Cyprus goes bust and EU seizes 10% of peoples life savings by force
http://www.telegraph.co.uk/finance/9...-bail-out.html
Cypriot savers hit as eurozone agrees €10 billion bail-out
Cyprus is to receive a €10 billion (£8.7 billion) bail-out from the eurozone to recapitalise its ailing banking system in return for a series of drastic measures which will hit the country’s savers.
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Originally Posted by Telegraph
The Mediterranean island nation becomes the fifth country to turn to the eurozone, following in the footsteps of Ireland, Greece, Portugal and Spain.
The emergency funding will be used to prop up the country’s banks which were hit by the financial restructuring of nearby Greece.
The Cypriot banking system had grown to be eight times the size of the country’s fledgling economy - which accounts for just 0.2pc of the eurozone’s gross domestic product.
But in a departure from previous bail-outs, the country’s savers are being asked to make sacrifices.
The terms of the deal mean that Cyprus’s savers will (forced) to sacrifice up to 10pc of their deposits in a move which will raise as much as €6 billion.
The move, which is likely to prove unpopular with the country’s 1m citizens - and the Russian non-residents who reportedly account for half of deposits in Cyprus’s banks - will be enacted almost immediately.
Following a bank holiday in the country on Monday, March 18, the levy on bank deposits will come into force on Tuesday, March 19.
The Cypriot government will take steps to prevent electronic money transfers over the weekend, in order to stop depositors attempting to avoid the curbs.
“As it is a contribution to the financial stability of Cyprus, it seems just to ask for a contribution of all deposit holders," said Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting at which the bail-out was agreed in Brussels.
"We are not penalising Cyprus... we are dealing with the problems in Cyprus," he continued.
Christine Lagarde, managing director of the International Monetary Fund (IMF), attended the meeting: “I welcome the agreement reached today to address Cyprus’ economic challenges. The IMF has always said that we would support a solution that is sustainable, that is fully financed, and that appropriately allocates the burden sharing.”
On returning to Washington, she said she would ask the IMF’s board to contribute to the bail-out package.
It is thought the IMF’s participation will come from existing funds, and therefore not require additional financing from member countries, such as the UK.
The €10 billion falls short of the €17 billion the Cypriot government estimated it required to stabilise its banking system.
However the eurozone finance ministers are understood to have felt such a level of debt would be too risky, given €17 billion is almost the size of the country’s annual GDP.
In addition to the raid on savers, the Cypriot government has also agreed to increase its corporation tax rate by 2.5 percentage points to 12.5pc in order to raise revenues.
Michael Sarris, the Cypriot finance minister, is due to fly to Moscow to negotiate an extension to an existing €2.5 billion loan from the Russian government.
He hopes to extend the term by five years, to 2021, and reduce the amount of interest payable.
Olli Rehn, European Commissioner for Economic and Monetary Affairs, said that he believed the Russian government is ready to make a contribution.
At the same meeting, eurozone finance ministers agreed to extend the maturity of existing loans to Portugal and Ireland, but the terms of the extensions were not made public.
I'm stunned. But here a few points are.
1) Those who have saved and been prudent are now being punished for being so, unlike the Cyprus government along with the European Union. As punishment they are having 10% of their savings taken away from them. Let that sink in for a moment.
2) In a supposed free country, property rights are one of the cornerstones of such a society. The moment a government (or in this case, a government under order from the EU) can freeze your bank account and simply take your money - thats the mark of an unfree country with an out of control executive.
3) These moves are illegal under the EU's own laws that it had written for itself - the free movement of capital, protection for savers and the bailout - all illegal under EU law. Yet it doesn't abide by its own laws as seen with the PIGS.
4) I said the Eurozone crisis wasn't over and it was going to get worse as did the likes of Nigel Farage and countless others who predicted this entire crisis. The EU said the crisis was over. The crisis continues. Conclusion: the EU and national governments are talking complete bollocks and telling you lies when they say all is fine. Everything that comes out of the IMF, national governments and the EU is utter verbal slurry.
5) Anybody sensible in Spain, Italy and any of the Eurozone countries will be heading to the ATMs tommorow morning and withdrawing all their savings.
6) Another example of why gold and silver among other assets are the best way to store any wealth you have.
7) Think this can't happen here? think again. The BoE is already engaged in QE (money printing) which has seen the Pound Sterling drop in value and worth by a large amount, and its going to continue. If a government prints away your savings value, thats just as equal to theft as this is.
Hopefully we see bank runs occur tommorow across southern Europe. But you know, the lesson in this is again - do not believe establishment types when they tell you everything is fine (as the Cyprus President did in his election campaign). They are liars, and you are a fool if you believe a word they say. Listen to the people who have been warning of this for years. I can't stress it enough. Ignorance isn't an excuse anymore.
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"We can't solve problems by using the same kind of thinking that created them." - Albert Einstein
Thoughts?
