Tag Archives: European Debt

Convoy Of Trucks Reportedly Hauling Tons Of Fresh Euros As Cyprus Banks Prepare To Reopen

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From BusinessInsider.com:

Trucks With Euros In CyprusA policeman stands guard in front of trucks carrying containers at the Central Bank in Nicosia March 27, 2013. The contents of the containers could not be verified by Reuters but local media reported they contained cash for the banks’ reopening on Thursday. Cyprus is set to restrict the flow of cash from the island and may curb the use of Cypriot credit cards abroad as it tries to avert a run on its banks after agreeing a tough rescue package with international lenders.

This is a lesson to us.  Are we listening?

BZ

 

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Cyprus told: take bank levy or leave euro

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Cyprus Cartoon 4What many Americans don’t know is this: Cyprus is a major locale for many individuals wishing to stash cash in a more relaxed tax atmosphere than their host country.

That said, from the UKGuardian:

Wealthy Russians stand to lose billions of euros in Cypriot banks under draconian terms being hammered out on Sunday night in Brussels to prevent the Mediterranean tax haven becoming the first country forced out of the single currency.

Negotiations got underway amid a hardening of the stance held by the International Monetary Fund and Germany, who insisted that depositors must take the hit for bailing out the eurozone’s latest crisis economy.

There were signs of panic in Cyprus as a €100 (£85) limit was imposed on ATM withdrawals, with more stringent capital controls to follow if a deal is reached.

The European Central Bank has threatened to cut off funds propping up Cypriot banks on Monday, precipitating the island’s exit from the euro if agreement was not reached on Sunday night at the emergency meeting between eurozone finance ministers, the president of Cyprus Nicos Anastasiades, and the bailout troika of the IMF, European Commission and the ECB.

Again, Socialists in the Obama Administration are awaiting the outcome.  They can’t wait to devise a way to do the same thing domestically.

But now: is Cyprus “saved?”

BZ

Cyprus Cartoon 2

 

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Cyprus completely closes its banks

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Cyprus ATM Bank RunWhy?

Because, as I wrote here on Sunday, Cyprus is dancing at the end of fiscal strings pulled by the EU.  Today, according to Reuters:

(Reuters) – Banks in Cyprus will be shut on Tuesday and Wednesday pending a decision by parliament to approve a levy on bank depositors, a government source told Reuters.

Cyprus taxpayers began making ATM runs when they learned their savings accounts were to be raided by the government to the tune of roughly 10%.

As a result today, Monday, the Euro has tumbled and our DOW was shaky.  Not unforseeable.

The FinancialTimes.com indicates:

Europe is risking a bank run

Wolfgang Munchau By Wolfgang Münchau

Creditor nations will now insist bank rescues must be co-funded by depositors

Oh goodie.  It’s insufficient that the taxpayers of the affected countries are bent over once; it’s now thought to be a good idea that their individual and personal bank accounts are raided due to mismanagement of their governments.

YahooFinance opined:

LONDON (Reuters) – The surprise decision by euro zone leaders to part-fund a bailout of Cyprus by taxing bank deposits sent shockwaves through financial markets on Monday, with shares and the bonds of struggling euro zone governments tumbling.

The bloc struck a deal on Saturday to hand Cyprus rescue loans worth 10 billion euros ($13 billion), but defied warnings – including from the European Central Bank – and imposed a levy that would see those with cash in the island’s banks lose between 6.75 and 9.9 percent of their money.

People are theorizing: is Italy next — to the tune of 15%?

Let me get back to a fundamental building block of finance: a given country’s monetary unit is worth precisely what people think it is.  Money is no longer backed by gold but by emotion.

These are very emotional times, and the wholesale raiding of the accounts of taxpayers is emotive in the extreme.

It is not impossible for bank runs to go viral across Europe, and for those emotions to cross the Atlantic.

Again, incompetent governments turning their taxpaying citizens upside down, pulling their pockets inside-out, and then smacking them in the backs of their heads.

“Silly,” you say.  “It can’t happen here.”

BZ

P.S.
And don’t think that Mr Obama isn’t salivating at the thought of doing this in the United States, just on general principles.

 

 

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Europe setting stage to create a run on Euro banks?

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ATMs in Nicosia, Cyprus, Bank Savings RunFrom Australia’s TheAge.com:

In a move that could set off new fears of contagion across the eurozone, anxious depositors drained cash from ATMs in Cyprus on Saturday, hours after European officials in Brussels required that part of a new €10 billion ($12.6 billion) bailout must be paid for directly from the bank accounts of savers.

The move – a first in the three-year-old European financial crisis – raised questions over whether bank runs could be set off elsewhere.

Read that paragraph again, carefully.

A bank in Belgium, a country far away from yours, has declared that it gives itself the authority to wade into your personal savings account in order to pay back a loan your country acquired from the “higher banking authority.”

And anyone wonders why people are raiding their own savings accounts via ATM?

Reuters has more:

(Reuters) – Cyprus’s parliament has postponed until Monday an emergency session to vote on a levy on bank deposits after signs that lawmakers might block the surprise move agreed in Brussels to help fund a bailout and avert national bankruptcy.

In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit up to 9.9 percent of their deposits in return for a 10 billion euro ($13 billion) bailout to the island, which has been financially crippled by its exposure to neighboring Greece.

So let me understand: taxpayers in Cyprus are, following a vote on Monday, potentially to lose 10% of their savings in order to stave off a fiscal problem due to an issue of proximity to a larger debtor nation?

Ladies, this is what you get when you turn your sovereignty over to a larger enterprise.

So let’s just see how this plays out, and how it affects the minds of taxpayers in neighboring countries.

Bank run, anyone?

Bueller?

BZ

 

 

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