There may be trouble ahead...

[apc2010]

We have a deal ..............

[Barman]

It is the deal the Germans wanted a week ago...

A mahoosive haircut on depositors with more than €100,000 in the bank. Plus they are now going to close a bank too...

The Russians will go mental, mental, chicken oriental! 

They are now suggesting that the fuck-arsing around over the past week may have made the problem €2B worserer so they €10B they are about to borrow (and will never be able to pay back) could fall short of requirements...

What a farce... 

[Grumpmeister]

Up to 40% of any savings over £85k?? 

I predict an exodus.

[Barman]

Up to 40% of any savings over £85k?? 

I predict an exodus.

And strict monetary controls so that you can't exodus! 

The best early reaction

Joseph Cotterill of FT Alphaville has written the best detailed analysis of the Cyprus deal: Scratch one stupid idea [Updated]:

Here are the key points (head over to AV for the full read (then come back!))

1) In case you didn’t get the memo the first time, this still isn’t about spanking money-launderers. (because there's no differentiation between foreign and domestic customers with over €100k)

2) It’s a depositor bail-in — for two specific banks, one of which is in full resolution. (rather than forcing all customers at all banks to contribute, as in the first - hated - bailout plan)

3) It’s also a senior bank bond bail-in. (Holders of Laiki’s senior unsecured debt look fully wiped out - those at Bank of Cyprus will take a brisk haircut)

4) Emergency Liquidity Assistance. -- Was this the week we found out that ELA will be protected from default no matter what? (under the deal, the assistance supplied by the European Central Bank to Laiki is now transferred to Bank of Cyprus)

* * * * * *

And over at Reuters, Felix Salmon points out that the winding-down of Laiki is a rather big deal for a rather small country:

   

The resolution of Laiki is going to give the world a very real example of what happens when a too-big-to-fail bank is allowed to fail.

    Laiki is small by global standards, but very large by comparison with Cyprus’s GDP. If Cyprus can survive Laiki’s collapse, then maybe — just maybe — the world could cope with the “resolution” of a big bank like Citigroup. But that’s a very big “if”.

    More likely, the costs to Cyprus of allowing Laiki to fail will be enormous, both politically and economically. And 800,000 Cypriots will for years to come be paying the price of what Mohamed El-Erian elegantly calls “bailout fatigue”.

[Snoopy]

Thank the Lord that the UK didn't sign up to the Euro.
Just for once Gordon Brown got something right ...... even if it was for all the wrong reasons.

Given the UK's ability to borrow at very low rates I was surprised that we didn't offer to help by giving Cyprus the 10 billion needed ..... Smacked too much of the old "Colonial" days I suppose.

Interesting the reaction of the "Occupied Territory" shown on Channel Four News last evening. The highly subsidised Turks are laughing their socks off even if some of their politicians are saying how sorry they are whilst others in the background of the interview were snorting in derision at such comments.

[Barman]

Thank the Lord that the UK didn't sign up to the Euro.
Just for once Gordon Brown got something right ...... even if it was for all the wrong reasons.

Given the UK's ability to borrow at very low rates I was surprised that we didn't offer to help by giving Cyprus the 10 billion needed ..... Smacked too much of the old "Colonial" days I suppose.

Interesting the reaction of the "Occupied Territory" shown on Channel Four News last evening. The highly subsidised Turks are laughing their socks off even if some of their politicians are saying how sorry they are whilst others in the background of the interview were snorting in derision at such comments.

No love lost between the two sides... 

[Grumpmeister]

Just a thought but would the financial controls cover business accounts as well? If not then there isn't anything stopping wages being paid into overseas banks instead.

Wonder if this could be the beginning of the end of the EU, now that the member states see that Germany/Brussels have no qualms in gouging the savings of the electorate.

[Snoopy]

Thank the Lord that the UK didn't sign up to the Euro.
Just for once Gordon Brown got something right ...... even if it was for all the wrong reasons.

Given the UK's ability to borrow at very low rates I was surprised that we didn't offer to help by giving Cyprus the 10 billion needed ..... Smacked too much of the old "Colonial" days I suppose.

Interesting the reaction of the "Occupied Territory" shown on Channel Four News last evening. The highly subsidised Turks are laughing their socks off even if some of their politicians are saying how sorry they are whilst others in the background of the interview were snorting in derision at such comments.

No love lost between the two sides... 

Bit like us and the Welsh then 

[Barman]

Just a thought but would the financial controls cover business accounts as well? If not then there isn't anything stopping wages being paid into overseas banks instead.

Wonder if this could be the beginning of the end of the EU, now that the member states see that Germany/Brussels have no qualms in gouging the savings of the electorate.

I do hope so! 

[Steve]

Apart from delaying old Aniseeballs being lightly killed isn't this the same deal I said over a week ago?

Get those Polonium detectors in now?   Not that such a thing exists.

[Grumpmeister]

It looks like the Cyprus situation has got a significant number of Spaniards looking at moving their cash to bitcoin instead. 

http://www.businessweek.com/articles/2013-03-20/jittery-spaniards-seek-safe-haven-in-bitcoins

[Nick]

So then, in summary, it has been established that:

1. The Euro must survive
2. That to do so Germany the Eu must demand that governments be given the right to rob their citizens' bank accounts
3. That further crippling debt is imposed upon the nations concerned  (Italy next?)
4. That every bank account holder in the Eurozone will now be spreading money around wherever they can (mattress, floorboards, gold, dollars, anyfink. Even Sterling)

Snoopy is right, Gordon Brown did us one favour by keeping us out of this fiasco. Blair wanted us in. Hang him

[Grumpmeister]

I've just thought, isn't offshore banking one of the major industries in Cyprus. This deal must pretty much destroy it.

[apc2010]

I've just thought, isn't offshore banking one of the major industries in Cyprus. This deal must pretty much destroy it.

Yes n yes....

[Grumpmeister]

So essentially the bailout deal boils down to

A. An economy that will shrink rapidly and painfully as there is no credit to be had. Leading to people moving their cash out as fast as they are able to with the current restrictions.

B. An economy whose main industry is being destroyed.

How the hell are things supposed to get better?