The island surplus population is reduced as the people fight for the last euro in the company store.

,

As I have kept saying for some time now .............the Irish are worth more dead then alive within the Euro construct.

 

This very closely resembles the Irish disaster of the 1600s when these same global banks operating out of the lowlands & London moved to push Ireland into massive physical surplus via depopulation / extermination measures.

 

These banks will continue to push resourses upwards via interest bearing money............as that is what they have always done.

Mon, 03/25/2013 - 11:51 | Link to Comment DavidC
DavidC's picture

THE DORK OF CORK,
Yes, you're right, he's certainly not. And the points you make are spot on.

It's my anger at all this that coloured my terminology!

DavidC

Mon, 03/25/2013 - 11:12 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

"Wait!  That's not quite how I meant it."

Mon, 03/25/2013 - 11:12 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Notwithstanding Diesel Boom's words, Ben will make sure the American taxpayer is on the hook for all bank losses for the rest of time.  It's how he rolls, and Jamie needs a new pair of (diamond) shoes.

Mon, 03/25/2013 - 11:12 | Link to Comment beastie
beastie's picture

Putin signs off on Cypress deal on condition he can pose for playgirl

http://screwtapefiles.blogspot.com/2013/03/putin-signs-off-on-cypress-on...

Mon, 03/25/2013 - 11:18 | Link to Comment LetThemEatRand
LetThemEatRand's picture

"Putin is pushing for a further concession involving posing with Chuck Norris and said, 'Not in a gay way. I want to do a cowboy type theme along the lines of a Fist Full of Dollars or Brokeback Mountain.'"   Not only is this hilarious, it is also a sad commentary on what appeals to the public in terms of "leadership."  It's just not that much of a stretch.

Mon, 03/25/2013 - 11:13 | Link to Comment riphowardkatz
riphowardkatz's picture

Until the President returns to Cyrpus to impose this plan. You shoud wait for it to be a template until it actually is implemented.

And how is that template going to work when the magnitude of the loans from IMF/EU are much greater than 10 billion. Germany will not allow it.

 

 

Mon, 03/25/2013 - 11:14 | Link to Comment Cursive
Cursive's picture

He may have just as well have said, "ALL YOUR MONEY ARE BELONG TO US"

 

The European bank run is well and good started.

Mon, 03/25/2013 - 11:14 | Link to Comment Schmuck Raker
Schmuck Raker's picture

What happened to the green shoots I read about this morning? [sigh]

Mon, 03/25/2013 - 11:15 | Link to Comment monopoly
monopoly's picture

I never thought human beings, of any nationality could be so fucking stupid as to believe that what transpired this weekend was "good for the people of Cyprus and Europe".

Mon, 03/25/2013 - 11:17 | Link to Comment truont
truont's picture

EU is gambling that large depositors will withdraw savings and buy their "safer" government bonds instead, which will lower yields.

Financial repression.

Big gamble, what if there is a bank run?

Mon, 03/25/2013 - 11:33 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

If they are thinking that they are fucking cracked in the head. I don't know where that money will go but I can bet you it is not going into EU bonds of any sort now. Crypto-currency style banking with the crypto-currency backed by hard asset reserves is looking more and more like the solution. It won't be bitcoin but a new and improved upon algorithm needed. You can structure like the existing banking system except better reserve requirements behind the currency along with savings/checkings seperate from investment banking. You can effectively keep this type of theft from ever happening again and these motherfuckers can't hold your accounts hostage. You don't even need a traditional bank just for example in the US you'd have the Treasury back the currency with hard assets like gold, silver, platinum bullion. You can get rid of the FED and parasites like JPM and the sociopaths running these institutions from using your savings as casino gambling chips.

Mon, 03/25/2013 - 11:59 | Link to Comment knukles
knukles's picture

In a real crisis as this may well entail, the Europeans have historically fled to "safer shores". Like the US
Treasuries?
I knew you could spell Treasury

Mon, 03/25/2013 - 11:18 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Interesting Kitco charts at the moment - flatlining.

