The looting of Cyprus by the EU will follow the Greek model

By LUIS MIRANDA | THE REAL AGENDA | MARCH 24, 2013

The Government has reached an agreement with the troika to seize 20% of the deposits that hold more than 100,000 euros that are in the Bank of Cyprus, the country’s largest bank and also the one that is preferred by Russian oligarchs. “How do you think it will be? Tomorrow I will lose 25,000 euros,” replied the waiter in a bar where a customer shouted how are you?

This measure, which still must be approved by Parliament, joins the two taken on Friday: The Laiki settlement, the second largest and the one with the biggest problem when it comes to capital controls. His liquidation was negotiated as necessary to prevent panic next Tuesday, when Cypriot banks reopen. The restructuring of a bank that has been both the growth engine of the island and the head of its economic sinking is completed at a discount of 4% for all other banks.

Cyprus has had to swallow his pride showed on Tuesday when MPs overwhelmingly rejected the bailout custom designed by Germany, which required the smallest euro economy to steal 5,800 million euros from its savers.

The Plan B hastily designed by political forces will not be so different from Plan A: depositors will have to pay to avoid the bankruptcy of the country, and perhaps in addition leave the euro. But now, those who will take the deepest haircut are those who have 100,000 euros, an  amount theoretically untouchable according to European standards, an idea that has faltered this week. Of the nearly 68,000 million euros euros in Cypriot bank accounts, 38,000 banks exceed this amount.

If leaders want to avoid bankruptcy, they do not have much time, according to European leaders. For the plan of salvation to succeed, Parliament in Cyprus will need to vote in favor of it after Cypriot leaders and finance ministers of the euro zone met on Sunday.

The European Central Bank has warned that if no agreement is reached by Tuesday, the Union will close the tap of liquidity to institutions of the island, which would mean the collapse of the banking system within hours. The domino effect in the government accounts would be very fast. This scenario was seen in Iceland, where the government refused to pay the debt created by the same banks who are now feeding on Cyprus. In Iceland, the government and the people stood up against banker bullying and kicked the bankers out.

A parliamentary source quoted by the Greek daily Kathimerini noted that the Cypriot deputies could wait for the Eurogroup meeting to conclude to vote the final agreement. It would be only after this vote that Cyprus would step away from the abyss that has approached this week. That does not mean the country is safe or that things will improve rapidly.

One only needs to take a look at Greece, where the bankers took over the country and its people are still suffering the pain of closing deals with the bankers. Cyprus will also pay a very high cost for the financial rescue: the collapse of confidence in its banking system and a black economic outlook, with a sharp drop in GDP and a rise in unemployment, according to several analysts, will make things even worse than in Greece.

If savers at Bank of Cyprus have suffered a severe punishment, Laiki’s have suffered even more. At midnight on Friday and Saturday, Parliament gave its approval to split the bank, converting it into an entity that takes control of more modest and healthy deposits and loans, while also bearing responsibility for the bad and large toxic assets.

Those who have money in Laiki will not recover it in the next few years, and when they do, it will be an amount much lower than they had.

This is what is feared by hundreds of employees at Laiki, who have been demonstrating against the plans of the Eurogroup. European governments have made it clear that one of the conditions of the bailout of Cyprus is that country reduces the size of its financial sector, especially the part that attracts large amounts of money at high interest rates.

Besides restructuring Laiki, lawmakers approved the creation of a ‘solidarity fund’ which will feature contributions from private citizens and businesses, as well as state assets and the Orthodox Church. The money contained in this fund will be directly managed, not to say stolen, by the European government, which has also said that pension funds will not be touched right now, but that refused to say what will happen with people’s retirement funds in the near future.

Advertisement

Greece must default, dump euro

by Peter Morici
UPI
September 13, 2011

European efforts at economic integration haven’t delivered sustainable prosperity in poorer nations like Greece and Portugal. Instead, these have left Mediterranean governments teetering on bankruptcy and at the mercy of Germany and other rich states that exploit European unity to live well at the expense of their poorer brethren.

The 1992 Maastricht Treaty, which considerably harmonized product and safety regulations and methods of taxation across Europe, was supposed to remove untold barriers to growth. It didn’t, because it didn’t moderate European labor laws and social programs that discourage individual ambition and investment.

The euro, created in 1999, floats against the dollar and yen and its value reflects an average of the competitiveness of its entire membership. This leaves higher productivity economies like Germany with an undervalued currency and trade surpluses and lower productivity economies like Greece with an overvalued currency and in constant need to borrow from foreign investors.

With Maastricht and the euro, German manufactures and technology became more valuable in a more integrated European market. However, Greece, Portugal and others aren’t able to use their lower labor costs to capture assembly plants to the degree, for example, that the U.S. South attracts automotive and high-end electronics manufacturing.

Moreover, Germany and other rich states continue subtle forms of protection that discourage outsourcing even to other EU member states and this frustrates the EU single market promise to more effectively equalize employment opportunities and prosperity between the prosperous core and southern Europe.

