The Cypress Crisis

[RNG]

Without really studying it in detail, I am amazed at the breadth of opinions I am picking up about the economic situation in Cypress and the potential fall-out. The general amalgam of news and op-eds I have read on the news websites of BBC, CBC, CTV and CNN, as well as a few blogs sent to me by a friend appears to be as follows.

The Cypriot banks are about to fail, and the government will totally run out of money in a month. Germany led the EU in offering a bailout as long as the Cypriot government took 10% of people's savings deposited in banks. Apparently Germany wanted this because of all the Russian oligarchy's money deposited there. The less kind sites referred to it as Russian Mafia money.

The common folk, somewhat understandably expressed outrage. The government pulled the proposed legislation, but the smart money says it had little to do with respect for the masses but mostly fear of the Russians.

Germany is ready to let the country sink.

Thoughts and opinions on the next step(s) and potential fallout?

[Boges]

There's been a thread about this since Monday.

[Canuckistani]

0% under 20k, 6% up to 100k, 10% over 100k. Germans aren't going to pay to bail out Russian oligarchs and gangsters (or is that redundant?) Now Cyprus is going cap in hand to Russia. Let them sink. Germans can't keep bailing out all these countries.

[RNG]

There's been a thread about this since Monday.

I scanned the top of the International Politics list, but didn't go down far enough, obviously. I thought it would be a much hotter topic. Sorry for the double post.

[Canuckistani]

Your post has a better title.

[Boges]

Your post has a better title.

Liar, mine is hilarious.

[Bonam]

What should be done? Just let them "fail". That way as soon as they've "failed", they can keep on going with life as normal. You know, just like Iceland or Ireland.

[TimG]

What should be done? Just let them "fail". That way as soon as they've "failed", they can keep on going with life as normal. You know, just like Iceland or Ireland.

They did not let the Irish banks fail.

[GostHacked]

What should be done? Just let them "fail". That way as soon as they've "failed", they can keep on going with life as normal. You know, just like Iceland or Ireland.

Iceland did something different and kicked out the international bankers. They did let a couple banks fail. They hurt for a bit, but now they are on a better path to recovery.

http://www.businessinsider.com/olafur-ragnar-grmsson-iceland-icesave-uk-banks-europe-2012-4

Prime Minister of Iceland speaks here.

A key example of this approach is Iceland's refusal to pump money into failed banks. The decision was controversial at the time, but now looks increasingly wise. "I have never understood the argument — why a private bank or financial fund is somehow better for the well being and future of the economy than the industrial sector, the IT sector, the creative sector, or the manufacturing sector".

There is, of course, another aspect. A tricky situation arose when the U.K. and Holland demanded money for their citizens' depleted Icesave accounts, and Iceland refused. The incident sparked a major diplomatic scuffle, with Iceland refusing to pay out and the U.K. even using "anti-terrorism legislation" against the state.

Edited March 21, 2013 by GostHacked

[TimG]

Iceland did something different and kicked out the international bankers. They did let a couple banks fail. They hurt for a bit, but now they are on a better path to recovery.

It is looking like Iceland saved themselves short term pain but are creating long term issues:

Many expected Iceland's recovery to be stronger given the way smaller economies can bounce from deep recessions. The International Monetary Fund had originally forecast annual growth of around 4.5 percent from 2011-2013. It now is under half that.

"Recovery? We're on the road to nowhere," said Vilhjalmur Egilsson, head of the Confederation of Icelandic Employers.

...

CCP, which makes the popular Eve computer game, made around $65 million in 2011. It employs some 500 people globally from Shanghai to Newcastle, more than half of which are in Iceland.

But capital controls imposed after the crisis, making it difficult to buy foreign currency, means financing is hard, as well as getting skilled workers to come to this volcanic island when repatriating savings is nearly impossible.

http://www.reuters.com/article/2013/02/21/us-iceland-economy-idUSBRE91K0JN20130221 Edited March 21, 2013 by TimG

[Jerry J. Fortin]

I think that the privately owned central banks in Europe, who are the actual shareholders in the European Central Bank, have decided its pay back time for Russia. It took a century, but those shareholders waited.....

Cyprus has been written off by the ECB, they will close the virtual doors in Cyprus by stopping the support for the financial system there. The Russians are going to start paying back what they "borrowed" at interest and its going to happen now. The nation of Russia cannot act because it does not have the available means, but Russian oil companies do have the means. The nation has used is leader to defend citizens dollars held in Cyprus from foreign interests. With the weight of political influence and the strength of monetary resources behind it, Russia is muscling its way into the EU.

