Cyprus votes to seize assets

They really had no choice. Either uninsured, mostly foreign, depositors would get a haircut or the whole damned house of cards would come down and all depositors would lose it all. They voted to amputate their right arm to save their life.

It was really a Hobson’s choice, wasn’t it?

Cyprus clinched a last-ditch deal with international lenders to shut down its second-largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians, in return for a 10 billion euro ($13 billion) bailout.

The agreement came hours before a deadline to avert a collapse of the banking system in fraught negotiations between President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund.

Without a deal, Cyprus’s banking system would have collapsed and the country could have become the first to crash out of the European single currency.

Swiftly backed by euro zone finance ministers, the plan will spare the Mediterranean island a financial meltdown by winding down the largely state-owned Popular Bank of Cyprus, also known as Laiki, and shifting deposits below 100,000 euros to the Bank of Cyprus to create a “good bank”.

I am guessing the days of Cyprus as a low tax haven for off shore funds has come to an end. It is now a ward of the European Union. Hell, it always was.

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8 Responses to Cyprus votes to seize assets

  1. R.D. Walker says:

    And the Russian mafia is going to be really, really pissed. Not that they should be. After all, they just got bailed out by the Germans.

  2. A Guy says:

    Stealing a fairly equal amount from everyone would be unfair. Just seize the imperialistic wealth!!


  3. James says:

    There are so many worthy quotes in the article, just read it, rather than my cutting and pasting them.
    Capital controls and asset seizure is the blueprint of banking behavior in all debt laden countries, for the good of the whole.

    Will it happen in the US, or will politicians and bankers simply print?

    • R.D. Walker says:

      When you have your own currency, you print. The effect is the same, however.

      • Jerry says:

        Well, they will get a 10% haircut. I think that I’m asking the right guy. How much of a haircut has the American dollar gotten with QE boondoggle?

        • R.D. Walker says:

          Hard to say because it is ongoing and may accelerate rapidly at any point.

          • notamobster says:

            Yep. Too hard to call but to get an idea, think back to what you used to pay for gas & groceries 10 years ago and compare that to this week’s bill.

            When you look at real, hard assets like groceries you can see the increase in the cost of doing business, in the underlying indicators like units/dollar.

            Here’s a good calculator of the dollar’s relative value with multiple comparisons:


  4. Roy Ryder says:

    This is just one little puff of the fuse that is slowly burning down toward a bomb that will shatter the EU and the European economy. The banks in Spain, Portugal, Italy and many other nations in Eastern Europe are in just as much trouble as those in Cyprus, and it’s just a matter of time before the crisis reaches each of those nations in turn.