Spain, Italy and other European nations to be raided to save Euro

It is in their blood. Bankers are born believing they can risk people’s assets and then come back to ask for financial rescues to pay for the losses that weren’t even theirs.

By LUIS MIRANDA | THE REAL AGENDA | MARCH 26, 2013

What are the real chances that the European Union applies the same medicine to other members nations in an effort to ‘save’ the Euro? According to Jeroen Dijsselbloem, the Dutch chairman of the eurozone, more looting is possible in places like France, Italy and Spain, three of the most heavily burdened countries in the economic bloc.

Dijsselbloem said yesterday that the European technocratic organization would do what is necessary, that includes taking more money from depositors and investors in other countries, the keep the Euro afloat. The statement sent shocks and sounded alarms all over European markets.

The plan revealed by Mr. Dijsselbloem should not be a surprise for those who closely follow what’s going on in the old continent and almost everywhere in the world. The openness of many other countries to apply for the same kind of aid that Cyprus did this week will hold  shareholders, bondholders and even bank depositors hostage to the thirst of the European bankers who in in addition to causing the debt crisis are now demanding that the poorest in the continent pay for the losses of their gambling.

Given the uproar caused by his words, Dijsselbloem’s communication department quickly tried to soften them, but the stone had been already thrown. Now that people all over Europe and the world know of the bankers’ plans, it is likely they will proceed with caution. It is even possible that they delay further raids in other countries in order to calm the markets and the insecurity created by the statement issued on the same say when most details about the so-called Cypriot bailout was completed.

Dijsselbloem has revived fears that awoke while the Eurogroup endorsed and then rectified the confiscation of deposits in accounts with 100,000 euros or more by imposing a new tax. This measure is the first in the history of the European Union.

Banking professor Juan Ignacio Sanz Esade of Spain says it is possible that something similar might happen in Spain in the “medium or long term”. He emphasizes that “there is a great suspicion when trying to recognize our own responsibilities.” For Sanz, Spain’s Bankia is one of the first candidates to suffer the same fate as Litzki and Bank of Cyprus. “Bankia is likely to continue falling if the market remains in this situation” and states that “no banking unit will be strong in Europe until all banks are cleaned up.”

The European currency fell after Jeroen Dijsselbloem, announced that example of Cyprus can be the model for future takeovers anywhere in Europe. “If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’,” he said. “If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders.”

The problem with this is that the bankers are only partners in crime with the largest banking institutions in the continent, so the public would do a disservice to themselves by believing that their local banks have their best interests in mind. Cyprus is a clear example of that. Neither can depositors or investors trust their politicians, because as it has been seen in Cyprus, they are easy pray for technocrats who use baseless threats to inflict fear on them.

It is important to remember that with the banking takeover in Cyprus two things became apparent. First, no one’s savings or investments are safe in any bank, and second, previous policies that protected savers’ funds according to the amount they had in their accounts have also been ditched. Now, according to Mr. Dijsselbloem, all accounts are fair game. It is expected that private investors and depositors be hit to pay for bad banking debts.

Angela Merkel blames Cypriots for bankers’ gamblings

By LUIS MIRANDA | THE REAL AGENDA | MARCH 26, 2013

German Chancellor Angela Merkel said today that the new rescue program for Cyprus is “right” because it forces “those who have caused the problem.” to take “responsibility” for their actions. In saying this Merkel blames the people of Cyprus for the debt incurred into by the very same banks the German leader so strongly attacks publicly but defends in private.

The head of the German government was said to be “satisfied” with the result reached this weekend, after seven days of media controversy, political unrest and turmoil that followed in the stock market and that stopped the conditions of the first bailout from taking place.

The plan as it is now known includes a 40% charge on depositors who may not even see their savings ever again. According to the plan imposed by the European Union, Cyprus will liquidate both the Laiki and Cyprus Banks and has already mandated the confiscation of almost half of the funds in accounts with more than 100,000 euros.

“The result reached is right and puts the onus on those who have created the problem. Way it should be,” Merkel argued in a brief meeting with media in Langenfeld.

She added that she is “happy” that a “fair division of the burden” has been achieved with Cyprus temporarily bribing its way out of a financial collapse by stealing 7,000 million euros from its people, while the European Union supposedly lends the country 10,000 million euros.

“First, banks must take responsibility. On the other, it has become clear that Cyprus can count on the solidarity of the European countries,” said Merkel. The Chancellor said in this regard that the EU will support Nicosia in the “difficult road” ahead. In other words, Merkel sees the Cypriot people as responsible for the banks gambling on behalf of the Mediterranean nation, whose people will now suffer greater pain than those in Greece, for example.

It is official: The European Union now owns Cyprus

By LUIS MIRANDA | THE REAL AGENDA | MARCH 25, 2013

The agonizing struggle between Cyprus and the euro zone is coming to an end. Cornered by the European Central Bank’s ultimatum to sign a bailout before midnight Sunday, the President of Cyprus, Nikos Anastasiades, tried to turn the situation to its European partners threatening to resign, leaving in the air the possibility of an uncontrolled outflow of euro zone countries.

