[Closed] Cypriot bail out

I thought it was theft.

Best thing for Cyprus to do is leave the EU, devalue their own currency, become the cheapest place in europe to holiday and rake in the tourist money....thus it was always so for places like Greece, Cyprus etc....who came up with the bonkers idea that they should play the same game as Germany?....did people ever think this would work?

Once they go other countries like Greece can start untangling themselves from the EU mess and leave too.

I thought it was theft.

LOL 😀

I'd like to know what they're putting in the water out there, i'm sure if this was happening in France/Italy/here there would be riots in all the major cities.

Looks like the latest gamble is leave the lower deposits alone, hit the larger ones more and (oh) nationalise pension funds of semi public companies. The technical terms chosen will be interesting!

Best option outlined by Bucheit and Gulati is simply to covert all large deposits into CDs with 5-10 year maturities. Doesn't solve the equity risk - but makes it easier to resolve - but alleviates the liquidity risks that will lead to the banks closing on Monday. Depositors ultimately get their money back (with interest) which is better than losing it all. Plus easier to argue against the theft accusations involved in the alternative. Are the players imaginative enough? We shall see.

Looks like old Karl Marx was right when he said that banks are institutions created for the systematic robbery of the people.

The ECB has now warned it will cease to fund Cypriot banks next Monday unless a deal is done. How firm their resolve and how strict the deadline remains to be seen.

It'll be the usual 11th hour, cobbled together, lash up. So they can kick the can down the road for another month or so

Lets face it... they've had enough practice

that the Emergency Liquidity Assistance will only be considered if the EU-IMF program is in place.

right so you are about to spend a lot of cash re financing a bankrupt banking sector in a country with no money . So apparently it is utter madness and bullying to set some conditions on this. Can I safely assume that if the EU just gave it to them without any criteria or rules -you two would be happy and not criticise them.

Seriously what is so bad about them setting conditions on bailing them out/lending them money? Is there a bank that does not do this? Does the IMF not do this - will Russsia not do this?
No matter what they do you two will be hear to tell us why its wrong and undemocractic Bllody germans eh binners [ no xenophobia was involved in this post

PS rather amusing Ernie but i find you calling me out as some sort of pretend lefty reminiscient of the Monty Python Peoples front of Judae scene when they unite aginst the common enemy.
I think we established earlier political persuasion does not let you predict someoens view on the EU as for positive i said my position was that i did not know how I would vote and it somewhat traguc that simply posting the facts from Wikki about EU democracy is considered to be support - its just facts hence why folk have played me and not what I said since Iposted it. Have we really reached the point were bland facts on the EU are seen as being support have we really become that biased?

MT a reasonable post and I assume that it is very beurocratic if not quite an authoritarian regime

 

right so you are about to spend a lot of cash re financing a [s]bankrupt banking sector in a country with no money[/s] country your inflexible monetary system has bankrupted

FTFY 😉

yes the 650% of GDP being in banking was the fault of the Euro
Without the Euro those economies which have no money would be doing just brilliantly

Good spot- I think you just earned your banking bonus for this year - Paid in pork scratching as usual 😉

If the rules of that club had been vigorously applied, Cyprus (and quite a few other states) would not have been allowed to join. Had euro membership been restricted to nations with the economic strength to join, it would probably have 6 - 8 members and be a huge success story.

Cyprus's problems stem from the [b]political[/b] decision to let it join the euro - you can't blame the Bankers for that

Regards the IMF etc - Greece, Cyprus, Spain, and yes, you guessed it, the UK too, are not experiencing 'austerity', we are going through a reset to a more realistic level of economic activity commensurate with our actual ability to pay the bills, Only when the masses wake up to the truth that tooth fairy finance is no longer available, and politicians stop trying to sell it as the holy grail, will genuine and sustainable growth and prosperity occur!

Junkyard - Member
you two would be happy and not criticise them.

Really, what is this fixation with binners and me? Please play the ball not the men - its getting silly and boring others (as Zokes pointed out earlier). This seemingly endless desperation to score points/nit-pick is merely illustrating the difficulty that you seem to be having understanding what is going on here - earlier the concept of maturity transformation (which you start by condoning and later criticise) and now the ELA. Sort it out over the beer and cider.