Mon, 03/25/2013 - 11:29 | Link to Comment freewolf7
freewolf7's picture

LO effin' L.

Mon, 03/25/2013 - 11:50 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Now vertical.  Game's afoot, gents!!!!

Mon, 03/25/2013 - 11:18 | Link to Comment TonyCoitus
TonyCoitus's picture

If this isn't the most bullish news for markets, then I'm a monkeys uncle!

Mon, 03/25/2013 - 11:18 | Link to Comment magpie
magpie's picture

He must have read my comment here

Mon, 03/25/2013 - 11:19 | Link to Comment NRGIsFree
NRGIsFree's picture

No price change in gold and silver spot for 30 minutes. ???

Mon, 03/25/2013 - 11:31 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Naw, just Kitco I'm sure. Odd timing, eh?

Mon, 03/25/2013 - 11:35 | Link to Comment PeeramidIdeologies
PeeramidIdeologies's picture

Many of my tickers are looking pretty funky right now. It's probably just a coincidence....

Mon, 03/25/2013 - 11:19 | Link to Comment madcows
madcows's picture

Any way they slice it, it's theft from depositors and transferred to bankers/politicians.  Revolt and hang them high.  Theft is theft, whether its government sanctioned or not.

Mon, 03/25/2013 - 14:05 | Link to Comment bIlluminati
bIlluminati's picture

The wealth was already gone, when the Greek bonds went bad. This is just an accounting of the loss.

 

In the U.S., the loss is hiding in the balance sheets of the Federal Reserve, to the tune of about $5 trillion in bad mortgages. Euro - deflation - USD - inflation. Gold should be good in USD, bad in Euro. Physical euro under a mattress should stil be good, until they find another way to inflate, which they will.

 

But a run on the bank is deflationary. Cash is king in Euroland for a bit.

Tue, 03/26/2013 - 08:17 | Link to Comment madcows
madcows's picture

Bank runs will be coming here, too.  B/c our wealth is also gone.  It was replaced with a bunch of debt.  This whole game is about trying to reinflate insolvent banks.  I don't think they will succeed.

Mon, 03/25/2013 - 11:20 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Can't the parliment pass a resolution end rounding this mess in Cyprus?

Mon, 03/25/2013 - 12:06 | Link to Comment seek
seek's picture

I'm pretty sure if they so desired, they could leave the euro and default, my guess is the average person would be a bit worse off initially, but the members of parliament would likely be much worse off. They demonstrated they had some balls last week, but in a pretty lame way (abstaining), so I doubt anyone has the guts to do it now.

Mon, 03/25/2013 - 11:21 | Link to Comment Azannoth
Azannoth's picture

So putting more than 100,000€ on a bank account is now akin to betting it all on Red at the Casino

Mon, 03/25/2013 - 11:27 | Link to Comment Legolas
Legolas's picture

Putting anything in a bank account is now akin to putting it in a candy dish on the front porch on Halloween.

 

There, fixed it for ya.

Mon, 03/25/2013 - 11:43 | Link to Comment Al Huxley
Al Huxley's picture

Think of it as buying unsecured, 0% interest bonds, with monthly holding and transaction fees.  They've basically confirmed that as a depositor you are 'lending money' to the bank.

Mon, 03/25/2013 - 12:25 | Link to Comment Flagit
Flagit's picture

for the benefit of the court, would you please define "lending".

Mon, 03/25/2013 - 11:22 | Link to Comment Kaiser Sousa
Kaiser Sousa's picture

and brought to you courtesy of those fucking propagandist at CNBC....

http://video.cnbc.com/gallery/?video=3000156375&play=1

 

why he let Kernan and the Buffet dick riding Bitch off like he did pisses me the fuck off....

 

Mon, 03/25/2013 - 11:23 | Link to Comment q99x2
q99x2's picture

BitCoin New All Time High: Last price:$77.03403

Mon, 03/25/2013 - 11:29 | Link to Comment Backspin
Backspin's picture

Yes, the correlation is too reasonable to ignore.  Bitcoin should trade inversley to fiat, but could be prone to speculative runs.

