Topic: Breaking: No deal for Cyprus despite widespread contradictory reports? (Read 1121 times)

I keep wanting to stop buying. Then governments keep doing stupid sh*t.

The Germans/EU didn't decline, they offered.  Cyprus declined and steered towards a plan that treats people more equally VS very different treatment for people depending on the bank they were deposited in.  The Germans/EU also preferred a plan that only went after accounts with more then 100k Euros.

It's an easy thing to talk about, but actually doing it requires some generous person to volunteer to pay for it. Like I say it sounds like it would be in the interests of the Germans to do it, but you can understand why they declined.

This was not planned as a part of the original deposit insurance, but it was talked about as a plan during the bailout talks THIS MONTH.  This would have been more palatable then anything that makes deposit insurance less certain.

This will be interesting on Tuesday. 

This was never planned in the first place. Deposit insurance was always the responsibility of the member states. The EU has a rule to say that member states have to provide depositor insurance, but the EU doesn't have either the responsibility or the resources to do it itself. Maybe this should have been set up when they created the Euro, but it wasn't.

The EU and the IMF are involved here because the Cypriot government can't afford to pay the deposit insurance of the banks that would go bust immediately, or the currently solvent banks that would go bust as part of the fall-out from the first lot of depositors losing their money. (See below):


1) You're a successful business with a loan from Solvent Bank S. You've got a large order from a Customer C with its money in Insolvent Bank I. Insolvent Bank I goes bankrupt, so does Customer C. You can no longer repay your loan to Solvent Bank S. You go bankrupt, Solvent Bank S lose their loan to you, and you lay off your employees, many of whom have mortgages with Solvent Bank S. Solvent Bank S is no longer solvent.

2) You've got your money in Solvent Bank S. Your friends who had their money in Insolvent Bank I just lost everything above 100,000 Euros (or worse, if the government already can't afford to honour its guarantee). Maybe (1) above won't happen, but maybe it will. Do you still keep your money in Solvent Bank S?

Upshot: Even the partially solvent banks are subject to bank runs. Sometimes there are no good options. (*)

(*) Actually there was a good option here, which is that German taxpayers bend over again and cough up enough money to bail everybody out, including the Russian mafia. That would probably have been in their best interests. But it's understandable that their government wasn't going for it with an election coming up...

Exactly. The degree of lawlessness being attempted by the ECB/IMF is truly staggering.

Quote from: http://www.zerohedge.com/news/2013-03-23/why-cyprus-matters-and-ecb-knows-it

"Further, not all of the deposits in Cyprus are in troubled banks. There is UBS, several Israeli banks, a number of French banks et al that are not troubled and still Europe wants to demand that the bank accounts in those relatively healthy banks have depositor's money taken out of them to pay for the woes of the government.  ...
In the Press, on this Saturday morning, they are discussing a European proposal to expropriate 25% of all bank accounts in the entire country of Cyprus to help pay the bills. This would be from normal citizens, Russians, other foreigners, British expats, American corporations and any one at all with money in any Cyprus bank. This would include not just the banks of Cyprus but also the French, Swiss, Emirates and  Israeli banks et al with offices there. There is a long history of bank robbery in the world but this is one heist that makes John Dillinger or Jessie James a small fry by comparison."

If Bitcoin had some market penetration with really good mobile apps then it would be an obvious alternative to Medieval shafting by the ECB and its partners.

Letting them ALL go broke would be the worst of all outcomes.  Best outcome:

Find out which banks are insolvent which is not all of them, at those nothing happens.  Then find out which banks are insolvent but sell-able, apparently some of them were BEFORE this whole mess started.  Those get sold and the new owners take care of the problem.  New owners were found for a substantial portion of the banking industry.  EXISTING BANK OWNERS of insolvent banks are left with nothing.

Now the bailout is much smaller.  The remaining really insolvent banks are closed, sold and the deposit insurance is provided by the EU as originally planned.  Holders over 100k euros in those banks fight for scraps of remaining assets.  EU has to provide less, owners of bad banks pay the price, deposit insurance is kept whole.

Now with all of this talk of bank account confiscation ALL BETS ARE OFF.  Even the partially solvent banks are subject to bank runs.  What were they thinking? 

I wouldn't be so quick to dismiss this.

For the past few years, many pundits have said that as long as the eurocrats don't make a policy mistake,  go long.

I think they've made one of Cyprus.

The Russians will make sure of that.

very unlikely. other european banks have very little stock in the cyprus banks (total 200 million euro or so). its one of the few cases where just letting all the banks go broke is an unproblematic option.
for bitcoin this is a win anyway, regardless of what they do. even more so the longer the final decision is postponed.

I've been watching a lot of people sell (all day) and have been wondering "What on earth are people thinking?!". Monday or Tuesday could deliver some historic and shocking developments that could rock markets around the world. 

This next week should bring an avalanche of new money

Not only will Cyprus be bankrupt it could cause a domino effect on other weak EU banks who have exposure which could be catastrophic.

I can't see how Cyprus can be saved by a bailout now.
Allegedly its bank deposits total $65bn. This is now scared money. Most of it will flee at the earliest opportunity. A $10bn bailout would be as much resistance as a 1000BTC wall on Mt Gox.

Nicosia official says Cyprus not in reach of deal with troika, blames IMF

"A senior Cypriot official suggested late on Saturday that his government was not close to an agreement with the troika over a range of measures aimed at securing a 10-billion-euro bailout for his country."

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/03/2013_489584