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In a vote that already has the makings of being enshrined in history, the parliament of Cyprus voted on Tuesday evening to reject the EU-sponsored "bailout" of the country's economy.  This "bailout" included the extremely controversial "haircut" of all bank deposits in Cypriot banks, which made worldwide headlines this past week and which was wholeheartedly supported by the European Union, and in particular, countries such as Germany.  In total, 36 members of parliament voted against the "bailout," 19 abstained, while not one vote in favor was recorded.

By Michael Nevradakis, reporting from Athens:

In a vote that already has the makings of being enshrined in history, the parliament of Cyprus voted on Tuesday evening to reject the EU-sponsored "bailout" of the country's economy.  This "bailout" included the extremely controversial "haircut" of all bank deposits in Cypriot banks, which made worldwide headlines this past week and which was wholeheartedly supported by the European Union, and in particular, countries such as Germany.

Despite the statements made by the newly-elected president of Cyprus, Nikos Anastasiadis, who claimed that the choice facing Cyprus was between acceptance of the "bailout" and a chaotic bankruptcy and departure from the Eurozone, the members of parliament did not cave, and instead, they overwhelmingly voted against the bailout.  In total, 36 members of parliament voted no, 19 abstained, and most notably, not one member of parliament voted in favor of the "bailout" and all of its attached measures.

Social networks were abuzz from the moment that news of the historic vote went public, with one commentator on Twitter describing the vote as "The 'NO' heard round the world."  Response from politicians in Greece, who have been following the developments in Cyprus closely, was also swift--and unsurprising.  In statements that could barely mask their disappointment, political leaders such as the extremely unpopular Greek finance minister Yiannis Stournaras and the equally unpopular leader of PASOK Evangelos Venizelos, reiterated lukewarm statements of "support" for Cyprus.

Meanwhile, reports coming out of Cyprus are stating that Anastasiadis has called a meeting of party leaders tomorrow morning, while it has also been rumored that the Cypriot finance minister Mihalis Sarris presented his resignation to the president, who reportedly did not accept it.

It is also being reported that Cyprus now has until June to come up with a solution or face default.  These reports come only days after the Eurogroup meeting, where the "bailout" agreement was reached, where it was being reported that Cyprus was only "days away" from a default.

The reactions of EU leaders and politicians throughout the EU are now being anticipated, as the EU's response to this historic "no" remains to be seen.  The reaction of the Russian government, which was vehemently opposed to the "bailout" and "haircut" and which was prepared to "re-evaluate" its reations with Cyprus if the "haircut" was enforced, is also anticipated.  Tonight's vote represents the first real rejection of an austerity or "bailout" package since the European crisis began in earnest in 2010.

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Comment Preferences

  •  Tip Jar (160+ / 0-)
    Recommended by:
    tardis10, Louisiana 1976, ontheleftcoast, coquiero, OldSoldier99, Anima, basquebob, Gooserock, Moongazer, Lonely Liberal in PA, hubcap, databob, detroitmechworks, isabelle hayes, Mr Robert, Siri, whataboutbob, livjack, antooo, Preston S, litho, SilentBrook, Azazello, kathny, zerelda, jayden, mikeconwell, carpunder, Kombema, J M F, sebastianguy99, Cofcos, jadt65, ctsteve, anodnhajo, northerntier, pgm 01, DRo, doingbusinessas, ChadmanFL, AoT, Aquarius40, anonymous volanakis, Publius2008, dewtx, countwebb, pragmaticidealist, ratzo, Clive all hat no horse Rodeo, Sun Tzu, jabney, US Blues, dov12348, puakev, Chi, VTCC73, ER Doc, bleeding blue, GoGoGoEverton, Shadowmage36, sfarkash, johanus, salmo, Thinking Fella, Habitat Vic, 3goldens, YucatanMan, rigcath, Stwriley, hazey, blueoasis, CorinaR, maxomai, Colorado is the Shiznit, oldliberal, absdoggy, Florene, old wobbly, onionjim, rmonroe, pat bunny, p gorden lippy, Horace Boothroyd III, fisheye, temptxan, quaoar, limpidglass, Mimikatz, allergywoman, TracieLynn, ColoTim, defluxion10, Athenian, offgrid, srkp23, Alma, Wolf10, also mom of 5, Crider, Intellectually Curious, hester, OleHippieChick, Teiresias70, Alumbrados, FarWestGirl, sap, JesseCW, dkmich, TheMeansAreTheEnd, Anne was here, karmsy, HCKAD, Bluesee, Jay C, Nulwee, Chaddiwicker, Shippo1776, buckstop, glitterscale, CTLiberal, mosesfreeman, revsue, Paul Ferguson, rapala, pioneer111, MJ via Chicago, maybeeso in michigan, cybersaur, pickandshovel, chimpy, Helpless, joedemocrat, Nattiq, Joieau, Blue Bell Bookworm, BobTheHappyDinosaur, Pam from Calif, oortdust, tobendaro, Lusty, artisan, GeorgeXVIII, bythesea, Cassandra Waites, Sapere aude, Black Max, petulans, roses, yoduuuh do or do not, MikePhoenix, shortgirl, You know me man, Dobber, Trotskyrepublican, quill, terabytes, Gemina13, eyesoars, thomask, We Won
  •  Great news, but confusing diary (26+ / 0-)

    If the entire diary is a quote from a news source, it violates fair use.  If only part is a quote, the quote belongs in blockquotes.  If you're the author, congratuations and identify yourself.

    I'm glad the Parliament rejected that outrageous deal.  I wish I had the confidence our Congress would do the same.

    Citizens United defeated by citizens, united.

    by Dallasdoc on Tue Mar 19, 2013 at 12:27:16 PM PDT

  •  Caught between Germany and Russia... (28+ / 0-)

    isn't going to be a happy place for Cyprus, regardless of who 'wins' this standoff.

    There seems to be a lot of laundered Russian money stashed in Cyprus, and the oligarchs seem, at least at this point, to have Putin's backing to push Cyprus to stand up to Germany.

    It's hard to forecast a good ending to this crisis for the citizens of Cyprus..... pawns rarely survive long, do they?

    Cheers.

    Against stupidity the gods themselves contend in vain. Friedrich Schiller

    by databob on Tue Mar 19, 2013 at 12:49:50 PM PDT

    •  This is about more than just Cyprus (16+ / 0-)

      If you thought that this issue was just about Cyprus, you would be wrong.  It's about setting (or preventing) a precedent that would have represented yet another step down the insane austerity spiral and yet another German-led power grab.

