Cyprus Capitulates to Eurozone (Updated)

Finance Minister Sarris came back from Moscow without any assistance from Russia. Russia had apparently made clear it was unwilling to offer loans, and would at most buy assets. Pravda reported that the Russians said if Cyprus hit their deposits, they would not put in a dime. And frankly, except for military assets, which could only be offered by the government, they’d do better scooping up bargains in the wreckage of deflation rather than now.

Bloomberg tweeted about 40 minutes ago that Cyprus had approved the legislation necessary for the EU bailout, but still does not have a news story up. The Wall Street Journal as of now has a “Breaking News” item on its website, again no story yet, “Cyprus lawmakers approve key bills aiming to secure broader bailout package.” So this looks to be a done deal.

I wonder how this will work. Capital controls are being implemented, since news reports from Cyprus indicated that residents intended (understandably) to drain accounts once banks reopened. In addition, I can’t see how the current government survives. Indeed, the President and key members of Parliament are likely at physical risk and it’s not hard to imagine that some will find it necessary to leave the country.

Update 2:45 AM: There’s a lot of reporting on the Parliament’s actions, and I’ll relegate that to Links. But the key issues are:

1. While Cyprus has voted in capital controls, it has yet to pass the “rape the depositors” bills. Those have not been finalized and are to be voted on Saturday. The legislature has voted on resolving the number two bank, Laiki. Now this means, despite Cyprus rolling over and showing its belly, a deal is not done. The Germans give every indication that they intend to remain rigid. So it is still possible that they won’t be able to bridge the now much narrower gap by the Monday ECB deadline.

Cyprus Mail (hat tip Richard Smith) had some details on the Laiki resolution plans:

The Laiki management team were last night informed in parliament that the government planned to table a bill proposed by the central bank governor to divide Laiki into a ‘good’ bank with only deposits of €100,000 or under, and a ‘bad’ bank where around €6 billion of uninsured deposits will be placed.

Speaking to the Cyprus Mail after his briefing in parliament and on his way to a board meeting, Phidias said the current decision on Laiki “will be a disaster not just for the bank, but for the economy of Cyprus”.

He added: “We’re talking about €6 billion belonging to Cyprus depositors being transferred to the bad bank with little possibility of them recovering their money. We’re talking about a lot of businesses having their assets and accounts frozen.

“Who gives anybody the right to say that someone with €100 million will get €100,000 back and someone with €80,000 will get it all? I’m not sure parliament has the right to decide this.”

Phidias warned the impact on the rest of the banking system would be severe: “The bank is a systemic bank and we believe this problem will be transferred to the other banks very quickly. So effectively no bank will be able to operate normally from now on and I don’t really know until when.”

The part that remains to be decided is how badly to hit depositors over €100,000. And there still appears to be a bid-asked spread between Cyprus and the Troika, and that’s before you get to some reports that the Troika has moved the goalposts for money to be provided by Cyprus from €5.8 billion to €6.7 billion. From Bloomberg:

Even with the raft of last night’s laws, Anastasiades may still find himself short of the 5.8 billion euros required to satisfy EU leaders. Winding down Cyprus Popular Bank Pcl, the nation’s second-biggest bank, would only bring the bill down to 3.5 billion euros, said Averof Neofytou, deputy president of Anastasiades’s ruling Disy party.

2. The imposition of capital controls has the potential to alarm depositors in periphery countries even more than deposit seizure. While the Eurocrats can try claiming that the deposit grab is a one-off, the result of Cyprus having a huge financial sector that was heavily deposit funded, it was already troubling that they didn’t go after equity or bondholders. But the imposition of capital controls effectively creates another currency without the benefit of allowing the currency to revalue. As Jeremy Warner of the Telegraph explained:

Yet the point is that if capital controls are introduced, it basically makes Cypriot euros into a national currency, rather than part of wider monetary union. The capital controls will severely limit your ability to get your euros out of Cyprus, rending them essentially worthless in the wider eurozone. It would be a bit like telling Scots they can’t spend their UK pounds in England. Monetary union is many things, but above all it is about free movement of money and a uniform value wherever it is spent. When these functions are disabled, then you cease to be part of a single currency.

John Dizard of the Financial Times is of the same view:

So even after the banks (presumably) reopen on Tuesday, a euro in Cyprus will now not be as freely transferable, or, really, as valuable, as a euro in Frankfurt. In some very real ways that is also true of euros on deposit in Greece, whose use is increasingly subject to detailed review and delay by tax authorities; or euros in Italy, where the size of cash transactions is severely restricted, at least by law.
Therefore, now that the Article 65 capital-controls cat is out of the bag, it is reasonable to consider when and where it will be used again, when a European banking system gets into trouble. You may be rich, in nominal Cypriot euros, or (fill in the blank) euros, but so what?….

In the same way that starting wars is much easier than ending them, the lifting of capital controls in Cyprus is likely to be a long time off. Britain imposed temporary exchange controls, as they were called then, in September of 1939 and did not lift them until 1979.

As we’ve indicated, the big risk coming out of the cramdown of Cyprus is a resumption of the flow of deposits out of periphery countries, which had been underway last year but was arrested by the introduction of the OMT. You’d be nuts to keep your money in a Spanish bank after the brutal treatment of Cypriot depositors. Expect Swiss, German, American, and, as Dizard put it, “banco de Mattress” to be the beneficiaries.

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  1. from Mexico

    Yves said:

    Indeed, the President and key members of Parliament are likely at physical risk and it’s not hard to imagine that some will find it necessary to leave the country.

    Kind of like Argentine president Fernando de la Rúa and his Economics Minister, the neoliberal guru Domingo Cavallo, escaping from Argentina in a helicopter in the wee hours of December 20th, 2001.

    1. ltr

      Argentina’s Domingo Cavallo was a Harvard guy, and America’s darling for keeping the peso pegged to the dollar so that Americans could invest in Argentina with no exchange rate risk.

          1. jurisV

            Thank you for the quote!

            I suspect that it makes them stupid first prior to the descent into the madness of cruelty.

            Uncertainty is very powerful once you get past the occasional anxiety — and it leads to curiosity and understanding.

            Richard Feynman — “I’d rather live with uncertainty than with answers that are wrong.”

    2. MyLessThanPrimeBeef

      We see here that the government is ultimately backed by force, not taxation, absence people’s consent, which always trumps all.

        1. Ruben

          Right is might, behind the facade and the posturing, there is only coercion and indoctrination, gullible voters and self-righteous charlatans.

          Anarchy is the only decent political system for intelligent, sentient beings.

          But the above cannot be true, right?

          1. VincentP

            It’s true but most (especially here) cannot bring themselves to even contemplate the notion, and so they get mired down in schemes that perpetuate the violence (MMT, Government-issued fiat currency, additional coercive regulation, etc.)

