Who wants a Greek Haircut? Euro Zone official: "Haircut" possible template for other banks.

[Poll_Blind]

Oh man...

Global shares, euro retreat as Cyprus euphoria fades:

(Reuters) - Global equity markets and the euro retreated on Monday after a senior euro zone official said the Cyprus bailout reached earlier could be a new template for resolving regional banking problems by shifting more risk to depositors and stakeholders.

The Cyprus rescue forced depositors and bank bond holders to bear losses, a deal that could become a template for future bank restructurings in the euro zone, said Dutch Finance Minister Jeroen Dijsselbloem.

"What we've done last night is what I call pushing back the risks," Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, told Reuters and the Financial Times.

--snip--

"The critical issue remains that of precedent for larger Euro zone countries, and the way in which the Cyprus situation has been managed does not seem to inspire a great deal of confidence," said Ilya Spivak, a currency strategist at DailyFX in New York.

--snip--

Depositors in Cypriot banking institutions must contend at best with capital controls locking up their money, Spivak said. At worst, they may lose as much as 40 percent of their holdings.

"This raises an important question: Why should a depositor in any Euro zone country similarly vulnerable to a banking crisis expect to be unscathed if a Cyprus-like calamity were to befall them," Spivak said.

Much more at the link!

EuroZone to Portugal, Ireland, Spain: We're lookin' at YOU!

It's amazingly hard to imagine a world where the Euro or European banks somehow come out stronger because of this. I love the "We will eat you alive" mentality. It's harsh, but being up front about it is the best thing to help wake the world up.

Cypriots stunned by forced savings cuts:

NICOSIA (Reuters) - Frustration over a delayed bailout turned to incredulity and anger in Cyprus on Saturday as islanders woke up to news that savers would be footing part of the bill to avert national bankruptcy.

In a radical departure from previous euro zone rescues for Greece, Ireland, Portugal and Spain, finance ministers struck a deal to lend the indebted island 10 billion euros ($13 billion). But in return, depositors would have to forfeit up to 10 percent of their savings.

--snip--

"My initial reaction is one of shock," said Nicholas Papadopoulos, head of parliament's financial affairs committee. "This decision is much worse than what we expected and contrary to what the government was assuring us, right up until last night," he told Reuters.

PB

[dipsydoodle]

1. It was the "Greek haircut"

on bonds held by Cypriot banks which largely contributed to the mess in Cyprus.

Template reference has already declared as being out of context :

4.51pm GMT

Key event

The backtracking begins, with Dijsselbloem's spokesperson confirming the quotes are accurate, but the suggestion Cyprus is a template is apparently taken out of context.

http://www.guardian.co.uk/business/2013/mar/25/eurozone-crisis-cyprus-bailout-deal-agreed

[Poll_Blind]

2. Oh after the fall in the Euro and confidence, I'd expect them to backtrack.

But the assurances, if you could even call them that, mean little, IMO. The bankers with crimson faces have looked up from their feeding frenzy on Cypriot accounts just long enough to clarify this is the last time they'll do it.

Hey, I'm sure the investors will buy it. Riiiiiiight?

PB

[dipsydoodle]

5. The overall issue

is countries paying higher interest rates than others which is what the attraction was here. The rates dwarfed US and UK rates.

The odd outcome of all this is that give it say 10 years and the population of Cyprus probably would've been better off with the first proposal. Across their population of a million the €3 biilion or so of their own losses , net of Russian losses ,broke down to about 6 Euros a week / head. I reckon the cost of the alternative will come to much more than that especially when the inevitable downturn in their economy now causes higher unemployment.

[Poll_Blind]

3. REUTERS: Germany Says Cypriot Government Must Tell People Why Bailout Right

I shit you not:

[link:http://www.foxbusiness.com/news/2013/03/25/cypriot-government-must-explain-to-people-why-bailout-right-germany/|
Germany Says Cypriot Government Must Tell People Why Bailout Right]

Damage control not included in the package?



PB

[Earth_First]

4. Is there ANYONE who did not see this as a test run practice...

to see exactly what and to what extent they could get away with before proceeding on a much lager scale?

[dixiegrrrrl]

6. Exactly.

First of all, before he was elected, the Cyprus PM promised there would be no haircut on bank deposits.
Any intelligent person would have asked themself..why was that a necessary promise?

and now, more foot in mouth about the obvious.."it worked once, let's do it again."
I expect by the end of the day anyone who did not take their money out of EU banks already
will be lining up now.
I sure as shit would.

rec..folks need to see this.

[arikara]

7. After watching this unfold, I was just telling the Mr

that we need to be digging a hole in the back yard for our money instead of leaving it for the banksters. If they can get away with it in Cyprus they will be doing it everywhere soon.

[geek tragedy]

8. Well, if Cyprus's banks are going under, who should bear the pain?

If a bank goes under, that means it can't pay everyone it owes money to.

Assuming shareholders get wiped out, it also means that some creditors don't get fully repaid.

So long as they didn't hit the people with insured deposits (uner 100K Euros) not sure how one would distribute the pain in a more fair way.