Ummm Cyprus. About that salvation…


We reported yesterday that Cyprus had been saved! Well, last night the story got a whole lot juicier.

Quick recap. The EU – read “Germany” – demanded a deal to bailout the Cypriot banks that protected small depositors but hammered large depositors to the tune of about 40% of their deposits. In Cyprus, “large depositor” = “Russian.” The banks in Cyprus have been closed for over a week to prevent, as the geniuses in the ECB refer to it, a “capital flight.” We peasants refer to it as “a bank run.”

It turns out that the Russians are smarter and more devious than the European bankers. Color me shocked. Shocked!

No one knows exactly how much money has left Cyprus’ banks, or where it has gone. The two banks at the centre of the crisis – Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus – have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia’s Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks’ largest depositors.

Got that?

  1. Cyprus closes their banks and shuts off electronic transfers in order to head off a “capital flight” primarily by Russian depositors;
  2. The largest banks in Cyprus, the ones holding the Russian’s cash, have offices in London;
  3. The Bank of Cyprus owns 80% of a Russian bank;
  4. The London branches of the Cypriot banks were open for business as usual with no restrictions on withdrawals;
  5. See 4 for the Russian bank owned by Bank of Cyprus.

What do YOU think could have happened? What would YOU have done if you had $1MM or so stuck in a Cypriot bank and you could get to London?

Yep. That would be my answer too.

What could that mean for the Cypriots? Well, assuming the European bankers stick to their deal that no funds would be stolen (my phraseology not the European banker’s), then the Euro folks – the Germans – are going to have to come up with a few extra billion euros to rescue the Cypriots. Or maybe they’ll change their minds about protecting the small depositors and just gobble up all the cash currently floating around Cyprus.

My bet would be the latter, but it really doesn’t matter. Cyprus is about to be in a prolonged depression and they are effectively now run by a group of people in northern Europe who don’t give a tinker’s dam about anybody in Cyprus.

Welcome to Dante’s Inferno. Be glad you’re not a Cypriot. And remember, this certainly couldn’t happen in Spain or Italy or France. And NEVER in the US of A.

Wanna bet?

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Michael Becker
Michael Becker is a long time activist and a businessman. He's been involved in the pro-life movement since 1976 and has been counseling addicts and ministering to prison inmates since 1980.

Becker is a Curmudgeon. He has decades of experience as an operations executive in turnaround situations and in mortgage banking. He blogs regularly at The Right Curmudgeon, The Minority Report, Wizbang, Unified Patriots and Joe for America. He lives in Phoenix and is almost always armed.

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