            I mean, people don’t even know what anarchy means; they think it means “no rules” or “chaos”, when of course what it actually means is “no rulers”. Check out Molyneux’s excellent “Practical Anarchy” for a fully-developed thesis on how such a voluntary, non-coercive system might be possible:


  2. shtove

    They showed the vote on BBC TV – the Cyprus parliament is so small the speaker just asks for a show of hands. The members raised their hands tentatively, each looking around to make sure he wasn’t the only one.

  3. Ηarry

    The president is a traitor,the whole thing was planned long ago but they had to wait for the 3 day closing due to public holiday to bring it up,He as Samaras PM of Greece are due to be hanged when people take back their countries

    1. Lafayette

      Thanks for our Daily Dose of blather from the Loony Left.

      Nobody is going to “take back their country”, except at the ballot box. Which the American electorate seems unlikely to do as regards the Troglodytes in the HofR.

      Americans, during this past election, mostly preferred to spectate from the sidelines rather than vote – only 57% bothered to get off their duffs.

      The other 43% obviously prefer to bitch-in-a-blog. A sizable portion of the electorate is thus not only physically obese but politically apathetic. (Or, should that read “politically ignorant”?)

      So, what happens is the sort of pathetic governance that apathy and dereliction of Civic Duty deserves, with elections manipulated by the funding of a handful of plutocrats. Meaning this: a Millionaires’ Club of a Senate and the HofR run by Dogmatic Replicants.

      Bravo, Uncle Sam! You’ve sold your democracy to The Rich!


      1. banger

        I think you are wrong about the American electorate. Many of us don’t believe that we live in anything other than a nominal democracy. I won’t go into a deep analysis on this, just reporting–Americans are more genuinely cynical (with good reason) than I’ve ever seen them. Americans were flim-flammed and conned by the ruling elites who provided a false narrative about everything–it was easy and after 9/11 the door was closed. It’s too late for electoral politics–third parties are just not viable in the system and the two party system is really one party, the property party, with two right-wings as Gore Vidal maintained.

  4. Francois T

    The butterfly in Cyprus brushed up its wings. As per Chaos theory, the mega-storm will hit the Eurozone sooner than later, since the whole system is in a supercritical state.

    This could be ugly…truly ugly!

    1. Lafayette

      Et la France. Elle est en meilleure posture?

      François, pour combler son déficit, et éviter la même conséquence qu’à Chypre, il veut “réquisitionner” les revenues des riches à 75% – mais le Conseil Constitutionnel lui dit qu’au de là de 67%, c’est injuste.

      Ces pirouettes de cloun des Socialistes en France, ils sont mieux ? Pas trop …

    1. Thor's Hammer

      There is a funny little brown swan circulating the globe at the speed of light. Its called Bitcoin. I wonder if there is any connection between the attempted rape of certain Russian gentlemen and the little British expat colony where they parked their money and the fact that its free market price in dollars has skyrocketed from $40 to $77 in only two weeks?

      Bitcoin detractors think that it isn’t real because it isn’t backed by the full faith and credit (LOL) of an entity like the US Goobermint or the ECB. As a Cypriot, Argentine, or for that matter a Brit pensioner there is a certain utility in being to transfer the Euros in your bank account or in your possession into an encrypted cybercurrency, send it anywhere in the world at the click of a mouse, and then use it to buy dollars or loonies or gold. And that characteristic is what gives it value.

      1. K Ackermann

        Yeah, and governments and banks are just powerless to stop it. Of course, Bitcoin may stop itself – ala MF Global et al.

  5. from Mexico

    Yves said:

    Capital controls are being implemented, since news reports from Cyprus indicated that residents intended (understandably) to drain accounts once banks reopened.

    It seems like capital controls won’t stop people from withdrawing their money from the banks and keeping it under their mattresses. This is what happens in countries like Argentina and Mexico where there is little faith in the banks. You get these unbelieveably large, underground cash economies. Here in Mexico, a good friend of mine is an antique dealer and he recently sold an antique to a man who is perhaps the biggest real estate developer in Mexico. It was about $80,000 and he paid cash. Likewise he sold an antique to the owner of one of the TV monopolies here in Mexico, and again he paid in cash. This would never happen in the US.

    Likewise, in Argentina cash in the hands of individuals accounted for 51 percent of private money supply.

    So where there is little or no faith in the banks, these large underground cash economies can develop. As the article above on Argentina explains, this robs banks of deposits, deposits which can be leant out for productive investment in the formal economy. But both Mexico and Argentina have monetary sovereignty, so can print up more pesos. What’s going to happen to poor little Cyprus, who can’t print up more euros?

    1. skippy

      Not to worry DS… in the near future everyone from birth will have to submit a BAS (business activity statement) monthly… everyone will have to – think – as a – like a – economic rationalizer… everyone will become a LLC – PTY – LTD – identity!

      Skippy… Children’s IHoles will be inserted with the appropriate curriculum and supplied by the inheritors of Freemarket choice… whats not to like!

      1. from Mexico

        This whole thing went down according to plan. Never let a crisis go to waste.

        In 1995, when Clinton placed a gun to Mexico’s head and pulled the trigger, where was Mexico’s governing group, all Ivy League trained (Harvard, Yale, MIT)? As Fuentes inquires in A New Time for Mexico:

        In effect, President Clinton withdrew the original $40 billion loan requiring Congressional approval and gave Mexico $20 billion out of a discretionary fund. Strings were attached: Mexico’s oil revenue would serve as collateral and be paid directly into the Federal Reserve Bank in New York. President Zedillo didn’t even blink at this onerous condition and both Zedillo and Clinton knew that the U.S. lent Mexico money to repay U.S. banks, and investors… Production, employment, salaries, education, and social services — the real saviors of the Mexican economy — were once more postponed. Sovereignty was serverely affected: the agrement gave the U.S. the right to monitor Mexico’s economic policies…

        Even after taking into account the executive branch’s lack of controls, its internal agenda, the tradition of secrecy, and the deluded complicity of Washington, a bitter doubt remains in Mexico. If the devaluation of the peso was not done in time, why was it done so badly? What happened to the technicians, the economists, the boys at the blackboard? Why did they not negotiate with the U.S. government before the devlauation, so that credit could be obtained at less risk to our national sovereignty? Why was it all done so late, so ineptly? In the last days of January 1995, when the illusion of a rescue loan was fading, our supplicant diplomats returned home with empty hands, equipped only with nails to scratch outselves with.