The ECB does not want Russia in the EU period. Battle lines are being drawn in a very brutal fiscal sense. In my view more importantly, the Rothchild family is now involved, and not merely whispering in the ear mode anymore. The ECB is a tool to be used at their whim, and apparently now is that time. Payback is a bitch, and Karma always gets you where you live........

When China reclaimed Hong Kong all foreign banks came under their control, a strange revolving door appeared. Capital had both a way into China and a way out, but the international banking agencies held the keys to unlock that prize. Nothing seems to have changes since that day, deals were made that much is clear. Those international banking folks were of the same clan as the EU folks in the business. Its really a family business, being the bankers of the world that is. Guess what...Russia is surrounded by bankers. Those same bankers want to have hiway sex with Russia.

I am most likely very wrong but, If Russia is surrounded by financial enemies the world is about to change. This kind of scenario brings international pressure to bear not subject to the whims and approvals of legislatures. Decisions are being made in board rooms and CEO offices under the duress and influence of monetary considerations irrespective of national origin. Governments cannot control the financial industry it controls them. In my view the Rothchild family through its actions undertaken with the ECB has decided to act and recover funds lost to it nearly a century ago. Russia is ripe and about to get plucked. Foolish enough and greedy enough, Russia is about to finish coming apart at the seams. That poor nation has gone from a position of dominance to that of planned obsolescence, played like a fidel.

Meanwhile the world turns slowly day by day. The rich get richer. Well played!

[Topaz]

I found this article and it makes one wonder if its really safe now days to leave one's money in the banks. In the article it says that once we put money into the account it really becomes the banks property and the article goes on saying this is a scheme by certain government to make the shareholders of the banks to pay and not the government when a bank fails. Interesting reading. http://www.globalresearch.ca/the-cyprus-bank-battle-the-long-planned-deposit-confiscation-scheme/5328098

[August1991]

Russia and Cyprus?

Supposedly, people "deposit money" in a bank. Is that true? A bank is merely an accounting office.

When a business does "offshore banking", this merely means that they move their accountant/books to an office abroad - a place where the tax authorities cannot see the numbers.

-----

Why are Cypriot banks in default? Apparently, the Cypriot banks bought a lot of Greek government bonds.

I think that this is the more serious question: why are Greek government bonds now risky?

[Argus]

I think that the privately owned central banks in Europe, who are the actual shareholders in the European Central Bank, have decided its pay back time for Russia. It took a century, but those shareholders waited.....

An international Jewish bankers conspiracy, Jerry? Really?

[Jerry J. Fortin]

Its not a conspiracy, it is a reality. Only a fool would believe that the creators of the modern banking system are hard done by. Only a fool would believe that family has not become the literal owners of the financial system. There is simply no question that fractional reserve banking system is responsible for the problems we have within the industry today. Lending out more than what is held on deposit, a simple math problem. Yet one sanctioned by law in every nation on this earth. The money supply is controlled by banks, not nations. Nations are controlled by banks, go figure.

[GostHacked]

Its not a conspiracy, it is a reality. Only a fool would believe that the creators of the modern banking system are hard done by. Only a fool would believe that family has not become the literal owners of the financial system. There is simply no question that fractional reserve banking system is responsible for the problems we have within the industry today. Lending out more than what is held on deposit, a simple math problem. Yet one sanctioned by law in every nation on this earth. The money supply is controlled by banks, not nations. Nations are controlled by banks, go figure.

We see evidence of that in the past few years. Housing market crisis in the USA, Freddie Fannie and 3+ bailouts. Markets in the EU Zone falling apart, don't need to mention Greece, Italy, Cyprus ect ...... Russia is seeing slowed growth as China is not accelerating like it was, and is also experiencing much of the same , but we don't hear to much about it. Iceland ...

Part of Libya's problem is that they had a central bank for the people, which put the money of the oil profits back into the infrastructure of the country. The international bankers did not like that, because what Libya did, meant independence for them.... International banksters don't like independant countries, they make no money off them.......

[RNG]

I just want to know when are we going to stop. Argentina has defaulted on it's debt at least twice. Mexico at least once. Greece and Iceland also although they have invented pretty words for them, just like it's not printing money, it's quantitative easing and it's not an illegal alien it's an undocumented worker. Why does "the system" save them? And why is it OK for "the system" to screw the lenders and not give them any means of minimizing their losses?

When I see the people of Greece and Cypress protesting against austerity measures I honestly think they deserve to starve if they are that unaware of the real world.

