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25 Lessons From The Cyprus 'Deal'

Tyler Durden's picture


There are many lessons and implications from the Cypriot crisis (we list 25 here). Among the most important is that conditionality is back, energetically, which is very important when considering the circumstances under which other, bigger, countries might access ESM or OMT. We believe, like BNP's James Mortimer-Lee, that the market has been too complacent, seeing OMT and “whatever it takes” as unconditional – that’s wrong. A second lesson is that a harsher line is being taken by the core. This partly reflects more effective firewalls, so that core countries are more willing to “burn” the private sector, where doing so does not represent a serious systemic risk. Cyprus may not be a template, but we have seen enough to glimpse what the new pan eurozone bank resolution system could look like. Risk for certain classes of stakeholders in banks has risen. We are a long way from seeing the eurozone crisis resolved.

Via Paul Mortimer-Lee, BNP Paribas,

There are many lessons to be learned from the Cyprus bailout, and plenty of implications for how things may develop in the future. We list 25 here, but there are more.

Lesson 1: Do not underestimate the ability of the eurozone to do the right thing – after all the alternatives are exhausted;


Lesson 2: Eleventh hour deals can often lead to mistakes and have unintended consequences. The decision to haircut depositors under EUR 100k was a pothole the Troika fell into. It questioned the integrity of the EUR 100k deposit guarantee;


Lesson 3: The disappearance of Mario Monti from the scene has reduced the influence the South has on decisions about the future of the euro;


Lesson 4: There appears to be bailout fatigue in Germany, the Netherlands and Finland. Mrs Merkel is prepared to be tougher ahead of the election than many thought;


Lesson 5: The new Chair of the Eurogroup, Mr Dijsselbloem, seems to be a hardliner compared with his predecessor, Mr Junker from Luxembourg;


Lesson 6: Mr Dijsselbloem can sometimes be too outspoken and not sufficiently diplomatic. Beware future gaffes;


Lesson 7: The ECB is prepared to use the ultimate weapon – “no more money for your banks”. This is not exactly ejecting a country from the eurozone, but would amount to making it very difficult for it to stay in;


Lesson 8: Such a threat has profound political implications and is above even Draghi’s pay grade, so must have the backing of Mrs Merkel and others;


Lesson 9: When a problem is not seen to be systemic, there will be reluctance in Germany and like-minded countries to use taxpayers’ money to solve it. Cost/benefit balancing will ensure each case really is “unique”;


Lesson 10: This puts private interests at greater risk in absorbing the financial pain, or at least the first tranche of it, especially in small non-systemic countries;


Lesson 11: “They” (the Troika) will seek to use private money where they can to limit the size of public sector involvement. While each case is unique, the principles are the same. In Greece, government bondholders took the pain; in Cyprus large depositors. Each case is “unique” but there may well be further “unique cases”, each different in its own special way;


Lesson 12: When it comes to resolving banks’ difficulties there is a hierarchy of who will take the pain: shareholders first, then junior bondholders, then senior bondholders, then large depositors, then the state, then foreign taxpayers;


Lesson 13: How much pain the private sector will take depends on whether or not a problem is seen as “systemic” or not. The less systemic it is, the more private interests will suffer;


Lesson 14: Some countries see firewalls as adequate. So they are now prepared to “burn” stakeholders who were previously protected;


Lesson 15: The probability of direct bank recapitalisation by the European Stability Mechanism (ESM) has gone down;


Lesson 16: Moral hazard has been reduced;


Lesson 17: We crossed a Rubicon of sorts when capital controls were introduced in Cyprus. A Cypriot bank euro is not freely exchangeable with German bank euro. The euro area became more fragmented;


Lesson 18: It may be more difficult to remove capital controls than expected;


Lesson 19: A precedent for the use of capital controls has been set that can speed up capital flight in a crisis, raising the probability of their subsequent re-use;


Lesson 20: It would be surprising if larger depositors were not making defensive moves out of weak banks and banking systems. Watch the scale of ECB MROs and ELA operations;


Lesson 21: The Cypriot economy will see a major recession;


Lesson 22: The Cypriot programme will, consequently, prove to be too optimistic, there will have to be another;


Lesson 23: While Draghi has bought time, the fundamental problems in the eurozone are a long way from being solved, and can come back to haunt markets;


Lesson 24: Do not expect Russia to take the loss with a feeble protest – there will be consequences;


Lesson 25: Conditionality is very important to the core countries. There is no such thing as a conditions-free bailout. There are no blank cheques and no free access to Outright Monetary Transactions (OMT) or ESM. There is no such thing as a free lunch (unless not having a free lunch threatens the system).


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Sat, 03/30/2013 - 15:17 | 3391937 knukles
knukles's picture

Jesus this is getting tiring

Sat, 03/30/2013 - 15:19 | 3391943 seek
seek's picture

Pace yourself. This is just the warm-up.

Sat, 03/30/2013 - 15:25 | 3391956 kaiserhoff
kaiserhoff's picture

Lesson #26 - Doing business in any form larger than a lemonade stand is impossible in the South until they GET THE HELL OUT OF THE EURO.

Lesson #27 - There is no problem so awful, that the EU can't make it much worse, and destroy all incentives for the private sector.

Sat, 03/30/2013 - 15:27 | 3391963 Xibalba
Xibalba's picture

Lesson #28 - the first 27 lessons were really about the USD

Sat, 03/30/2013 - 15:37 | 3391983 Schmuck Raker
Schmuck Raker's picture

Lesson #29 - Don't eat all your popcorn in one go. You'll get a tummy-ache.

Sat, 03/30/2013 - 18:45 | 3392408 TheLooza
TheLooza's picture

Lesson #30 - An uncovered BJ from a hooker is a sure way to get herpes.