        1. skippy

          I cannot fathom the ironic incongruity of neoliberalism… cough… Anarcho capitalism

          Anarcho-capitalism (also referred to as free market anarchism,[1] market anarchism,[2] private-property anarchism,[3] libertarian anarchism,[4] and voluntaryism) is a libertarian political philosophy that advocates anarchy in the sense of the elimination of the state in favor of individual sovereignty in a free market.[5][6] In an anarcho-capitalist society, law enforcement, courts, and all other security services would be provided by privately funded competitors rather than through taxation, and money would be privately and competitively provided in an open market. Therefore, personal and economic activities under anarcho-capitalism would be regulated by privately run law rather than through politics.

          Various theorists have differing, though similar, legal philosophies which are considered to fall under “anarcho-capitalism.” The first well-known version of anarcho-capitalism was formulated by Austrian School economist and libertarian Murray Rothbard in the mid-twentieth century, synthesizing elements from the Austrian School of economics, classical liberalism, and nineteenth century American individualist anarchists Lysander Spooner and Benjamin Tucker (while rejecting their labor theory of value and the normative implications they derived from it).[7]

          In Rothbardian anarcho-capitalism, there would first be the implementation of a mutually agreed-upon libertarian “legal code which would be generally accepted, and which the courts would pledge themselves to follow.”[8] This legal code would recognize sovereignty of the individual and the principle of non-aggression. – wiki

          Skip here… which then begs the question what is the NAP (Non-aggression principle) which underpins this ology – ism mean see:


          The principle has been derived by various philosophical approaches, including:

          Argumentation Ethics: Some modern libertarian thinkers ground the non-aggression principle by an appeal to the necessary praxeological presuppositions of any ethical discourse, an argument pioneered by libertarian scholar Hans Hermann Hoppe. They claim that the act of arguing for the initiation of aggression, as defined by the non-aggression principle is contradictory. Among these are Stephan Kinsella[5] and Murray Rothbard.[6]

          Consequentialism: Some advocates base the non-aggression principle on rule utilitarianism or rule egoism. These approaches hold that though violations of the non-aggression principle cannot be claimed to be objectively immoral, adherence to it almost always leads to the best possible results, and so it should be accepted as a moral rule. These scholars include David Friedman, Ludwig von Mises, and Friedrich Hayek.[7][not in citation given]

          Natural rights: Some derive the non-aggression principle by appealing to natural rights that are deemed a natural part of man. Such approaches often reference self-ownership, ethical intuitionism, or the right to life. Thinkers in the natural law tradition include John Locke, Lysander Spooner, and Murray Rothbard.

          Social contract: The social contract is an intellectual device intended to explain the appropriate relationship between individuals and their governments. Social contract arguments assert that individuals unite into political societies by a process of mutual consent, agreeing to abide by common rules and accept corresponding duties to protect themselves and one another from violence and other kinds of harm. Many libertarians, however, reject the “social contract” term as it has been historically used in a non-voluntary fashion. They argue that for a contract to be enforceable it must be voluntarily accepted.

          Social progress: Herbert Spencer, the 19th century polymath, first proposed that aggression either between individuals or the state against the individual inhibits sociocultural evolution. Based on his theory of social evolution (from Lamarckian use-inheritance), he concluded that aggression in all its forms impedes progress by interfering with the individual’s ability to exercise his or her faculties. He wrote, “… when each possesses an active instinct of freedom, together with an active sympathy—then will all the still existing limitations to individuality, be they governmental restraints, or be they the aggressions of men on one another, cease. … Then, for the first time in the history of the world, will there exist beings whose individualities can be expanded to the full in all directions. And thus, as before said, in the ultimate man perfect morality, perfect individuation, and perfect life will be simultaneously realized.”[8]

          Objectivism: Ayn Rand rejected natural or inborn rights theories as well supernatural claims and instead proposed a philosophy based on observable reality along with a corresponding ethics based on the factual requirements of human life in a social context.[9] She stressed that the political principle of non-aggression is not a primary and that it only has validity as a consequence of a more fundamental philosophy. For this reason, many of her conclusions differ from others who hold the NAP as an axiom or arrived at it differently. She proposed that man survives by identifying and using concepts in his rational mind since “no sensations, percepts, urges or instincts can do it; only a mind can.” She wrote, “since reason is man’s basic means of survival, that which is proper to the life of a rational being is the good; that which negates, opposes or destroys it [i.e. initiatory force or fraud] is the evil.”[10] – wiki

          Skip here… so whats all the humbug about aggression or is it assertiveness? When does it begin and what is its path through out ones life… is part and parcel of adaptive behavior or some part that should be genetically bred out – removed from the herd… eh.


          The frequency of physical aggression in humans peaks at around 2–3 years of age. It then declines gradually on average.[103][104]

          These observations suggest that physical aggression is not only a learned behavior but that development provides opportunities for the learning and biological development of self-regulation. However, a small subset of children fail to acquire all the necessary self-regulatory abilities and tend to show atypical levels of physical aggression across development. These may be at risk for later violent behavior or, conversely, lack of aggression that may be considered necessary within society. Some findings suggest that early aggression does not necessarily lead to aggression later on, however, although the course through early childhood is an important predictor of outcomes in middle childhood. In addition, physical aggression that continues is likely occurring in the context of family adversity, including socioeconomic factors. Moreover, ‘opposition’ and ‘status violations’ in childhood appear to be more strongly linked to social problems in adulthood than simply aggressive antisocial behavior.[105][106] Social learning through interactions in early childhood has been seen as a building block for levels of aggression which play a crucial role in the development of peer relationships in middle childhood.[107] Overall, an interplay of biological, social and environmental factors can be considered.[108]

          What is typically expected of children?

          Young children preparing to enter kindergarten need to develop the socially important skill of being assertive. Examples of assertiveness include asking others for information, initiating conversation, or being able to respond to peer pressure.

          In contrast, some young children use aggressive behavior, such as hitting or biting, as a form of communication.
          Aggressive behavior can impede learning as a skill deficit, while assertive behavior can facilitate learning. However, with young children, aggressive behavior is developmentally appropriate and can lead to opportunities of building conflict resolution and communication skills.

          By school age, children should learn more socially appropriate forms of communicating such as expressing themselves through verbal or written language; if they have not, this behavior may signify a disability or developmental delay

          What triggers aggressive behavior in children?

