Buchheit On Cyprus: "The Situation Is Spiralling Down", And Why A Second Bailout May Be Needed

Tyler Durden's picture

When the world's leading expert on Sovereign debt restructurings believes that the endgame for Cyprus might be another round of restructuring, adding that "I'm not sure this is over," it is important to listen. With the calmness in Cyprus today more reflective of paralysis than confidence,  Lee Buchheit senses that the parameters of how much money will be needed to recapitalize the banks have changed. He tells Bloomberg TV's Lee Pacchia in this brief clip, "the situation is spiraling down... they'll need more money because the economy is worse, tax collections less, deposits will flow out when they can flow out." As for which European nation will be next in need of assistance with its sovereign debt burdens? Buchheit agrees with us that while many are looking to Slovenia, he sees real economic and political problems in both Italy and Spain remaining especially since the EU "have certainly changed the rules of the game."


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
RacerX's picture

This is like the dominoes for "Communism", except this is for another reason. "Stateism" maybe? "Bankism"? "Corporatism"?

Duh: "DEBTism"

Arrowflinger's picture

I say corporatism. We need a new symbol - for Cyprus SemiCONducers. The whole banking system is a Con inducing savers to run for the gold.

WayBehind's picture

The Situation Is Spiralling Down?

No kidding genius! 

redpill's picture

It's always amazing to watch these dumbfuck central planners pretend that output will stay the same after they castrate an economy.

OldE_Ant's picture

lol.  You made me think of a new term:

cyprustrated - when your savings sack is suddenly and violently cut off.

Manthong's picture

for chrissake.. where do these bozos come from?


tango's picture

Worse, Congress prats constantly that our economy is based on consumer spending so their "solution" is skyrocketing health care costs, new investment taxes, higher gas and food prices and less disposable income.  I'm not quite sure how this helps an economy powered by spending unless you're biggest invesment is debt.   Oh wait...

StychoKiller's picture

Curious how French Bonds rose in price (falling yields) now that Cyprus is whimpering in the corner with a bloody nose...

EscapeKey's picture

corporatism is another name for fascism

at least, if you take mussolini's word for it.

Deo vindice's picture

You know you are in trouble when you have to bail out what you just bailed in.

Maybe they should just stop bailing altogether?

LoneCapitalist's picture

I think the depositors should bail.

Go Tribe's picture

Those who have been in-bailed will now be taxed to bailout their banks. Get in the circle, jerks!

Banksters's picture

It looks like Italy is heading toward new elections.  Beppe needs to run one ad:


EU  controls and raids savings account.  Cyprus 1st, Italy next? 

Over and over and over.

OldE_Ant's picture

I was thinking something catchier:

The EU thinks its their money.  I think its yours. 

Keeping their dirty hands out of YOUR POCKETS.


Harlequin001's picture

It's neither. Deposits are investment in a bank.

If you want to save get yourself a safe deposit box otherwise you are an investor in a bank, thats why the bank pays interest for the use of your money, and when it goes tits up you lose your investment just like any other supplier of goods and services.

What's happening in Cyprus is absolutely right, when a bank goes tits the investors lose their investment. The travesty is that people still think of their investment as savings, and that banks can still get away with calling it that, but once their true position finally becomes clear 'savers' will move to something less risky, like gold. Maybe one day they may even insist it be used again as money...

For obvious reasons.

tango's picture

I have bought a large safe and built a room around it.  The man at our local bank said he was not sure that in case of an "emergency" (defined in Patriot Act somehow) that anyone would be allowed access to their personal lockbox since ownership "temporarily" is passed to "someone".  As vague as that was, it was clear enough for me - invest at your own risk.  The old meaning of banking - where folks place their money safely with interest, get a loan and secure credit - has vanished.

IridiumRebel's picture

Collapse takes time

francis_sawyer's picture

...and so it goes


It starts with 'Diesel Boom'... & disintegrates to [Buchheit] 'bullshit'...

