SC(yprus)UPPERED !

March 24, 2013

Cyprus should leave the euro and deal with its problems in the same manner as Iceland. Cyprus is scuppered!nicosAnastasiades

Even small savers no longer trust their money in Cypriot banks.

Parliamentarians as this is written are fighting a rear guard action in Cyrus to protect depositors, their banking system, the Cypriot economy.

The Cypriot economy wound around its banks is not merely a victim of the shadow banking financial system set loose by unregulated lending in a global perspective since 1970 aided by unregulated investment banking; its fall is the result of the burning of bondholders and losses in respect of Greece, it’s another shadow banking cancer in the euro,  a band-aid is being used instead of dealing with a cancer within the make-up of the euro.

Write-offs for Greece have impacted severely on the Cypriot banking system. Unlike in France and Germany and Ireland managing to hide losses behind the domestic economy and bad hidey- holes such as NAMA,  there is no economic activity worth speaking of in Cyprus outside of banking.

According to Ellen Browne bank depositors everywhere should realise they are classified as ‘creditors’ of the bank and their deposits can just as easily be burned as those of bondholders.

Capital controls will not stop a run on their banks. A tax on depositors money especially on large  institutional deposits will set off a flight of capital from Cypriot banks that will not return. 

This flight of capital occurred in Irish banks and that money has not returned. In spite of the brave fight of Cypriot parliamentarians in contrast to ‘where do I sign’ Irish parliamentarians, the f9 monkeys will press a button and flight of capital from Cyprus will be complete. (derivatives/f9 monkeys)

According to Richard Bruton, Ireland’s Minister for Jobs, Enterprise and Innovation, speaking in RTE Radio One, News At One, Mar 24, we can’t see Ireland’s recovery, he can?

“We are beginning to see positive employment results and we are coming out from end of crisis.” He believes our banks are sufficiently well capitalised but they are not sufficiently addressing the mortgage crisis. It remains to be seen what penal measures banks will introduce to deal with the growing problem of mortgage arrears effecting 1:10 mortgages in Ireland. It would be naive to believe Irish banks are sufficiently well capitalised to deal with such losses.

The people of Ireland know their domestic economy is scuppered and will not be persuaded by announcements from Bruton of a new entrant to Ireland’s digital league of new business startup flagging  60 new jobs requiring qualifications and foreign language proficiency that will only be found by importing personnel from abroad into Ireland. All this to obtain tax relief with Corporation Tax incentives secure in the knowledge tax is on Irish property and will be kept low on their huge salaries especially if you work in financial services.

Statistics hide the true state of unemployment in Ireland. Many SME owners underwater because of the financial meltdown are for statistical purposes not counted as unemployed because their business has not been taken off the register. Emigration and part-time employment also manage the disguise.

Taxes such as property taxes, new household taxes in Ireland are brought in under the disguise of dealing with our balance of payments deficit. Not as open in their grab of bank depositors money as in Cyprus, nevertheless such levies are leveraged to pay external bondholders and foreign banks policed by our troika bailout.

Before Richard Bruton speaks of turnaround or recovery he should await the effective results of such changes in our taxation system brought about under direct orders from the troika and our gang of four, Enda Kenny, Eamon Gilmore,Brendan Howlin and Prof ‘giveaway’ Honan, puppets under direct orders from the troika.

These willing suspenders of disbelief parrot and puppet Europe’s experiment with a new zombie economic system that many believe will goose the Irish economy for good.

We will see if Frankenstein rises from the grave and what economic and democratic shape this country will end up in as a result. Augurs are not good.

Meanwhile it appears Enda Kenny and Richard Bruton and Michael Noonan in Sheriff of Nottingham style are now imposing targets on the banks to deal with mortgage arrears that will see severe losses that will further exacerbate the problems of those in negative equity and further damage the economy.

How many of the cohort of those in negative equity and mortgage arrears will rise to being able to pay their new household property taxes remains to be seen. Augurs are not good many laughing at these new bills through the letterbox.

