Saturday, March 16, 2013

Cyprus Confiscates Money Deposited in Banks

I decided to do my own research and write-up on Cyprus, a small island country in the Mediterranean, the 3rd largest island in Mediterranean about 3500 Square Miles, and a bit of a money laundering and money protecting tax haven, that the Russians especially like.

 A very BOLD MOVE, the country decided to confiscate 6.75% of all Bank accounts under $130,000 US equivalent, and 9.9% of all larger accounts.   The gov is going to just take the money, they call it a "tax".  These are Cyprus Gov "insured" accounts like FDIC, so if there was a loss, it would be covered, if its a tax, Whallah!  problem solved.  

ADD--well not Pure Theft: Very unclear but a few articles indicate that after the "tax" is collected, that those who paid the tax will receive "equity" in the bank that used to hold their money.   No telling what that means, but most likely, they will receive "stock certificates" which will of course be highly diluted because of the sheer number of them being issued.  Also this is a strategic move....if those who had money confiscated remove all their money and cause a run on the bank, then whatever value they may had in the so called equity in the bank will also be destroyed. 
Of course this happens on not just a 3 days weekend for Cyrpus, but also on Saturday for the US.    So nobody except the big money with connections can make a move.

Besides this, I think some of the more important aspects of this "Bail In" are those that are barely stated anywhere--

1) Their corporate tax rate will increase 500%, from 2.5% to 12.5%.     That will be a shock.
2) The government will "accelerate" selling of assets, aka privatization.   This is better than classic economic hitman.   First "experts" recommend lots of infrastructure, like desalination plants, water systems, roads.   Then these experts from other countries finance the infrastructure, make large money on the buildout, and then manipulate/control the country through debt.   Now, once the debt is paid off...then they create another crisis, and take possession of all of the assets.   These are assets that people need in order to live on a daily basis, that is quite evil.    Now the evil will in charge of your water supply and your roads, directly.    And charge you up the ying yang for those services.  

Indeed Cyprus is a small country, and US main stream media is already doing the Big Brother Propaganda act in the low on the page headlines....."Cyprus tax payers to assist bailout through higher taxes..."   Huh, sound just like a "Patriotic" thing to do, why are those Cryprissians complaining.

The point is, a precedent has been set.    We (gov of all sort in collusion with Brokers/Bankers) will just take money from your bank account....the former method of stealing it through inflation just takes too long and also affects the big boys holding big assets too.   So there is the precedent.  

Cyprus is a bit of a tax haven, well it used to be until today!

Cyprus moved in the the Euro Currency on Jan 1, 2008.    Comparing the Euro/USD currency pair they haven't done bad on that move, only losing 6%, perhaps that shows the power of Ben's printing press.

Compared to Gold, you need twice as many Euros now than in 2008

 A lot of UK expats go to retire in Cyprus.   They are going to take a haircut of 10%.

The Cyprus bank system is small, around $70B Euros, of which 37% is foreign held and much by Russians (tax haven stuff).   6.75% to 9.9% of these bank accounts will be confiscated.

The GDP of Cyprus is around $18B to $24B Euros, depending on who you listen to, which is only .2% of the overall euro countries.   And with a million people, that is only around $20,000 per person GDP, that doesn't sound so good. 

The 2 largest Cyprus banks lost $4.5B Euros in 2012 because they were holding large amounts of Greek debt.

So roughly, the Banks will be made whole on their Greek Debt losses by confiscating depositor accounts.   Workers in Cyprus see it as they are being made to pay for bank mistakes.

The EU will pitch in $10B Euro (Bailout) to add to the Bank theft of around $6B euro, and maybe Russia will extend the duration on a $2.5B loan although with alot of the powerful rich Russians losing a boatload of money, I really don't see how that is going to play out.

It has long been this humble author's opinion that the Euro never made any sense.   The only reason it could have been created is to consolidate power, most likely into German and British hands (think Rothschilds) whilst the system blows up.

For now it appears that Cyprus and other EU countries have to "vote" on this bailout, but for sure bank accounts are now frozen, and no electronic transfers are allowed,  although rumor that some huge Russian investors were allowed to move money out, AFTER the decision.

So there is the background  

Going forward?    

I would expect a bank run on Cyprus banks, although they have a 3 day weekend to establish controls, and probably prevent people from  moving their money in a panic.

And a general distrust of banks throughout Europe, which may spread to USA

There may be a flight to USD, and to Yen, and Yen has gotten super weak in the last 5 months, so you can get alot of Yen per Euro at this time.

I wouldn't be surprised if we also see a big rush into Precious Metals.

Direct theft from bank accounts is a HUGE DEAL.    Expect anything going forward.   It is difficult to make and protect assets, but that doesn't mean the attempt shouldn't be made.    And protecting what one has may take precedence over making more at this time.

 Last week I was mentioning a short trade on EUR/JPY currency pair in Forex.    It was a double top backtest of a Bernoulli channel pattern, and just happened to be a 78Fib retrace also.

It dropped like a rock, funny how the charts seem to telegraph some of these big events.    Like the Invisible Hand knows......

Original Call to Short EUR / JPY

The results

Pictures from Cyprus


  1. In my experience, evil only acts boldly like this when it is very secure and certain of no consequences.
    This tells us we are much closer to collapse than I thought even a month ago.
    Cash may quickly become king here, along with PMs.
    And the California move to cancel the 2nd Amendment fits in with this coordinated attempt at tyranny.

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  3. They may be just testing the sheeple to see what they can get away with. Either way, it ain't good.

  4. thanks Red, the evil that be are hard at work (although some is just plain incompetence)

  5. Hmmm

    "invisible hand" I think not. Just look at the unbelievable late day volume in gold and silver stocks Friday. Quite a few precious metal stocks saw volume spike 8 times above normal. Clearly nobody drops 50-60 Million on stocks in a sector that has been getting pounded for months. Unless.........

    And don't think for one second that the wealthy depositors did not get a heads up and pull their cash last week.

  6. That is what the invisible hand is....the high level insider knowledge, SPX volume was also skyhigh on Friday, distributing.

  7. Much of the Press Calls Account Seizure in Cyprus a 'Tax,' Avoiding 'Seizure'

  8. Thats a good one, thanks David

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