That said, a speculative run could be a lot of fun!

Mon, 03/25/2013 - 11:23 | Link to Comment kito
kito's picture

perhaps im missing a point here, but this proposal follows "free market" rules alot closer than any previous decision to just hand over truckloads of money to the sovereign nation in the form of a loan, and then that money being used to bail out the banks with no consequence..........................

bottom line is that if the bank goes belly up...tough luck to bondholders and shareholder.....tough luck to the uninsured depositors who of course are of course going to take a hit......its called the consequences of RISK.........................

the only downside i see here is that there is still a loan being loaded onto the cyprus citizens..........................

Mon, 03/25/2013 - 11:28 | Link to Comment Dr. Engali
Dr. Engali's picture

The problem Kito, is that the Eurotrash leaders are doing it in a completely arbitrary way. If a bank collapses due to financial mismanagement that's one thing..outright theft is quite another.

Mon, 03/25/2013 - 11:36 | Link to Comment kito
kito's picture

not following you doc..the cyprus banks held trashy sovereign debt the same way the u.s. banks held garbage bundles of mortgage derivatives................the u.s. govt shouldve kissed citi and the others good night, wiped out bondholders and shareholders, protect depositers up to $250,000 and let the chips fall where they may......so now the eu is essentially doing what the u.s. govt shouldve done, except they are burdening cyprus with a massive loan......................

i see this new step by the eu as one that is CLOSER to the way things should be rather than farther away..................

Mon, 03/25/2013 - 11:47 | Link to Comment Dr. Engali
Dr. Engali's picture

My point is the theft. Letting the bank collapse is fine....it should collapse. But the fact that they are determining which banks they will support and which will fail coupled with the fact they are  freezing accounts and stealling assets is the issue. 

Mon, 03/25/2013 - 12:09 | Link to Comment kito
kito's picture

yes, tis true..its the courts job to restructure the banks once in bankruptcy.......not Pig Merkel's job.......................but accounts would be frozen regardless......no money is no money.........the beauty of fractional reserve banking.....................as long as this ridiculous system stays in place, bank runs will always be around.......

Mon, 03/25/2013 - 11:31 | Link to Comment monopoly
monopoly's picture

Disagree kito, yes, bondholders get creamed since they know there is risk to higher yield, but since the dawn of America if you put your money in a "bank", for safe keeping, no bonds, stocks, or any investment, you expect it to be safe and be available when you need it. You deposit it in a bank for SAFETY, not risk. Now we put money in a bank that is not insured and we can lose it? Changes the whole game and makes me want to move my money out of all banks. Takes away whatever trust we had left in banks. Even my savings can be stolen, legally. No thanks.

Mon, 03/25/2013 - 11:42 | Link to Comment kito
kito's picture

agreed Monopoly that we should be able to sleep at night knowing our money is safe in a bank.....and it totally sucks that its not that way...but it is what it is....you cant go back......so it doesnt mean you print oodles of money and burden the citizens with massive onerous loans just so banks stay safe....you are encouraging even further RISK TAKING......and soon it cascades and leads to well....exactly what we all fear.......

so bottom line is, as jim rogers has pointed out time and time again, banks need to go under if they cant stand on their own........small depositors get protected under banking laws, and the rest have to eat it......its not a perfect world but at least if these consequences were allowed to unfold the way they are supposed to, banks will think twice about risk the next time and debt gets wiped out....and the world can move onto the next chapter..............

you want big brother to protect everyone instead??????

Mon, 03/25/2013 - 11:51 | Link to Comment fonzannoon
fonzannoon's picture

Kito don't look now but you are channeling Peter Schiff. He feels the exact same way. I've been listening to him.

I agree with Doc Engali though. This is not equal treatment. They are picking winners and losers. In effect making the whole thing a bag of shit. It does not inspire confidence, it shakes it.

