Grand theft is official Cypriot policy.
Bank account
haircuts are authorized. Those above 100,000 euros are targeted.
Depositors may lose much more than initially thought.
Minimally it's around 40% of their money. It may be double that amount
or more. Potentially it's everything.
In return, they'll get unsecured IOUs (promises to pay).
They'll be converted to bank shares. They may end up worthless.
Small depositors aren't safe. If enough money isn't
raised, they're vulnerable. Once thought safe bank accounts are being
looted. It gets worse. Friends of President Nicos Anastasiades got
advance word. Cypriot newspaper
Haravgi said A. Loutsios & Sons Ltd wired 21 million euros to London.
It
did so on March 12 and 13. It was days before capital controls were
imposed.
Loutsios & Sons is co-owned by the husband of
Anastasiades' daughter. The company denied Haravgi's report.
Anastasiades said it,
"attempt(ed) to defame companies or people linked
to my family."
It's "nothing but an attempt to distract people from the
liability of those who led the country to a state of bankruptcy."
On March 22, London's
Daily Mail headlined,
"Cypriot
president 'warned his friends to move money abroad' before financial
crisis hit: Leader under fire as he faces just FOUR DAYS to save country
from collapse."
"Cypriot president Nikos Anastasiades 'warned' close
friends of the financial crisis about to engulf his country so they
could move their money abroad, it was claimed on Friday."
"The respected Cypriot newspaper Filelftheros made the
allegation which was picked up eagerly by German media."
"The Cyprus newspaper did not say how much money was
moved abroad but quoted sources saying the president 'knew about the
possible closure of the banks' and tipped off close friends who were
able to move vast sums abroad."
"Italian media said the 4.5 billion euros left the island
in the week before the crisis."
On March 25,
Reuters headlined "INSIGHT -
Money fled Cyprus as president fumbled bailout," saying:
"…(L)arge amounts of euros fled (Cyprus) before and
after Cypriot lawmakers stunned Europe by rejecting a levy on all bank
deposits."
"No one knows exactly how much money has left Cyprus'
banks, or where it has gone." Minimally it was many millions. Perhaps it
was much more. Insiders got advance word. They took full advantage.
Others weren't as lucky.
On March 31,
AFP
said Cypriot politicians "had loans written off by the island's three
biggest banks, two of them at the heart of the financial meltdown."
"Lawmaker Mavrides, meanwhile, confirmed that a committee
appointed by President Nicos Anastasiades would investigate a list
published by Greek media of Cypriot politicians who allegedly had loans
forgiven."
"The Bank of Cyprus, Laiki and Hellenic Bank reportedly
forgave millions of euros in loans over the past five years to
lawmakers, companies and local company authorities, newspapers in Greece
said."
"The allegations would likely be discussed in parliament
next week, Mavrides added."
Expect more whitewash and cover-up than revelations.
What's reported is likely true. Politicians often get special favors.
Advance word let privileged insiders shift money offshore. They did so
in time.
On March 31, the
Financial Times headlined
"Scramble to find Cypriot cash escape route," saying:
The hunt's on. In recent weeks, at least three people
tried fleeing "with more than 200,000 euros in cash on their person."
They were caught. Funds were confiscated.
Limassol police stepped up security. At issue is stopping
people trying to get funds offshore by boat.
Unidentified Cypriots called Russian businessman Sergei
Tyulenev. They did so the day capital controls were imposed. They
offered help to shift more than one million euros from Laiki Bank to
Hellenic Bank. It's relatively safer.
He explained a catch. He'd have to pay 200,000 euros up
front. He refused. Eurocrats raised concerns. Politically connected
depositors moved cash out in time. Others got funds out after banks
closed.
An unidentified Eurocrat said:
"There are some dubious capital outflows out of Cyprus as
we speak. I'm sure it's 'the friends,' and the friends are not only
Russians."
Before crisis erupted, many foreign depositors exited.
They smelled trouble. They moved funds offshore in time. The
handwriting's been on the wall for months.
In February alone, about 18% of Cypriot deposits moved to
other Eurozone countries. Central Bank of Cyprus figures confirm it.
Since last June, Cypriot deposits fell 41%.
Hours before capital controls were imposed, large sums
exited Laiki Bank and Bank of Cyprus.
On March 31, The
New York Times headlined "As
Banks in Cyprus Falter, Other Tax Havens Step In," saying:
"(F)inancial centers across Europe and beyond are
promoting their own skills at keeping money hidden and safe."
A Malta law firm said:
"We are aware of the economic problems facing Cyprus at
the moment. We would like to propose an avenue of action for your
consideration: offering corporate relocation to Malta."
-
Switzerland
-
Luxembourg
-
the Cayman Islands
-
Dubai
-
Singapore,
...and other tax havens made similar offers.
Swiss-based
Gonthier Group emailed Cypriot firms working
with foreigners. It suggested they offer clients an investment,
"vehicle
which is extremely low-profile, not classified as a bank account or
trust and thus very much under the radar of national fiscal
authorities."
Turkey controls northern Cyprus. It's promoting its own
banks. It does so as a safer alternative.
Nicholas Papadopoulos heads parliament's finance and
budgetary affairs committee.
"We are being thrown to the wolves, and now
the wolves have responded," he said.
Limassol lawyer Andreas Marangos said Cypriot banking "is
finished."
At stake is the island's main industry and tens of thousands
of jobs. Expect unemployment to soar. Protracted Depression looks certain. An entire economy is
being destroyed.
Cypriot economics Nobel laureate Christopher Pissarides
is right saying
when the IMF gets involved, there's always blood on the
ground.
On March 31,
Cyprus Mail accused President
Anastasiades of failing,
"to introduce an honest, reality-based,
political discourse."
He said what people wanted to hear. He sounded like his predecessor. He's not up to the
challenge. He panders to privileged Cypriots. He offers false hopes and
breaks promises.
He hasn't prepared Cypriots for hard times.
They "need to know they have a leader who is aware of the
crushing difficulties we face, but he has a plan to help the country get
back on its feet eventually."
He's got none. Cyprus' future remains hugely challenged.
For most Cypriots, it's bleak.
Today Cyprus. Tomorrow Euroland.
FT's
Wolfgang Munchau says,
"Economics will catch up with the Euro."
"(A)t what point (is it) economically rational for a
country to leave the Eurozone?"
It's an "imperfect banking union."
Public and private sector debts are unsustainable in troubled countries. They're better off going it alone. Insured depositors in
Spain, Italy, Portugal and Greece aren't safe. For sure, Cypriot ones
aren't.
Spain looks next up for a bail-in. Its banking system is
broke. It faces protracted Depression.
It's "logically irrational for any Spanish saver to keep
even small amounts of savings in the Spanish banking system. There is no
way that the Spanish state can guarantee the system without defaulting
itself."
Spain's best chance is exiting the Eurozone.
The same
goes for Greece, Italy and Portugal. Economics may not be the main
driver.
"Politics may trump economics." Longterm, "you cannot operate a
monetary union in the face of economic logic."
One size fits all Eurozone rules don't work. Imposing
them reflects financial tyranny. Surrendering monetary and fiscal
control assures trouble.
Cyprus' virus is spreading. Ordinary people will be
harmed most. Insured savings aren't safe. Euroland looks most
vulnerable. Take the money and run is policy. Depositor haircuts are authorized. Canada did the same
thing.
It's a short leap to America.
They're coming. Expect them...
