R.I.P. Euro Zone ...

Discussion in 'What's On Your Mind?' started by Mike, Mar 18, 2013.

  1. Mike

    Mike Founding Member Coach

    ... and I'm shocked that a paper that pretends to be about "Financial Times" so completely misses consequences of this practice:

    Financial Times: Europe is risking a bank run

    I myself had favoured a haircut, or tax, on deposits of more than €100,000 – the portion not covered by the deposit insurance guarantee. There is no moral or economic reason to protect foreigners who have decided to park large sums in a Cypriot bank account for whatever reason. Such a haircut would also have been in line with the philosophy of deposit insurance. Its purpose is not to provide absolute certainty, but to prevent bank runs, which is what happens when you go after small depositors. Well-designed deposit insurance schemes thus impose ceilings.

    I just could not believe it when I heard that eurozone finance ministers went after the small depositors in Cyprus. I understand the purely technical reason why they did it. The eurozone could not agree a full bailout, which would have cost €17bn.

    Most of the deposts that will be levied are owned by foreign -- primarily Russian -- investors. The same mistake won't be made twice. If Europe confiscates 10% of the wealth in Cypriot banks, no international company or investor will ever keep more in a Euro-Zone account than the minimum necessary to manage their local operating costs. Everything else will be shifted overseas. Banks that operate both in & out of the Euro-Zone will offer products tailored to the situation: Any bets on how soon someone will offer euro-checks on deposits held in London or Zurich? There will be an enormous run on Euro-Zone banks, and the beneficiaries will be dollar, pound and other currencies.

    A short-term bank run by smaller depositers would be a bother, but the long-term avoidance of the Euro and Euro-Zone banking will kill the Euro.
  2. nachtnebel

    nachtnebel Original Member

    Excellent post Mike. To this material I would add these two facts:

    • The small saver is getting 6.75% of his money stolen, the bigger saver is losing 10%, but the senior bondholders being bailed out are being made whole 100%, showing you just who is calling the shots here, and just who is benefiting from this. They are stealing money from savers who were guaranteed safety to give it to bondholders who were assuming much greater risk!
    • Huge amounts of this depositor money is Russian money as you say, but let's be precise about what money this is: it is partly Russian Mafia money, partly old KGB money squirreled away at the fall of the Soviet Union, and partly Russian corporation money. That's where Russian business money flows to and from wrt world trade! There is much more at stake here than the news outlets originally reported.
    I'm not sure about you, but if I were in Cypress as a lawmaker, there is no way I'd vote to steal Russian Mafia and old KGB money. I'd be very public in my pro Russian stance, just to keep my hide safe. I'll bet this misbegotten idea has a very short life.

    oh, and don't for a second think the amounts are small numbers like $17 Billion Euros. That is simply not what is at stake here. The real amounts dwarf this, and the liars at the central banks are keeping mum about that. The amounts are in the hundreds of billions.
  3. Mike

    Mike Founding Member Coach

    Stiffing the Russian underworld certainly will add an aura of suspense to the debacle. :eek:
  4. Frank

    Frank Original Member

  5. nachtnebel

    nachtnebel Original Member

    The EU held a conference call with the affected central bankers, but Cyprus never showed up.
    Interesting, the Russians stiffed the Cypriots when they came hat in hand. Ball is now in EU's court.

    why is the EU so insistent here, over a measly $10 billion, as the press reports? They appear to be panicking. Remember the derivative liabilities of the US banks? (JP Morgan Chase $69 TRILLION, CitiBank $55 TRILLION, Bank of America $43 TRILLION, etc.)
    For those positions to NOT blow up and implode the banks, the counter parties holding the other end of the transactions need to stay solvent. My guess is there are dependencies in this area on Cypriot banks not going bust, in order to not break the derivatives chain.
  6. RB

    RB Founding Member

    At some point someone is going to be holding an empty sack. These derivatives were never good investments. Your seeing an advanced level game of hot potato.
    nachtnebel likes this.
  7. nachtnebel

    nachtnebel Original Member

    lacking their own, the banksters are trying to get our sacks for sure ;)
  8. Frank

    Frank Original Member

    And you wonder why people are turning paper money into items of actual value?
  9. nachtnebel

    nachtnebel Original Member

    Mike has proximity, perhaps he could check on what farmland has done in Southern Minnesota over the past five years. bloody unreal.
  10. Mike

    Mike Founding Member Coach

    In the end, they left small savers alone and took 40% of accounts > 100K.

    They may have stiffed the Russian mafia, but they've also stiffed the people create jobs and value for those less wealthy. And apparently this won't be the last of it:

    UK Telegraph: Cyprus bail-out: savers will be raided to save euro in future crises, says eurozone chief

    Savings accounts in Spain, Italy and other European countries will be raided if needed to preserve Europe's single currency by propping up failing banks, a senior eurozone official has announced.


    Mr Dijesselbloem's comments will alarm countries like Ireland and Spain that had been hoping to access the ESM in order to restructure banks without killing off their financial sector by inflicting huge losses on investors.


    Five words: Screw the Euro. It's toast.
  11. nachtnebel

    nachtnebel Original Member

    What main street media is NOT reporting is extremely comical.

    The big Cyprus banks had branches and subsidiaries in RUSSIA.
    These were never shut down nor stopped from transactions all through the crises of last week.
    The Russians got their every last nickel out of those banks, they're not hurting. They drained all their capital out of the banks!!! Leaving those banks as empty husks.
    The EU did not dare mess with the Russian Bear.

    The EU will make whole the small depositors <= E 100K, but the domestic Cypriot companies and moderately wealthy domestic Cypriots are are totally screwed.

    The statements of the Euro idiots such as Dijesselbloem will move a lot of money out of the Southern european banks and into other investments--ie, generate bank runs.
  12. Frank

    Frank Original Member

    Thus creating the exact thing they were supposedly trying to prevent. The small depositors are next, if I were them I'd be pulling out my savings and buying real trade goods. Ammunition sounds like a good growth currency...
  13. KrazyKat

    KrazyKat Original Member

    Amazing, per MSM I had not read about the open branches in Russia.
    To the tune of 60%!
  14. nachtnebel

    nachtnebel Original Member

    Notice that *nothing* has been taken yet. The operative word in all the news stories is "may* and "is likely*. they are sending up trial ballons and positioning. Nothing will happen for a couple of weeks, during which time, everyone dangerous will get taken care of. There'll be careful watch for street riots, I'm sure.

    In a joint agreement issued in December 2012, The FDIC and the the Bank of England have noted that the next financial collapse will be too big for taxpayer and government underwriting, and that creditor depositor money will be taken:

    notice that there is no exemption for insured accounts. All accounts will be taken. If you have money in banks, I wouldn't keep more than is absolutely necessary.
  15. Mike

    Mike Founding Member Coach

    Are you sure that's the final figure? 10%, 40%, 60% .... do I hear 80, 80, 80, give me an 80 ... :D
  16. Frank

    Frank Original Member

    We may yet again see bankers hanged from London Bridge.

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