Cyprus secures bailout: Eurozone financial leaders speak

[Cidersomerset]

dAQhEuL0U1g

Published on 25 Mar 2013


Cyprus bailout: extracts from a press conference by the president of Eurogroup Jeroen
Dijsselbloem, vice president of the European Commission in charge of economic and
monetary affairs Olli Rehn, and managing director of the IMF Christine Lagarde.

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BBC ONLINE...........


25 March 2013 Last updated at 15:13

Cyprus defends bailout deal amid recession fears

The government of Cyprus has defended a 10bn-euro bailout deal to save its banks
from collapse, amid warnings the island faces deep recession.Laiki (Popular) Bank,
the country's second largest, will be wound up, but small savers will be protected.

Depositors with more than 100,000 euros ($130,000; £85,000), many of whom are
Russian, face big losses.Cypriot finance minister Michael Sarris said his country had
avoided a "disastrous exit from the eurozone".But correspondents say Cyprus' economy
will shrink sharply as offshore banking - its main industry - is effectively shut down.
President Nicos Anastasiades - who negotiated the deal with the "troika" of the EU, the
European Central Bank and the IMF in Brussels - is to address the nation in the coming
hours. It is not clear when Cypriot banks will reopen, or when temporary restrictions on
the movement of capital will

Plundering loot'

German Chancellor Angela Merkel welcomed the agreement, saying "a fair burden
distribution" had been achieved.

"We do not want tax payers to save banks, banks must save themselves," she said.

"This is what will happen in the case of Cyprus."

But Russian Prime Minister Dmitry Medvedev said losses imposed on big depositors -
many of them Russian - amounted to "stealing".

"What is going on around Cyprus is that they are continuing to plunder loot there," Mr
Medvedev said.

"It is necessary to understand where this story will lead, and what its consequences will
be for the international financial system and our interests," he added.

Suspicion has been growing in Russia that Europe is using the banking crisis to target
Russian money in Cyprus, the BBC's Steve Rosenberg in Moscow says.


READ MORE

http://www.bbc.co.uk/news/world-europe-21928277

[conk]

Just how many countries does the IMF own now? I see lately they are moving out with plans to destroy the Amazon Jungle, having secured most of it from Brazil in a debt scam.

[aniN]

Oh, great.. we are next... For now all is still...

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/24/move-over-cyprus-slovenia-is-the-new-tiny-country-you-should-worry-about/?tid=pm_business_pop

[Cidersomerset]

OHxAMi5tje8

Published on 25 Mar 2013


Depositors in the Bank of Cyprus, the biggest bank on the island, will reportedly
lose from 30 to 40 per cent on their holdings above 100,000 euro as result of a
bailout agreement which Cyprus and the troika of international backers signed on
Monday.

John Laughland, the director of studies at the Institute of democracy and
cooperation in Paris, believes that the developments in Cyprus share their roots
with a number of historic revolutions.

[Cidersomerset]

'Cyprus deal pushes EU closer to French, Bolshevik revolutions'



DjN86xgzlUg

Published on 25 Mar 2013


Depositors in the Bank of Cyprus, the biggest bank on the island, will reportedly
lose from 30 to 40 per cent on their holdings above 100,000 euro as result of a
bailout agreement which Cyprus and the troika of international backers signed on
Monday.

John Laughland, the director of studies at the Institute of democracy and
cooperation in Paris, believes that the developments in Cyprus share their roots
with a number of historic revolutions.

[Cidersomerset]

U5sYsvJPwdI

Published on 26 Mar 2013


Students have taken to the streets of the Cypriot capital Nicosia, protesting against
the last-ditch bailout deal sealed on Monday. Reports say a couple of smoke bombs
went off, as the crowd chanted against the troika. Cypriots have been anxiously
waiting for banks to re-open on Tuesday, but their doors remain closed, all banks
on the island will stay shut until Thursday. Even then, capital flows will be
temporarily restricted. The last-ditch bailout deal may be hailed as a relief by the
government and the EU, but it's certainly no comfort for people struggling to
withdraw their money, as RT's Tesa Arcilla reports from Nicosia.

[ThePythonicCow]

Yves Smith over at Naked Capitalism (http://www.nakedcapitalism.com) has posted a good analysis by Yanis Varoufakis, Professor of Economics at the University of Athens on the Cyprus "rescue". Varoufakis concludes:



However, the ugliest dimension that the new deal has introduced is the effective end of any hopes of a genuine Eurozone-wide banking union. Mr Dijsselbloem, the new Eurogroup head who seems terribly keen to be more amenable to German thinking than his predecessor, Mr Yuncker ever was, said so in no uncertain terms when rejoicing that the Cyprus deal paves the ground for new bailout arrangements such that the European Union “…will never need to even consider direct recapitalisation” of failing banks. This constitutes the death knell of both the direct recapitalisation agreement reached last in the EU’s June 2012 summit and, naturally, of any meaningful banking union. The message is thus clear: Each to his or her own! All plans to use the ESM in order to de-couple the banking from the public debt crisis are off the table.

