Different faces but the same old story is being replayed in a small part of the Euro-zone, Cyprus, and that story is one of the Cypriot banking crime syndicate gambling with depositor funds on the debt markets, this time it's Greek bonds, yes, these master-eds of the universe used depositor funds to pile into soon to go bankrupt Greece because of the high yields they offered so that the bankster's could bank bonuses on the basis of fictitious profits as illustrated by the fact that they have dumped an infinitely pile of losses (Greek Bond's ) onto Cypriot tax payers, far beyond anything that any other Euro-zone member has had to face to date.
The Damage Has Been Done Expect a Bank Run
The emerging details early Monday morning in the face of a literally eye popping deadline are that of at least 40% of deposits over Euro 100k will be stolen in the two largest cypriot banks, one of them Laiki (2nd largest) will definitely be wound down, many mainstream commentators have jumped onto the fact that the depositors will receive shares in the banks which might be fine if the shares were given AFTER the banks were restructured i.e. bad assets being written down, but they are not instead the depositors are likely to be handed what amounts to worthless toilet paper in exchange for their hard cash.
The damage has been done, as the one thing that the banking system relies on has been destroyed and that thing is confidence. No depositor in Cyprus has any confidence in any cypriot bank and will try to transfer out of the Cyprus tax haven at the earliest possibility so there will be a bank run on cypriot banks the unfolding of which will be inline with the capital controls have been put in place.
The damage has been done to the Cypriot economy as its biggest industry the finance sector has been destroyed to result in huge job losses.
The damage has been done as all businesses have been impacted severely due to both many businesses having had their bank deposits stolen and for Cyprus having become a cash economy, where credit is scarce and not trusted by suppliers, so expect many non finance related business to go bust over the coming months.
The damage has been done to the reputation of Cyprus, where it is now seen as a high risk destination for tourists and investors for the reason of perceived instability, just as Greece's tourist industry has suffered.
The damage has been done geopolitical as Turkey profits from this crisis as Northern Cyprus is not only stable, but like the mainland is prospering. Also there is the potential for conflict with the suggested sale of Natural gas deposits around Cyprus as they effectively belong to both North and South Cyprus, whilst this does not mean a military conflict it will make investors more reluctant to enter a potential conflict zone given the flammable nature of natural gas.
Why Should Germany Bailout the Cyprus Tax Haven?
As ever the blame is being leveled at Germany for German tax payers not digging deeper into their pockets to bailout Cyprus as illustrated by the Cypriot born Dragon's Den star Theo Paphitis laying the blame at the Germans for not finding the extra Euro 6 billion rather face the truth that the Cypriot Bankster's and the Cypriot politicians are WHOLLY responsible for the current crisis because this crisis has its roots in actions several years AFTER the 2008 financial crisis i.e. Cypriot bankster's used depositor funds to gamble on Greek bonds and off course lost heavily which is why the banks went bankrupt.
Bank Holiday Financial Armageddon – The Path to Hyperinflation
Well over a year ago I attempted to map out how euro-zone financial armageddon might play out for the UK that would start with a Bank Holiday that would keep getting extended until the Government had worked out the mechanisms for stealing your savings. The big difference between the UK and euro-zone members is that the UK can and would print an unlimited amount of currency to prevent nominal loss to depositors Cyprus style, the consequences of which would be a collapse in sterling and resulting very high inflation whereas that option has not been available to the likes of Cyprus by virtue of having the Euro so it is forced to outright steal depositor funds.