          Physical fear of others

          Family difficulties

          Learning, neurological, or conduct/behavior disorders

          Psychological trauma

          Corporal punishment such as spanking increases subsequent aggression in children.[109]

          The Bobo doll experiment was conducted by Albert Bandura in 1961. In this work, Bandura found that children exposed to an aggressive adult model acted more aggressively than those who were exposed to a nonaggressive adult model. This experiment suggests that anyone who comes in contact with and interacts with children can have an impact on the way they react and handle situations.[110]

          Summary points from recommendations by national associations
          American Academy of Pediatrics (2011):

          “The best way to prevent aggressive behavior is to give your child a stable, secure home life with firm, loving discipline and full-time supervision during the toddler and preschool years. Everyone who cares for your child should be a good role model and agree on the rules he’s expected to observe as well as the response to use if he disobeys.”[111]

          National Association of School Psychologists (2008):

          “Proactive aggression is typically reasoned, unemotional, and focused on acquiring some goal. For example, a bully wants peer approval and victim submission, and gang members want status and control. In contrast, reactive aggression is frequently highly emotional and is often the result of biased or deficient cognitive processing on the part of the student.”[112]

          Situational factors

          See also: Stereotype threat

          There has been some links between those prone to violence and their alcohol use. Those who are prone to violence and use alcohol are more likely to carry out violent acts.[122] Alcohol impairs judgment, making people much less cautious than they usually are (MacDonald et al. 1996). It also disrupts the way information is processed (Bushman 1993, 1997; Bushman & Cooper 1990).

          Pain and discomfort also increase aggression. Even the simple act of placing one’s hands in hot water can cause an aggressive response. Hot temperatures have been implicated as a factor in a number of studies. One study completed in the midst of the civil rights movement found that riots were more likely on hotter days than cooler ones (Carlsmith & Anderson 1979). Students were found to be more aggressive and irritable after taking a test in a hot classroom (Anderson et al. 1996, Rule, et al. 1987). Drivers in cars without air conditioning were also found to be more likely to honk their horns (Kenrick & MacFarlane 1986), which is used as a measure of aggression and has shown links to other factors such as generic symbols of aggression or the visibility of other drivers.[123]

          Frustration is another major cause of aggression. The Frustration aggression theory states that aggression increases if a person feels that he or she is being blocked from achieving a goal (Aronson et al. 2005). One study found that the closeness to the goal makes a difference. The study examined people waiting in line and concluded that the 2nd person was more aggressive than the 12th one when someone cut in line (Harris 1974). Unexpected frustration may be another factor. In a separate study to demonstrate how unexpected frustration leads to increased aggression, Kulik & Brown (1979) selected a group of students as volunteers to make calls for charity donations. One group was told that the people they would call would be generous and the collection would be very successful. The other group was given no expectations. The group that expected success was more upset when no one was pledging than the group who did not expect success (everyone actually had horrible success). This research suggests that when an expectation does not materialize (successful collections), unexpected frustration arises which increases aggression.

          There is some evidence to suggest that the presence of violent objects such as a gun can trigger aggression. In a study done by Leonard Berkowitz and Anthony Le Page (1967), college students were made angry and then left in the presence of a gun or badminton racket. They were then led to believe they were delivering electric shocks to another student, as in the Milgram experiment. Those who had been in the presence of the gun administered more shocks. It is possible that a violence-related stimulus increases the likelihood of aggressive cognitions by activating the semantic network.

          A new proposal links military experience to anger and aggression, developing aggressive reactions and investigating these effects on those possessing the traits of a serial killer. Castle and Hensley state, “The military provides the social context where servicemen learn aggression, violence, and murder.”[124] Post-traumatic stress disorder (PTSD) is also a serious issue in the military, also believed to sometimes lead to aggression in soldiers who are suffering from what they witnessed in battle. They come back to the civilian world and may still be haunted by flashbacks and nightmares, causing severe stress. In addition, it has been claimed that in the rare minority who are claimed to be inclined toward serial killing, violent impulses may be reinforced and refined in war, possibly creating more effective murderers.[citation needed]

          As a positive adaptation theory

          Some recent scholarship has questioned traditional psychological conceptualizations of aggression as universally negative.[24] Most traditional psychological definitions of aggression focus on the harm to the recipient of the aggression, implying this is the intent of the aggressor; however this may not always be the case.[125] From this alternate view, although the recipient may or may not be harmed, the perceived intent is to increase the status of the aggressor, not necessarily to harm the recipient.[126] Such scholars contend that traditional definitions of aggression have no validity.[citation needed]
          From this view, rather than concepts such as assertiveness, aggression, violence and criminal violence existing as distinct constructs, they exist instead along a continuum with moderate levels of aggression being most adaptive.[24] Such scholars do not consider this a trivial difference, noting that many traditional researchers’ aggression measurements may measure outcomes lower down in the continuum, at levels which are adaptive, yet they generalize their findings to non-adaptive levels of aggression, thus losing precision.[127] – wiki

          Skippy… boy oh boy I sure am confused over this w]Ihole neoliberlism thingy – cough… Anarcho Capitalism… I mean… if squillionaires are sovereign entity’s on top of – pinnacle of – ownership’s – propertarianism’s mental thunit excrement pile… well history is well defined on this subject matter… can you say Tudors on steroids… the individual[s of wealth become **religious creators** in their own – individual – rights! Dark ages 2.0 value added w/ devolution sq – cubed…

          PS. is it possible to barf, retch, and sob all at the same time… uncontrollably?

        2. skippy

          In the time out corner, till then…

          Skippy… boy oh boy I sure am confused over this w]Ihole neoliberlism thingy – cough… Anarcho Capitalism… I mean… if squillionaires are sovereign entity’s on top of – pinnacle of – ownership’s – propertarianism’s mental thunit excrement pile… well history is well defined on this subject matter… can you say Tudors on steroids… the individual[s of wealth become **religious creators** in their own – individual – rights! Dark ages 2.0 value added w/ devolution sq – cubed…

          PS. is it possible to barf, retch, and sob all at the same time… uncontrollably?

    2. Synopticist

      “Likewise he sold an antique to the owner of one of the TV monopolies here in Mexico, and again he paid in cash. This would never happen in the US.”
      actually, I have a friend who’s dad and brothers run very up-market antique dealership, and they do a fair amount of business at US trade fairs. A lots of their customers pay cash.

      Not that that contradicts your main point.

      1. Crazy Horse

        Here in Teton County Wyoming, the wealthiest county in the US, typical second or fifth homes start at 3 million and go up to 70 million depending upon how much authentic cowboy furnishings are included. No lack of trophy homes changing hands and at least half the sales are for cash. If the lazy no good 47% would just stop whining and get a job at Wall Mart instead of running away from their mortgage obligations the country wouldn’t be going to hell and trying to steal from the job creators that make the J Holes of the world possible.

      1. Synopticist

        Look on the bright side.

        Next time Richie Rich claims his money is inviolate, what you going to say to him?

    1. kris

      I don’t think many common people have deposit of more than 100k. It seems to me this is rich robbing rich, elite infighting.

    1. AbyNormal

      nah, it could never happen ‘here’ or ‘to me’…

      Every man takes the limits of his own field of vision for the limits of the world. Schopenhauer

  6. Jim Haygood

    The awful ruin of Europe, with all its vanished glories, glares us in the eyes.