Affluent Germany, unburdened by an obligation to share tax revenues with poorer EU states, provides generous pensions, gold-plated employment security and jobless benefits and the shortest workweek on the planet. Meanwhile, governments in Greece and other poorer EU states struggled to keep up and borrowed extensively from banks in Germany and France and other rich countries to keep up.

Now unable borrow anymore in private markets, Greece and other poorer governments are forced to seek emergency loans and concessions from richer states and private creditors. They are being compelled by Germany and others to slash government spending and social benefits, dramatically raise taxes and sell off public assets.

None of this will work, because the private sectors of these economies are so dependent on government spending to maintain employment that austerity will only cause more layoffs among both private businesses and public agencies, thrust their economies into deep recessions and significantly reduce, rather than enhance, their governments’ capacity to tax and pay interest on their debts.

Moreover, to service their restructured debts, poorer governments must pay richer governments and foreign creditors in euros and this will require their economies to accomplish significant trade surpluses by developing new export industries. This would require Germany and the rich countries to let manufacturing activities and jobs migrate south that they heretofore have blocked from moving to lower-wage economies.

With a single currency, building new export industries would require rather substantial cuts in Greek and other poorer country wages and for the Germans and others to relinquish subtle forms of protection that guarantee them higher wages and favorable trade balances.

It is doubtful Greeks are willing to let their economy sink to Third World status to perpetuate the myth of European unity. As important, the Germans too much like lecturing the world about the virtues of Teutonic thrift and efficiency to let go of mercantilism, and to let debtor nations accomplish trade surpluses and obtain the euro needed to repay their debts.

If Greece had its own currency, it would still have had to reduce government spending, increase taxes and cut wages but not by nearly as much as richer EU states and the ECB now demand because Greece could also devalue its currency against those of richer EU economies to make its exports more competitive, accelerate growth and increase debt servicing capacity.

In the end, necessity will trump pan-Europeanism. The Greeks will default on their debt and, if they are smart, eventually dump the euro.

Peter Morici is a professor at the Smith School of Business, University of Maryland School, and former chief economist at the U.S. International Trade Commission.

Bankers Order the Looting of Greece

According to Max Keiser, people of the kinds of Forbes are already in Greece to get its assets for pennies on the Euro. It is now clear the rest of the countries will come next. That is the plan.

Reuters
June 18, 2011

A restructuring of Greece’s 340 billion euro ($481.5 billion) debt is not on the agenda and would damage the country’s credibility on bond markets, the European Union’s internal markets commissioner said on Saturday.

Forcing Greece’s private creditors to take part in an upcoming aid package would count as a restructuring and is not being considered either, Michel Barnier told Europe 1 radio.

“This question of a restructuring … is not on the table,” he said. “It would only postpone the problem and in the wake of a restructuring Greece would face exactly the same difficulties and would no longer have any credibility to borrow.”

Greece’s embattled prime minister on Friday sacrificed his finance minister to force through an unpopular austerity plan and avert bankruptcy, while EU powers Germany and France promised to go on funding Athens.

Citing German and French backing for a plan to involve private bondholders such as banks on a purely voluntary basis, Barnier said: “To impose an effort would be to acknowledge a restructuring and that is not on the agenda.”

Describing Greece as a country that had been badly run and had lived above its means, Barnier said the solution was a “collective” effort to successfully thrash out the details of a new rescue plan in the coming weeks.

“We don’t have the right to draw blank cheques on the back of future generations,” he said. “The work is to continue over the coming weeks.”

Bond markets remain spooked by fears of a Greek default and most economists are overwhelmingly sceptical that Greece can ever repay its debts in full.

America Is ‘Bankrupt Mickey Mouse Economy’

By Patrick Allen

America is a “Mickey Mouse economy” that is technically bankrupt, according to Jochen Wermuth, the Chief Investment Officer (CIO) and managing partner at Wermuth Asset Management.

“America today looks like Russia in 1998. Consumers, companies and the government are all highly indebted. America as a result is a bankrupt Mickey Mouse economy,” Wermuth told CNBC.

The comments followed news that the Fed was extending its quantitative easing program following what the Federal Open Market Committee (FOMC) described as a fall in the pace of growth in output and employment.

The Fed has spent the past three years on a route of aggressive rate cuts and purchases of trillions in various securities but it is running out of measures it can take, Pimco’s co-CEO Mohamed El-Erian told CNBC.

Wermuth is a fund manager heavily invested in Russia and says if the same International Monetary Fund (IMF) team that managed the financial crisis in the former super power in 1998 now turned up at the US Treasury, they would withdraw support for current US policy immediately.

“The big evil for the IMF in Russia in 1998 was the prospect of the central bank funding government debt. The Fed is now even buying mortgage-backed securities,” he noted.