[u]The ELA is already providing emergency assistance to the Cypriot banks.[/u] Now I will sympathise with you that the love of transparency that goes through the Euro-system, means that you cannot measure and identify this (!) but the ECB has confirmed that they are currently supporting Cyprus' banks via the ELA (my post above could have been clearer, I accept). The point that I made earlier is that this will now be stopped unless Cyprus agrees to the terms of the EU-IMF proposal. People can make their own minds up as to whether this is a "threat" or "advice". The conclusion is the same.

There is nothing in my posts suggesting that conditions to a loan/funding should not be attached. That would be silly. Indeed the whole thread is about how does Cyprus raise the €5.8bn ('the conditions') that is required for the EU and IMF to release the funds it (Cyprus) requires to prevent a sovereign default.

Please, for the last time (hopefully) lets focus on the facts in front of us.

And who let the country with 650% of its GDP in banking join its common fixed currency? Did anyone bother to ask them first? Did anyone look at the books? Oh... I forgot... this is the EU. The organisation that has never ever had its accounts audited and signed off

As rattrap said, If they'd applied [i]their own[/i] criteria (FFS!) then none of the Southern European counries would have joined the club. Italy, Spain and Portugal were nowhere near meeting the targets for entry. Never mind basket cases like Greece and Cyprus. They just conjured up some figures and made some vague noises about future compliance through some imagined economic growth

All this was absolutely inevitable. As many many people have pointed out for years. Also inevitable is the next crisis. And the next one. And the one after that. And the one after that. And the one after that. Until somebody actually addresses the fundamental problems, instead of just pouring more and more money down the tubes, and hoping for the best.

rattrap - Member
Only when the masses wake up to the truth that tooth fairy finance is no longer available, and politicians stop trying to sell it as the holy grail, will genuine and sustainable growth and prosperity occur!

Is there such a thing as endlessly sustainable growth though? Even Redwoods stop growing...

That to me is a bigger fairy tale.

what he ^ said.

we live on a planet of finite resources, and a diminishing individual share of those resources. There's no such thing as sustainable growth, it's impossible.

borrowing so much money that you can only afford your debt *if* you get that payrise/economic growth is insane.

and that's what we've done.

awesome.

we live on a planet of finite resources, and a diminishing individual share of those resources. There's no such thing as sustainable growth, it's impossible.

Lack of ambition!

Officials warning that second biggest banks will run out of liquidity imminently ie, in hours, so forget Monday?

Really, what is this fixation with binners and me? Please play the ball not the men

This seemingly endless desperation to score points/nit-pick is merely illustrating the difficulty that you seem to be having understanding what is going on here

this will now be stopped unless Cyprus agrees to the terms of the EU-IMF proposal. People can make their own minds up as to whether this is a "threat" or "advice".

And who let the country with 650% of its GDP in banking join its common fixed currency? Did anyone bother to ask them first? Did anyone look at the books? Oh... I forgot... this is the EU.

The organisation that has never ever had its accounts audited and signed off

The Commission also point out that Member States control 80% of EU funds with the remainder managed directly by the Commission. This means that, by and large, member states themselves are responsible for detecting and correcting errors.
In other words, there is a certainly problem in how some EU funds are paid out wrongly and its not immediately clear how much of this is corrected by the Commission. But crucially this isn't just a problem that originates from the EU's central bureaucracy but spans much wider into member states themselves.
Moreover, the EU Budget has not been "rejected" or "refused" by the auditors - its payments have been consistently found subject to significant error for the past 18 years. This is hardly good news, but it isn't as serious as some headlines imply.

Defence officials spent nearly £600 million on technical advice which was intended for equipment, an internal report has revealed.

The audit of defence contracts since 2009 found control of budgets at the Ministry of Defence were "poorly developed or non-existent", while civil servants made little attempt to ensure value for money

The Ministry of Defence has overspent its equipment budget by £6.5bn and some of its major orders are likely to be delivered 39 years late.

It is a fair point that member states joined who appear to have not meet the criteria but they appeared to meet the criteria by cooking the books - who you blame for this is your choice and I think i can guess who will get it. Its not good though.