The combination of (a) the denial of the need to effect public debt consolidation, (b) the derailing of a meaningful banking union and (c) the heavy-handedness with which Cyprus was treated over the past week, spell a new, uglier, state of affairs in Europe. Up to now, supporters of austerity and of the German approach to the Eurozone Crisis in the deficit countries (including France) have argued that we need to go along with Berlin and Frankfurt so as to inspire sufficient confidence in those who control the purse strings (in our willingness to ‘do our homework’) before they can yield to the inevitable eurobonds, to the logic of a banking union, to whatever it takes to bring about greater political and economic union.

Alas, the Cyprus deal reveals how wrong this view was: Even though peoples throughout the periphery (in Ireland, in Portugal, even in Greece and Italy) have, however grumpily, bowed their heads to severe austerity and the removal of labour protection laws, the powers that be in Berlin and Frankfurt are shifting away from unifying moves, adopting increasingly authoritarian, divisive policies that are pushing the Eurozone in precisely the opposite direction to that dictated by political and economic sustainability.

In short, while the bailing in of inane Cypriot bankers and risk-taking depositors is to be welcome, I would not be at all surprised if the Cyprus week-long episode does not register in history’s annals as a major turning point; as the moment in history when Europe moved beyond the pale.
More at Yanis Varoufakis: The Good, the Bad and the Extremely Ugly (Aspects of the Cyprus Deal) (http://www.nakedcapitalism.com/2013/03/yanis-varoufakis-the-good-the-bad-and-the-extremely-ugly-aspects-of-the-cyprus-deal.html).

[Hervé]

Once your fur has been sheared off your skin, then you are asked: "Any preferred way to help you get rid of your skin?"... from http://www.guardian.co.uk/world/2013/mar/25/cyprus-bailout-dijsselbloem-chaos-markets:

Cyprus bailout: Dijsselbloem's U-turn creates chaos in the markets



The island has been left in a near-impossible situation by the terms of its rescue, and is likely to require another bailout




http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2013/3/25/1364243902967/Jeroen-Dijsselbloem-010.jpg


Dutch finance minister Jeroen Dijsselbloem has rowed back on his statement that future bailouts would follow the Cypriot model. Photograph: John Thys/AFP/Getty

The good news for the eurozone was that the markets reacted well to the bailout deal for Cyprus (http://www.guardian.co.uk/world/cyprus). The bad news was that the rally lasted barely until lunchtime. By then investors were running scared at the prospect that the terms imposed on one of the single currency's smaller members would be the template for rescue packages for bigger countries.

Credit for the change of mood goes to Jeroen Dijsselbloem, who chairs meetings of eurozone finance ministers and who decided it would be a good idea to go public with the idea that Cyprus was not such a special case after all.

For the past week the message has gone out that there are no comparisons between a country that allowed itself to become the tax haven of choice for high-rolling Russians and other, better-managed, members of the eurozone.

Then, in a couple of interviews, Dijsselbloem said Cyprus would be used as the model for future bailouts.

The comments were an open invitation to any investor with more than €100,000 in a eurozone bank to remove it without delay, which some then did.

By the end of the day shares in Europe (http://www.guardian.co.uk/world/europe-news) were tumbling, the euro (http://www.guardian.co.uk/business/euro) was dropping against the dollar and the cost of insuring European banks (http://www.guardian.co.uk/business/europeanbanks) against default was rising, forcing Dijsselbloem to issue a clarification of his earlier remarks. Confirming that European politicians could not organise a booze-up in a brewery, Cyprus was back to being a special case once again.

Very much business as usual, in other words. Confusion reigns as the eurozone stumbles from crisis to crisis, with the markets already bracing themselves for the next bailout.

In all likelihood, that will be another rescue for Cyprus, which has been left in a near impossible position by the terms of its rescue. The €10bn (£8.5bn) loan from the European Union (http://www.guardian.co.uk/world/eu), the European Central Bank and the International Monetary Fund means Cyprus will have a debt-to-GDP ratio of 140% and an economy that is on course to shrink by at least 20% in the next two or three years. In those circumstances an already unsustainable debt ratio will continue to increase. Ultimately the country's creditors will either write down a good chunk of the debts or Cyprus will leave the euro.

