Wednesday, April 10, 2013

Cyprus: the plot thickens

A couple of weeks ago, we noted that certain companies and politicians had their loans from Cyprus banks written off before the latter melted down.  It's quite a scandal . . . but now it appears that big European banks were being just as naughty, for much longer.  Charles Hugh Smith reports:

The banking problems in Cyprus had their roots in the Greek Sovereign Default, and were known by the general public for about a year prior to the recent default; a New York Times article dated April 11, 2012 lays out the particulars.

. . .

Put more simply ... Greek Government debt owned by the two banks on Cyprus that failed ... went from a 12 billion euro value in mid 2011, down to a 1 billion euro value in early 2012. That's an 11 billion haircut - all due to the Greek Default.

So why did the eurozone wait so long to resolve the problematic Cypriot banks with their 11 billion euro hole that was clearly serious in the middle of 2011, and becoming blindingly obvious by 2012? Therein lies a story - it has to do with banking, and how banks make money.

. . .

Looking at the timeline, even as late as the end of 2011, when it was clear Greece would default and the banking regulator had to know the banks in Cyprus were doomed, the amount of Eurozone-bank derived deposits in Cyprus was over 20 billion euros, a good portion of which would be subject to massive losses if the Cyprus Template were to be applied at that moment.

[Note that 20 billion euros was - at that time - the same size as the "Russian Mobster" Money.]

But at that moment ... some big chunk of that money were likely in time deposits, unable to be withdrawn. That money couldn't flee, not just yet.

But as time passed, those Eurozone bank deposits were slowly reduced down to 10 billion euros, a reduction of 50%. Presumably, as the time deposits expired, the money was brought back to the fatherland.

And then suddenly the President of Cyprus was informed he had 1 week to solve the banking situation that had been pending for more than a year.

In looking at the movement of capital prior to the default, we can give a grade to each participant, as a result of their apparent ability to assess the the danger to their deposits.

The clear winner: Eurozone Banks. Those guys were geniuses. They were the only participant to seriously reduce holdings prior to the default.

There's much more at the link.  It's a long, sordid story, but very important to our understanding of how the banksters operate.  Highly recommended reading.

Basically, the big European bankers appear to have held off on proposing or implementing corrective measures - which would have benefited everybody, not just themselves - until they'd got their money out of the problem banks and bad loans on Cyprus;  then, and only then, they hammered the island's economy into the ground.  This seems to have been intended as a 'lesson' to other nations in similar straits - the big banks are in charge, and small nations stand no chance against them.

The fact that many Cypriot pensioners have now lost large chunks of their life savings, and will never again know financial security, doesn't matter a damn to the banksters.  Neither does the plight of the English couple who sold their house on Cyprus, and deposited the proceeds in a bank there preparatory to returning to England - just in time for it to be seized as part of the bank restructuring.  Not only will they now lose between 37.5% and 60% of their money, they can't even withdraw the rest until capital controls are eased!  They not only can't afford to buy a house in England any more - they can't even afford to live on Cyprus any more!  They've gone from being relatively comfortably off to being poverty-stricken, all at the stroke of a politician's pen.  If you think it can't happen to you, remember they thought the same . . . until, a few weeks ago, reality caught up with them without warning.

This is the unacceptable face of capitalism.  "I've got mine - to hell with you!"  It's enough to make one think dangerously socialist thoughts about bringing down the banksters and nationalizing all of their ill-gotten gains . . .



Wraith said...

This is not capitalism, this is straight-up theft. Capitalism involves open and honest trade, under a set of laws that make sure no one screws anyone else.

These people are thugs, and thugs only understand one thing: FORCE. If there were a single testicle to be found in Europe, I'd buy stock in tar, feathers and rope. Unfotunately, it seems you have to move to Iceland for any sort of real financial justice, and it's just too damn cold there.

Billll said...

Banking is the most heavily regulated business in the world. If you want to be a banker, you must first learn what the government wants you to do, then try to figure out how to do that without bankrupting yourself.

The left successfully takes advantage of this by regulating businesses into bankruptcy, blaming the problem on the "capitalists" and then nationalizing the business to protect the consumer.

Given an unlimited supply of tax money, this can be made to appear to work, up until the supply of other peoples money runs out.At this point either the government finds a new scapegoat or it collapses.

Historically, as long as Jews exist, the left will never lack for a scapegoat.

STxRynn said...

I agree with Wraith. If there is a law that applies to this particular issue, pursue it with gusto. But if you dig deeper and follow the money, I'm sure the EU politco-class made out well as a result of the banks theft of capital.

It seems like an invariable rule: The liberals pass more laws, but dont' enforce them, the conservatives enforce laws but not uniformly. We are horribly broken. I feel like I'm in Kafka-land.

perlhaqr said...

This is the unacceptable face of capitalism. "I've got mine - to hell with you!"

It's not capitalism. It's mercantilism, at best, and more likely just flat out feudalistic theft. There's just a new class of aristocracy.

It's enough to make one think dangerously socialist thoughts about bringing down the banksters and nationalizing all of their ill-gotten gains...

Yeah. :-/ I really hate it when people do that to me.

It reminds me of the old quote: "Kill one man, and you are a murderer. Kill millions of men, and you are a conqueror. Kill them all, and you are a god."

Steal a dollar, and you're a thief. Steal a million dollars, and you're a politician. Steal a billion, and your a bank president.