    When the designs of wicked men or the aggressive urge of mighty States dissolve over large areas the frame of civilised society, humble folk are confronted with difficulties with which they cannot cope. For them all is distorted, all is broken, even ground to pulp.

    From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the Continent.

    The euro — an idea whose time has come and gone.

    It’s all over but the cryin’ …

  7. Claudius

    A previous reader posted a comment “we are Cypriots now”. Maybe, but “we” Cypriots join one other nation that has history of government imposed wealth confiscation and capital levies foisted on its poor, benighted, downtrodden, hapless population; Germany.

    Since 1913, Germany’s government has imposed ‘forced loans’, capital levies or a wealth tax on its citizens, no less than eight times: In 1913, the government introduced a one-off levy on higher wealth and income as a defense tax; in 1919, the national emergency tax levy was introduced as an general capital levy as part of Erzberger’s financial reforms; the government also levied a forced loan in 1922/23, which taxed citizens with a ‘one time’ 100,000 marks; in 1949, a retroactive capital levy was raised on the asset base of citizens from 1948; ‘The Investment Aid Act’ of 1952 forced loan from the commercial sector for reinvestment in the ‘primary’ industries; and, in 1982, the coalition government introduced an ‘Investment Aid’ levy to promote housing construction – paid back at a later date with no interest.

    Clearly , Germany sees the correlation between forced loans and capital levies as obvious: Forced loans can more or less be converted into capital levies due to the structure, interest, and repayment methods. Larger one-off capital levies are easily spread over longer periods of time to minimize the liquidity burden on taxpayers (E.g. the 1950’s, the capital levy was uniformly spread over a 30-year period (including interest) and collected in quarterly installments). Germany sees that forced loans and one-off capital levies serve as an “one time” fiscal instrument to secure public debt refinancing, without having to rely on external aid.

    If we want to see where the next expropriation of private wealth might be, look not to Greece, Spain or Italy but,perhaps, look to Germany itself. What easier way to lead by example on the way back to economic strength?

    We are all ‘good Germans’ now.

    1. craazyman

      That sounds like lifting weights in the gym with chalk all over your hands and old cotton sweatpants and sweatshirts. Grey, no flashy bright colors or shoes that light up when you walk. I’m talking leather high tops with laces. That’s how Rocky Marciano used to work out.

      That’s an interesting history-slice into the Geode of the Teutonic mind. Let’s forget about the Nazis for a second.

      The theory is. You can do a correlation going back 100 years between capital levies and industrial might. The r-squared is nearly 1.00.

      Cyprus will eventually be the strong man of the Mediterranean! Hanz and Franz will PUMP YOU UP!

      1. Claudius

        I like your: “That’s an interesting history-slice into the Geode of the Teutonic mind”. Caused me to spill a half boiled egg.

        I think you’re right about “an” R2 – coefficient of determination – as it relates to capital levies of one type or another and German resolve (across a whole spectrum of Teutonic geodes).

        What I see is that these levies were/are accepted not when the German people were/are at their strongest, their most fearless or resolute, but when they are politically, economically and socially (cohesively) at their weakest. Germans, as the Americans say, “suck it up”.

        One must suspect that if the Europe Union fails, there’s economic collapse and social unrest, Germany will be one of the most distressed; yet, ironically, the country most determinedly prepared to “suck it up”; R2 = 0.9.

  8. impermanence

    It’s simply a matter of who is stealing from whom, the basic history of social man.

  9. Synopticist

    Someone had to pay.
    Who would you rather it was? European taxpayers? Can French and Spanish citizens really spare the cash?
    Or rich people, with savings below 100,000 protected?
    Frankly I’m coming to think this is a good thing.

    Either we crash the system, we tax everybody, we cut public services to the bone for a decade, or we confiscate the wealth of the richest. Or a mixture of the last 3.

    If we cant write-off the debt and atart all over again, I WANT WEALTH TAXES. I think thats the fairest way, it’ll hurt the most people the least, and it’s a quick way to raise a shedload of cash.

    I reckon out plutocratic overlords are going to regret this, because in bullying Cyprus, and shafting a bunch of mostly rich Russians, they’ve openned the door for normal people to do it to them.

    1. AbyNormal

      and no matter how diligently i work to separate my financial activities from Chase…they’re always there, somewhere.

      1. Synopticist

        No, maybe 100 thou isn’t that much for a business, but it’s the priciple which is important.

        They’ve just forced through a wealth tax. The plutocrats haven’t woken up to that yet.

        1. Ned Ludd

          It’s not a wealth tax, it’s a liquidity tax. Wealthy people don’t keep large sums of money deposited at the bank. They invest in real estate, equities, bonds, derivatives, futures, options, and swaps. They have financial advisers who advise them not to let their money sit in a savings account.

          Who has large amounts of money in savings accounts? Risk-averse retirees. Small businesses. A person or business saving up to make a large capital purchase without taking out a loan. The middle class – the financially conservative middle class. This seizure of wealth is aimed straight at the middle class.

    2. g kaiser

      You want wealth taxes, but I don’t want to pay!
      So are you going to rob me, or are you going to do your own work. ?
      This “i want” should be “let me go and do”
      As long as you and other people hink they are entitled to my labour, then you and I are not going to see eye to eye!

      It’s time people rise up and throuw their shackles off.

      If you have learnt nothing to now, please hurry up. Not much time left before the practicals!
      If you are not prepared to defend it, you loose it. That goes for your dignity, your wealth, your freedom and ultimately your life. So what is it.?

      1. They didn't leave me a choice

        Your labour? You call looting the corpses of long dead plants and animals /your/ labour? The delusion runs deep.

  10. steve from virginia

    Still no details … don’t know whether the Germans or the ECB or Santa Claus will sign off on it … whatever ‘it’ is. A bit too early to tell.

    Sticking it to the Russians … that’s certain to turn out well.

    1. Lexington

      Cause DC is so good a solving problems.

      Like Iraq. Or Hurricane Katrina. Or restructuring too big to fail banks.

      Hell, they can’t even keep the lights on for the Superbowl.

    2. Yves Smith Post author

      I don’t buy it.

      The FT reports they knew the Russians would not rescue Cyprus before they put the screws on Cyprus.

  11. MarcoPolo

    Given what we’ve learned to expect from the EU & US I suppose I shouldn’t be surprised, but someone please tell me why it’s not Russia who just blew the biggest deal ever. For 16b they could have owned all the banks in the country – including the Central Bank – giving them a seat at the ECB table. And from there they could have built a “financial center” better and bigger than BCCI. Forget those military bases. That’s so 20th century and how they went broke before. They could have had all the deposits from…

    Well, that’s what I would have done.

