Cyprus Again

TMM continue to be staggered by the ineptitude of the Eurocrats' response to the Cyprus issue. Haircutting deposits is not something to be done lightly and making a mockery of deposit insurance is really, really dumb . I mean, that's what central banks are meant to do, amongst other things, right? TMM understand the tempation to give a "number three back and sides" to a lot of fairly iffy Russian cash but, once again it has to be impressed on Germany that crises are a lot more "Run Lola Run" or "The Great Escape" than "Faust": the point is to get out with minimum collateral damage first and mete out punishments and lessons in morality second and hope you can regulate them out of existence afterwards.

There has been a lot of ink, bits and bytes spent on this already so TMM are going to comfort themselves with some online shopping and hope that the Cypriots at the bare minimum manage to not make deposit insurance worthless.

We have recently discovered one can make custom dart boards at Zazzle, what do you think?

Previous
Next Post »

13 comments

Click here for comments
Anonymous
admin
March 18, 2013 at 12:18 PM ×

Definitely see where you are coming from in all this (this comment and last). But seems pretty clear from pointed German/ECB comments that this outcome was Cyprus’ decision, confronted with a specified contribution. Honouring the 100k guarantee was favoured by the Troika, Cyprus did not take that route. Can only imagine reason either a) going for a toxic solution to try and torpedo whole thing – trying to call bluff &/or b) focused on interest of protecting political/money elite by spreading pain thinner. In any case, not obvious exclusive direction of TMM ire is entirely right, or Cyprus government sympathy justified ?

Reply
avatar
Anonymous
admin
March 18, 2013 at 12:38 PM ×

C Says'
"Russia's number two bank VTB - a state-owned institution - alone had $13.5bn (£8.9bn) resting in Cyprus through a subsidiary and was due to lose a tenth of that amount, news agency AFP reported"

Maybe it didn't leave so much as switched ownership.

Anyone know what TD's the cypriots been offering the last couple of years?

Reply
avatar
Anonymous
admin
March 18, 2013 at 1:33 PM ×

"Russian energy giant Gazprom has offered the Republic of Cyprus a plan in which the company will undertake the restructuring of the country’s banks in exchange for exploration rights for natural gas in Cyprus’’ exclusive economic zone, local media reported. Representatives of the Russian company submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening, Sigma TV reported.

The proposal states that Gazprom will fund the restructuring of the country’s crippled financial institutions in exchange for substantial control over the country’s gas resources while Cyprus won’t need to take the harsh bailout package offered by the EU."

Big guns arriving.Gazprom behind the Cypriot banks.Angela will not be pleased.
I suppose Europe could try and preted that Cyprus was just a larger version of a Russian Champney's.

Reply
avatar
Jim
admin
March 18, 2013 at 2:22 PM ×

The plan was laid out three weeks ago in the WSJ...

"...any plan to inflict haircuts would need to be hatched in secret to avoid bank runs"

Keep the public assured...

"I want to be absolutely clear. Absolutely no reference to a haircut on public debt or deposits will be tolerated. Such an issue isn't even up for discussion,"
President Nicos Anastasiades three weeks ago.

Note Pimco's involvement...and the usual suspects Bank of America/Merrill Lynch and Morgan Stanley have their foot prints were all over this.
They laid out the plan and told the IMF to implement it.

http://tinyurl.com/cgbe3uh

Reply
avatar
Gus
admin
March 18, 2013 at 2:59 PM ×

"Experts believe Cyprus could be sitting on hydrocarbons worth up to $400 billion.

Noble Energy and the Cypriot government announced in 2011 that they had discovered gas deposits of around 7-8 trillion cubic feet, 40 percent of the EU's annual demand.

Aphrodite, as the gas field is known, has more gas than Cyprus could use in over a century, so the government hopes to boost its revenues through exports to the European Union."

http://uk.reuters.com/article/2013/03/14/cyprus-natgas-exports-idUKL6N0C6AG520130314

Reply
avatar
Leftback
admin
March 18, 2013 at 3:51 PM ×

Extended bank holiday in Cyprus. LB wishes he were a Cypriot banker. Holidays, bailouts, sunshine.... sigh!

Reply
avatar
Anonymous
admin
March 18, 2013 at 3:53 PM ×

Reuters' new interactive game: save the Limassol bakeries!!

DD

Reply
avatar
Leftback
admin
March 18, 2013 at 4:05 PM ×

Interesting impasse in the US markets now. The bond markets have already voted, yields have been declining for a week or so,

On the one side, Permabulls: "it's just some little Mickey Mouse country in Yoorp, ignore it all and just buy the dip", and Permabears: "contagion is inevitable, Europe is going to implode".

We are taking a more pragmatic view, based on Price Is News, or: "when it tops, it tops, it doesn't matter what the reasons are". At some point, anxiety about Cyprus and European banks will meet concerns about slow US growth and disappointing corporate earnings. This may happen now, or it may come later. Price will tell us.

Reply
avatar
Leftback
admin
March 18, 2013 at 4:07 PM ×

Better to be a Limassol banker than a baker, DD. The bankers never get burned, apparently...

Reply
avatar
Leftback
admin
March 18, 2013 at 7:10 PM ×

Changing the focus from Cyprus, we have a corporate default. In China. This probably will not be an isolated event, given that credit conditions there are still being tightened in order to control the real estate bubble.

Suntech Defaults

Even as junk bonds in the US continue to trade at prices that suggest default is a thing of the past....

Reply
avatar
Leftback
admin
March 18, 2013 at 8:09 PM ×

Back to Square One in Cyprus. The "tax" was voted down in the Cyprus assembly. Apparently some of the members had been called by Sergei and Boris at home for a little chat.

So we now return you to your regularly scheduled diet of bazookas, bondholders, banks and bailouts....

Reply
avatar
Anonymous
admin
March 18, 2013 at 8:29 PM ×

C Says
LB,did you have a link for the vote?

Reply
avatar
Anonymous
admin
March 19, 2013 at 9:11 AM ×

C Says'
Interesting,makes you go hmmmm.

http://www.nakedcapitalism.com/2013/03/wolf-richter-housing-bubble-ii-but-this-time-its-different.html

"Best of all, these formerly foreclosed homes have now been pulled off the for-sale inventory list. Hence the “tight” inventory. And they’ve been transferred to the for-rent inventory list where they don’t bother anyone. Except the owners. Colony Capital, for example, with its 7,000 homes, has an occupancy rate of 53%."

and

"This tendency was confirmed by others. On the west side of Phoenix, where investors have concentrated their purchases of single-family homes, rents dropped by $100 a month last year—a stunning 10%!—according to James Breitenstein, CEO of Landsmith which has dumped most of its Phoenix properties. He is seeing similar pressures in Las Vegas and Atlanta. “There’s a whole bunch of rental supply that’s coming on that used to be sitting empty in bank portfolios,” he said.

Well,that paints a rather different picture on US property price appreciation and tight inventory.Tends to mean that transactional activity is really just squeezing a problem into a different space than providing some form magical transformation.In other words this is likely to cause blowback because housing market pressure is not really being reduced just temporarily relieved would be my interpretation.

Reply
avatar