CYPRUS BAILOUT; Residents Rush To Pull Money From Cyprus Banks As EU Takes Aim At Russian Deposits; GREECE CONNNECTION
‘Cypriot banks are invested heavily in Greek government bonds, which were restructured last year at the EU’s demand, incurring big losses on bondholders.’ – FOX News
The Cyprus bailout is therefore spill over from the Greek bailout… it looks like the EU dominos have already begun to fall.
This could additionally be viewed as some sort of economic warfare against Russia, or Russian oligarchs, possibly for their continued to support of Syria, but I’m not convinced of this scenario. It appears more like a cash grab by the ECB to set a precedent so this can occur in other EU countries as the dominos continue to fall.
2013.3.18 Residents Rush To Pull Money From Cyprus Banks As EU Takes Aim At Russian Deposits (foxnews.com):
Cypriots rushed to pull their money out of banks and ATMs before the tiny Mediterranean nation’s government could finalize a plan to seize depositors’ funds to satisfy euro zone leaders, sparking a run that prompted banks to be closed until at least Thursday.
The island nation’s leaders were huddling to come up with a way to soften the blow on average depositors, with one proposal targeting accounts with deposits above $130,000. The plan elicited an angry response from Russian President Vladimir Putin, whose nation’s oligarchs may have as much as $19 billion secretly deposited in Cyprus banks.
“Putin said that this decision, in case of its adoption, will be unfair, unprofessional and dangerous,” Russian news agencies quoted Kremlin spokesman Dmitry Peskov as saying.
The Brussels-based euro zone agreed on Saturday to give Cyprus a $13 billion bailout, but demanded levies that would take between 6.75 and 9.9 percent of bank deposits.
Analysts believe the measure is designed to ensure that the bailout doesn’t go toward propping up Russia ‘s billionaires – including Putin himself.
“It is clear that (Cyprus) is under tremendous pressure from the European Union,” Deputy Finance Minister Sergei Shatalov told Interfax.
The $19 billion figure comes from Moody’s, and would account for as much as half of all Cypriot deposits. Cyprus’ bank deposits dwarf by 8-to-1 the gross domestic product of the nation of 1 million, indicating a dangerously oversized banking system stuffed with foreign cash. And Cypriot banks are invested heavily in Greek government bonds, which were restructured last year at the EU’s demand, incurring big losses on bondholders.
News of the coming bank accounts seizure sent shockwaves rippling through Europe and beyond. Not only did it spook wealthy foreigners who have long parked money in the island nation’s banks, it was seen as possibly setting the stage for similar grabs in bigger nations within the troubled euro zone.
“If I were a saver, certainly in Spain or maybe Italy, I think I’d be looking askance at these measures and think this could yet happen to me,” Peter Dixon, global financial economist at Commerzbank, told Reuters.
The Cypriot Parliament put off a vote on the measure until Tuesday in order to blunt the pain for small savers. But without the EU bailout, Cyprus would be headed for default, according to experts. If depositors – especially the foreigners who have made Cyprus the Cayman Islands of Eastern Europe, pull their money from banks, action by the European Central Bank may be all that can stop regional contagion. The Cypriot central bank announced all banks will remain closed until Thursday while talks on the savings seizure continue.
Russian mining tycoon and owner of the NBA’s Brooklyn Nets Mikhail Prokhorov said euro zone leaders “had set a real financial mine under the idea of a single Europe.”
“And this is not because it touches Russian business, which can afford to lose $2 [billion] or $3 billion,” Prokhorov told the Kommersant business daily. “The European Union essentially opened a Pandora’s box.”
Some analysts say the move could send billions in Russian deposits to safer havens, such as Luxembourg, leaving Cyprus no way to pay down its bailout.
“The unhappiest of the Russians will simply look for other places to put their money,” Paragone Advisory Group analyst Alexander Zakharov told the Global Post.
White House spokesman Jay Carney declined to comment on the events, but said “a stable and strong Europe” is in the U.S.’s interest and that the President Obama is focused on domestic economic growth, which can help insulate the U.S. from foreign tumult.
Fed Release Absurdly Redacted – 513 pages / Meetings blacked out / 2008 Meltdown
April 19, 2012 by Jack Blood
Filed under Economy
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The Federal Reserve released 513 pages of previously unseen transcripts of policy meetings that took place between 2007 and 2010—and most of them are so heavily redacted that they elicit laughter.
Take the entry from March 10, 2008. It begins with these words.
CHAIRMAN BERNANKE: Good evening, everybody. I am sorry, once again, to have to call you together on short notice. We live in a very special time.
That sounds like the start to a very interesting meeting. Unfortunately, the remainder of that page is redacted. In fact, the next 31 pages are redacted. We’re left guessing what it was that led Bernanke to talk about living in a “very special time.”
In this case, it’s easy to guess: very likely, the impending collapse of Bear Stearns and central bank preparations for a global liquidity crunch. The following day, the Fed announced the creation of the Term Securities Lending Facility (TSLF), one of the first of many bailout facilities the Fed would launch to prop up the financial system. It also increased its swap lines with the ECB and the Swiss National Bank.
Let’s fast-forward to the meeting of Sept. 16, 2008, when Lehman Brothers was collapsing. Surely this would make for interesting reading—if it weren’t redacted to the point of being almost a blank slate.
It starts off:
CHAIRMAN BERNANKE. Good morning, everybody. Sorry for the late beginning.
What follows is 15 pages of redacted material.
Finally, when we are allowed to peek back into the meeting, Bernanke says: “Anything else? All right. Do you want to call the roll on this one?”
The Federal Reserve has been releasing its transcripts on a five-year delay. It released these early, following a Freedom of Information Act request from MSNBC’s Dylan Ratigan show. And, apparently, decided to redact them very heavily.