Sat, 03/30/2013 - 15:40 | 3391996 dick cheneys ghost
dick cheneys ghost's picture

Good point.......Jim Willie writes in his latest letter that Cyprus could be all about the petro-dollar........

''Cyprus might indeed have been all about trying to save the Petro-Dollar, more than the European banks. Perhaps the Moscow Summit dictated the Cyprus timetable.''

Sat, 03/30/2013 - 18:41 | 3392403 Buck Johnson
Buck Johnson's picture

I know, who's going to want to do business with any country in southern EU if said country has no say in it's future.  Hell, Cyprus politicians essentially went quite after this.  They should get out of te EU and save their country.

Sun, 03/31/2013 - 04:54 | 3393040 jeff montanye
jeff montanye's picture

see lessons 7 and 17.

Sat, 03/30/2013 - 16:44 | 3392155 Not Too Important
Not Too Important's picture

I hope no one was thinking of purchasing farmland:

'USDA agricultural census program is a covert surveillance operation to compile government database of food and farm assets'

Sat, 03/30/2013 - 15:27 | 3391958 cherry picker
cherry picker's picture

We continue to hear the "sky is falling", but it hasn't happened yet.  There is a lot wrong on this dissfunctional planet and a lot right too.

At this point in the ball game, I no longer believe anyone until I experience for myself.

I started reading Zero Hedge some three years ago.  Some contributors keep on sounding like doomsday will happen within 24 hours and it hasn't.  ZH has to sell its advertising too and good news rarely sells.

Sat, 03/30/2013 - 15:37 | 3391986 Banksters
Banksters's picture

Are you fucking kidding me?  


THe mother fucking fed is printing 85 billion dollars a month.  48 million Americans are on food stamps.  9 plus trillion dollars of deposits are backed up with a few billion  at the FDIC.  Banks are marking their assets to myth.  


I could go on, but the point that zerohedge contributors are making is this:  This fucker is going down and here is why.   When, well like wtc7 that depends on when they decide to pull it.  How would be easy.  Pull QE and raise interest rates 1/2 point.   The market would drop 2000 points in a day.



Sat, 03/30/2013 - 16:13 | 3392058 northerngirl
northerngirl's picture

Amazing isn't it?  You can pacify 48 million American's with a few hundred dollars a month in food stamps.

Sat, 03/30/2013 - 17:16 | 3392237 de3de8
de3de8's picture


Sat, 03/30/2013 - 16:14 | 3392072 RafterManFMJ
RafterManFMJ's picture

 Dude: Look, nothing is fucked, here, man. 
The Big Lebowski: Nothing is fucked? 
The Big Lebowski: The god damn plane has crashed into the mountain! 

Sat, 03/30/2013 - 17:10 | 3392223 GCT
GCT's picture

Spot on Banksters. 

For the fellow stating we are all doom gloom and then boom!  I read ZH daily and have for two years.  I am not the sharpest tool in the shed.  Having said that not one time has ZH stated the world will end tomorrow.  The Tylers are merely pointing out this is not sustainable and if simple math is applied it will indeed end.  As a matter of FACT every single time in history when these types of operations began, coupled with voters voting wealth on the back of the taxpayers, the system has failed 100% of the time in recorded history. So is this time any different?  Not at all.

People think they can wish and hope and dream this will not happen to them, when it is already happening to them.  I love the comments about the frog in the slow boiling pan many use here.  This is exactly what is indeed happening.  If you think your government is out to save the people your dreaming at best or just plain ignorant believing the propaganda. 

I will agree there are alot of comments about doom and gloom but the reality of the situation is we are being screwed while crooks are making off with your money and will never see the inside of a jail cell.  Already has happened many times.  Wake the fuck up we are not doom and gloomers just people that state many things that are already reality if you only opened your eyes.  ZH was the first followed by a British site to point out thie is outright theft of depositor's and the money in the know got out of this deal.  Guess what it has happened and now the EU wants to know where the money went lol.  Hell leaving branches in countries open where the EU had no control tells it all! 


Sun, 03/31/2013 - 11:52 | 3393350 LoneCapitalist
LoneCapitalist's picture

Well said. But if they pull QE rates will go up way more than 1/2 %.

Sat, 03/30/2013 - 15:39 | 3391991 IridiumRebel
IridiumRebel's picture

Seems you and a few others have doom fatigue. God plays a long game. Just when you think this will sort itself out will be when you caught with your pants down. Do a little something everyday. Keep positive and have fun. Love much and establish your community. It's coming. Be prepared, but not scared. We can do this. We shall overcome.

Sat, 03/30/2013 - 16:31 | 3392117 disabledvet
Sat, 03/30/2013 - 18:11 | 3392345 masterinchancery
masterinchancery's picture

Well said. Yes, the shit will hit the fan exactly when you least expect it, probably on a Friday afternoon or holiday, so plan for that. Otherwise, seek joy and love.

Sat, 03/30/2013 - 23:11 | 3392798 RaceToTheBottom
RaceToTheBottom's picture

Plus your community will help you when you have to splat someone for stealing your carrots.

Sat, 03/30/2013 - 15:40 | 3391993 JR
JR's picture

 When a great nation with the promise to have been one of civilization's greatest achievements has been torpedoed and now takes on water as it may head to the bottom, then some of those dire predictions are not only warnings but they are just now, just this minute, underway.

The daily reports on Zero Hedge are hardly cautionary tales; they are details of disasters. Cyprus has all but been destoryed. And the dominoes in the European Union are leaning and falling: Greece, Spain, Italy, Portugal, Ireland... Only the banker-financed world media would have the people believe that this is a rough patch in man's history.

It is no a rough patch when tyrants are at the controls and millions of innocent people are having their lives destroyed.

Cherry Picker, the sky has fallen. You just can’t see it because of the clouds.

