Monday, March 18, 2013

Cyprus Bailout A Game Changer and Wake Up Call


Anyone who reads the news about the Cyprus bailout should be concerned. This could be a game changer in the political and financial world. Here are some analysis by Lars Seier Christensen, the co-founder & CEO of Saxo Bank A/S in his recent blog:

This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere - not that it would have mattered much as the trust is gone anyway. It is now difficult to expect any kind of limitation to what measures the Troika and EU might take when the crisis really starts to bite.

if you can do this once, you can do it again. if you can confiscate 10 percent of a bank customer's money, you can confiscate 25, 50 or even 100 percent. I now believe we will see worse as the panic increases, with politicians desperately trying to keep the EUR alive.

This is a major, MAJOR game changer and the fallout will be with us for a long time to come. I believe it could be the beginning of the end for the Eurozone...


James Turk also recently commented :

Here is how my colleague Alasdair Macleod describes this wake-up call to bank depositors.

1) It places depositors below bondholders, riding roughshod over property rights. It is a clear example of the state placing itself above the interests of its citizens, and will be noted by depositors in all troubled jurisdictions.

2) The politicians are now dithering on the announced terms, which will most probably extend the crisis and destroy confidence.

3) The longer Cyprus’s banks are closed, the more the crisis is likely to intensify.

4) The package assumes continuing Russian support for Cyprus. As this mess develops the Russians are increasingly likely to walk away.

5) Contagion into the Greek banks appears certain, with possible threats to Russian and middle-European banking systems.

6) Depositors all around the eurozone are likely to seek alternatives to bank deposits. These alternatives are likely to be cash withdrawals, capital flight into Swiss and other banks, and into physical gold.

This should be a wake up call for us to own physical gold and silver.  

"The fool never learn from his own mistakes, the wise learns from his own mistakes, but the wiser learns from the mistakes of others"

Cyprus Savers to Pay for Banks' Mistakes

When Cyprus's banks reopen on Tuesday morning, every depositor will have some of his or her money levied. Deposits accounts under 100,000 euros will have 6.75% of the funds levied. Accounts over 100,000 euros will have 9.9% levied. Only then will the Eurozone's emergency lending facility and the IMF inject 10 billion euros into the banks to allow them to keep operating.

Their justification? To prevent immediate bankruptcy and closure of the major banks.   Just imagine this happens to your own bank account.  If you have $10000 in your account, after this Tuesday morning, $675 is automatically gone.  If you have $100000 of your hard earn savings? $6750 will be deducted on Tuesday morning by the government so that they can secure more loans from IMF and EU to bailout the banks.

Why do the savers need to pay for the mistakes made by the banks? Why shouldn't the banks' stakeholders bare the risk? Well, because they are too big to fail. Bankruptcy has become a taboo these days. This has never happen before. How is this going to turn out? Definitely not good. This is day like robbery on the common folks.