Dealings with the troika led by ECB and IMF are in stark contrast with Ireland’s supplicant ‘where do I sign’ inability to say no the troika. Exit from the euro zone would appear to be the best option for the Cypriot people, alternative being a ruined praetorship of the troika owned by Germany with a new unlikely consul, Nicos Anastasiades, president of Cyprus in his new role as consul of the troika, a role more suited to Enda Kenny, who is much more easily led.

The European Credit Union of the Euro is already speaking out against bailout for Cyprus, Germany will not spend its money to write down Cypriot losses. Instead Germany has decided to pass the Rubicon and steal depositors money from depositors in Cypriot banks. Don’t believe for one second depositors in Irish banks are safe, they can and will attempt to steal your money too.

Their parliament through due process has examined in critical fine detail what’s on offer and have turned down what’s currently on the table from the troika in a blow for democracy, in contrast to Ireland’s smothering of debate coupled with false propaganda that the best is on the table.

Ireland’s negotiators have successively accepted impossible deals distinguished by their lack of feasibility coupled with their immorality and evidence of incompetent prescience.

It takes Ireland time to realise its been sold a pup meanwhile embarking on social engineering experiments, emigration, a raft of new taxes including property taxes, all unravelling to the sound of politicians preaching confidence that Ireland’s economy can manage its debt burden and is recovering.

Thus we are led by Ireland’s version of Ceaucescu, Enda Kenny, into a bizarre non write-down debt experiment that will certainly end as badly for him as it did for Ceaucescu.

Eventually gravity of Ireland’s unconscionable debt profile will so damage this economy that Kenny’s goose that lays the golden egg for Ireland’s insiders will inevitably come crashing down as in the pricking of a balloon. Cyprus is part of what this blog described as the surprises that are to come before this crisis is over.

In contrast to Ireland’s zombie response to its meltdown led by ‘Where Do I Sign?’  Enda Kenny, Cyprus President Nicos Anastasiades is leading a brave attempt to save Cyprus from the troika attempts to burn depositors and destroy the economy of Cyprus.

It’s a fruitless band-aid attempt to recover all monies lent to Cyprus by the troika in a disguised destruction of the Cypriot people masked as ‘bailout’, no write down, future lock-down into unconscionable debt repayments endured by countries such as Ireland.

But Cyprus is different. Its economy cannot be separated from its banking sector. It cannot be used to extract odious debt from the citizens, its losses are too great. So the troika decided to cross the Rubicon and burn deposits with severe tax levies on depositors money.

In a bid to clean up banking, the EU is sceptical of the Volcker Rule(1) which already is a watered down version of the Glass Steagal Act. It is running into severe difficulties in attempting to impose a Financial Transaction Tax that could be used to help countries such as Ireland and Cyprus with their banking difficulties.

“This proposal, announced by US President Barack Obama, aims to limit risky behaviour within banks but is narrower than the Glass-Steagall Act. Banks that take retail deposits would not be allowed to engage in proprietary trading that is not directly related to the market making and trading they do for customers. These banks would also be prohibited from owning or sponsoring hedge funds or private equity funds.

Mr Obama also wants to cap the overall size of banks.

This rule was inspired by Paul Volcker, the former chairman of the Federal Reserve.

Europe is seeking to impose on Cyprus, Ireland and later Spain, Italy a doomed financial system that has led to 2008 and a haemmhorhaging of the euro, many of Europe’s banks are running on LTRO air.

Added to the above crisis is the inherent instability of the euro, a currency that is not a true currency union such as the dollar under the Fed, but a credit union system whose leading members appear to be hell-bent on the extraction of unconscionable debt from weaker members of the union.

The euro is destroying the European Union turning it into a union of cannibals.

In Cyprus we are witnessing the breakup of the euro.

Hats off to Cyprus President Nicos Anastasiades. However, see below:

Lest the Cypriot government appear to be  knights in shining armour defending their citizens instead of leeching the best deal out of the pockets of citizens to stave off losses for large institutional investments aka dodgy money laundering for Russian oligarchs, Bill Black has some probing reflections here:

Large institutional investments or SME’s in the eurozone should learn the lesson their money in European banks is no longer safe.

Expect more surprises in this growing financial crisis. Not enough water to put out the bush fires…..





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