Sat, 03/30/2013 - 16:31 | 3392118 It is a bargin ...
It is a bargin my friend's picture

Cherry..just because things never happened at the pace you expected them too dosen't mean they never will, you just miss judged the current at which posters post. A few years is nothing in the timescale of things

Sat, 03/30/2013 - 16:37 | 3392131 valley chick
valley chick's picture

Exactly.  I had read an article on the Economic Collapse Blog regarding how the system would come down...step by step.  At the time I thoroughly disagreed with it thinking it would be something that would trigger an event and then the floor would fall out.  Obviously I was wrong.  So another step down we go...another step closer to the bottom.  I just take advantage of the extra time to keep on stacking and preparing. ;)

Sat, 03/30/2013 - 17:27 | 3392259 dudebum
dudebum's picture


The 'when' question is the hardest one to answer.  It could happen in the PIIGS next week and still see Germany, UK, US good for months maybe even years.  The problem is, when it hits my town I better have some way to get my basic needs met because that will get a whole lot harder real fast.  Just how much harder - it depends, just how fast - depends.  Tail scenarios don't happen in many of out lifetimes so we just don't have the experience to guide us.  I just hope my preparations are good enough when I finally see it.

Sat, 03/30/2013 - 17:39 | 3392287 exartizo
exartizo's picture

you misspelled "dysfunctional"

Sun, 03/31/2013 - 05:01 | 3393044 jeff montanye
jeff montanye's picture

that would be a diss.

Sat, 03/30/2013 - 18:07 | 3392336 AurorusBorealus
AurorusBorealus's picture

Predicting the future is difficult business.  Social Science is an oxymoron... economics included.  Human civilization (what is left of it) is not a laboratory system with predictable outcomes as variables change.  Do not believe any economist who tries to make this argument... in fact, this is one of the primary problems with economics, in general, the belief that human society correlates with some mathematical model or logical set of theorems (this includes Austrian School economics).

Good sense is the best one can hope for... and who do you think has better sense... Tyler Durden, et al., who have been pointing out that Europe is not fixed, that the U.S. is in the same straights, that big banks and government are 1-in-the-same, that the current fiat-debt-as-money-fractional-reserve system is inherently instable or the apologists who continuously insist that all is well even as one leak after another appears in the dam of the world financial system?

Sun, 03/31/2013 - 13:11 | 3393489 algol_dog
algol_dog's picture

While I cam relate to your sentiment at times, regarding the endless tirades here of impending doomsday, keep in mind that by the time you "experience" that fact, the time will be over to do anything about it.

I like to use zero hedge as a barometer of what my risk is out there. To be forewarned is to be forearmed ...

Sun, 03/31/2013 - 19:10 | 3394395 Tango in the Blight
Tango in the Blight's picture

You are like the type who after all his neighbors got burglared still says "It can't happen to me" and refuses to upgrade his locks even when he is advised to do that.

And after he does get burgled hollers "why didn't the government protect me from burglars?".

Sat, 03/30/2013 - 16:19 | 3391968 Banksters
Banksters's picture

Apply Cyprus to the US

There is no way that the largest wave of retirees in the history of the planet- US and European baby boomers  will get anything close to what they thought they had.   It is simply impossible.  Either they get seriously devalued fiatscos or they are told outright that the pensions, ss, bank accounts, IRAs, equity portfolios, etc, are going to be "taxed" or "levied".   I think they are docile and depressed because they intuitively know this will happen and they also know that revolting will definitely precipitate this outcome.  Therefore, they sit on their asses waiting for the news.   And it will come because of simple mathematics- plot credit growth vs wages and inflation.  Add in a few dashes of medicare and SS and you will see the graph quite clearly. It spells FUCKED.


I'm not sure what is wrong with the rest of the population.  Is it the water, shitty food, tv, lack of exercise, or the some combination thereof,that has resulted in pathological apathy?   All I know is that I am a pissed off, well informed human being, that is chomping at the bit for SOME TYPE of action, preferably criminal prosecution, though I'm not holding my breath..   As the London cab driver aptly put it, " these bankers are like pedophiles, they can't stop themselves..."   


I know, I am a terrorist, and all that shit.   FUCK YOU OBAMA, HOLDER, CONGRESS, and the JUDICIARY.  FUCK YOU!

Sat, 03/30/2013 - 17:51 | 3392304 akak
akak's picture

You just summed up in one succinct phrase the very concept and phenomenon that I have been trying for the last several years to put my finger on, and I wish I could give you 1000 up-arrows for it:

Pathological Apathy

Let that be listed as the cause of death of Euro-American freedom and prosperity.

Sat, 03/30/2013 - 18:14 | 3392350 masterinchancery
masterinchancery's picture


Sun, 03/31/2013 - 07:43 | 3393114 Bicycle Repairman
Bicycle Repairman's picture

One of the main political tenets of politics is to spread the pain around.  As long as there is a system, that's what will happen.  The idea that the baby boomers will be singled out for some kind of retribution is not reality based.  It is simply something from some juvenile's wish list.

Sat, 03/30/2013 - 15:57 | 3392036 gonetogalt
gonetogalt's picture

Off topic, sorry, but I need some guidance. I need to take 50 oz to Europe, either the UK or Holland in a few days.  I'll probably wear rough cast jewellery to leave home port, but the question is, will I have a problem entering either of these countries? Anyone with real knowledge out there? I'd prefer to have it in a carryon.

Sat, 03/30/2013 - 16:34 | 3392126 disabledvet
disabledvet's picture

sew it into your clothes. wear dark glasses. have an entourage. call yourself a rock star. that's what i did...had no problems whatsoever.

Sat, 03/30/2013 - 17:19 | 3392244 Solarman
Solarman's picture

Sell it and take $1500 in cash and rebuy it in Europe if you are that worried.