      It's much more hard to forecast a good ending to the "European dream" and the vaunted Euro at this point.  They bluffed, and someone finally stood up and called them out on it.

      •  Easy there, tiger. Databob doesn't seem to be (16+ / 0-)

        implying it's just about Cyprus -- and quite the opposite. The DKos crowd is pretty sophisticated, and I think just about everyone here recognizes the broader implications and complexities of this event. It's the economic shot heard 'round the world, in the context of the ongoing plutocratic oppression.

        "Government by organized money is just as dangerous as Government by organized mob." -- Franklin D. Roosevelt

        by Kombema on Tue Mar 19, 2013 at 01:26:41 PM PDT

        [ Parent ]

        •  Banksters probably delighted with Cyprus (11+ / 0-)

          Every banker's nightmare is a run on the bank.  Cypriots were running to the banks to take their money out on Saturday to avoid the tax.  The next step would be Cypriots running to the banks for fear that their savings would vanish.  After that, Greeks, Italians, Spaniards and Irish would run on their banks, having learned that their deposit guarantees were no guarantee of their deposits if Europe's commissars said otherwise.

          The result would be an instant liquidity crisis spreading around the world at the speed of light (or at least of a Wall Street trader pursuing the mother of all shorts.)

          "Politics should be the part-time profession of every citizen who would protect the rights and privileges of free people and who would preserve what is good and fruitful in our national heritage." -- Lucille Ball

          by Yamaneko2 on Tue Mar 19, 2013 at 02:23:02 PM PDT

          [ Parent ]

          •  Banksters don't like push back (7+ / 0-)

            Man what a stupid idea this was. Bad enough that we can move $$ around at the speed of light , but given this crisis, it would be like hamster hell.

            What drives me nuts is that they've set the interest rates way too high. No one could ever dig their way out of the loans at 25-35% This interest rate policy they have does not make mathematical sense. Either they INTEND the system to fail, or they just can't do arithmetic, makes no difference. It won't work.

            A true craftsman will meticulously construct the apparatus of his own demise.

            by onionjim on Tue Mar 19, 2013 at 02:54:37 PM PDT

            [ Parent ]

            •  They need to default (7+ / 0-)

              It will be better in the long run. And even though they're not going to raid people's accounts, I bet there will still be a run on the banks come Wednesday.

              A big F U to the IMF and their member banks.

              "Societies strain harder and harder to sustain the decadent opulence of the ruling class, even as it destroys the foundations of productivity and wealth." — Chris Hedges

              by Crider on Tue Mar 19, 2013 at 03:51:51 PM PDT

              [ Parent ]

              •  Question is, will the runs spread to others? (1+ / 0-)
                Recommended by:
                Kombema

                Even Democrats can be asses. Look at Rahm Emanuel.

                by Helpless on Tue Mar 19, 2013 at 05:26:06 PM PDT

                [ Parent ]

                •  Yeah, this one could be rapidly developing, as (1+ / 0-)
                  Recommended by:
                  neo11

                  they say. The PIGS countries are already on fragile ground, and this could pull the rug out from under the whole Euro system. Germany had better not underestimate the impact this could have on them, either.

                  "Government by organized money is just as dangerous as Government by organized mob." -- Franklin D. Roosevelt

                  by Kombema on Tue Mar 19, 2013 at 10:07:17 PM PDT

                  [ Parent ]

              •  They should probably take (2+ / 0-)
                Recommended by:
                neo11, Kombema

                their money out, because I'm sure the bankers will figure out some kind of austerity and they will need their money.  The bankers will figure out some way to hurt the people. . . they will take their pensions, take away funds for schools, take funds for roads and bridges, and I they will take away your money for food.  Nice bankers we have, but honestly these guys are playing with fire, I wouldn't want their karma.  The bankers may think their getting away with whatever their hearts desire, and laughing all the way back to the bank in the Cayman Islands, but I wouldn't want their karma.  It will catch up them.

                I would love to see the bankers stopped, it would prevent a lot of damage.  

                "During times of universal deceit, telling the truth becomes a revolution­ary act. " George Orwell

                by zaka1 on Tue Mar 19, 2013 at 06:59:46 PM PDT

                [ Parent ]

            •  Just a wild idea... (3+ / 0-)
              Recommended by:
              neo11, Leap Year, Kombema
              Either they INTEND the system to fail, or they just can't do arithmetic...
              Has anyone else noticed how similar all these bailouts and terms for bailouts are to the way Hedge Funds, etc.,  operate when they "buy" an ailing company?   (as in Bain Capital and KB Toys)

              They eventually load the company up with management fees and so much debt there's no option for the company but bankruptcy and laid off workers, after the "Hedge Fund" has sold anything of value in the company.

              Between the bailout procedures and the privatization of national treasures (I'm thinking Greece, in particular, here), it just seems to bear some striking similarities to me.  YMMV

          •  Sigh... yeah, disaster capitalism writ large :( nt (2+ / 0-)
            Recommended by:
            TracieLynn, Leap Year

            "Government by organized money is just as dangerous as Government by organized mob." -- Franklin D. Roosevelt

            by Kombema on Tue Mar 19, 2013 at 02:56:05 PM PDT

            [ Parent ]

    •  sounds like early 20th century, doesn't it? (10+ / 0-)

      The track record of countries ensnared in German and Russian power games isn't a happy one.

      What laws can the senators make now? Once the barbarians are here, they'll do the legislating. C.P. Cavafy

      by anonymous volanakis on Tue Mar 19, 2013 at 01:53:39 PM PDT

      [ Parent ]

      •  Umm (0+ / 0-)

        So that means all of Europe has spent the past 70 years under Nazi and Soviet rule, right?

        Seems to me that those who play the "power games" are the ones that eventually lose big.

        •  Settle Down (3+ / 0-)
          Recommended by:
          jds1978, hester, Nattiq

          You're lashing out at the wrong people neo.  Your snarky comments are not going over well.

          [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

          by rabel on Tue Mar 19, 2013 at 02:09:14 PM PDT

          [ Parent ]

        •  dunno who the losers will be, yet. (9+ / 0-)

          we'll see how this plays out.

          maybe a crack in the Eurozone, which may not be a bad thing. Germany will continue to be a regional power, with undue and antidemocratic influence over its neighbors, simply by virtue of the size of its economy.

          Sorry to nitpick, but the Russians did extend a rather substantial power over Eastern Europe within the last 70 years, and Germany has been ascendant in the EU. Russia's trying hard to claw its way back as a regional power at the very least. These are not controversial observations.