The blackmail, the threat of failure, was the only card left to Cyprus after the help they expected to receive from Russia never materialized. But the cracking has not softened its European partners. Last night again the Eurozone put on the table the same requirements as a week ago: make banks depositors pay for debt created by the banks themselves (investors and depositors who had over 100,000 euros in their bank accounts will pay 40% of those savings to the EU) for the mistakes that had the country on the verge of bankruptcy.

Just a week ago, the Cypriot government refused to apply such punishment to its people after the streets of Nicosia and other cities was taken over by thousands of depositors who wanted their money back in full. So the Cypriot government decided to impose an exceptional rate on all bank deposits, a move that Parliament refused to approve and which had caused great concern throughout Europe.

Last night, however, the Cypriot government agreed to return to the original plan: pass a severe restructuring of its banking sector to force investors and depositors of troubled institutions to take massive losses. Those who had investments or savings below 100,000 euros seem to have been spared for now.

Time was short. The ECB had announced that it would cut the tap of liquidity to Cypriot banks if the government did not accept the proposal from Brussels in its entirety.

Without that artificial respiration tank, Cyprus would have fallen into bankruptcy, which as we have informed before, it is the route chosen by Iceland, the only country that refused to bend the knee before the bankers’ requirements. Instead, Cypriot President Anastasiades broke down during the negotiations with the troika, a group composed by technocrats like Jorg Asmussen and Mario Draghi from the ECB, Barroso and Olli Rehn from the European Commission and Christine Lagarde from the IMF.

The evening did not start well. The Cypriot government, far from returning to Brussels resigned to assume the conditions of the troika, tried to play back the blackmail letter. The International Monetary Fund tightened its requirements on the bank restructuring plan, calling for the closure not only of Laiki Bank -second most important entity in the country- but also the number one, Bank of Cyprus.

“You’re pushing me to resign”, said Cypriot President Anastasiades to Christine Lagarde, according to sources. The IMF director did not flinch.

Before landing in the EU capital, the president had made a stop in Athens to halt the sale of the subsidiaries of Cypriot banks in Greece, reversing a decision made over the weekend, and cut the risk of transmission of the crisis to the neighboring country.

Germany also was insensitive to pressure from Cyprus’ maneuvers. “We can reach an agreement but that requires that Cyprus sees the situation with some realism”, claimed the German Finance Minister, Wolfgang Schäuble. “It doesn’t depend on us, but on Cyprus”.

His allies in the North (Netherlands, Finland, Austria) reiterated that the conditions in the euro area have not changed over the last week: They would lend Cyprus 10,000 million euros only if the nation pledged 7,000 million euros. How does this work, you may ask. In reality, the EU isn’t lending Cyprus any money. Cyprus is confiscating money from its citizens -7,000 million euros- to bribe its way out of an European liquidation of its banking system, and in doing do, it is prolonging the pay for its financial system and its people.

Any solution to increase public debt, Cyprus argues, reduces the chances that the country can return the loan, hence the refusal to offer more money or accept a lower contribution.

The Spanish Economy Minister Luis de Guindos, however, stressed the need to reach an agreement that guarantees the stability of Cyprus and the rest of the Eurozone. Although he considers that there is no risk of contagion, he also admitted that this possibility “would be revealed if the monetary union, the Eurogroup, was not able to make a decision that was conclusive.”

According to sources present at the meetings the European Union has also mandated that the plan negotiated with the country is not submitted for approval in the Cypriot Parliament.

In Cyprus your money is not really yours

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

Banks in Cyprus has imposed a daily limit of cash withdrawal of 100 euros at ATMs, reports Reuters. The measure, advanced by the Laiki Bank, which allowed out until now 260 euros, will now blocking customers from accessing their savings should they decide to withdraw more than 100 euros at a time.

According to some sources, this decision, which hardens the playpen that seeks to prevent a bank run, remains in effect until the banks reopen, which is scheduled to occur on Tuesday, but could even be kept afterwards negotiations between Cyprus and the EU which will continue past Sunday’s meeting (ECB).

The measure has been taken as the Cypriot government is negotiating with the EU, IMF and the troika to obtain a bailout in a parallel meeting at the Eurogroup finance ministers.

In this situation, the Eurogroup will try to close a deal on the Cypriot bailout to avoid financial collapse in the Mediterranean country, whose president, Nikos Anastasiades, negotiated with the leaders of the European institutions and the IMF to pave the way for a consensus.

The Cypriot leader arrived at the headquarters of the European Council at 13.00 GMT from Nicosia to meet with the presidents of the European Council and the European Commission (EC) Herman Van Rompuy and Jose Manuel Barroso. The purpose of the meeting is to find a path for negotiations that unlock alternative rescue conditions for Cyprus ahead of the meeting of finance ministers of the Eurozone.

Finance ministers from the eurozone try to refine the elements of the rescue plan, which is expected to take intense and long discussions about the pressing needs to close a program before Monday.

The negotiations between Cyprus and the troika -the EC, the ECB and the IMF have moved to Brussels and, after a Saturday night failed attempt to achieve a definitive agreement in Nicosia on an alternative rescue, putting the Eurozone in “a delicate situation and with very little leeway,” according to the Cypriot government.

 

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.