Sat, 03/30/2013 - 17:28 | 3392258 donsluck
donsluck's picture

Gather ye coinage of many realms. Put thine pure coinage amingle. Place in coin tray at security. Pass through.

Sat, 03/30/2013 - 18:06 | 3392331 DangerClams
DangerClams's picture

Gather ye coinage while ye may?

Sat, 03/30/2013 - 22:36 | 3392609 Mine Is Bigger
Mine Is Bigger's picture

If you are talking about 50 oz of siliver, then I don't think you have anything to worry about.  I flew with 200 or so oz of siliver in my carry-on from NYC.  At JFK, I was pulled aside to explain what they were.  I just told them coin cllecting is my hobby, and I also regard my collection as my retirement savings.  The guy looked at me strangely.  But that was it.

Unless you act strangely, it is highly unlikely you will be stopped at the customs in the U.K.  I can't tell you about the Nertherlands, since I've never been there.

Hope this helps.

Sat, 03/30/2013 - 23:27 | 3392815 RaceToTheBottom
RaceToTheBottom's picture

I fly weekly and for the last few weeks I have been carrying 100 OZ Silver bricks back home in carryon. 

1)  Each time I have been pulled out of line cause the brick shows up on the machine.

2)  Ask for a "personal screening" if you are traveling alone.  They will bring you into a separate cubicle and open your bag to find the brick.

3)  Make sure the brick (or whatever) is in a brown paper bag, because they will have togather it up and put it through the machine by itself outside of your bag.  Stay within eyesight of the TSA workers and joke with them about letting it out of your sight as they will be carrying it back to the XRay machine.  You cannot go with them.

4)  When it goes through the machine again and you get both your bag and your brick (or whatever) back again, thank them and put it in you pack and move on.  They are minimum wage slaves and will undoubtedly do worse than you when TSHTF.

5)  Thanks for your question, I am going to try something new this week: I will separate the brown bag from the pack when I first go through the machine.  That might remove the need for them to do the second trip.....

Good luck sir.

Sun, 03/31/2013 - 05:04 | 3393047 e-recep
e-recep's picture

convert it to fiat, swift it to your own account, buy coins there where the metal will stay and not move. i wouldn't go thru customs with such a load. only in case of emergency maybe.

Sun, 03/31/2013 - 19:56 | 3394484 Tango in the Blight
Tango in the Blight's picture

Sell your PMs for fiat, exchange into Bitcoin, put Bitcoins on a memory stick or on your laptop, tablet, smartphone whatever. Go to Holland then sell Bitcoins for euro's (try Go to a reputable Dutch gold dealer such as Doijer & Kalf or Amsterdam Gold and buy PM's there with cash (at an amount of less than 11,000 euros per transaction else you have to show identification and it it will be reported). If you try to smuggle your phyzz into the country you risk confiscation, if you declare it you will be severely taxed. Same thing applies to the UK I guess.

Sat, 03/30/2013 - 17:39 | 3392288 one-in-nine
one-in-nine's picture

It is getting old but this is a marathon, not a sprint. Just when you think it's over another shoe drops and you realize you are know where near the finish line. It's not over yet and it's definitely not safe.

I was a bit slow getting started not realizing we were closing in on end-game until Lehman Bros went TU, then I reduced exposure to anything related to banks. We were nowhere near end-game, but thinking we were got me thinking seriously.

Most people are still clueless and have no idea what is happening in Cyprus or why they should care. Greece, Cyprus, Italy, Slovenia -- what's the big deal? Who are the PIIGS and why do you spell it with two I's? Face it, most peeps don't know, don't care and don't want to be bothered.

It's a marathon, but it's not a race; all you gotta do is finish on your feet.

Why didn't PIIGS have a "C" in it?

Sat, 03/30/2013 - 15:19 | 3391942 paperlessforms
paperlessforms's picture

Is the location of Cyprus a factor in that it is not so easy to bring Euros into the country across a land border. So controls are more effective?

Sat, 03/30/2013 - 15:30 | 3391969 kaiserhoff
kaiserhoff's picture

I think not.  Grand theft is the issue.  Cash flow is a side effect.

Where the island comes in, is you can't easily go across a border to get gas, hang out with relatives for a while, or pick up an illegal BB gun.

Sat, 03/30/2013 - 15:21 | 3391945 Yen Cross
Yen Cross's picture

   True that Knuks. That list was about [15 Lessons] redundant.

Sat, 03/30/2013 - 20:56 | 3392614 The Reich
The Reich's picture

Thank you for calling the Department of Redundancy Department.

Sat, 03/30/2013 - 15:20 | 3391946 GFKjunior
GFKjunior's picture

Most of ya'll on ZH have probably seen it but I recommend this documentary on 3d Printed Guns.

A must watch.

My favorite line is "I don't think we're utopians. I think the real utopia is the idea you can go back to the 1990's and everything will be perfect forever. All we are saying is; No You Can't. Now there's the internet."

Sat, 03/30/2013 - 15:45 | 3392012 hairball48
hairball48's picture

I hadn't seen this video.Thanks

Very interesting. I'm surprised Cody is still among the free and living.

Sat, 03/30/2013 - 15:24 | 3391952 q99x2
q99x2's picture

I'd rather wash the feet of inmates than read another word about Cyprus.

Sat, 03/30/2013 - 16:01 | 3392044 Pseudo Anonym
Pseudo Anonym's picture

i dont know what your bottom line is wrt the trade off; but you made me laugh.  must be the visual.

Sat, 03/30/2013 - 18:49 | 3392412 NoDebt
NoDebt's picture

I was thinking "jeez- he could do that any time he likes!"

I understand the puke-factor after you've read articles for 2 straight weeks.  But you need to understand this one was a game-changer.   I notable landmark on the road to hell we're headed down.