  12. Lambert Strether


    Merkel told a closed-door meeting of legislators in Berlin today that Cyprus’s decision to test Europe is unacceptable, and that it must now act quickly, a party official said.

    “Democratic deficit,” to put it mildly.

    1. Claudius

      Merkle’s comments refer not to Cyprus’ fiscal plight, but to their Russian overtures. One might suspect that the US and Britain have been scolded Germany; reminding them what’s at stake geopolitically.

      To wit, Britain (yesterday) has dispatched a task-force of top civil servants to Cyprus led by Treasury; permanent secretary Tom Scholar (previously, an Executive Director at the World Bank.) after Nicosia accepted an offer of “technical assistance”. What’s least reported is that here is (unusually) the defense department’s contingent from the offices of Ursula Brennan, the Defence Permanent Secretary and Bernard Gray, the chief of ’defence materiel’.

      Meanwhile the Financial Times (London) reports (yesterday) on the defense component.

      In, typically, understated British terms)Extracts:
      ‘As the debacle over the island’s finances continues, that question is on the minds of western diplomats, some of whom wonder whether the Kremlin could use the island to challenge their security interests in the eastern Mediterranean.’

      ‘However, the island is not a member of NATO and has for years had a growing relationship with Russia. If Russia were to provide a large rescue package, or if Cyprus was to plunge out of the Eurozone, diplomats would certainly begin to ponder the diplomatic consequences’.

      ‘Meanwhile the Russian Navy, which is turning into a significant beneficiary of the Kremlin’s rearmament programme, clearly wants to boost its presence in the region.

      Admiral Viktor Chrikov, the commander of Russia’s navy, said at the weekend that he was looking to position five or six ships “on a permanent basis” in the Mediterranean. The civil war in Syria means Russia risks losing its only Mediterranean naval base at Tartus. Enhanced relations with Cyprus might compensate for that loss’.

      ‘Concern has been expressed by diplomats from the UK, whose base at Akrotiri has 2,000 personnel. RAF Akrotiri played a crucial role as a base for air operations in the 2003 Iraq war and the 2011 Syria conflict’.

      ‘The US could also be vexed by an enhanced Russian presence in the region. Since 2012, the US Navy has been operating warships in the eastern Mediterranean as part of the NATO theatre missile defence’.

      Something is afoot (and I don’t mean a rush to arms).

      1. Lambert Strether

        If that’s the hand the Cypriots had to play, they surely didn’t play it well (or, as I recall reading somewhere, Obama already had a word with Putin before the Cypriots tried to cut the deal).

    2. Ruben

      Democratic excess, rather, seeing how this is all posturing for the coming German elections.

      Frau Merkel also told yesterday early morning after a ministerial meeting that _whatever they do_ the Cyprus business model is dead.

      I think that went down well with Frau Merkel’s potential voters.

  13. someone

    a blog which claims to support the occupy movement has problems with a wealth tax on people who have more than 100k in deposits. Instead the overall taxes of poor people should be increased or it would be done with outright inflation to protect these savings.
    I see a problem in this agenda.
    Oh yeah, forgot, it was the freckin’ dschörman nazi scum who imposed this.

      1. someone

        Occupy is a very confused movement in view. But a wealth tax is one of the ways to reduce inequality, the enormous power of the rich and the public concentration on the well-being of capital.
        There is no easy way out. The imagination that we tax just one percent and then the nice smiling uncle from Omaha will accept it, while we can take out some villains is to easy.
        I mean your demand to raise the insurance scheme up to 250k looks to me rather part of the problem than the solution. I just know the German figures, but I doubt that the American ones look really better and they say that with a 16000 bank account you belong to the richer half of the population.
        You have over 40 million food stamp receveiers in your country, don’t you think that their problems should have priority and not the problems of the upper middle-class?
        And this is what it seems to be going to happen, the taxation of the upper middle class.

        1. Lambert Strether

          A direct levy on bank accounts is not a tax (though that is indeed how powers that be frame the issue).

          When the government is able to exercise that power, do you seriously believe that the rich won’t be able to evade it, and that the burden won’t fall on the poor?

          Let me tell you, I don’t have a lot of money in my bank account at all, and the prospect of the government reaching into it and grabbing whatever they want whenever a bank needs a bailout — or for whatever other reason they want, because it won’t stop there — gives me the chills.

          I think you need to think a little bit more about the actual lives of the people you claim to want to protect.

          1. someone

            Oh, now you begin with sophistry. Is a levy a tax or is it outright expropiation. Nice try. Perhaps it’s the difference between Europe and the US. I don’t have a real problem with socialism/communism. But you have obviously. And you domestiticated your 99’ers and food stamp receivers quite well, not to forget that in the land of free more people are imprisoned than in the hightimes of the Gulagsystem and more than in any other country nowadays, ok, North Corea might be worse.
            But is the levy still a tax or is it already expropietation? This is the question.
            And let’s be nice to rich people, they know ways to avoid it, so that any try is condemned to fail.

          2. someone

            I wrote Occupy is a very confused movement.
            Typical well-off citizen-uproar with no analysis at all. The existing upper middle is part of the problem not the solution.

            1. Lambert Strether

              @someone No. You wrote “Occupy” in a very confused moment. For example, many Occupations included a strong homeless contingent (though of varying degrees of effectiveness). Please pontificate no further on a subject you clearly know nothing about.

          3. someone

            Is it so hard to look a few comments above?

            “Occupy is a very confused movement in view.”
            Ok, got a typo and forgot “my”. And where is your acclaimed statement? And by the way, if your French, German, Italian, Catalan and Dutch were half as bad as my English one would be one big step further. Your ad hominem attacks are really sweet.

          4. Lexington

            When the government is able to exercise that power, do you seriously believe that the rich won’t be able to evade it, and that the burden won’t fall on the poor?

            By that logic all taxation is unfair, since the rich will always be able to evade it and the burden will always fall on the poor. Ergo, governments should never tax.

            The proof will be in the pudding. The initial plan called for a 6.75% tax on deposits below 100k Euro and 9.9% on those above the threshold. However the FT has reported that a much more progressive 3.5% / 12.5% has since been proposed to make the plan more politically palatable.

          5. someone

            Even more clear cut. Northern EU/IMF at first wanted a straight insolvency process with the deposits above 100k in the banks with problems. The others were not directly attached. But in this proposal the big deposits would have faced a 40% haircut.
            One can argue for fair, that in such a small country, if the two biggest banks face insolvency the other banks would be toast. So the Cypriot government itself came up with he idea that one introduces a general levy. And since the Cypriot gorvenment was afraid of a bank run on the foreign bank accounts it proposed to tax everybody so that the haircut on foreign bank accounts which are by experience larger can be kept beneath 10%.

