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."


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Thu, 03/28/2013 - 16:49 | 3386727 RacerX
RacerX's picture

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

Duh: "DEBTism"

Thu, 03/28/2013 - 17:24 | 3386828 Arrowflinger
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.

Thu, 03/28/2013 - 17:44 | 3386912 WayBehind
WayBehind's picture

The Situation Is Spiralling Down?

No kidding genius! 

Thu, 03/28/2013 - 18:48 | 3387101 redpill
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.

Thu, 03/28/2013 - 23:03 | 3387624 OldE_Ant
OldE_Ant's picture

lol.  You made me think of a new term:

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

Fri, 03/29/2013 - 04:15 | 3387929 Manthong
Manthong's picture

for chrissake.. where do these bozos come from?


Fri, 03/29/2013 - 10:02 | 3388332 tango
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...

Fri, 03/29/2013 - 09:26 | 3388249 StychoKiller
StychoKiller's picture

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

Thu, 03/28/2013 - 18:06 | 3386988 EscapeKey
EscapeKey's picture

corporatism is another name for fascism

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

Thu, 03/28/2013 - 18:29 | 3387049 Deo vindice
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?

Thu, 03/28/2013 - 19:03 | 3387132 LoneCapitalist
LoneCapitalist's picture

I think the depositors should bail.

Thu, 03/28/2013 - 19:29 | 3387189 Go Tribe
Go Tribe's picture

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

Thu, 03/28/2013 - 20:37 | 3386885 Banksters
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.

Thu, 03/28/2013 - 22:28 | 3387618 OldE_Ant
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.


Fri, 03/29/2013 - 03:08 | 3387887 Harlequin001
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.

Fri, 03/29/2013 - 10:08 | 3388345 tango
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.

Thu, 03/28/2013 - 16:52 | 3386739 IridiumRebel
IridiumRebel's picture

Collapse takes time

Thu, 03/28/2013 - 17:04 | 3386766 TeamDepends
TeamDepends's picture

Exhibit A:  Building 7

Thu, 03/28/2013 - 17:26 | 3386833 francis_sawyer
francis_sawyer's picture

...and so it goes


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

Thu, 03/28/2013 - 17:45 | 3386913 Dick Buttkiss
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.

Thu, 03/28/2013 - 21:31 | 3387498 Dick Buttkiss
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.

Thu, 03/28/2013 - 17:51 | 3386939 TeamDepends
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Silverstein, is that you?  'Cause we are good and drunk and ready to go.

Thu, 03/28/2013 - 17:08 | 3386780 spastic_colon
spastic_colon's picture

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

Thu, 03/28/2013 - 17:18 | 3386812 JLee2027
JLee2027's picture

Not a credit event either.

Thu, 03/28/2013 - 17:22 | 3386825 TBT or not TBT
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.

Thu, 03/28/2013 - 17:36 | 3386880 spastic_colon
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.

Fri, 03/29/2013 - 10:14 | 3388371 tango
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. 

Thu, 03/28/2013 - 17:25 | 3386832 Arrowflinger
Arrowflinger's picture

Only if the toilet clogs

Thu, 03/28/2013 - 17:21 | 3386822 Arrowflinger
Arrowflinger's picture

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

Thu, 03/28/2013 - 16:53 | 3386742 ziggy59
ziggy59's picture

Apathy: It seems to be contagious

Thu, 03/28/2013 - 16:55 | 3386750 McMolotov
McMolotov's picture

I wouldn't worry about it.

Thu, 03/28/2013 - 17:10 | 3386784 spastic_colon
spastic_colon's picture

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

Thu, 03/28/2013 - 20:23 | 3387317 Dooud
Dooud's picture

Even the losers get lucky sometime, Man.

Thu, 03/28/2013 - 17:31 | 3386854 kliguy38
kliguy38's picture

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

Thu, 03/28/2013 - 17:34 | 3386864 Jake88
Jake88's picture

What? Me worry...

Thu, 03/28/2013 - 17:05 | 3386768 OpenEyes
OpenEyes's picture

I don't care

Thu, 03/28/2013 - 20:55 | 3387408 max2205
max2205's picture

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

Thu, 03/28/2013 - 17:08 | 3386776 RafterManFMJ
RafterManFMJ's picture

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

Thu, 03/28/2013 - 17:24 | 3386831 TBT or not TBT
TBT or not TBT's picture

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

Thu, 03/28/2013 - 17:26 | 3386840 Arrowflinger
Arrowflinger's picture

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

Thu, 03/28/2013 - 17:43 | 3386909 NoTTD
NoTTD's picture

Q:  What is the difference between ignorance and apathy?

A:  I don't know and I don't care.

Thu, 03/28/2013 - 16:53 | 3386744 kaiserhoff
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.

Thu, 03/28/2013 - 17:10 | 3386789 ParkAveFlasher
ParkAveFlasher's picture

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


Thu, 03/28/2013 - 17:37 | 3386877 catacl1sm
catacl1sm's picture

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

Thu, 03/28/2013 - 20:17 | 3387297 espirit
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.

Thu, 03/28/2013 - 17:00 | 3386756 The Ram
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. 

Thu, 03/28/2013 - 17:23 | 3386827 Citxmech
Citxmech's picture

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

Thu, 03/28/2013 - 17:45 | 3386915 NoTTD
NoTTD's picture

They all passed in 2011.

Thu, 03/28/2013 - 22:58 | 3387678 Citxmech
Citxmech's picture

Hilarious.  Wonder how the fuck that happened, eh?

Fri, 03/29/2013 - 00:29 | 3387797 RaceToTheBottom
RaceToTheBottom's picture

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

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