Not everything can be "who gives a fuck?"  Some things matter.  Haircutting uninsured depositors would have been a huge deal all by itself.  But we got a BONUS DISASTER along with it- the original plan that called for impairing even INSURED depositors.  Didn't go down like that, but the cat is out of the bag now.  Once something is known it can't be dis-known.

This was not just the next step into hell- it was the next step PLUS a clear view of the one after that.  And it gives you and me (regular joes) a brief glimpse further into the future than we would ordinarily be afforded.  Pay attention, use the information wisely and stay nimble.  There is a plan at the highest levels (they've had PLENTY of time to put it together) and now they're running it.  Them helping out and protecting your narrow ass ain't part of their plan.  You're just FOOD to them.  When they get hungry enough, you will be slaughtered and eaten, without pitty or remorse, as the Cypriots just were.

Today's as good as it gets.  Prepare for worse.  You don't have to prosper through these times, but you do need to survive them.  Good luck to you.  Good luck to all of us.


Sat, 03/30/2013 - 15:26 | 3391959 Atomizer
Atomizer's picture

Basel III guidelines have not been met. A new calamity shall emerge to endure the Ponzi theft. Meanwhile, Ben is pumping the stock market to linger FAITH within a theater of currency wars.


Any other questions?

Sat, 03/30/2013 - 16:26 | 3392105 DeadFred
DeadFred's picture

I did not have to see that on an otherwise nice Saturday, LOL

Sat, 03/30/2013 - 16:50 | 3392174 Atomizer
Atomizer's picture

Glad you enjoyed. That link has probably been blocked by FinCen and the SEC. It involves the master & slave theme. Taxpayer funded public party Muppets need not to focus on that type of image.




Sun, 03/31/2013 - 08:01 | 3393127 Bicycle Repairman
Bicycle Repairman's picture

Atomizer, I thought you'd packed it in?  I petitioned Tyler to raise your jersey to the rafters.  The longer you hang around, the longer we wait for you to be elevated to your rightful place.

Sat, 03/30/2013 - 23:34 | 3392821 RaceToTheBottom
RaceToTheBottom's picture

Not only Basel III, but basic Accounting has been and still is debased.  Mark to fantasy accounting removes any possibility of correctly valueing companies, especially banks that are holding houses.....


We are turning into a banana republic

Sun, 03/31/2013 - 07:57 | 3393124 Bicycle Repairman
Bicycle Repairman's picture

Basel II, Basel III, Basel XXIV, and every single accountant laid end to end cannot stop systemic risks or any of the "solutions" to systemic risk.

The End.

Sat, 03/30/2013 - 15:27 | 3391960 Professorlocknload
Professorlocknload's picture

1-25 condensed. The illusion of security in and of life, is just that.

Sat, 03/30/2013 - 15:27 | 3391961 Vincent Vega
Vincent Vega's picture

"Lesson 16: Moral hazard has been reduced."  Ok, I'm slow. Can someone explain to me why/how this is true?

Sat, 03/30/2013 - 15:38 | 3391987 seek
seek's picture

In theory, knowing your assets are at risk (instead of guaranteed via insurance or bailouts) will result in you taking fewer risks.

I'd agree that moral hazard would be reduced if the banksters saw jail time out of this, as that would assign risk to the decisionmakers. Depositors losing money while the bankers walk away, not so much.

I bet the smart-but-not-politically-connected money will be paying close attention to the actual financial position of the banks they use, so the next stage of the fraud will be when they discover all the numbers are cooked well beyond what is known already.

Sat, 03/30/2013 - 15:54 | 3392028 css1971
css1971's picture

Depositors are going to be a fuck of a lot more cautious in the future, all over the EU not just Cyprus. There will be questions asked like "is my money being put at risk" which the answer will universally be "yes". Interest rates are going to rise as a result, no matter what the Central Bank does.

Sat, 03/30/2013 - 16:27 | 3392046 Vincent Vega
Vincent Vega's picture

Thanks for your comments. When I think of moral hazard I think of taking risk with someone else money. So I understand individuals being more cautious about where they park their money. But to me that's not moral hazard...just sound/cautious financial planning.

I certainly agree with the second part of your post and that's more where I see moral hazard taking place (bankster's) but since, as you point out, there is no punishment; how is moral hazard reduced <rhetorical>. Thanks again for your comments.

Sat, 03/30/2013 - 15:28 | 3391962 williambanzai7
williambanzai7's picture

Lesson 26: Floating garbage is not gone for long...

Sat, 03/30/2013 - 18:01 | 3392324 AurorusBorealus
AurorusBorealus's picture

Unless it is in China...


Sat, 03/30/2013 - 15:30 | 3391967 Freaking Heck
Freaking Heck's picture

Lesson 26: When the going gets rough. The populace get Farked!

Sat, 03/30/2013 - 15:31 | 3391970 Yen Cross
Yen Cross's picture

    Trading on days like this, might be beneficial to your health.   ECB operations schedule

Sat, 03/30/2013 - 15:30 | 3391971 IridiumRebel
IridiumRebel's picture

One lesson is needed to be understood: get your money out NOW.

Sat, 03/30/2013 - 15:44 | 3392004 sitenine
sitenine's picture

"We are a long way from seeing the eurozone crisis resolved."

What the fuck ever.

Lesson 1 is that this shit will NOT be resolved. Europe is a dead man walking. The entire western financial system is a fucking ponzi, and thus a dead man walking. Credit derivatives were never anything more than a clever way to counterfeit 'wealth' and to 'eliminate' risk. We've been had, and there's no 'fixing' it. There are no black swans anymore either - there is only the slow collapse into the abyss. Enjoy the ride.

Sat, 03/30/2013 - 16:22 | 3392093 Banksters
Banksters's picture

You mean tim geithner only tried to apply national security status to the AIG bailout to protect us from the fact that AIG NEVER HAD A FUCKING CHANCE TO PAY OUT BILLIONS UPON BILLIONS in CDS 'insurance.'