In truth, leaving the single currency looks the better option. Cyprus previously had a flawed economic model; now it has no economic model at all. The financial services industry will be wiped out and membership of the euro means there can be no boost to the only alternative source of revenue – tourism – through a cheaper currency. Cyprus was, in many respects, the eastern Med's version of Iceland, another small island that allowed its banks to balloon in size. But Iceland is not a member of the euro, and its recovery from financial crisis (http://www.guardian.co.uk/business/financial-crisis) has been aided by devaluation.

For the time being, though, Cyprus remains shackled to the eurozone, which increasingly resembles a zombie economy. There has been no growth for the past 18 months, there is little inclination to address monetary union's structural weaknesses and the sort of cathartic crisis that might occasion change is prevented by the ECB's willingness to pump unlimited amounts of cash into Europe's enfeebled banks.

Dijsselbloem has a point when he says it is unfair that Europe's taxpayers should be continually asked to foot the bill for bank losses, and Cyprus has certainly been used as the laboratory mouse for a different approach.

But the botched rescue and its messy aftermath have done nothing to draw a line in the sand. On the contrary, investors big and small now have the sneaking feeling that their savings could be at risk in the event of a future crisis. Dijsselbloem did little to persuade them otherwise.

[Camilo]

This is the perspective of someone from Cyprus about the real current situation there...

During these last few days, I have witnessed the cries of a whole nation, my homeland Cyprus. From my nation’s perspective, the world changed in just one night. We went to sleep on Friday, October 15th, and by Saturday morning everything was different. The European Commission, the European Central Bank, and the International Monetary Fund (the troika) decided that a huge number of people who carefully planned their finances, the depositors, must be punished for the bad financial situation that our bankers and our government created through either theft or mismanagement. Their demand was that depositors should contribute their own money to the amount of 5,8 billion euro to help pay our country's debt. Otherwise, the country would never be allowed to get the 10 billion euro needed to avoid bankruptcy.



The total of 17 billion euro needed for the bailout is a petty amount of money for the European and international economy. In the days that followed March 15th, several billions of euros (I think it may have even been up to Euros 15 billion) were spent in order to support the Euro against other currencies!



The Parliament of Cyprus voted categorically “No” to this unacceptable, ridiculous demand by the lenders at the European Union. Little did we know what was going to follow . . . . After a few days, our lenders demanded that one of the two major banks should close down, leaving many large depositors with much less money than what they saved in the first place. If this was not enough, the lenders then went even further, suggesting that the other major bank should impose a 50-60% “haircut” on deposits over 100,000. Last night (midnight of the 24th - 25th), the government reached a painful agreement; they managed to reduce the haircut at 40%.



This is a moment in history; the good savers of the nation have become the saviours of the nation, while the crooked bankers and government officials are allowed to get away Scott free! Remember this my dear readers!!!!



Granted, the Cyprus economy was not in good shape, but the media claims that the people here are lazy, or that Cyprus is THE tax paradise, or the myth that Northern Europe is after the Russians billionaires who have money in Cyprus. All these allegations are far from the truth. Most western countries are in deeper financial turmoil, and as far as control over money laundering, most of the European countries score worse, as internationally recognized banks such as HSBC, have engaged in huge amounts of money laundering. If our partners wanted to go after the billionaires, they could find more appropriate ways. But our financial problem has a somewhat different twist: Cyprus has rich natural gas reserves and its geopolitical position is of strategic significance. These are the underlying factors, not the economy, for our economy is too small to pose any danger to the rest of Europe.



What the Cyprus crisis has shown the world, plain and simple, is that banks are not safe to keep our paper money anymore. What has happened to Cyprus can happen anywhere. The Cyprus story shows that bank(st)ers and politicians have such control over the global economies, that they can just confiscate (Oh, sorry! The right term is tax!) our money at will. The basic human right to own property (our money is our property) is gone; forget it! And of course the authorities will always say that they did all this for our own good……….Yeah, right! What is next then, methinks; our houses?



Are we ready for such a change? In our case (Cyprus), it happened overnight. I never thought it would, at least in just a few hours. In my mind, I thought that if something would happen, I would have some time to get ready. Was I ready for such a change? Honestly, even though I was taking measure to protect my finances, I was caught by surprise. At least for a few hours, I was distressed and angry. After this initial phase though, I came back to my senses and I remembered that this was indeed the moment I was preparing for. I realised that this was the point of no return for the global financial situation, for the Eurozone collapse, regardless of what the “big” guys are trying to say; that Cyprus is too insignificant to create any problems in the European and global economies. I would tell them to think again because every time a national economy will be in deep trouble from now on, the savers will remember of Cyprus, and a mass run on the banks would be enough to bring a whole economy to its knees. The “big” guys, the Dark Forces, have different agendas, which have been planned for centuries. The Cyprus experiment was well thought out and executed, and as usual, we were caught once again by surprise.

Stavros Eleftheriou