Posted on 03/23/2013 11:46:28 PM PDT by Olog-hai
Cyprus is on the brink of bankruptcy and of becoming the first-ever country to leave the euro after the European Central Bank (ECB) issued an ultimatum on Thursday (21 March).
In its statement, the ECB warned that it would turn off the tap of emergency funding to Cyprus’ banks on Monday if a rescue package is not agreed.
Removing Cyprus’ emergency support could see the country's two largest banks, Bank of Cyprus and Laiki, collapse within days.
Carston Brezki, senior economist at ING, described the ECB’s move as a “gun at the head of Cyprus.” …
(Excerpt) Read more at euobserver.com ...
Ping
This article is old news. Need info for 24 Mar 2013 onward. Sunday EST is Monday in EU. We will have an inkling what will happen in EU by Sunday night which will impact stock opening in New York on Monday EST.
Cyprus has reportedly agreed to a new scheme to tax deposits in order to raise the money to bail out its banks.
According to Reuters, a 20 percent tax on deposits over 100,000 euros at the Bank of Cyprus would be levied. That would be coupled with a 4 percent tax across the board elsewhere.
Ouch!
EU purportedly guarantees deposits of 100,000 Euro or less against default. How does this “tax” square with such a guarantee? It doesn’t.
How does the EU hope to ever retain large foreign depositors when they’ve hung them out to dry in an EU member state? They won’t.
This has been a tremendous game of chicken and the EU just blinked. They’ll quietly find some face-saving means of a full bailout. The consequences across the EU are too great to allow this.
What really s*cks is, it’ll probably be the Federal Reserve that ultimately bankrolls the whole thing. They’ve been recapitalizing the EU all along since 2008.
Zero Hedge has some good articles & links (language warning on comments).
#Cyprus has good updates. This is really, really, really not good- worse than TARP (direct theft), if that’s possible.
And when everyone pulls their money out of the banks to avoid the tax, then what?
Capital controls, no withdrawals, banks are still closed.
Agreed may mean nothing or it may be everything if their agreed means their parliament already voted on it.
The tax would be collected before the banks reopen. They wouldn't have a chance to pull their deposits in order to avoid the tax.
The Turks will take over the rest of the island on the other side of the ceasefire line and/or the Russians buy the banks and the undeveloped offshore gas fields?
Now they are talking 20% - 25% instead of 100%.
That will not happen.
Depositors will likely lose closer to 100%.
Why?
Tuesday, banks will ‘open’.
When Cyprus banks open, there will be a run on the banks by all depositors who are not brain dead, to remove every cent.
Deposits will be limited, capital controls... in an attempt to stop a bank run. So what if you have a piece of paper that says you have $1million in the bank if you cannot withdraw it at all.
When will they remove the capital controls?
That is the day the banks fail completely - they are insolvent.
If you cannot withdraw your money, you don’t have it.
Now they are talking 20% - 25% instead of 100%.
The way it will play out - the government will steal 20%-25%, the subsequent run on the banks will bankrupt them and depositors will lose every penny of the rest.
Every penny.
Not only did they kill the banks but they killed Cyprus’ biggest industry outside tourism.
Cyprus as a tax haven is dead.
Cyprus as a company location is dead.
There are thousands of lawyers who made a living setting up companies, investment funds, trusts, etc. in Cyprus.
They are all finished.
From what I’ve read, the 20% confiscation will be made to those who have over 100,000 € in their account at the Bank of Cyprus. The second largest bank (Popular Bank) will be split into 2 (good assets and bad assets). What I’m not clear about is what happens to the accounts in Popular bank that were over 100,000 €? Is it all gone?
Now they are talking about confiscating (stealing) 25% with some demanding 40-50%.
Pretty much every penny in Cyprus banks is gone, what remains to be seen is if their deposit insurance works and if the little people lose everything too.
The Soviet mob bosses will help them recover....right?
The euro was a dumb idea. Wailing over the consequences of a dumb idea is stupid.
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