Fuck me.

Sat, 03/30/2013 - 15:44 | 3392005 JJ McApe
JJ McApe's picture

Lesson 26: Never keep a million tollah in one cyprian / any bank account.

Sat, 03/30/2013 - 18:15 | 3392353 Assetman
Assetman's picture

To go further than that...

If you're going to be a depositor (liability) in any banking institution, be well aware what is included in your asset base.

I wonder how many depositors in these Cypriot banks knew that crappy Greek debt comprised a large part of the asset base of these banks.  Obviously, not enough.

As things are unwinding in Europe, doing an asset composition exercise should be required for any depositor that has uninsured assets at risk.


Sat, 03/30/2013 - 15:45 | 3392006 sangell
sangell's picture

At the end of the day Germany and other creditor states only have two options. Unsecured debts owed by debtor National Central Banks to their own Central Bank under the Target 2 regime or the government bonds of those debtor states. That's it. Since 'conditionality' , i.e., forcing the debtor government to implement austerity measures sufficient to enable it to meet its bond obligations is the only way to recover the imbalances built up in the Target 2 system that is what must take place absent Euro withdrawal or writing off the Target 2 debts.

Sat, 03/30/2013 - 16:38 | 3392135 disabledvet
disabledvet's picture

really? as the creditor nation "they can just print the money" too. the only thing certain is that Cyprus goes into a massive recession. "Who's Next" again? this whole thing is TUPID.

Sat, 03/30/2013 - 17:02 | 3392202 sangell
sangell's picture

That's the problem with the Euro/ECB. No nation can, on its own, print money. Even ELA requires approval from the ECB governors.

Sat, 03/30/2013 - 15:44 | 3392010 Urban Redneck
Urban Redneck's picture

Lesson #1 demonstrates that an employee of BNP is either a lying piece of banker shit, or a stupid piece of banker shit.

The ECB and its shareholders are the only ones to escape any write-downs on their poor investment choices in Cyprus (unless you count the banker LTRO reach-arounds, which BNP's balance sheet probably enjoyed).  


Sat, 03/30/2013 - 15:51 | 3392021 Duke Dog
Duke Dog's picture

Lesson #26:  It will certainly be used in the U.S. at some point - they will not use the "bail in" because they "have" to in order to prop the system. As has been pointed out, countries like Canada/USA can "print and QE" to involuntarily "bail in", not just depositors, but every citizen/taxpayer. BUT, they will need it, and will use it, for the FINAL FUCKING BAIL IN.

Printing/QE simply buys the needed time for PTB to get positioned properly (they make the rules therefore know when/how etc.. the steps occur) - when the table is set, the entire system will be imploded and every single digital dollar of financial assets will be "Corzined/Cyprused". In other words, as is said around here by some posters "All your wealth are belong to us", LMAO. jd.

Sat, 03/30/2013 - 15:55 | 3392027 q99x2
q99x2's picture

Easter Saturday treat on Peak Prosperity. David Stockman: We've been lied to, robbed and mislead.

Sun, 03/31/2013 - 02:39 | 3392925 RaceToTheBottom
RaceToTheBottom's picture

Thanks for the link.  I listened to the whole recording, about 45 inutes and signed up for his book.  The guy is intellectually honest and rigourous.  Am looking forward to reading the book

Sat, 03/30/2013 - 16:06 | 3392050 Yen Cross
Yen Cross's picture

  Lesson#1 :  Don't keep your $ in the bank.  Lesson#2 : Read lesson #1.

Sat, 03/30/2013 - 16:20 | 3392059 Atomizer
Atomizer's picture

How to unveil the Cypriot crisis.


  • Place your politicians under wraps.
  • Insert iPod ear buds on victim.
  • Max volume on IPod, press play. Trololo Remix - 10 HOURS
  • Begin Chinese water torture.   


Sit back & wait for results. Waterboarding is so yesterday.

Sat, 03/30/2013 - 16:13 | 3392064 debtor of last ...
debtor of last resort's picture

All this Cyprus template stuff, and what we have read in the last few months, physical shortages in pm's should occur. Real money controls will be implemented, but everyone can see the naked emperor. This could be a game changer en put things fast forward, maybe out of control.

Sat, 03/30/2013 - 16:19 | 3392085 ivana
ivana's picture

these are lessons in bullshitting. For example, Lesson 2 was just usual political spin where ordinary Cypriots are first scared to death - later great EU Chairsatan showed "mercy" and allowed most of small savers to remain not robbed. Therefore parliament/gov was free to vote for such criminal act and not beeing killed by own people. Clear "democracy" in action

Sat, 03/30/2013 - 16:39 | 3392136 Yen Cross
Yen Cross's picture

  Well done ivana. +1  'Harvey Milktoast', wrote that list?

Sat, 03/30/2013 - 16:20 | 3392087 ivana
ivana's picture

Lesson 26 - bastards are about to repeat this in every smaller EU banana periphery country which has any cash on balance sheet

Sat, 03/30/2013 - 16:22 | 3392094 falak pema
falak pema's picture

Lesson 26 : We are entering bigtime into the zone of Oligarchy meme now faced with "when thieves fall out" reality going viral; too many balls up in the air and hardliners like Diesel-Bloom making it difficult for consensual "bail out" liners like Draghi to make south and north cohabit in EZ, now becoming impossible exercise under social explosion pressure. In vital election year for kingplayer Mutti of Germany. Bail-ins are not down Draghi's alley, nor the Squid-Ben put which is ZIRP sensitive.

The demise of Monti as pointed out and the marginalisation of Hollande relative to core policy, with Merkel stepping overtly on his throat, makes the north-south cocktail very explosive in EZ. And France may be the tinder spark as Hollande is sinking fast and Lepen rising on anti Euro ticket.