          Anyway, I sincerely hope your optimism is well placed. Certainly many European countries are experiencing unnecessary suffering at the insistence of austerity mongers, and if Cyprus can show a viable path out, all the better.

          What laws can the senators make now? Once the barbarians are here, they'll do the legislating. C.P. Cavafy

          by anonymous volanakis on Tue Mar 19, 2013 at 02:13:06 PM PDT

          [ Parent ]

        •  See the late 19th and early 20th centuries (3+ / 0-)
          So that means all of Europe has spent the past 70 years under Nazi and Soviet rule, right?
          There is substantial history of tension between  Germany and Russia that definitely pre-dates the 'Big Unpleasantness' of 1941-45.

          Start with Kievan Rus and the Teutonic Crusader orders.

          This space for rent -- Cheap!

          by jds1978 on Tue Mar 19, 2013 at 03:37:21 PM PDT

          [ Parent ]

  •  Am now considering emigrating... (15+ / 0-)

    A parliament that actually LISTENS to their people and rejects the dictatorship of the wealthy and powerful?

    I'm shocked by the display of actual... you know... democracy in action.

    I don't blame Christians. I blame Stupid. Which sadly is a much more popular religion these days.

    by detroitmechworks on Tue Mar 19, 2013 at 12:51:48 PM PDT

    •  Don't be so sure.... (10+ / 0-)

      that the Cypriot government is listening to the people, and not the Russian oligarchs who reportedly have a lot of money stashed in Cyprus.

      Cheers.

      Against stupidity the gods themselves contend in vain. Friedrich Schiller

      by databob on Tue Mar 19, 2013 at 12:55:24 PM PDT

      [ Parent ]

      •  The Russians? Really? (0+ / 0-)

        That's all you got?  

        Well, the Republicans are recycling their economic and social policies from the 80s, so sure... why not the 80's boogeyman too?

        /snark

        I don't blame Christians. I blame Stupid. Which sadly is a much more popular religion these days.

        by detroitmechworks on Tue Mar 19, 2013 at 12:57:43 PM PDT

        [ Parent ]

        •  in this case (15+ / 0-)

          its actually so. Cyprus already has gotten a credit lifeline of several bn from the russians, and cyprus has been asking all around for money:for instance the Chinese (nothing came of that.

          Reports are that Gazprom has offered to substantially contribute to a bailout, in exchange for preferred access to the expected substantial gas reserves on the shelf around Cyprus.

          now what do you say to that ...

          They are in a shitty situation there in Cyprus. Its not unlike Iceland. Their banks sector is 8 x Bruttoinlandsproduct (BIP). roughly 30% of the 800%, or about 2.4 x the size of the islands entire economy, is alone accounted for by specific russian deposits.

          This isnt some flowery peoples revolution or whatelse people on DailyKos dream of. The Cypriot president in negotiations on the weekend (vainly) offered regular tax increases and cuts in salaries and pensions as an alternative to the depositor´s haircut. How´s that for sticking up for the poor? People should really watch out before they get themselves fooled here.

          •  See here's the thing... (18+ / 0-)

            You can toss out all the random theories about motives, but in this case...

            The parliament voted for what the people wanted.

            So...  maybe they fuck the poor over tomorrow, who knows.  But for today, they did the right thing and told the banks to go fuck themselves.

            Surprise, surprise... the world hasn't blown up.  Makes me think about precedent.   Makes me think about how it looks bad for the US to not have the cojones to do what a little island in the Mediterranean is capable of doing.

            Today, the right thing happened, no matter what the shadowy motives people want to ascribe to it.

             

            I don't blame Christians. I blame Stupid. Which sadly is a much more popular religion these days.

            by detroitmechworks on Tue Mar 19, 2013 at 01:23:12 PM PDT

            [ Parent ]

            •  Some proof (28+ / 0-)

              Here's some proof that backs you up: we were told, continuously, that the "bailout" and the "haircut" that was proposed was the only choice for Cyprus, and that it had to be passed immediately to avert an imminent and chaotic bankruptcy.  

              A few days later, the Cypriot parliament doesn't bite, and what happened?  Nothing.  Cyprus is still there, they haven't gone bankrupt, and now, the story is that they have until June to find a "solution" to avoid default.

              Funny how these "deadlines" seem to shift whenever things don't go the EU's way.

              Seems to me that the EU and Merkel's bluff was called, and what this tells me is that all those threats that have been made over the past three years, which led to parliaments in Greece, Spain, Portugal, etc. passing "necessary" austerity measures under unconstitutional "emergency procedures" was just those countries falling for the same bluff.

              •  That's what struck me immediately (10+ / 0-)

                They acted like it was imperative that it be passed right now or the banks would immediately collapse. We now find out that wasn't true at all.

                I do wonder how much longer they can actually keep the banks closed there. It's been about 5 days now hasn't it? Also, I imagine the people there are itching to get their deposits out before they can come up with some other plan to confiscate them and twist enough arms to get the measure passed. They can't just keep the banks closed till a new plan is drawn up can they?

                "Compassion is the radicalism of our time." ~ Tenzin Gyatso, 14th Dalai Lama -7.88, -6.21

                by Siri on Tue Mar 19, 2013 at 01:48:37 PM PDT

                [ Parent ]

                •  Thursday? (6+ / 0-)

                  Banks are supposed to reopen on Thursday, but let's see what happens.  The longer they keep them closed, the more resentment will rise.

                  The EU was unmasked today.  If they've bluffed with Cyprus, they were likely bluffing the entire time with everyone else too.

                  •  I can imagine a run on the banks. Unless the (8+ / 0-)

                    people have assurances that the gov't will never give in to the "haircut'. But how could you ever feel confident in those assurances?

                    •  If we use Greece as an example... (5+ / 0-)

                      ...not very.  From 2010, the Greek people were "assurred" that no further measures would be necessary and that by implementing the austerity program, Greece would return to growth in 2011.  No, make that 2012.  No, make that 2013-14.  Now make that 2016 or 2020 or 2022, depending on who you ask.  That certainly puts my mind at ease.

                    •  Hi you (3+ / 0-)
                      Recommended by:
                      poyma, diffrntdrummr, mrkvica

                      if you don´t mind me greeting you. Technically, this was supposed to be a tax. Thats what governments get to do: institute taxes on ... things ... such as people´s wealth. Sometimes out of the blue.