        2. Dogberry

          How is this a “wealth tax”? If I was a Cypriot saving for a rainy day or saving for my retirement or saving for the deposit on a home or to start a small business I’d be hit with a contribution towards helping the Greeks keep their deposit accounts intact. If I’d spent all my money on second homes, rental properties,shares in German or US companies, foreign hedge funds or just wine, women and song I’d be laughing all the way past the bank on the other side of the road.

          1. someone

            Unluck? Not good money management?
            These are luxury problems which I would really appreciate to have. And the EU/IMF position preferred the clear insolvency process from the beginning. Cyprus didn’t want it and thought it could play Russia off against EU/IMF. Bad bet.

        3. Yves Smith Post author

          Please see Ned Ludd’s comment above.

          This is not a wealth tax. No wealthy person would keep a lot of money in ‘friggin deposits.

          This is a tax on conservative retirees and small-medium sized businesses. Just watch Greek and Cyprus news and see how many businesses fail as a direct result of the deposit seizure.

          1. someone

            Let’s make the gesture of a revolutionary with all the quack and when it comes to the real questions let’s stick back. These are the best. Of course are some people able to play and to avoid tax regimes, so it is. But then do nothing, sit on your hands and be afraid that rich people can harm you and complain about the banana republic.
            Do you think Putin were so outraged this week, if not substantial moneys were trapped?

          2. Lexington

            How many businesses are going to fail if Cyprus’ banking system collapses and depositors get nothing?

            The bottom line is that someone is going to have to pay for the bailout and the consensus on NC seems to be that someone should be anyone except the people who engineered and benefited from a financial sector that was completely out of proportion to the rest of the economy, largely by providing a tax shelter to foreign investors.

            Yeah, Luxembourg and Wyoming do it too. Last time I looked they weren’t the ones looking for a bailout from the ECB, though.

          3. Yves Smith Post author


            You take the position that [implictly] only NC and a handful of observers is opposed to the bail-in. Even the neoliberal, free-markets-lovin’ Economist hates it.


            Did you miss the part that tanking the Cypriot economy will cause hardship to people who had pretty much squat to do with its banking sector (like British retirees and people who work in the tourism)? Oh, and will just produce an implosion leading eventually to a sovereign debt restructuring? And that making people nervous about their deposits is bad for banks across the Eurozone?

    1. Sanctuary

      That’s because this isn’t a wealth tax. It’s a confiscation of assets to bailout more filthy banksters. A true wealth tax is assessed on all assets and collected annually like an income tax and is used to punish rentier behavior and incentivize the productive allocation of assets. It is usually 1-2% and is done in lieu of capital gains and gift taxes. Instead of letting wealth build-up and languish in offshore bank accounts accruing interest, a true wealth tax encourages productive investment. The Cyprus saga is nothing of the sort, especially since it is supposedly a “one-off” phenomenon. It is just a blatant heist of people’s money to avoid giving a banksters a big sad.

  14. Finnucane

    I’m not wise in the ways of finance, banking, etc., so correct me if I’m wrong: doesn’t the imposition of a “reverse toaster” fee amount to a nullification of the EMU deposit insurance? And without said insurance, won’t there be a run on the banks in other EMU countries? If I’m, say, a Spanish pensioner, won’t I have an incentive to run to my bank first thing Monday morning, take out my euro-cash, and exchange it for dollars or yen or shrunken heads or something, because my heretofore safe deposit is now exposed to the threat of “bailout fee” confiscation? And aren’t bank runs bad or something?

    As a kid growing up in monolingual small town ‘merica, I always figured the Europeans, with their Goethe and Latin schools and Anatole France and le bac and all that, must be smarter than us. Now I realize they’re just 99%-er losers, just like the rest of us. Welcome (back) to the trailer park, Proust!

      1. wunsacon

        Since wikipedia summarizes the plot of the (Twilight Zone) episode, I should mention “Spoiler Alert!”.

  15. Lambert Strether

    White House Petition:

    Protect personal accounts from confiscation for bank bailouts

    Whereas, during recent events in Cyprus, the European Union sought to confiscate personal accounts, including insured accounts, for a bank bailout;

    And whereas the Open Bank Resolution of the Bank of International Settlements considers holders of personal accounts “creditors” and hence subject to “losses” during a bailout;

    And whereas millions of Americans have entrusted their money to banks for safekeeping;

    Be it resolved that the President of the United States, Barack Obama, shall issue this statement:

    “Neither the Federal Reserve, the U.S. Treasury, nor any other governmental or international body shall ever levy deposits from U.S. personal bank accounts for the purpose of a bank bailout.”

    The President shall enforce this statement with appropriate regulations.

    1 down, 99,000 to go….

    1. Laughing_Fascist

      You would think the FDIC would payout if there were a (bondholder) bank robbery in the U.S.

      But FDIC only pays if the bank fails. Very clever.

  16. different clue

    I thought Putin was an bold agile tactician and a grand strategic visionary. Why did not he ( or he and China) leap at this chance? (Someone above suggested AmeriGovernment threats. Is the AmeriGov really in any position to threaten Russia over this)?

    1. Laughing_Fascist

      Russians have been burned by the West enough times to know that a rapid decision to jump into the Cypress banking fiasco without due diligence might result in Russia falling victim to whatever treachery the western bankers have waiting. The reports of western warnings to Russia to keep out might be a ruse and would only fuel suspicion that the West really wants Russia to jump.

    2. Yves Smith Post author

      The new President was (poor chump) pro EU. The departing President was a Communist and pro-Russia. Any deal on military assets would escalate international tensions enormously and subject the President/government to a huge amount of pressure. Putin would need to be willing to bail out the entire banking system, which I’d guesstimated was a €30 billion tab. He’d also need to be sure that the government wouldn’t welch once it committed. I suspect the latter was a problem, that even if Putin was game for the gamble, he wasn’t sure the Pres would stick to his guns.

      Plus the Cypriots would have had to offer strategic assets. I’m guessing they didn’t, that they lacked the imagination or naively through the Russians would regard the gas fields as a lot more valuable than the Russians think they are.

    3. kievite

      I am not sure that Putin sympathizes too much with those Russians who put money in tax heaven or run businesses via tax heaven. I would think they are more his enemies and West friends (Yeltsin gang, oligarchs, etc). So weakening this fifth column might be in his interests.

      BTW in an unrelated news Berezovsky died (heart failure or suicide) in London

  17. killben

    As I had expected Cyprus did not do an Iceland.

    As I had said earlier unless people get down to the street and lynch Politicians, Banksters and Central bankers wherever and whenever you find them out in the open, this is exactly what will happen everytime. After all when there is no law of the land, why should people submit?

    What does it take for people to do that?