Mon, 03/25/2013 - 12:05 | Link to Comment knukles
knukles's picture

Si
For all intents and purposes, have the bond holders been wiped out, the equity layer lost?
No.

Well then it's not within ant recognized liquidation or restructuring methodology known, it is arbitrary, driven by the need not to impair bonds as the RCB itself becomes at risk..

In short, this is theft
Fucking theft

Mon, 03/25/2013 - 12:39 | Link to Comment MsCreant
MsCreant's picture

All about preventing a credit event. ;-)

Mon, 03/25/2013 - 11:57 | Link to Comment Irene
Irene's picture

Bankers couldn't give a shit about the amount of risk they expose a bank to, unless of course they're held personally responsible for it. Which of course they aren't anymore.

Jim Rogers will do anything for a buck.  The guy is going senile, ranting all the time that the US gov't stops him from raking in the dough in Myanmar. Boo hoo hoo.  Seriously, you'd think there were no other investment opportunities for him in this world.

 

Mon, 03/25/2013 - 12:01 | Link to Comment kito
kito's picture

...............north korea ;)

Mon, 03/25/2013 - 12:27 | Link to Comment fonzannoon
fonzannoon's picture

I thought Myannmar was all the rage?

Mon, 03/25/2013 - 11:23 | Link to Comment monopoly
monopoly's picture

Kitco charts broken, for the moment.

Mon, 03/25/2013 - 11:25 | Link to Comment john_connor
john_connor's picture

They will just call it a "unique situation" in a couple hours and then it will be back to risk on.

Mon, 03/25/2013 - 11:24 | Link to Comment Miss Expectations
Miss Expectations's picture

"If this had been an actual emergency, the Attention Signal you just heard would have been followed by official information, news or instructions."

Mon, 03/25/2013 - 11:25 | Link to Comment EmmittFitzhume
EmmittFitzhume's picture

So murder can be legal if you just reword it as "Organic Matter Reclamation"

Mon, 03/25/2013 - 12:07 | Link to Comment redpill
redpill's picture

Or, "choice"

Mon, 03/25/2013 - 12:06 | Link to Comment knukles
knukles's picture

For the good of the people

Always need more Soylent Green

Mon, 03/25/2013 - 11:25 | Link to Comment Byte Me
Byte Me's picture

Lemme see...

Dieselbumm is Schaeuble's understudy??

Wasn't one fuckup enough?

Mon, 03/25/2013 - 11:27 | Link to Comment chinaboy
chinaboy's picture

oops, the market cannot handle the truth.

Mon, 03/25/2013 - 11:28 | Link to Comment dobermangang
dobermangang's picture

BRB.  I'm going to the bank.

Mon, 03/25/2013 - 11:28 | Link to Comment moriarty
moriarty's picture

“Uninsured depositors in the Bank of Cyprus will have their accounts frozen while the bank is restructured and recapitalised”.

Excuse my potential ignorance here but dose my reading of this hold any water. I.e. there will be no restriction on insured depositors (of which there are apparently quite a few) who therefore will be free to exercise the favoured tactic of those banksters “Grabit n’ Run” and pull there money out of Cyprus if not the E.U?

Mon, 03/25/2013 - 11:37 | Link to Comment MyBrothersKeeper
MyBrothersKeeper's picture

This is really a great point you make. What makes the authorities think those who are "insured" feel anything but lucky that they were not wiped out like some will be?  If I were one of the insured, i'd be finding another place to park my assets so as not to be bitten by the "fool me twice..." axiom....especially considering how very close they came to being another victim of thebail-in despite the insurance.

Mon, 03/25/2013 - 11:48 | Link to Comment SmallerGovNow2
SmallerGovNow2's picture

two words for both of you, "capital controls".

insured depositors will be restricted to how much they can pull out per day and they will limit or not even allow transfers...  In other words, you don't really own it to with what you please...