                      In this respect it is worth noting that the deposits in those banks are many times the value of the wole island´s economy. I. e. the deposits of actual cypriot "commoners" are only a very small part of the deposits. Much of the deposits is money that went there to avoid taxation it might have been subjected to in their places of origin. It is quite unsurprising that that money´s owners would find it "theft" if Cyprus suddenly came up with a capital tax.  And that they would raise hell about the "unjustness" of such taxation.

                      that may be something to consider.

                      •  This is not a tax (4+ / 0-)
                        Recommended by:
                        Siri, JesseCW, dfe, mrkvica

                        There's no precedent for suddenly dipping into people's bank accounts in order to cover problems and losses in other sectors of the economy.

                        There's also no reason to believe that this would be a "one time" thing, when:

                        1) the precedent will have already been set, both for Cyprus and for the rest of the EU, and
                        2) because in Greece, Portugal, etc. we've heard the same thing again and again.  "There will be no new measures."  "The measures are designed to not adversely impact the poor."  "No new cuts will be needed."  And lo and behold, every single time such words have been uttered, there's been more cuts, more austerity, and more promises to be broken.  Why, after three years of EU lies, should the people of Cyprus suddenly believe the EU and their pro-EU president?

                        And please, again, explain this double standard to me: why is it perfectly okay for countries such as Luxembourg and Lichtenstein to be tax and banking havens, but not Cyprus?  How does a tiny country like Luxembourg amass $1.8 trillion in debt?  Is that not "outsized"?  Or is the fact that they are German speaking and part of the EU core the cause for the double-standard?

                      •  Some bus driver who has scrimped and (3+ / 0-)
                        Recommended by:
                        mrkvica, neo11, Siri

                        saved 5,000 Euro to take his family on holiday should be fined 300 Euro with no warning  why, again?

                        income gains to the top 1% from 2009 to 2011 were 121% of all income increases. How did that happen? Incomes to the bottom 99% fell by 0.4%

                        by JesseCW on Tue Mar 19, 2013 at 06:13:41 PM PDT

                        [ Parent ]

              •  Paulson gave US from Friday to Monday if (1+ / 0-)
                Recommended by:
                Siri

                I remember right.  First go around no.  Then drop in stock market and yes.  Should have waited to see what the stock market would really do to the real economy.

                The US is much more suceptible to propaganda and much more used to being ruled by banksters.

          •  You've been fooled, not us (21+ / 0-)

            No one is getting fooled here except you.  First off, the position of the president of Cyprus remains in favor of the now-rejected "bailout" and "haircut."  The parliament, including every member of his party, voted otherwise.  Just because the president didn't "stand up for the poor" doesn't mean that the parliament followed suit.  Get it?

            And yes, Russia continues to pressure Cyprus.  But if they are willing to purchase the island's major banks, as Gazprom has proposed, with no haircuts to people's deposits, why should Cyprus refuse that in favor of whatever the EU has done in Greece, Portugal, and elsewhere?  You tell me.

            If Russia suddenly seems to be a much better option for Cyprus, the EU has no one to blame for that development but itself.  The world has already seen what they've done with their "austerity" programs in Greece, Spain, Portugal, and elsewhere.

      •  Small country (4+ / 0-)
        Recommended by:
        marsanges, blueoasis, dfe, mrkvica

        Cyprus is a small country and those members of government and parliament are few and probably not too hard to find.  Yes, the pressure from Russia is there, but you can be sure that they listened to their outrage populace as well.

        That Russian pressure didn't seem to stop Anastasiadis from going "all in" on the haircut in the first place, did it?  Don't tell me he couldn't have predicted what the Russian response would have been.  Let's stop being so naive.

  •  Finally--NO to the criminal bankers--and what (13+ / 0-)

    does anyone fear about "departure from the Eurozone," anyway?  I say get the hell out--and as quickly as possible.

    If the plutocrats begin the program, we will end it. -- Eugene Debs.

    by livjack on Tue Mar 19, 2013 at 12:58:21 PM PDT

  •  Great news for Cyprus (26+ / 0-)

    This would set a terrible precedent.  It's not a tax in any traditional sense.  What the bankers were planning was outright theft of peoples' savings.  Did they honestly think ordinary people would just meekly accept their accounts being raided in such a blatant manner?  

  •  What a stupid move (11+ / 0-)

    I expect people will withdraw all their money the first opportunity they get. The banks will really suffer now. What a stupid dick move it was to even suggest this. I know if I was there I would take all my money out of any bank.

    •  Would likely have happened anyway (8+ / 0-)

      This would have likely happened even if the parliament of Cyprus followed the "proud" example set by their Greek counterparts and voted, like a cheap whore, "yes to everything."

      •  now what? (0+ / 0-)

        I don´t think I follow your characterizations, but it´s your diary. But now, deal is rejected. Now what would you suggest should happen?

        No money from the EU; state bankruptcy in June? What precisely would that entail? all deposits (of everyone; most voluminously, non-Cypriots) guaranteed to 100.000 E, and nothing above that?

        probably not. So, what?

        •  Interesting idea from Lee Buchheit by way (10+ / 0-)

          of Felix Salmon:

          First, leave all deposits under €100,000 untouched. Hitting those deposits was by far the biggest mistake of the Cyprus plan as originally envisaged, and everybody would be extremely happy if guaranteed depositors could be kept whole.

          Second, term out everybody else by five years, or ten if they prefer.

          That’s it! That’s the whole plan, and it’s kinda genius. If you have bank deposits of more than €100,000, they will be converted into bank CDs, with a maturity of either five years or 10 years — your choice. If you pick the longer maturity, then your CD will be secured by future Cypriot gas revenues, which could amount to hundreds of billions of dollars.

          And if you have sovereign bonds, they too will be termed out by five years, giving Cyprus a bit of breathing room to get its act together.

          Do that, say Buchheit and Gulati, and you manage to reduce the size of the needed bailout by more than the €5.8 billion that Cyprus is currently planning to raise with its tax on bank deposits — and you don’t touch anybody’s principal at all. To be sure, the new CDs, which would be tradable, would surely trade at less than par: there would be a present-value haircut on deposits over €100,000. But that’s going to happen anyway. And at least in this case patient depositors will have a chance of getting all their money back in full — with interest. And, most importantly, guaranteed depositors will remain unscathed.

          http://blogs.reuters.com/...
          •  interesting. (3+ / 0-)

            In fact, in the original version of the EU deal, the % cuts were nominally converted in bank equity too .. following a little bit along lines such as you cite.

            That was scathingly laughed off the table as "theft" by people who stood to lose (not poor people, thus). So I guess they would hate this plan even more.