  18. Skeptic

    As alluded to in the article, there is now a Two Tier Euro.
    There are FROZEN EUROS, like those in the Cyprus banks and subject to capital controls, and HOT EUROS, those free to roam. This sure looks like the future model for the EURO NOSTRA.

    Should be lots of financial jobs for those monitoring capital controls. Will business accounts be treated the same as Momma’s. Lots of opportunity for more corruption and influece peddling to manipulate these capital controls.

    The EURO NOSTRA will also be able to measure the Financial Consciousness of the rest of Europe by seeing how many run for the Exits. If there is little reaction, expect even more draconian cramdowns.

  19. hugh fowler

    I notice that the whole financial MSM has gone very quiet on the subject of Credit Default Swaps. One of the reasons the Cypriots banks have become insolvent is becuase they were forced to take a large write down on Greek bonds when the Eurozone constructed the bailout for Greece. One assumes that at least part of that debt was insured by CDS. It is the holders of these instruments that are getting bailed for free at every stage of this crisis not the debtor nations who are being stuck with austerity and yet more ‘loans’ to repay. Anyone got any figures who wa on the wrong end of insuring Greek debt because they bear a huge responsibility for what is happening in Cyprus and once again they are not beeing held to account.

  20. trj

    Maybe lay off the gratuitous use of the term “rape” as a metaphor – it’s offensive, and perpetuates the endemic, collective insensitivity to the real thing.

    1. JTfaraday

      Okay, so, let’s say someone takes all my money and leaves me out in the street.

      Or, coming up in the world, let’s say I’m the proud holder of a minimum wage job. Or a waitress.

      What fosters insensitivity to the real thing, is insensitivity to the real thing.

      Plenty of insensitivity to go around here.

      1. McKillop

        Good old Latin: as an unwilling student I managed to get a credit in the language only through my knowledge of English derivatives.
        Rapuo, rapuare, (I think) meant to carry off by force, to seize.
        “Rape seed” was grown by my father. It’s now “cannola”.
        Hell, where I live even “rape” is, criminally, “sexual assault”.
        I agree with you, context, yeh?

  21. TC

    Whatever it takes to provide assets on the cheap to fascist loving swindlers working the London-New York Axis of Fraud whose out-of-control use of leverage spewed from its zero due diligence regime positively must increase, lest the whole house of dirty cards collapse (which is doomed to happen anyhow). That ridiculous satrap of this imperial dung pile, Germany, evidently has all the creative capacity of moon rock.

  22. Michael Hudson

    If I understand this, Yves, ONLY Laiki is suffering. The Russians do NOT have money in it — it’s a Greek bank with Arab backing. So this looks like Cyprus is saving the Russian deposits EXCEPT for secondary effects from their cross-ties to Laiki.
    This seems to me to be the path of least resistance, keeping the Russians happy. My guess is that it’s mainly Greek cypriots who are depositors in Laiki. Not much love lost there …
    the Germans must be fuming. I think that their action was aimed largely against Russia from the start, hoping to drive it to bank with the Europeans. (Meanwhile, Putin is stepping up pressures with the BRICS next week to create their own banking and currency area.)
    watch what Sara W. said in the Bundestag yesterday.

    1. Yves Smith Post author

      No, that’s just what they’ve voted through so far is the Laiki restructuring. That gets them only €2 billion of the €5.8 billion they need. They are voting today to go after other deposits (well that could go into Sunday, but the plan was to vote on it today). The reporting isn’t as granular as I like, but I think that’s because the structure is still in play, but at a minimum, they intend to take ~22% to 25% of the deposits over €100,000 of the biggest bank (Laiki is #2), and the question of how much to hit other depositors is still being sorted out. The President and his finance ministers are flying to Brussels (I think Brussels) today for more negotiations. They still want to borrow against pension fund assets, which the Troika nixed. They I believe are trying to get the Troika to accept a smaller amount of borrowing against state pensions (a bill authorizing that was passed) but I don’t think the Troika is gonna budge.

      Basically, they can’t get to the €5.8 billion without taking a LOT from other depositors. There is only €3 billion in deposits at the Russsian state bank sub, which is perfectly solvent (one source of the Russian unhappiness). It’s pretty clear Russians have euros in other banks too, I’ve seen no guesstimates on the distribution.

      The other thing which is NEVER NEVER mentioned is there is a lot of Lebanese money in Cyprus and some Saudi as well. The reporting has clearly been heavily influenced by the Troika demonization of the Cypriots.

  23. docG

    Hark! Did I hear the phrase “Wealth Tax”? I know I know strictly speaking it’s not a wealth tax. But somehow over the last week or so could we see a precedent being set?

    If it’s even possible to consider taxing the bank deposits of the affluent, then why is it forbidden to consider taxing their wealth generally?

    Now I can see how a tax on wealth invested in necessary or useful businesses, which actually produce products people can use, or at least want, could be counterproductive. But how about a wealth tax on money that’s either just sitting there (as in a bank account) or that’s invested in socially questionable or even harmful enterprises, such as, for example, the financial industry, stock speculation (e.g., high speed trading, hedge fund investment, etc.), currency speculation, speculation in oil, gold, silver, etc.?

    And would it really be all that bad to impose such a tax? Especially here in the USA, where we keep hearing complaints about all that inequality, aka all that out of control GREED? On the part of those who simply cannot get enough and refuse to recognize any limits on their capacity to accumulate wealth at the expense of others?

    Sorry, but when we are continually being told there’s “not enough money” to do all the many things that need to be done to maintain civil society in the developed world, and assist the desperately poor of the undeveloped world, and at the same time we do the math and realize there is more wealth in the hands of those .1% than ever existed in the whole history of the world since day 000,000, then isn’t a wealth tax the obvious answer?

  24. The Dork of Cork.

    As our former very perceptive banking slave (finance) minister observed before his death.
    Ireland is a island…………..

    Both Cyprus & Ireland qualify as capital control specimens.

    Capital controls within the Euro would be the worst form of monetary prison.

    Global banking forces would be free to annihilate the surplus population of these islands and transfer resources not consumed to more profitable plantations.

    This looks like a repeat of Cromwellian dynamics from where I am sitting.
    Continental populations will be too sacred to react , they will just be glad that they are not the victims and keep their heads down.
    Ireland still burns a considerable amount of oil , 130 ,000 ~ BPD.
    We have reduced our oil consumption by more then the entire Greek area of Cyprus but I imagine the local banking agents are good for another more deadly round of austerity.

    If not the ECB will cut off the euro fiat as seen above.

    You cannot fight a limited war against these deadly Venetian forces.
    Given that we are dead anyway (its just a matter of time)
    National military fiat is the only option for the PIigs.

  25. Malmo

    FT reporting is essentially a done deal. So far only those with deposits over $100k will be hit. Wont they have to hit them at 40% plus to aquire the needed ransom?

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