Mon, 03/25/2013 - 12:58 | Link to Comment Going Loco
Going Loco's picture

Your money is completely safe. look, here it is, on this statement. 

No, you can't withdraw more than 100 euros/pounds/dollars today.

Because we have capital controls to protect your money.

No, you cannot take your 100 euros/pounds/dollars out of the country.

Because if we let people do that pretty soon there would be no money for anyone.

No, we haven't taken your money away from you. Look, here it is, written down on this piece of paper. It's still your money.

Mon, 03/25/2013 - 11:29 | Link to Comment q99x2
q99x2's picture

A cash only world is just around the corner.

Mon, 03/25/2013 - 12:11 | Link to Comment seek
seek's picture

Cash, physical gold and silver, and probably bitcoin for e-payments for those that unplug completely.

I have to imagine the average bank balance is going to plunge -- statistically it would have to with the theft of big accounts -- but moreso from people reallocating funds outside the reach of thieves.

 

Mon, 03/25/2013 - 11:29 | Link to Comment PeeramidIdeologies
PeeramidIdeologies's picture

And for the moral of the story ~ True wealth is measured in good health and wise ways ~

Mon, 03/25/2013 - 11:33 | Link to Comment zjxn06
zjxn06's picture

When you tell nothing but lies, mixed in with an occasional half truth,  it's a real problem keeping it all "straight".

Mon, 03/25/2013 - 12:03 | Link to Comment redpill
redpill's picture

dbl

Mon, 03/25/2013 - 11:33 | Link to Comment Cultural Capital
Cultural Capital's picture

Finally, some change we can believe in. 

Mon, 03/25/2013 - 11:34 | Link to Comment Pseudo Anonym
Pseudo Anonym's picture

of course

depositors are now fair game everywhere

and not just now, the depositors always were fair game:

Proponents of FRB often say that FRB “depositors” “are” aware of what is done with their money since interest is paid on it. In actuality what they are saying is that such customers are “deemed” to have constructive knowledge of the fact that their money is lent out, since they “ought to” know that this is implied by the earning of interest.

credits: http://tinyurl.com/cner4my

Mon, 03/25/2013 - 11:34 | Link to Comment ekm
ekm's picture

I'd like to reiterate it again:

Western civilization the way we knew it, died today, March 25th, 2013.

 

From today on, nothing you own as private property anywhere in the western world is protected and can be shaved off at no notice.

 

Enjoy

Mon, 03/25/2013 - 11:51 | Link to Comment Bingfa
Bingfa's picture

Seems everyone I talk with wonders how much more people will take...

It's like the whole world is balanced on the head of a pin

waiting for that one event....tic toc

 

Mon, 03/25/2013 - 12:12 | Link to Comment seek
seek's picture

...can be shaved off at no notice.

Only if they can find said property; plan accordingly.

Mon, 03/25/2013 - 12:22 | Link to Comment Ropingdown
Ropingdown's picture

The solution for Cypress doesn't represent a disrespect of private property, but rather a startling new respect for taxpayers.  If you put lots of money into a flimsy bank, instead of into a productive business or other working asset, you are accepting THE BANK'S credit, not the taxpayer's. It's the US solutions that disrespect private property and private responsibility.  -And our insurance level, $250,000, is much too high.

Mon, 03/25/2013 - 12:36 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

I agree 100%.  Keep posting.

 

 

</s>

Mon, 03/25/2013 - 12:49 | Link to Comment ekm
ekm's picture

Sir, you do whatever you want with your money and property.

You can keep theorizing.

 

Just a reminder: Ben Bernanke was asked during the press conference whether the cyprus solution would be applying to USA.

He dodged the question. Laws do not matter much any longer.

 

Again, I've taken care of my money and property the way I see it fit. You do whatever you want with yours. I feel morally obligated to share my conclusions with you and give you heads up. Do as you wish.

Mon, 03/25/2013 - 13:55 | Link to Comment SDShack
SDShack's picture

Actually, the Bernak did kind of answer that question. He said in effect, It could happen (the theft of depositer account), but only if a major crisis happens, like the EU breaking up. Of course in his warped world, that would never happen. His helicopters will prevent it.

