Baseball91's Weblog

March 22, 2013

The Green Line in Cyprus

Filed under: euro,European Union — baseball91 @ 2:30 AM

There was need in so many countries for low-interest loans that are essential to keeping its banks afloat. And thus the monetary policy of the Federal Reserve bank. Like for Cyprus where there is need for €5.8 billion euros for a bailout from the IMF and the European Central Bank and the European Commission (the troika).

The air over Cyprus with exasperation, anger and anxiety, while waiting. For the future. Standing in line for the future, hoping for money. Would new loans only swell Cyprus’ already badly managed debt?

When there was no there THERE. At the banks. In the soul of the leaders of Europe. Living in a fantasy world. The order has come from govenment to Cypriot banks to keep automated bank machines filled with cash as long as bank doors remain shut.

Standing at the autotmatic cash machine, Irena Margilou, 32, was hoping for automatic cash. “We don’t know what the future holds.” With what was perceived to be an embittered voice, per a New York Times reporter, the unlucky thirteenth person in an eighteen-person line wondered: “What is happening to European solidarity?”

Outlook negative: There was this legal difference between insolvency and bankruptcy versus liquidity, when those government bonds were the air which a nation breathed, before you dried up.

Barren. Lost fertility. Wealth destruction during this one week bank holiday, separating the good from the bad. Bloomberg News is reporting that finance ministers from the EMU currency bloc are pressuring Cyprus to shrink its banking system by, judging the good from the bad. How? The finance ministers for the 17 euro countries have proposed closing the two biggest banks – Cyprus Popular Bank and the Bank of Cyprus – while freezing assets of uninsured depositors; the good deposits would go into a good bank, while uninsured deposits would go into a bad bank and be frozen until assets could be sold. Losses to unsecured creditors, including uninsured depositors at the two biggest banks, would reach 40 percent under the proposal which the International Monetary Fund and the European Central Bank support. Did this sound like the unorthodox buzzcut for government bond-holders of Greece in 2012?

In June 2012, Cyprus became the fifth country in the eurozone to request an international bailout after lenders got caught up in the debt restructuring of Greece’s banks. To prevent a panic if not a revolution over the EU, insured deposits below the 100,000 euros ceiling of these European Union policy wonks would go into the so-called good banks, not sustaining any losses.

When governments took your money another way, other than through tax policy. When you lost your nest egg from government actions, in currency wars. When your sovereignty as a people was at stake.

This EuroGroup (the troika) meeting is over for the night. The the troika says it is important that Cyprus guarantees deposits under €100,000, and expects the country to quickly submit a new rescue plan. Frozen in late March, thousands of international companies who do banking in Cyprus cannot transfer money in and out of accounts to conduct business, with the banks all closed. As old rules of thumb from the right to eminent domain of nothing, if you lent €5.8 billion euros to bankrupt banks backed by an insolvent state, you no longer were a creditor but the owner of the bank – even when there is no THERE there.

As Standards and Poor’s cut their rating of Cyprus to junk bonds from CCC+ toCCC. When tens of billions of euros in bank deposits likely leave the country additionally, though not exactly overnight. Maybe when the banks open.

Why would you keep your money there? When there is no THERE there? And in a place where there was not much bond in this so called European Monetary Union. This was a rewritten script from 1998, when Russia quit paying on their $40 billion in debt. And Cyprus was was the number-one destination for Russian money being sent abroad. The German fear without transparency concerning this haven for Russian dirty money. So why would Germany bailout Russian dirty money? German intelligence reports, per Der Spiegel magazine, estimates the size of Russia’s deposits in Cyprus from €8 billion to €35 billion. And the number-one direct investor in Russia, with more than $13 billion in investments, is Cyprus according to the Russian Central Bank.

Russia and Cyprus are so intertwined from an economic perspective, when your sovereignty as a people was at stake, Cyprus could almost be another region of the Russian Federation. And history was not on the side of the people.

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1 Comment »

  1. Alphainventions

    Comment by paperlessworld — September 8, 2013 @ 12:09 AM | Reply

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