[Bonam]

When I see the people of Greece and Cypress protesting against austerity measures I honestly think they deserve to starve if they are that unaware of the real world.

Except that they wouldn't starve. The "real world" economies in these nations produces more than enough for basic needs to still be met. No one would starve. It is the bloated financial sector with its nonsensical risk-taking that is in trouble, and only it. And people are duped by the media into thinking that letting some irresponsible banks just fail would be the end of the world.

And why is it OK for "the system" to screw the lenders and not give them any means of minimizing their losses?

The lenders know the risks they take when they lend money. If the entity they lend to becomes insolvent, their investment is lost, minus anything they can recover in bankruptcy proceedings. It is not the responsibility of anyone else to bail out lenders that made risky bets.

[RNG]

The lenders know the risks they take when they lend money. If the entity they lend to becomes insolvent, their investment is lost, minus anything they can recover in bankruptcy proceedings. It is not the responsibility of anyone else to bail out lenders that made risky bets.

The point I am making is that countries are spared the bankruptcy and the lenders are left in the lurch. Look at what has happened to those to whom Argentina owes. And if you hold Greek debt you are, I believe, limited to 30% recovery, if you ever get that rather than being able to attach Greek assets as you would in a corporate or private bankruptcy.

So Greece defaulting (and no matter how pretty a phrase you come up with, that's what happened) screwed Cypress and now the taxpayers in the other EU countries and any creditors of Cypress get further hosed.

Just let them sink.

[Canuckistani]

What does bankruptcy for a country mean? Lending involves risk, that's why there's so much interest charged. Lenders should take a hit. You'd better believe in all these countries it's the little people that take the biggest hit, because they don't have much cushion in the first place.

[Jerry J. Fortin]

So there we go...another bailout. Each bailout sets new highs in the EU effort to replace the greenback. Precedents are made but each case is unique we are told. The latest twist is a shell game to tap depositor victims of banking incompetence, who gets to pay? In truth...everybody gets to pay. Pay who? The bankers...nothing changes.

Save the bankers, save the banks......whodda thunk!

[GostHacked]

It's a real indication of the current state of economies, and it also shows that the EU cannot hide the problems anymore.

Greece, Italy, Portugal, Spain, Germany, the UK Cyprus all had major financial problems in the last few years. It's not simply just a Cyprus problem or a Greek problem, but an overall bigger issue with the EU Zone on the whole. It seemed like it was set up to fail from the start. With the EU zone having such diverging economies there was no way a one currency for all system would work. The value of each country is different and their output production differs greatly among the EU members.

But each time a country is bailed out, the money has to come from somewhere, and where Cyprus owed X amount of money to other entities, now they own X + N. The bailouts benefit the banks, and not the people as we have seen especially in Greece that suicides and even public immolations were getting to be common weekly occurrences.

Let the damn banks fail. All this does is kick the can a little further down the road so the next schmuck in power to worry about. The shortsightedness of these politicians and banksters will result in the common man getting screwed over.

One more time, let the damn banks fail. But what does that mean for the people who actually have money in the bank. If the bank crashes, there is no way they can get their money, simply because the bank does not have it really in the first place.

[GostHacked]

So now they have postponed opening the banks for a 3rd or 4th time.

http://www.bbc.co.uk/news/business-21936554

Up to 40% of savings over 100,000 is now the talk. And the bank will limit weekly withdrawals to prevent the run on the bank.

They don't have the money to begin with. And when Thursday comes around, they will keep it closed for a couple more days. It will get postponed until they have some deal for the bank. This propping up of failed banks is going to cause a lot more problems down the road.

[Jerry J. Fortin]

Welcome to the New World Order !

You can deposit a check, but you can't cash it. You can take money out of the bank, but only three hundred Euros at a time. They did fire the CEO of the central bank, the government is new. Now they have one long term bad day syndrome to deal with.

Capital controls are in place, there is now two kinds of Euro, one inside Cyprus and one outside Cyprus. The public will take a while to figure this out but I think it will be a rude awakening for many people. Banks are no longer a safe place to put your money. Stocks are too volatile, bonds are taking a beating. The entire monetary system is starting to show some very large and problematic cracks.

World debt is not sustainable, people need to understand the size and scope of the problem. Things are not going to get any better, in fact they will get even worse. The only solution is a general debt amnesty, an option not available until modern times. As we slip into a world of macro-economic considerations there appears to be few available options to a one world currency, a one world bank, a one world economy. A debt amnesty is a far better alternative.

[GostHacked]

Very well said Jerry.