Dick Buttkiss's picture

And don't forget the other two -- all three collapsing at free-fall speed and leaving behind little more than dust particles -- utterly impossible to explain in terms of the official story:


Never mind, of course, as America can't handle the truth and will not be bothered by it until it's way too late.

Dick Buttkiss's picture

To the four (so far) downers -- who are surely too much in denial to watch the video -- you are but further proof that Americans can't handle the truth.

Good luck when the truth finally has its way with what the state -- i.e., government and those who control it -- has done to our country. You're gonna need a whole lot of it if you expect to land on your feet after the shit has finally hit the fan.

As always, the state can kiss my ass.

TeamDepends's picture

Silverstein, is that you?  'Cause we are good and drunk and ready to go.

spastic_colon's picture

indeed....the collapse of the euro experiment will take 500+ years - no sarc

JLee2027's picture

Not a credit event either.

TBT or not TBT's picture

Demographic collapse is happening NOW. That underlies the crises over there. The pensions and free stuff cannot be delivered. Only France is close to replacement, but that's replacement by north African immigrants kids, for whom the word Francis is an insult. We do owe them for the spectacular carbeques though. Socialist. Heh. Wattaagonnado.

spastic_colon's picture

yes, and destitution of a society can persist for extraordinary periods of time while TPTB remain unscathed.  The most successful operations of change have been either mass well supported uprisings from within, or a gutting of the current value systems (ala Constantine et. Al.) none of which happened overnight.

tango's picture

People don't understand how long collapse takes.  I mean, the USSR was a basket case for 70 years where folks quietly starved to death and waded through grungy, desperate lives by staying drunk.  Yet it survived long past any logical timeframe.  The incredible thing is that they never knew the true price of any good or service since it was all centrally planned.  And of course they were unable to compete in the world - zero exports unless one counts cavier and weapons. 

Arrowflinger's picture

"Spiraling down" is a nice way to say 'shit flush.'

ziggy59's picture

Apathy: It seems to be contagious

McMolotov's picture

I wouldn't worry about it.

spastic_colon's picture

some people don't recall early tom petty.....early meaning old, which is why i recall

Dooud's picture

Even the losers get lucky sometime, Man.

kliguy38's picture

me neither...can't do anything bout it

max2205's picture

This is gonna make the collapse in the Ussr look like a popcorn fart

RafterManFMJ's picture

"You got your apathy in my ignorance! Mmmmmmm, it's delicious!" - Joe 6-Pack

TBT or not TBT's picture

Ah, to be low information. Maybe in a next life.

Arrowflinger's picture

No it is contiguous. Every person in line is infected and thinks he's fine.

NoTTD's picture

Q:  What is the difference between ignorance and apathy?

A:  I don't know and I don't care.

kaiserhoff's picture

What else could it do except "spiral down?"

Quick, expand the Ponzi.

I want to see them do to the Pope and the Sicilians what they just pulled in Cyprus.

Now that will be a dog and pony show.

ParkAveFlasher's picture

"dog and pony show." ... is that on Food Network?


catacl1sm's picture

Way to tie in stories. you get a +1.

espirit's picture


MeThinks you might have that twisted around, as the authority is chasing ill-gotten/greedy gains. 

Times are changing, the boss is back in town.

The Ram's picture

"The EU certainly has changed the rules of the game"  Understatement of the year.  Unfortunately, most of the 6 billion people across the globe have not been told of the rules change, especially the 'saving class'.  Let's see if the Spanish and Italians catch on quickly and start yanking their shit out of their accounts. 

Citxmech's picture

Anybody know if any of these Cypriot banks passed an EU administered "stress test" recently?

NoTTD's picture

They all passed in 2011.

Citxmech's picture

Hilarious.  Wonder how the fuck that happened, eh?

RaceToTheBottom's picture

Apparently stealing from depositors was not part of the stress test.  Time to revise the test to include EU Frack ups