Tue, 03/26/2013 - 11:50 | Link to Comment e-recep
e-recep's picture

true dat, ekm. there's no law anymore. it's the wild west again.

the system is collapsing and its wards will do anything, i mean anything to stop and reverse the collapse. but they can't, it is mathematically and fundamentally impossible. so they'll get angry, wild, very wild. bank deposits, pension funds, property deeds and any accumulation of wealth that is out there in the open are no longer secure. they can be snatched any time.

they will go after the big guys, they will go after the little guys, they will go after anything outside the small circle at the top. i say the best thing to do is become invisible, undetectable. vanish, people. i know it's hard but do your best. stay off the radar. 

Mon, 03/25/2013 - 11:37 | Link to Comment Zolko
Zolko's picture

"not in need of a parliamentary, democratic vote"

there still is a need for a parliamentary vote in Germany though.

 

Mon, 03/25/2013 - 11:41 | Link to Comment smacker
smacker's picture

Perhaps. But it'll go thru because this time it's Cyprus depositors who are taking a big hit, not taxpayers.

Mon, 03/25/2013 - 11:38 | Link to Comment Schmuck Raker
Schmuck Raker's picture

"Dijsselbloem, Dijsselbloem, Dijsselbloem"

Uh oh, now you've done it...

Mon, 03/25/2013 - 21:51 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

THIS DEMANDS a banzai7!! VISUAL COMBAT! From the banking after-life!

 

Are you a banker? Are you tired of all these depositors hassling you every day?

Do you need an exorcism?!

Mon, 03/25/2013 - 11:39 | Link to Comment smacker
smacker's picture

I have to wonder if this slimy EU inspired deal is legal within Cyprus. Calling it a bank restructure doesn't change that it's stealing depositors money which should need to be approved by parliament.

Once again, the EU and its crats brush aside democracy and the Rule of Law.

Ghordius will be along soon to calm us down and remind us that "the EZ is working as intended".

That's alright then...

Mon, 03/25/2013 - 11:44 | Link to Comment SmallerGovNow2
SmallerGovNow2's picture

and don't they need to actually default or declare bankrupt or something to trigger a restructuring?  and what powers do the troika have to dictate the restructuring of a Cypriot bank?

Mon, 03/25/2013 - 11:54 | Link to Comment smacker
smacker's picture

Indeed, but in the EU hierarchy, the EC stands above national governments and their democratic & legal systems.

Apparently, the EU/EC are not subject to the Rule of law. Therefore anything goes.

Mon, 03/25/2013 - 12:18 | Link to Comment Ropingdown
Ropingdown's picture

It isn't necessary to let a bank actually crash once the ECB facilities have already lent it money.  Call it 'covenant heavy.'

Mon, 03/25/2013 - 12:20 | Link to Comment olto
olto's picture

I disagree smacker:

"This is the way the banking sector under Glass-Steagle was designed to function; those with a lot(not too many), had to spread it around in different banks with different account names if they wanted to sit on their money----as opposed to storing it in gold or real estate, as examples of alternatives.

Everyone accepted as fact, the possibiity of a bank failure; they had lived through 100's of bank failures. We were grateful for the insurance and that, coupled with being paid interest (remember that word?), gave us enough security to sleep well at night.

I like this Euro plan and only wish the US had the balls to do the 'right thing'.

Besides, if a person cannot manage an excessive amount of capital-----then that person has too much."

oldman 3-23-13 personal correspondence

Mon, 03/25/2013 - 12:37 | Link to Comment NoCrazies
NoCrazies's picture

Wow, did you just say that? "Besides, if a person cannot manage an excessive amount of capital-----then that person has too much.""

Sounds like you are saying if you have more money in an individual account than the government guarantee, you get what you deserve. I assume you feel that others should take control over your assets and redistribute them however you like? Marxist much?