Remember the weakest financial links of consequence are Spain and Italy; but the hub of EZ cohesion rests the Germany- France axis.

France, now sweating blood in the two year austerity peroid of 2013/2014, has to stick it out and hope the southern mayhen in Spain n Italy doesn't blow up out of control of core group; some undertaking!

If the extraneous factors to EZ crisis hotten up, and the Pax AMericana morphs to more world conflict, it will have repercussions on EZ cohesion. Korea, Russia-Germany-USA standoff over Syria, and CHina calling, can make the Euro ship reach beyond break point; as they stay the weak link along with Japan now full tilt in printing to infinity; making the China-Japan-Korea showdown on world trade even more corrosive in vital Asian growth zone. If we lose that economic growth lung we sink further into deep unchartered 1914. 

The gist of this article and the way its pointing is spot on! Provided the rest of the world hangs in there...

Sat, 03/30/2013 - 16:24 | 3392097 ekm
ekm's picture

Out of all these points the only ones that really, really matter are number 3 and number 8.

Draghi has been sidelined so far, hence bankers are being sidelined.


Remember, as of Swap introduction after MFG collapse in Nov 2011, Euro has simply become an extension of US Dollar.

Euro cannot stand on its own with swaps between the Fed and ECB.


No wonder it's the dutch who are taking the lead. They are small but very active in NATO. They even have been trained to use Patriot missiles and are the ones operating them in Turkey against Syria.


It's coming.

Sat, 03/30/2013 - 16:32 | 3392120 ivana
ivana's picture

That process btw ECB/FED and selected EU banks has been going on for few years now. Flooding eachother with fresh printed money. Preparing for great crash. Preparing for disconnection with BRICS & declaration of trade wars. Just month ago great EU/USA ties have been reinforced by bla bla new cooperation. Then few new wars etc etc


Sat, 03/30/2013 - 16:31 | 3392122 SubjectivObject
SubjectivObject's picture

This Paul Mortimer-Lee, BNP Paribas, guy.

Is he a bankster disinfo specialist front man?

Sat, 03/30/2013 - 18:51 | 3392417 Anglo Hondo
Anglo Hondo's picture

Don't know, but he seems to go by the name James Mortimer-Lee, as well as Paul.

Or, are they brothers of a different mother?

(Is there also a Darrel Mortimer-Lee?)

Sat, 03/30/2013 - 16:51 | 3392176 Mototard at Large
Mototard at Large's picture

For God’s sake, please don’t tell anybody outside of the ZH forum, but I hacked into the Bureau of Labour Statistics (BLS) last night to find out their secret statistic making methodss. I found an encrypted file marked “statistics production methods” and this was what was in it. They use:

Anthropomancy – the entrails of unemployed men are read to determine U6 figures

Gastromancy - stomach noises are used to determine U3 figures

Gyromancy - walking in a circle- they observe members of the White House staff to see what new laws might actually get passed that could affect the economy Myomancy - movements of mice – they watch Congress and lobbyists

Omphalomancy - knots on the umbilical cord are used to determine household formation

Onychomancy – fingernails – they look at worn and bleeding fingertips to see how many people are still scratching out a living in the heavy manufacturing sector.

Tyromancy – this one is about reading cheese; did not really understand it but looks like they stole it from the French

Belomancy – arrows, apparently as an emergency measure to determine markers. They shoot arrows into the air, but where they land they do not care.

Necromancy - you really do not want to know this one....

ZH readers can see the full report at:

Sat, 03/30/2013 - 18:46 | 3392407 Manipuflation
Manipuflation's picture

Yeah, we saw it.  I have my own site that I have been working on and I have pimped here on ZH twice, on two different dates but I only posted on one thread at a time.  Lot's of ZHers have their own blogs.  I pimped here because I wanted to understand the analytics a little better.  I will click you one more time but don't go on posting the same thing over and over again on every thread.  No offense, but run your SEO if you crave more attention.  Peace. 

Sat, 03/30/2013 - 17:36 | 3392281 NoWayJose
NoWayJose's picture

Since the Troika showed that it did not respect the Cypriot Parliament, and turned the Cyprus mess into a central bank issue, then perhaps the Cypriot Central Bank should just issue 10 One Billion Euro platinum coins and pay off their EU debt.

Sat, 03/30/2013 - 17:50 | 3392291 Manipuflation
Manipuflation's picture

#24. LOL

And you can bet that I will not have any of this Easter bullshit.  If you can't have a holiday on the same day every calender year than I am not interested in what a bunch of drunken fucking moon worshiping fools who sat around at the Council of Nicaea had to say a millennia ago.  I don't buy into any of this bullshit.  Come on.

But no, wife, who claims to be Russian Orthodox anyway just HAS to take the kids to the COMMUNE-ity Easter egg hunt.  I would not go with because I told her it was as stupid waste of time.  Then you get the "you don't love your children" bullshit because you won't go with.  WTF?  No.  Sure enough, she comes back all pissed off because other parents, who were not supposed to be involved in the hunt for chinee plastic eggs, were pushing small kids out to the way to get MOAR shitty plastic eggs for their kids.  You can't even make this shit up.

Now we have been invited to an Easter dinner by some people who are not even family.  I have no interest in any holidays.  Every day that I am still alive is holiday to me.  I have no interest in hanging around people who believe that pigs can fly and paper is money.  Religion my ass.  Philosophy, yes, I can respect that part.  To turn it all into a 501c3 tax haven for warmongers and special interests?  Bullshit.

I just went and bought a spare case of beer.  I have no problem getting up early in the morning to drink beer.  I declined the last dinner invitation and I expect some flak from MRS so perhaps I should just get good and Shitfaced drunk before noon tomorrow.  I can bring my KM numismatic books with too and give a thrilling twelve hour lecture to everyone there on what a bunch of fucking douchebags they are and remind them of what Jesus did to the money changers.(if that really happened)  That should stop the invitations for me at least. 

