Friday
Mar292013
What Exactly Is Inside The Bank Of Cyprus?
Bank of Cyprus vs. Spanish and Italian banks.
Tom Keene earlier today with Bloomberg's single best chart examining assets and balance sheets at several European banks in relation to the Bank of Cyprus. The conclusion -- unlike Cyprus, for Spain and Italy, there's enough debt to spare depositors in a future bank bail-in.
Father Of The Euro: "Italy Is Next After Cyprus"
Reader Comments (11)
Can't seize debt, unless fiscal suicide is in mind. So the lesson is: if you want your bank to survive, make it as insolvent as possible, so that your government and the ECB will have nothing easy to steal. They will have to resort to austerity blackmail against the population, instead of just a simple weekend smash-and-grab.
Unfortunately, the Greek bonds failed and their Billions in assets were reduced by +40%, however their liability to depositors continued. Thus making the banks insolvent.
The ECB provided funds to Ireland, Portugal, Spain to cover the likely withdrawal by depositors and kept the banks from having a "Northern Rock" moment. They said we will lend money to the banks, but the Governments (i.e. the taxpayers) must sign the repayment guarantees.
Because many depositors in Cyprus are not EU citizens, and because there is an election coming in Germany, they decided to "play hardball" with Cyprus.
Deposits are the worst kind of liability, they are payable on demand. The least dangerous from a bank point of view is Equity, followed by long term bonds, and and other bonds.
However, this is "chump change" to their liabilities in Derivatives which are gambles on future financial conditions and will almost certainly destroy the whole banking community when any major change (default by a major player e.g. Italy, France, Britain etc.) takes place.
If you are not in Cyprus and have any significant money in a bank either as deposit or a bond (you could not possibly be dumb enough to own shares) I would suggest you realise that ALL countries have laws which allow the banks to grab deposits ( and the contents of client safe boxes) should they need to "recapitalise" their balance sheets.
The ordure is approaching the rotating arrangement of vanes or blades at high speed and only a short time remains before contact.
Good luck.
As they have here, there are plenty of Goldman alumni in place to guide the process: Draghi, Monti, Carney, Papademos, Issing, Sutherland. The list is long and smelly.
A hell of a lot less then there should be.
Looks the Cypriot politicians and elite are exactly like the politicians and elite in the U.S.A. Use the government to steal most of the money and make the middle class people and small business pay the tab, while the Cypriot politicians, rich Russian oligarchs and other wealthy depositors get their loot out of reach.
http://www.infowars.com/mega-rich-withdrew-money-from-cyprus-before-looting/