            I look at it from an entire other viewpoint. I´m a European taxpayer, so the people crying about "theft" about this haircut solution don´t mind wanting my money to cover their losses.

            •  Wrong (15+ / 0-)

              No one is asking for your money to cover their losses.  The Cypriot people, just like the Greek people, are not begging for your money.  They never asked for a "bailout."  They never asked for austerity.  They never asked for their bank accounts to be slashed, their salaries to be cut, their jobs to be vanished.  The EU, instead of punishing those politicians and banksters who are responsible, in its entirety, for this mess, has instead taken out all of its power and anger on the people.

              It was about time that the boomerang turned around and smacked them in the face.

              •  So you think the people want to default? (0+ / 0-)
                •  Another false dilemma (14+ / 0-)

                  Seriously, are you from Merkel's press office?  It's not black or white.  It's not "accept this or default."  That's what the EU was threatening Cyprus with this week.  Their bluff was called.

                  By popular demand, here's a few solutions that are applicable to Cyprus, Greece, and other austerity-ravaged countries:

                  - Actually prosecute and jail the corrupt politicians from all parties who have any responsibility at all for their countries' current economic woes.

                  - Actually prosecute and jail the corrupt and criminal banksters who have any responsibility at all for helping bring about this economic crisis.  

                  - Seize the illegally obtained assets of all of the above, no matter where they may be held.

                  - Form an independent commission in each country that will investigate the totality of the debt, and immediately write off any debt that is found to be odious (illegitimate).

                  - Form an independent commission in each country that will investigate all of the criminal austerity measures and the decisions that were taken which implemented said members.  Prosecute and jail anyone and everyone responsible.

                  - If necessary, declare a temporary stoppage of payments on all legitimate debt.  Declare a national state of emergency and pour all available national resources towards helping to restore the economy, instead of to pay interest.

                  - Renegotiate the payment terms for all legitimate debt, take it or leave it.

                  - Actually give the people a say in their country's financial future, openly and democratically, with an informed national dialogue that is free of blackmail and scaremongering.  Just as they did in Iceland.  How's that for a novel concept?

                  - Build up as much foreign currency reserve as possible and return to a national currency, after first formulating a careful plan.  Utilize Euros as part of those foreign currency reserves.  For more details about how this can happen, an interview with economist Dimitris Kazakis (who, by the way, predicted back in December what would happen in Cyprus) is in order: http://www.media.net.gr/... (interview in Greek with translation into English).

                  Economists such as Kazakis and Costas Lapavitsas, among others, have provided far more informed analyses as to how all of the above may be achieved.  I recommend looking them up.

                  •  Reading your source (4+ / 0-)

                    Costas Lapavitsas  writes approvingly:

                    Iceland followed a radically different path, as it is free of the troika and not a member of the EMU. It refused to increase its national debt and it thus let banks go bankrupt, shifting the costs on to shareholders, bondholders and depositors abroad. Iceland looked after small depositors, but also allowed its currency to devalue and applied capital controls. The country avoided a deep and protracted recession, and last year the economy grew at 2.5%.
                    emphasis mine.

                    So the part of the now-scuttled deal that most goes along with Costas Lapavitsas ideas is the part where depositord get the haircut! With the only exception - a poison pill - that it had no "small" depositor safety offcut limit.

                    Whereas the part of the EU-cyprus deal that goes most against your economist is where the EU uses 10 billion of european public money to bail out the banks - "In effect, the costs of failed banks were brazenly shifted onto society as a whole", as he calls it for Ireland.

                    Right?

                  •  Exactly (3+ / 0-)
                    Recommended by:
                    mrkvica, yoduuuh do or do not, neo11

                    Never understood why in the world this is presented as an all-or-nothing, binary choice between two outrageous, unacceptable alternatives- default vs. utterly screwing over small depositors and shaking faith in the banking system in general (all for the benefit of a few well-connected bankster gangsters).

                    As neo11 points out here, a constructive solution is simple, straightforward and far more beneficial to all parties involved. First go after the corrupt 1%ers who are responsible for this, including the corrupt ultra-rich (aka the Cypriot Mitt Romneys) who've been evading their obligations. Seize their assets, and make it clear that the EU law is with the people, not the banksters.

                    Even if Cyprus doesn't leave the Eurozone itself- since the prior corruption by Cyprus's 1%ers wouldn't inspire much confidence (or solvency) in Cyprus's own currency- the solution is that the Euro must be turned into a national currency itself for all the Eurozone members, that is, a liquid instrument that allows all of the EU countries to effectively be sovereign in the currency.

                    In practice of course, on an economic level, this would in many ways convert the EU states into something like the American states, which although they can't print dollars themselves, are nonetheless able to denominate their debts in what is their own (collectively) sovereign currency, with backing from the federal government itself (whatever the EU's equivalent is).

                    And above all, Angela Merkel has to go. She's become ridiculously obsessed with the austerity nonsense and seems incapable of grasping basic macroeconomics. One of the most blindingly simple concepts from Econ 101 is that the entire global economic and financial system depends on people's trust that their bank deposits will be fully honored, thus innovations like e.g. the FDIC. That Merkel doesn't get this (or that she's made herself a tool of powerful banksters) means that she's no longer even pretending to be a representative of the people, her won or any other in the EU.

              •  what again is the mess? (3+ / 0-)

                wait wait you´re too fast for me. What did Cyprus want the 10 european billion of the - now scuttled - deal for?

                refinancing state debt, isn´t it? Debt caused by the lost creditworthyness of Cypriotic banks, isn´t it? That those banks have made a shit out of their capital is not the fault of the common Cypriot. Its also not the fault of the common mid-European. Yet, the Cypriots (not the mid Europeans) stand to face a state bankruptcy over this. And so they ask anyone - Russians, Chinese, EU - for a bridge loan.

                The EU would be willing to give that, on condition that the actual culprits (the international tax haven money that fueled the Cypriot banking system) pay a significant share.

                The Russian oligarchs offer to buy out the indebted outfit called Cyprus, no oligarch loses money, and they get to own the place.

                Your choice indeed!

                The EU´s mistake was this foolish not having a lower offcut for the depositor tax, That made it stink. After all common-folks cypriots arent to blame here. So, blame the EU for this stupidity. OK .. and then? Still your choice, What do you want?

                •  You're too forgiving of the EU (5+ / 0-)

                  If the whole issue is just providing "bridge loans," then please explain such measures as lowering the minimum wage in Greece to below poverty level and taxing heating oil to death, even though so few people can now afford it that revenues from this tax have actually gone down.

