|The people of Cyprus say "No" to EU bank account seizures|
Cyprus was warned by the European bankers that if they did not agree to the “robbery” of their citizen’s bank accounts, that the European Union would not bail out their banks. This will likely mean that the two largest banks in Cyprus will suffer catastrophic meltdowns and the government will declare it is bankrupt.
Not so fast. Here come the Russians to the rescue. They have offered to provide the bailout funds – if the Cypriots will lease Russia the oil and gas rights off the coast of Cyprus. Gee, what a deal. This is beginning to sound like a script for the next James Bond movie. Don’t you wonder what the next surprise in Europe will be?
Well, this might be it. Joerg Kraemer, chief economist of the German Commerzbank, has called for private savings accounts in Italy to be similarly plundered. “A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product,” he said.
First Cyprus, then Italy, then….?
Check out these latest reports:
CYPRUS PARLIAMENT REJECTS BANK DEPOSIT TAX
Wall Street Journal
March 19, 2013
Cyprus's parliament Tuesday rejected a controversial bank deposit levy—a precondition for receiving a €10 billion bailout—effectively tearing up the four-day old loan deal the country had negotiated with European and international creditors that it needed to stave off default and a looming meltdown in its financial sector.
The vote, coming after days of fraught political talks in the Cypriot capital, means that a new deal—if one is possible–will have to be reached in days or Cyprus could face a complete collapse of its banks, an event that many analysts fear could also send the tiny island nation hurtling out of the eurozone.
CYPRUS CRISIS: WHAT HAPPENS NEXT?
March 19, 2013
Cyprus, one of the smallest members of the European Union, has become the latest high-profile casualty of the long-running eurozone crisis.
Like Greece, Ireland and Portugal before it, the Mediterranean island has agreed a bailout deal with European authorities and the International Monetary Fund (IMF). But unlike those other nations, it is asking savers to pay some of the costs.
That has sparked anger among Cypriots, and Cyprus's government is now rushing to renegotiate the deal before a parliamentary vote and amid widespread uncertainty at what the impact of the Cyprus crisis on the wider eurozone might be.
So what might happen next?
Read more at: http://www.bbc.co.uk/news/business-21844363
GERMAN COMMERZBANK SUGGESTS WEALTH TAX IN ITALY NEXT
March 17, 2013
While some argue that Cyprus was "one of the biggest money-washing machines for Russian criminals," and others that Cyprus ex-Pat community and energy resources brough deposits (not to say their high deposit interest rates), it seems the European Union (IMF et al.) have decided that the route to crisis stabilization, just as we outlined here over a year ago and updated here, is through a wealth tax.
However, as Handelsblatt reports, the gross distortions of wealth distribution among both core and peripheral nations (evident in the chasm between 'mean' and 'median' net assets - or wealth) makes some nations more 'capable' of 'giving' and as Commerzbank's chief economist notes, median wealth in Italy is EUR164,000 (as opposed to Austria's median of around EUR76,000 and mean of around EUR265,000) meaning that in theory Italy has no debt crisis (with net assets at 173% of GDP) - significantly more than the Germans at 124% - "so it would make sense, in Italy a one-time property tax levy," he suggested.
"A tax rate of 15% on financial assets would probably be enough to push the Italian government debt to below the critical level of 100% of gross domestic product." So there you have it, the 'new deal' in Europe, as we warned, is 'wealth taxes' and testing the "capacity of Cypriots" appears to be the strawman on what the public will take before social unrest becomes intolerable.
Read more at: http://www.zerohedge.com/news/2013-03-17/german-commerzbank-suggests-wealth-tax-italy-next
WILL THE BANKING MELTDOWN IN CYPRUS BE A “LEHMAN BROTHERS MOMENT” FOR ALL OF EUROPE?
March 19, 2013
Cyprus lawmakers may have rejected the bank account tax, but the truth is that the financial crisis in Cyprus is just getting started. Right now, the two largest banks in Cyprus are dangerously close to a meltdown. If they fail, depositors could end up losing virtually all of their money. You see, the banking system of Cyprus absolutely dwarfs the GDP of that small island nation. Cyprus is known all over the world as a major offshore tax haven, and wealthy Russians and wealthy Europeans have been pouring massive amounts of money into the banking system over the last several decades. Yes, those bank deposits are supposed to be insured, but the truth is that there is no way that the government of Cyprus could ever come up with enough money to cover the massive losses that we are potentially looking at.
Read more at: http://theeconomiccollapseblog.com/archives/will-the-banking-meltdown-in-cyprus-be-a-lehman-brothers-moment-for-all-of-europe
Charles M. Grist