 

...back on topic ( 😯 ) looks like events have well and truly overtaken everyone now. Laiki didn't even make it to the weekend, let alone until Tuesday.

Yes, the updates on Zero-Hedge make startling and sobering reading. Expect the BBC to downplay it, we musn't frighten the horses...

I must admit i'm not quite up to speed on all of this, but to me it almost appears that Cypriot politicians are attempting to play the Russians against the EU for finance.

The politicians, Bankers, National and EU knew that that certain countries fiddled there figures to get into the Euro. There will be no smoking gun as it was a collective failure to really get the "European Project" going. I can understand this given the history of some of those involved but it is going to turn into a tragic mess for many.

We do not yet fully understand the ramifications yet but it will not look good.

My view is that Cyprus has now choice but to do what the EU/IMF have demanded. The alternatives our far worse for most of the ordinary people.

Since when did politicos care about the ordinary people?

Election time?

The Cypriot govt is a new one. If they apporove a 40% grab as has been suggested they are already dead men walking.

They haven't even discussed the other solution - swapping €100k+ deposits into CDs with 5-10 yr maturities, so I guess they have no option but to impose haircut. Desperate times.

ohnohesback - Member

Since when did politicos care about the ordinary people?

Power and after that self preservation is what politicians want.Hence the stalemate in Italy at the moment.No workable coalition agreement and the only thing the three main parties can agree on is they don't won't to go back to the polls in case they lose out! So the country creaks along with no decisions being taken.....

The problem is that a centralised EU elite in Brussels now view national governments as completely expendable, and are happy to sacrifice them for their grand European political 'project'.

They'll cajole, strong arm and blackmail them to do things that they know the electorate will immediately reject. Thus voting them out. But no-one in Brussels, (the people who's mess it [i]actually[/i] is) will be voted out. They stay deliriously unaffected by the chaos they've created, Sat in their ivory towers, as they sweep to their next pointless summit meeting in their chauffeur driven limo's

The detachment of those at the top from the people so effected by their disastrous policies is now complete

The politicians, Bankers, National and EU knew that that certain countries fiddled there figures to get into the Euro

But no-one in Brussels, (the people who's mess it actually is)

blackmail them

The detachment of those at the top from the people so effected by their disastrous policies is now complete

Will be an interesting couple of days to see what the solution is tbh.
Cypriots are in trouble now Russia pulls out and really have no choices tbh. It will be interesting to see whether the electorate are savvy enough to realise they have no choice but to take a deal[ however bad] or whether they chooose the bankruptcy option [ who would want to lead that govt?

The EU deal is a good one imho.If Cyprus raises the taxes requested the EU write down the loan,ie reduce it permanently.Anything from elsewhere would be an additional loan or extension which would only make things worse.The EU wanted this bank tax to leave the small savers alone and penalise the big savers more,i.e. be progressive,the Cyprus govt.disagreed probably not wanting to upset the Russians.

I think we can now take it as read that Cyprus is now well and truly ****ed!!! And will now enter the same economic death spiral as Greece (economy contracting at 5% a year? Yip - Thats sustainable long-term without dissolving into anarchy)

The question now is 'who next?' Italy? Spain? Portugal? Greece (again)? And how long? Because that's exactly what the [s]vultures[/s] speculators are thinking. As they know there will be no change of direction in Brussels as that would be an admission that their 'Project' is the disaster we all know it is. Well... with one notable exception 😉

My money is on Italy? I'll give them 6 months, tops! I wonder how much they'll need?

A lot of talk about Brussels when in reality it's Germany holding the purse strings, but who can blame them for wanting something in return for bailing out another failed economy, especially one built on money from out side the region.

Merkel is up for election in September she needs to take that in to account or Germany could end up with a bellend government like Italy. Anyway, why should they bail out Russian money held in an EU country, unfortunately the Cypriot public are caught in the middle. It's the failed economy of Cyprus and their reliance on a GDP from a banking system built around providing a tax haven bubble that has now burst.

Not read much of the previous 7 pages so may have been said and no doubt argued about already.

Dobbo....agreed that Germany is acting in its own interests and Merkel has one eye on re-election....so does this not give a massive clue that ever closer EU integration cannot work if individual nations are still doing whats best for them?