                  If the EU wants to punish those who created the mess, punish the politicians and the banksters.  Period.  The fact that they are not doing so means that something else is going on.  Something more akin to a German-led power grab.

                  Go on and continue being an apologist for them though if you wish.

                  •  that was just what (0+ / 0-)

                    -- if the press is to believed, which you are entitled to doubt --- the Cypriot president had offered instead of the depositor tax: wage cuts, pension cuts, general tax increases. Again, that wasnt demanded by the EU, that was offered by Cyprus instead of getting a chunk of international tax evader money.

                    The EU refused that.

                    It can be that I am agreeing with you about the worthlessness of Cypriots politicians? maybe? The central Europeans are mostly right-wing idiots and callous bourgeois, nothing to be proud of either.

                    Yet it doesnt look to me that this is a story of a poor little island bowed under financial tyrants from Germany. It seems to me that that would be just hyperbole to hide a little island struggling at the brink of the abyss to keep at least some of its preferred business (being a capital flight destination).

                    •  Well (3+ / 0-)
                      Recommended by:
                      marsanges, Chi, mrkvica

                      Well it seems to me the president is worthless, but quite a few people knew that prior to the election.  He may have won, but the vocal minority predicted that he would go along with whatever Europe wanted, and inded, that's what happened.

                      The fact that he proposed cuts to wages and pensions and also proposed tax increases - everything that has been done in Greece to disastarous results - says it all.

                      By the way, please explain to me why it's perfectly acceptable for countries like Lichtenstein, Luxembourg, Switzerland, etc. to be tax havens, but not Cyprus.  Is it because it is preferred by the big bad Russians instead of by the likes of Mitt Romney?  Just curious.

                      •  No no (2+ / 0-)
                        Recommended by:
                        Chi, mrkvica

                        I dont like them either (meaning not to say that I dont like Cyprus - the opposite is the case; actually I like them far less). Luxembourg has been a bit cut to size as its directly in the EU. That was good. Liechtenstein is ever being fought over, just recently aghain when German tax services availed themselves of illegally gotten data from there.  

                        The more I read your economist - this Mr Lapvitsas - the more I agree with him. I hate whats being done to Europe, the desocialization thats going on, all to preserve the well-suitedness of a certain, pretty rich upper bourgeoisie.

                        I also hated the pettyness of my Dutch countrymen when Icesave went down - oh losing their capital couldnt be a fate that was in store for touchy Dutchmen! It was morally repugnant. They wanted all the gain for themselves and all the risk for the state.

                        Yet; a part of the failure of the left in our continent is that they as a whole have not really developed an alternative. Merkels policy was begun by Schroeder (who I helped elect). French lefties afforded themselves a five-candidate split - with trotskyites - guaranteeing Chirac´s long power, and THAT was a crushing blow for Europe. Zapatero in Spain made a gallant stand but ultimately had no answer to the crisis that he had not caused. I feel very much for him. Yet there it is ... if I ask you "now what" then I implicitly ask myself and all of us "now what"? We need to get rid of this posse thats ruining our continent.

            •  Maybe you should stop trying to shove the (0+ / 0-)

              other zebras in front of the lions.

              income gains to the top 1% from 2009 to 2011 were 121% of all income increases. How did that happen? Incomes to the bottom 99% fell by 0.4%

              by JesseCW on Tue Mar 19, 2013 at 06:16:11 PM PDT

              [ Parent ]

            •  The average depositor in the Cyprus bank didn't (2+ / 0-)
              Recommended by:
              mrkvica, neo11

              cause this problem.  Why should a pensioner with 45k in the bank be charged 3150 for the mistakes the board and operators of the bank made??  It's not the average depositor that's 'wanting' 'your' money.  It's the big banks across the world.

          •  intriguing (0+ / 0-)

            and worth a virtual tip.

            The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

            by ozsea1 on Tue Mar 19, 2013 at 03:11:47 PM PDT

            [ Parent ]

        •  Cyprus was supposed to go bankrupt this week (11+ / 0-)

          Cyprus was supposed to go bankrupt this week, if we believed what the EU and the president of Cyprus were telling us, in justifying the "bailout" and the "haircut."  Now that they said no, Cyprus suddenly and magically and amazingly has until June.  If they say no in June, will they then have until Christmas?  And if they say no at Christmastime, will they determine that Cyprus actually has until 2014, 15, 20, or beyond?

          Comments like yours are exactly what people in Greece, Portugal, Spain, etc. have heard, again and again.  "We have no other choices."  "If we say no, and then what?"  

          The EU was bluffing, and it took three years for their bluff to be called.

          •  uhm thats not an answer (0+ / 0-)

            One has a finance ministry for running state finances. If the minister says it´s needed in June, then that´s all what I have to go along with. If he lies for effect, then the people of Cyprus should give him the boot (as the Spanish did with Aznar´s government).

            All the more, the way I have heard it in our press, the threat wasnt that the state went bankrupt this week but "merely" the two biggest banks would have stopped getting money from the ECB, and have been bankrupt. (I. e. completely closed - no access to their money for anyone). It could be a horror story, of course. Everything could be.

            Yet, you havent said anything in response to the "now what" question - except suggesting that there is actually no crisis. You really want to suggest that?

            •  No (6+ / 0-)

              We have more to go with than that.  It wasn't just the Cypriot government that was saying that Cyprus had only a few days until collapse.  The EU blackmailed Cyprus using that threat.  The same sort of threat they've been using for years now with Greece, Portugal, Spain, and other countries.

              And yes, I've said something about the now what question.  There's a link to an article from an economist that I've posted which provides some alternatives.  Perhaps you should read more carefully before criticizing so easily.

        •  Another take (1+ / 0-)
          Recommended by:
          blueoasis

          From economist Costas Lapavitsas, who has been among the first to speak out against the austerity madness: http://www.guardian.co.uk/...

    •  Well, it's too little, too late, really. (1+ / 0-)
      Recommended by:
      johnny wurster

      I think refusing to go along with it was the lesser of two evils, at this point.

    •  People are going to withdraw their money (2+ / 0-)
      Recommended by:
      Joieau, nchristine

      no matter what happens. At least they would if the banks ever reopened.
        The confidence is already lost.