“Even before the (Troubled Asset Relief Program) and the expansion of the Fed’s balance sheet, total US public and private debt as a percentage of GDP in the US stood at 290 percent, that figure is now far higher,” Wermuth added.

“US credit risk is huge and America has two options, either default or let the currency depreciate substantially against currencies such as the yuan and the rouble,” he explained.

“Last night’s news from the Fed simply creates the right conditions for dollar weakness and a reduction in US liabilities to foreign investors and governments,” Wermuth said.

Bilderberg 2010 Agenda Leaked

Corbett Report

Veteran Bilderberg researcher and bestselling author Daniel Estulin has once again acquired a copy of the agenda for the annual meeting of the world’s power elite. In an exclusive interview with The Corbett Report earlier today, Estulin revealed what the Bilderbergers will be discussing at this year’s confab in Sitges, Spain on June 3-6, 2010.

According to the documents—which Estulin obtained from his sources inside the secretive group—issues to be discussed in this year’s formal deliberations are:

1. Will the Euro Survive?
2. Development in Europe: Europe’s Exit Strategy…On Hold?
3. Do We Have Institutions to Deal With the World Economy?
4. Greece: Lessons and Forward-looking Strategies
5. NATO and Afghanistan: The Practical Agenda for the Alliance
6. Iran and Russia: Economic and Financial Threats to the Alliance
7. The Consequences of War Against Terrorism
8. The Influence of Domestic Issues on American Foreign Policy
9.The Outlook for Japan’s Economy
10. The Future of the U.S. Dollar: Alternative Scenarios

That the Bilderbergers—essentially a talking shop for European and North American power players—are interested in discussing the current meltdown of the European economy should come as no surprise, especially as the group’s attendee list includes many of the key financiers and string pullers who helped steer Europe into the crisis in the first place. Past attendees of the meeting include current EU President Herman Van Rompuy who got the job as the first non-elected head of the undemocratic European Union after a special wine and dine session with Bilderberg steering committee members. Last year he heralded the beginning of global government, praising the increased role of G20 in dealing with the global financial crisis. Other key Bilderbergers include Jean-Claude Trichet, who, as head of the European Central Bank, was instrumental in helping to craft the current European bailout which itself is designed to incentivize the bankruptcy of Europe. Trichet, too, also recentlycalled for global government to regulate the world economic meltdown that his fellow Bilderbergers helped to create.

Those familiar with the Bilderberg group’s long-cherished dream of achieving global government through the creation of an international financial framework will be unsurprised to see that a debate on the question “Do We Have Institutions to Deal With the World Economy?” is the third order of business at this year’s meeting. Nor will it be a surprise when the question is inevitably answered with the standard globalist line that international institutions like the IMF and the World Bank need to be “strengthened” and even given enhanced regulatory powers as a result of the crisis they have brought about, exactly as Bilderberg observers have been predicting for years. Indeed, as Estulin himself notes in his latest book, Shadow Masters, former U.S. Undersecretary of State George Ball expressed the ambition of the globalists in an address to the 1968 Bilderberg meeting in Mont Tremblant when he stated that they were interested in developing a “world company” to take over the “archaic political structure of nation states”

Other items on the agenda are exactly in line with the issues and plans made at last year’s Bilderberg and those ideas debated at last year’s G20 Finance Ministers meeting, both of which Estulin was able to infiltrate with his inside sources. The fact that the Iran-Russia alliance is on this year’s agenda is doubly telling, not only because a strike against Iran was on the table at this year’s Trilateral Commission meeting, but because, as Estulin notes in today’s interview, it indicates that the real object of the Bilderbergers’ aggression against Iran is the destabilization of Russia, a country that has traditionally been a thorn in the side of the globalists.

Perhaps the only thing that is surprising about this year’s leaked agenda is that the secretive group, which has gone to great length to conceal itself from media and public scrutiny, has failed to take precautions to prevent Estulin and his sources from acquiring the information yet again. “I’m a little bit disappointed in the Bilderbergers,” he said on the line from Spain, where he currently resides. “I would think they would have taken certain precautions and measures, especially coming to my part of the world.”

While the agenda is only a guide for the larger group discussions and the real decision-making takes place among the core members of the group behind closed doors, it does serve as an indicator of the issues and events that are preoccupying the globalists at this sensitive stage of their operation, just as they begin to realize their dream of instituting global government by manufacturing a global depression. Even as these plans begin to come to fruition, the people of Iceland, Greece, and other developed countries are beginning to rise up en masse to throw off the yoke of financial oppression and key Bilderbergers are openly talking of their fears of a global political awakening.

This year’s conference marks a new level of exposure and opposition to the Bilderberg group itself. Daniel Estulin will be making an historic speech to the European parliament on June 1^st along with Mario Borghezio, Nigel Farage, and other key MEPs. Then Charlie Skelton, reporting once again for the UK’s Guardian newspaper, will be taking part in a mass counter-conference where those opposed to the Bilderbergers and their secret proceedings will gather to draw attention to the group.