How is the EU ever supposed to function as a whole (fiscally) when economies as diverse as Cyprus and Germany are thrown together and Germany being the major contributor acts out of self interest?

The whole thing is a farce....it is built on political idealism without the necessary economic underpinnings.
There was a program on why our european neighbours push 'the project' at all costs and why we are lukewarm in the UK....it basically said that memories of a continent ravaged by 2 world wars are the driving force behind ever closer integration.
In the UK we experienced the wars on our doorstep but in France, Italy, Greece, Holland, Germany etc it took place right in their homes....the program stated that EU politicians are basically motivated by the fear of this happening again....our mindset is different in the UK which is why we dont 'get it' and for the most part are confident in our ability to go it alone....we see the wars as glorious victorious episodes in our history, the same is not true on the continent.

Anyway, the whole thing is broken....its just a matter of time, civil unrest will follow and then bizarrely the peace the EU set out to create may be disrupted by their own idealogical efforts to avoid war at any cost.

There is a certain irony that an until-now benign Germany, which has clearly started the project with the best of intentions is now forcing austerity on countries like Greece, which as a reaction have seen an explosion in support for extreme far right/fascist parties

But i suppose that's the laws of unintended consequences for you. Depressing nonetheless

Its a mixture tbh they work more in the common good - would they even give a hoot about Cyprus but for the EU/Euro or do anything at all but still with national interest at heart/prime directive. Change is slow and it will take generations till we all see ourselves as Europeans - if ever and yes binners that is a massive HIUGE if the size of a bailout.

Greeece would be being austere right now irrespective of the Euro project as basically it has no money. Situations like this always lead to a rise in extremism - have you seen the UKIP vote over here etc 😉 JOKE PLEASE GOD NOOOOOOOOOO

It looks like they have done a deal with Greece of all places.

What could possibly go wrong?

Its official. The Eurozone has now made satire redundant 😯

They go on the lash to celebrate, get hammered on Ouzo and loose the wallet with all the bailout money in it, then get in a fight with a Russian while a group of Germans are looking on in bemusement?

From the telegraph

14.55 And here's what we think that proposal might look like, based on reports and rumours from journalists on the ground.
Laiki Bank - the island's second largest lender - is wound down. Depositors' first €100,000 are hived into the Bank of Cyprus. Everything else is put into a bad bank, and sold off, likely at a 20pc to 40pc discount. Since a wind-down of Laiki means it will not need recapitalised, this part of the plan takes care of the first €2.3bn of the €5.8bn that Cyprus must raise to qualify for its €10bn troika bailout.
So where to get the remaining €3.5bn? Since the troika royally rejected the idea of a 'solidarity fund', largely over objections to nationalising some pension funds, the bank levy is thought to be back on the table. According to information on the spread of deposits (see table in 12.47), a 9.46pc levy - lower than the 9.9pc proposed in the Eurogroup's original plan - on deposits over €100,000 would do the trick.
Under such an arrangement, the biggest losers would be those with deposits over €100,000 in Laiki Bank, who could be charged a 9.46pc levy and have any deposit over €€100,000 swallowed into the 'bad bank' and sold off at a discount, losing as much as 40pc of its value. As Open Europe argued earlier (13.27), they could, in effect, be hit twice.

By the sounds of that, there are going to be some pretty seriously ****ed off Russians. Given the nature of said Russians, if I was responsible for that decision I may be going to live in a cave somewhere far far away

"The question now is 'who next?' Italy? Spain? Portugal? Greece (again)? And how long? Because that's exactly what the vultures speculators are thinking"

Sorry they aren't... the spainish and italian bonds are holding up well... % rate on the 10 year bonds are down small today.

And that's the point ... the markets see Cyprus for what it is... 0.2% the the wider EU.

Thats how Brussels is getting away with playing hardball

Wow just understood that the company that Im working at which has a normal business current account at the bank of Cyprus has just been notified that its current account will be raided to the tune of 40%.

****in unbelievable.

I'm sorry, but that can't be the case. If you read the prvious posts, Junkyard has categorically assured us that the only people who'll lose money are Russian gangsters. Anyone losing any cash will be doing so because they deserve it!

Its all part of the EU's refreshing attitude to representative democracy, fairness, equality and openess 😆