 

Mon, 03/25/2013 - 13:20 | Link to Comment olto
olto's picture

Marxist?????

You are so far gone, brother/sister that there is no way to retrieve you. You missed the point entirely projecting your personal phobia on another. Good luck to you and yours.

But, then again, perhaps, I am because I don't have any 'assets'; just a few bucks under my mattress--I'm an oldman.

I am  considered an 'anarchist', so, for me, personal responsibiity is all there is. I don't know anything else.

Mon, 03/25/2013 - 21:58 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

Actually that’s very much anti-marxist. If you have so much money you can’t help losing it, that sounds like a personal problem. That includes trusting your money with those who can’t be trusted when it’s obvious to others.

Government guarantees with what money they don’t even have is more Marxist than no guarantees or guarantees with some kind of insurance.

If some fee was taken from every account every month to account as insurance and this insurance covered so many credits in so many accounts & everyone knew up front, that would be different & consenting since people can take money out early or refuse to put any in, having seen those conditions.

This Cyprus situation is a break of the rule of law as all rules & all laws are  broken and even across international boundaries & EU treaties.

Mon, 03/25/2013 - 12:39 | Link to Comment PeeramidIdeologies
PeeramidIdeologies's picture

Yes, unfortunate as it is, these provisions should be considered as a way forward. The most important stipulation, mind you, is that it has to be applied to everyone. No exceptions. "Money" isn't for collecting. It is to assist in the transfer of goods and services. Without this ridiculous notion of stacking zero's the free market would be more inclined regulate it's self to a more balanced system. The new "template" is beginning to take shape, one can only hope that we are those in power begin to awaken to this necessity themselves...

Mon, 03/25/2013 - 11:39 | Link to Comment Peter K
Peter K's picture

If the Eurowhackjobs blow up the Eurobanks, who is going to buy the soveriegn Eurodebt?

Ben? :)

Mon, 03/25/2013 - 11:56 | Link to Comment Legolas
Legolas's picture

Since the Eurowhackjobs just blew up the Eurobanks, who is going to buy the sovereign Eurodebt?

 

Does that sound better?

Mon, 03/25/2013 - 11:38 | Link to Comment Bingfa
Bingfa's picture

I have never seen such an assemblage of complete fukin idiots as the EU ruling class....

 

Mon, 03/25/2013 - 11:42 | Link to Comment SmallerGovNow2
SmallerGovNow2's picture

have you seen obama, biden, pelosi, ried, boner, napalatano, frank, et al...?

Mon, 03/25/2013 - 11:46 | Link to Comment Bingfa
Bingfa's picture

LOL, very close second...

But it's anybody's race at this point

Mon, 03/25/2013 - 12:14 | Link to Comment Ropingdown
Ropingdown's picture

The solution apparently to be implemented in Cyprus is what should have happened in the US in 2008.  Bondholders and equity owners should be responsible for the leverage of their banks.  Any other answer is unacceptable to taxpayers.  All the talk of saving the nations "circulatory system" was BS.  They were just unwilling to pull bad veins, do some quintuple bypass operations.  As a result, we TP's are holding tons of rotten assets and shares. And the entire plan cost losts of TP money if the time-value of the money was accounted for.  And I note that the first thing the bastards did here was extend guarantees to all deposits for a time.  Why?  So that they could then say "any bank or money fund failure would be more expensive than our TARP+ provisioning."  Simple.

Mon, 03/25/2013 - 11:38 | Link to Comment FunkyOldGeezer
FunkyOldGeezer's picture

Long: English language schools.

 

Mon, 03/25/2013 - 11:40 | Link to Comment Lampooka
Lampooka's picture

Dijsselbloem just made a killing talking his trades up!

Mon, 03/25/2013 - 11:41 | Link to Comment plonati
plonati's picture

Well, let's say a haircut to italian bank accounts will never to be approved by italian parliament today. That should mean game over for the Euro, imho.

Mon, 03/25/2013 - 11:54 | Link to Comment Legolas
Legolas's picture

But they have a workaround for that now.  This stuff no longer comes under the authority of governments.

