Sovereign debt bubble thread

[Admiral Yi]

This levy on insured deposits seems to be the bastard child no one wants to take credit for.

[Iormlund]

Yeah, kinda makes you wonder how it ever got approved when apparently nobody but the ones being buttfucked was in favor.

By the way, it seems there aren't enough votes today either.

[CountDeMoney]

Its crazy to get into business with Russians.

"Yoo haff wery nice country here.  Would be wery beeg shame if somethink should happen to eet."

[Admiral Yi]

Yeah, kinda makes you wonder how it ever got approved when apparently nobody but the ones being buttfucked was in favor.

By the way, it seems there aren't enough votes today either.

The only people who would obviously be in favor of a tax on mom and pop are Russian corruptocrats (since it would reduce their own haircut).  So the next question is who in the bailout process do they have the most influence on.  The natural answer IMO is Cypriot politicians.

[Iormlund]

Yes that part is no mystery at all. The question is why everyone else agreed to it.

[Admiral Yi]

Yes that part is no mystery at all.

[Agelastus]

Apparently the Eurozone FinMins had an emergency video conference today and are considering letting the Cypriots only take money from people with more than €20 000 deposited. But it still looks chaotic.

I find it hard to believe that they don't understand that the issue is the levy itself, not the level it's set at.

They're taking money from depositors to recapitalise Cyprus' banks now while guaranteeing a flight of capital from Cyprus' banks in the near future.

Even in the local case, that of Cyprus itself rather than the general one of peripheral Europe, it does not make sense.

[Admiral Yi]

If the level is set at or above the insured amount then it's no different than asking sovereign bond holders to take a hair cut as part of a bailout.

[PJL]

Well the Euro is falling like a stone. And even Ben Benarnke's 'helicopter money' is becoming true:

From the BBC. link here:
http://www.bbc.co.uk/news/uk-21847013

MoD flies 1m euros to Cyprus for British personnel

An RAF plane carrying 1m euros is flying to Cyprus from Britain as a contingency measure to provide military personnel with emergency loans, the Ministry of Defence says.

The move comes after a controversial one-off levy of up to almost 10% on savings in Cyprus was announced.

The money will be used for British personnel and their families if cash machines and debit cards stop working.

The tax is a condition for Cyprus to get a loan from the EU and IMF.

Cyprus needs a 10bn euro (£8.7bn; $13bn) bailout to rescue its banks.
Salary needs

A revised version of the tax, which has yet to pass through the Cypriot parliament, would mean a 6.75% levy on deposits over 20,000 euros, with those over 100,000 euros charged at 9.9%.

The move could affect many of the 3,000 UK military personnel in Cyprus, and up to an estimated 25,000 expatriates.

An MoD spokesman said the situation was being kept under review and that it would consider further shipments if required.

"The MoD is proactively approaching personnel to ask if they want their March, and future months' salaries paid into UK bank accounts, rather than Cypriot accounts.

"We're determined to do everything we can to minimise the impact of the Cyprus banking crisis on our people."

Chancellor George Osborne has already said the UK will compensate any British troops in Cyprus hit by plans to introduce the bank levy.

And British government workers would also be protected, he said.

[citizen k]

In a brief 30-second clip during a Bloomberg TV interview, none other than Anthanasios Orphanides, the former Central Bank of Cyprus Governor, explains the terrible reality of what just happened in Europe: "What we have seen in the last few days is a very serious blunder by the European governments that are essentially blackmailing the government of Cyprus to confiscate the money that belongs rightfully to the depositors in the banking system in Cyprus." He then concludes quite clearly, "It is not clear how this can affect in a positive manner the European project going forward." The Cypriot then goes on to explain how the EU is making a mockery of the idea of a banking union...

http://www.bloomberg.com/video/eu-blackmailing-cyprus-government-orphanides-BHwGo6fQS6K_53m0i3cmSg.html

http://www.bloomberg.com/video/eu-making-a-mockery-of-banking-union-orphanides-Ssl75SA7TtWpXiZIGvtdNA.html

[Zanza]

Yes that part is no mystery at all. The question is why everyone else agreed to it.

You gave the answer yourself already: they considered an internal matter of the sovereign nation of Cyprus. If they had dictated something, surely someone would have hated that too and pointed fingers at Schäuble and Moscovici. Damned if you do, damned if you don't, I guess.

[Iormlund]

Threatening to cut off Cyprus if deposits are not tapped is fine, but enforcing an EU directive made local law is going too far? Please ...

[Zanza]

Threatening to cut off Cyprus if uninsured deposits are not tapped seems fine. And that's all Schäuble claims he did.

[PJL]

Looks like Cyprus MPs have rejected the deal. Curiously nobody actually voted for the deal. I suspect they'll hand the island over to the Russians.

[MadImmortalMan]

Russia stepping in and providing aid actually doesn't look like an unlikely scenario to me.