      ¡Cállate o despertarás la izquierda! - protest sign in Spain

      by gjohnsit on Tue Mar 19, 2013 at 04:05:40 PM PDT

      [ Parent ]

  •  it's heartwarming to read of this, an example (6+ / 0-)

    of the will of "the people" making itself heard

    so there's 56 members in the parliament of cypress, and not one voted for what the eurogroup is demanding

    if they're ready to stand their ground, this could be the start of other populations choosing not to "cooperate"

    the european has a very strong wwii component in her/his body/mind, a memory of war taking place at your home;

    the privations if not worse that the europeans underwent in that conflict inured their psyches, to the point where rebellion in the streets or stopping up the roads with cattle/produce is always possible, for starters

    the revolution is permanent

  •  Did the bankers consult Frank Luntz? (13+ / 0-)

    I swear the words they're using to describe raiding the life savings of ordinary people in Cyprus sound like something out of Frank Luntz's playbook.  I guess they thought phrases like "haircut on bank deposits" sounded innocent enough to fool people into not realizing it's an outright theft/confiscation of their life savings by bankers.

  •  For those who thought... (5+ / 0-)

    ..the riduculous one-currency-without-separate-federations would ever work must find this very clarifying.

    The non-federated euro will go down as the stupidest ever decision in the history of western civilization.

    There have been more evil ones - but none stupider.

    Boehner Just Wants Wife To Listen, Not Come Up With Alternative Debt-Reduction Ideas

    by dov12348 on Tue Mar 19, 2013 at 02:05:59 PM PDT

  •  Progressive taxation. (5+ / 0-)

    One point I haven't seen is this: the poorest have no bank deposits.  The middle class, these days, has only a little.  The only ones with big deposits are the very rich.

    In this country, seniors often do too; but retirement accounts are protected from seizure in most cases.  Not sure about Cyprus law, of course.

    But if my guess is right, this bailout is sitting squarely on the shoulders of the Cypriot 1%.  But as usual, they have the poor marching in the streets on their behalf.  Am I wrong?

    Early to rise and early to bed Makes a man healthy, wealthy, and dead. --Not Benjamin Franklin

    by Boundegar on Tue Mar 19, 2013 at 02:18:56 PM PDT

  •  Cyprus=Cayman Islands for Russian plutocrats (2+ / 0-)
    Recommended by:
    the fan man, Rich in PA

    If they exempt small depositors, I think the 10% grab should go ahead.
    A few weeks ago Yanakovich, the Ukrainian President visited Cyprus. Seemed odd.
    He was checking on his cash stash.

    The Cyprus banks holdings are 8 times the GDP of the country.
    The 'NO' mobs are paid by the plutocrats.
    EU misplayed this one.

    •  In this case... (7+ / 0-)

      Why isn't anyone investigating Switzerland, Lichtenstein, Luxembourg (with its $1.8 trillion external debt), Gibraltar, the Isle of Man, the Cayman Islands, and the City of London Corporation?

      Seems double standards are at play, as always.

      As for the large depositors, why should they be punished if their wealth was legitimately earned?  What I mean is, if money laundering is the problem, go after the money launderers.  Duh.

      •  Not much Russian wealth has been legitimately (3+ / 0-)

        earned, to be honest.  Today's wealthy are those who had the dumb luck of being at the right place in the right time, the right time being the careless privatization of Soviet state assets, which were sold to these people for a song.

        But I've wondered the same thing - is the money being kept in Cyprus because the average Russian citizen doesn't trust local institutions?  Or is it safe to assume that all Russian money in Cyprus is the product of illegal activity?  Or is it merely a tax haven?  After all, the Obama Administration has been putting notable pressure on Western European bank havens like Switzerland and Lichtenstein to get them to release names to the IRS; multinationals can still use them to get lower tax rates on some types of income, but raw tax evasion is being cracked down on.

        If it's a tax haven, the Russian government would not be opposing the tax - they'd want the money to be repatriated and subjected to whatever taxes that are being dodged by depositing in Cypriot banks, and uncertainty and lack of trust in the Cypriot banking sector might lead to that repatriation - for the Russian depositors, many may conclude that the devil they know is better than the devil they don't know.  So I expected them to stay silent or make a non-committal remark about all parties following the rule of law or something.  Instead, they are intervening on behalf of depositors.

        "The first drawback of anger is that it destroys your inner peace; the second is that it distorts your view of reality. If you come to understand that anger is really unhelpful, you can begin to distance yourself from anger." - The Dalai Lama

        by auron renouille on Tue Mar 19, 2013 at 03:00:43 PM PDT

        [ Parent ]

      •  Their banking systems aren't in trouble. (0+ / 0-)

        What a weird, silly question.

        You know, I sometimes think if I could see, I'd be kicking a lot of ass. -Stevie Wonder at the Glastonbury Festival, 2010

        by Rich in PA on Tue Mar 19, 2013 at 05:12:05 PM PDT

        [ Parent ]

        •  Weird and silly? (0+ / 0-)

          It's weird and silly to suggest that if money laundering is one of the major problems in Cyprus, that perhaps that should be investigated there, and also, in other tax and offshore havens as well?  

          Luxembourg has an external debt of $1.8 trillion.  That doesn't seem all that healthy to me.  And do you really want to wait for a banking system to be in trouble to begin investigating potentially illegal activity?

  •  This vote is just a temporary setback for (2+ / 0-)
    Recommended by:
    Chi, JesseCW

    the banksters.  One very telling feature is that 1/3 of the votes were abstentions. Why would these members of parliament not vote against the proposal unless they intend to vote for something in the future?  I suspect a lot of pressure will be placed upon the 36 yes votes. The banking cartels will not give up easily and some form of gaining their pound of flesh from the people of Cyprus will be resurrected and repackaged.  The banksters are a criminal enterprise and unfortunately, they will probably win in the end.

    "Growing up is for those who don't have the guts not to. Grow wise, grow loving, grow compassionate, but why grow up?" - Fiddlegirl

    by gulfgal98 on Tue Mar 19, 2013 at 02:31:19 PM PDT

    •  Not so certain (5+ / 0-)

      The EU's bluff was called and they've been unmasked for the liars and crooks that they are.  Merkel and Schauble are already whining about how "unfortunate" the vote in the Cypriot parliament was.  The banksters may be criminals, but precisely because they are criminals, someone had to stand up to them.  For three years, the EU and its austerity-driven insanity has run amok and destroyed thousands of lives and businesses in the process, without any consequences for those who devised these policies.  Perhaps one small country finally standing up to this blackmail will encourage others to do the same, regardless of what the banksters try to do.

      As for the abstentions, they are from the ruling party.  But even if the abstentions became votes in favor of such a haircut, it would not pass.