Who needs parliaments anymore ?

Get all monies out of all banks, now!

 

Mon, 03/25/2013 - 11:57 | Link to Comment TomGa
TomGa's picture

For those paying any attention, Dijsselbloem had already told us this last week.

 

From the FT: "a revised deal being discussed in Nicosia, with the blessing of the European Commission, would shift more of the burden on to deposits larger than €100,000, according to officials involved in the talks."

And if you think this is just to be limited to Cyrpus, "Jeroen Dijsselbloem, president of the group of euro-area ministers, on Saturday declined to rule out taxes on depositors in countries beyond Cyprus,...."

 

In fact , the new policy seemed well known to other members of the Troika already...

"If this is successful then it will be used in the future," said the dejected official, predicting Spanish and Italian banks could face similar levies."If this is not successful then who cares about Cyprus.""

http://www.cnbc.com/id/100561018

 

"However, there is a problem: it means that depositors are now fair game everywhere, and that the ESM or EFSF, with their unlimited scope but "democratic" impleention pathway, are on the backburner."

Well, no kidding.  This was the immediate conclucsion last week which everyone was talking about and which caused so much outrage. Nothing new here....

 

Trust: gone. Confidence: gone.

Mon, 03/25/2013 - 11:41 | Link to Comment Lampooka
Lampooka's picture

Dijsselbloem just made a killing talking his trades.

Mon, 03/25/2013 - 11:42 | Link to Comment TumblingDice
TumblingDice's picture

so you're saying shareholders and bondholders are at risk?

Mon, 03/25/2013 - 11:42 | Link to Comment Watson
Watson's picture

_"If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'. If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders," he said._

This guy is amazing...the good sense of a Nigel Farage, but without Farage's unfortunate habit of weakening his message by adding personal insults.

Mon, 03/25/2013 - 12:07 | Link to Comment Ropingdown
Ropingdown's picture

Yep.  I'd like to hear the Fed give such a speech.  The reality, though, is different in Europe.  No nation was on the hook for others' broke banks or sovereigns under the treaty's "no bailouts" clause.  The 'rich' countries finally decided to stop allowing politicians in the South (i.e. Barroso's crowd) to keep talking as if it were otherwise.  I've been waiting for this natural outcome for months and months, and welcome it.

Mon, 03/25/2013 - 11:46 | Link to Comment Rathmullan
Rathmullan's picture

Hmmphg. Kong think maybe overlevered bank bad for economy. Make wealth disappear.

Mon, 03/25/2013 - 11:49 | Link to Comment FunkyOldGeezer
FunkyOldGeezer's picture

Anyhoos, the hard money peeps on here should now be glad the taxpayers of the EU are no longer having their money confiscated (QE by any other word).

So, although QE was regarded as 'exotic', we'll now see the true meaning of the word. Either way, it'll be heads the 1% win, tails the 1% win.

Mon, 03/25/2013 - 11:47 | Link to Comment olto
olto's picture

Bravo!!!!

This is the way the banking sector under Glass-Steagle was designed to function; those with a lot(not too many), had to spread it around in different banks with different account names if they wanted to sit on their money----as opposed to storing it in gold or real estate, as examples of alternatives.

Everyone accepted as fact, the possibiity of a bank failure; they had lived through 100's of bank failures. We were grateful for the insurance and that, coupled with being paid interest (remember that word?), gave us enough security to sleep well at night.

I like this Euro plan an wish the US ha the balls to do the 'right thing'.

Besides, if a person cannot manage an excessive amount of capital-----then that person has too much.

Mon, 03/25/2013 - 12:05 | Link to Comment Irene
Irene's picture

Jesus, are you nuts?  Companies with hardly more than 25 employees could need more than $100,000 in the bank to operate.  I used to need that much just to prepfor a job. 

They are killing the very companies that keep people employed.  Great job you EU shits who've never had to make payroll once in your lives.

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