Edit:  I just made up a new religion a minute ago and that religion is called Manipuflatonism.  The tenets are this:  Leave us alone and don't try to pass your hypocritical theology bullshit on us because we are armed in more than one way.

Sat, 03/30/2013 - 18:53 | 3392421 Black Markets
Black Markets's picture

Ditch your tedious spiteful attitude and spend more time with your kids you vindictive self centred prick.

Sat, 03/30/2013 - 21:40 | 3392694 Manipuflation
Manipuflation's picture

I have seen your shit out there BM.  You want to spar with me?  Why don't you ditch your self righteousness as though you are an agent of God personified?  Who the fuck do you think you are?

Black Markets:  Another fucking cunt who thinks they can tell me how to run my personal affairs.  I ain't no city boy either so either fucking step up or shut your face.  I WILL knock that stupid cowboy hat off your head.  Bring it. 

Sat, 03/30/2013 - 22:39 | 3392767 Manipuflation
Manipuflation's picture

One red arrow?  That's all you have to offer BM?  You are not a man and don't you ever dare post any of your crap even near me if you do not have the balls to spar.  Now you pissed off a country boy and I will red arrow your ass on any post that you make here to fore.  What you really need is a punch in the face.  I am willing to settle it MidWest style but I am guessing that you are still nursing from your mother's tits.  I will tell you where to meet me if you have the balls.(you don't)

Sun, 03/31/2013 - 07:29 | 3393108 Monedas
Monedas's picture

We have a saying here in Mexico .... "Wash your dirty laundry at home !" .... no need for the neighbors to see the shit and blood stains .... screw the plastic Easter eggs .... go watch your wife and kids and support them .... enjoy them ? Geeesh !

Sun, 03/31/2013 - 08:05 | 3393128 Monedas
Monedas's picture

Manipuflation:  I remember I took my wife to see the Rose Parade .... even bought bleacher seats .... almost 40 years ago .... I took a 6 pack of Coors half quart cans .... you could smell the roses of the parade before you could see it .... I stumbled across everyone's feet going to piss every 20 minutes .... the embarrassment I caused .... still haunts me !

Sat, 03/30/2013 - 18:16 | 3392355 Seal
Seal's picture

Lesson 1: Do not OVERestimate the ability of the eurozone to do the right thing – after all the alternatives are exhausted;

Sat, 03/30/2013 - 18:32 | 3392384 chistletoe
chistletoe's picture

bring a sexy girlfriend....


make sure her carry-on bag has lots of thongs, brightly colored bras,

miscellaneous lotions, motions and toys,

and then add a belly-dacing costume .... with coins ....

Sat, 03/30/2013 - 20:33 | 3392579 corporate slave
corporate slave's picture

It seems to me lesson 15 has no fundamental at all. You cannot compare Luxemburg, Cyprus, Slovenia with Spain or Italy. From 11 February 2013 ESM Board of Governors elects Jeroen Dijsselbloem as its Chairman Luxembourg – The Board of Governors of the European Stability Mechanism (ESM) today elected the President of the Eurogroup Jeroen Dijsselbloem as its Jeroen Dijsselbloem, It will be my key task to allow the ESM to develop its full potential as the crisis resolution mechanism the currency union needs.” The Board of Governors forms the highest governing body of the ESM and comprises the Ministers of Finance of the euro area Member States as voting members. The European Commissioner for Economic and Monetary Affairs and the ECB President participate in the meetings as observers. The most important decisions taken by the Board of Governors require unanimity. SO DISSEL BOOM IS A PLAIN SPECTATOR

Sat, 03/30/2013 - 20:40 | 3392585 LG_Knight
LG_Knight's picture

You missed an obvious lesson: connected interests will be given paths to secure/move their capital. Common citizens will be hit hardest.

Sat, 03/30/2013 - 23:00 | 3392790 RaceToTheBottom
RaceToTheBottom's picture

Lesson 17 was definately a trial balloon.  It is a easy way to have a northern and southern Euro.  Expect that to be quickly locked in...  With variable membership no less.

Sun, 03/31/2013 - 03:44 | 3393017 katchum
katchum's picture

Lesson 26: Cherish your gold.

Sun, 03/31/2013 - 03:58 | 3393019 GoldIsMoney
GoldIsMoney's picture

"Lesson 12: When it comes to resolving banks’ difficulties there is a hierarchy of who will take the pain: shareholders first, then junior bondholders, then senior bondholders, then large depositors, then the state, then foreign taxpayers;"


That would be the normal way, but as you can see the large depositors come before the senior bondholders. 

Sun, 03/31/2013 - 07:05 | 3393093 greydogg
greydogg's picture

It's important to remember that this is a MANUFACTURED GLOBAL CRISIS.

Sun, 03/31/2013 - 07:17 | 3393100 Monedas
Monedas's picture

Schmuck Raker:  A friend invited me to see Avatar in English in a Mexican "Cineopolis" complex .... I treated two big tubs of buttered popcorn and large cola drinks (I never buy that expensive theatre fare .... but, my ticket was free) .... they couldn't get the projector to work .... we got a refund on the tickets .... and I got a refund on the popcorn and colas .... even though we had consumed a lot ! I thought you would be proud of me !     Monedas    1929

Sun, 03/31/2013 - 07:52 | 3393121 Monedas
Monedas's picture

Old people are being told to hurry up and die .... their savings are being plundered .... to help them make the sensible decision ?

Sun, 03/31/2013 - 09:22 | 3393160 honestann
honestann's picture

Lesson 1:  All governments are fictions.
Lesson 2:  All corporations are fictions.
Lesson 3:  All officials are predators.

Do NOT follow this link or you will be banned from the site!