    •  I think the 36 votes you referenced (3+ / 0-)
      Recommended by:
      neo11, gulfgal98, mrkvica

      were actually NO votes.  There were no YES votes.  There were 19 abstentions, however.  If I'm wrong on this, my apologies in advance.

      "A voice is heard in Ramah, weeping and great mourning, Rachel weeping for her children and refusing to be comforted, because they are no more." - from the prophet Jeremiah

      by 3goldens on Tue Mar 19, 2013 at 02:46:59 PM PDT

      [ Parent ]

      •  Correct (2+ / 0-)
        Recommended by:
        3goldens, gulfgal98

        You are correct.  36 against, 19 abstained.

      •  oops! (2+ / 0-)
        Recommended by:
        3goldens, mrkvica

        I typed yes when I meant no.  Thanks for the correction.  The rest of my post stands.  I still believe that this is not going to go away after one negative vote of parliament.

        "Growing up is for those who don't have the guts not to. Grow wise, grow loving, grow compassionate, but why grow up?" - Fiddlegirl

        by gulfgal98 on Tue Mar 19, 2013 at 02:56:16 PM PDT

        [ Parent ]

        •  No, but... (3+ / 0-)
          Recommended by:
          DRo, 3goldens, gulfgal98

          No it's not going to go away, but now a new precedent has been set: actually standing up to the EU and IMF bullying and blackmail.

          •  Could Cyprus (3+ / 0-)
            Recommended by:
            3goldens, gulfgal98, nchristine

            find themselves under the thumb of Russia instead of the EU? And do you have any info on the reported find of natural gas, could this in part be a resource grab?

            Be the change you want to see in the world. -Gandhi

            by DRo on Tue Mar 19, 2013 at 03:04:59 PM PDT

            [ Parent ]

            •  Yes (5+ / 0-)
              Recommended by:
              3goldens, DRo, limpidglass, gulfgal98, mrkvica

              Yes, Cyprus could find itself under the thumb of Russia.  But let's not jump to conclusions yet.  And I'm not sure that with the EU's actions in Greece, Portugal, Spain, and elsewhere, that being under the thumb of the EU is any better.  Some might say it's worse.

              As for the resources, they are there and they are very real.  It was reported just four days ago that Cyprus may have as many as 60 trillion cubic feet of natural gas under its waters.  One would have to be really naive to think that that was not on the EU's mind (or Russia's, for that matter), along with Merkel's good friends in Ankara.

        •  You're always so reliably accurate in your (1+ / 0-)
          Recommended by:
          gulfgal98

          diaries and comments,  I figured it was just a typo but didn't want you to be unaware of it.

          "A voice is heard in Ramah, weeping and great mourning, Rachel weeping for her children and refusing to be comforted, because they are no more." - from the prophet Jeremiah

          by 3goldens on Tue Mar 19, 2013 at 03:11:53 PM PDT

          [ Parent ]

          •  Thanks...my excuse is (3+ / 0-)
            Recommended by:
            3goldens, marsanges, mrkvica

            that I am battling a nasty head cold and today is the heavy sneezing day.  My brains are locked up in my sinuses and my sinuses are winning.  LOL

            "Growing up is for those who don't have the guts not to. Grow wise, grow loving, grow compassionate, but why grow up?" - Fiddlegirl

            by gulfgal98 on Tue Mar 19, 2013 at 03:29:32 PM PDT

            [ Parent ]

            •  Been there--I call it Brain Fog! (1+ / 0-)
              Recommended by:
              gulfgal98

              Hope you're feeling better soon.

              "A voice is heard in Ramah, weeping and great mourning, Rachel weeping for her children and refusing to be comforted, because they are no more." - from the prophet Jeremiah

              by 3goldens on Tue Mar 19, 2013 at 03:41:51 PM PDT

              [ Parent ]

              •  It is always self limiting (1+ / 0-)
                Recommended by:
                3goldens

                Three miserable days and then onward.  There are certainly a lot worse things in life than a head cold.  Thank you for the well wishes.

                "Growing up is for those who don't have the guts not to. Grow wise, grow loving, grow compassionate, but why grow up?" - Fiddlegirl

                by gulfgal98 on Tue Mar 19, 2013 at 03:56:37 PM PDT

                [ Parent ]

  •  Very bizarre situation here. (2+ / 0-)
    Recommended by:
    DRo, marsanges

    This all unraveled extraordinarily quickly but I've seen some hints in the press that the powers-that-be in the EU and IMF wanted a more progressive structure but that perhaps the Cypriots wanted it this way.

    The managing director of the International Monetary Fund, Christine Lagarde, said earlier Tuesday that she was in favor of modifying the agreement to put a lower burden on ordinary depositors. “We are extremely supportive of the Cypriot intentions to introduce more progressive rates,” she said in Frankfurt.
    That's pretty strong language.  I know that it's de rigueur to hate on the IMF here but strangely, the IMF seems to be on the right side of this issue.  So if they wanted more progressive rates, how did we end up here?  Did the Cypriots want the tax to include deposits below €100,000 in order to limit their losses and protect foreign depositors, have Cypriot citizens take some of the hit in order to cushion the blow to Russian and Middle Eastern depositors and not have a total exodus of foreign currency?  Or is this a poison pill, did the Prime Minister want a deal that Parliament would reject in order to get a far better deal?

    "The first drawback of anger is that it destroys your inner peace; the second is that it distorts your view of reality. If you come to understand that anger is really unhelpful, you can begin to distance yourself from anger." - The Dalai Lama

    by auron renouille on Tue Mar 19, 2013 at 03:09:24 PM PDT

    •  Who are the "Cypriots"? (2+ / 0-)
      Recommended by:
      3goldens, JesseCW

      The president may have wanted it that way, but clearly not the people of Cyprus, and clearly not most of the members of parliament.

      •  To save on verbiage, I meant the government's (2+ / 0-)
        Recommended by:
        Gary J, Aquarius40

        negotiators.

        In a parliamentary system, having a bill rejected is extraordinarily rare - there are no checks on the government because the government is by definition the lower house's majority party.  Imagine a system where we had only a figurehead president, a Senate with no real powers, and where the Speaker of the House of Representatives was the head of the government.  Since the Speaker is chosen by the majority, the vast majority of bills will pass.  Only when the backbenchers revolt do bills not pass, and that's quite rare - the majority party in a parliamentary system wields enormous power and can end the backbenchers' careers.

        "The first drawback of anger is that it destroys your inner peace; the second is that it distorts your view of reality. If you come to understand that anger is really unhelpful, you can begin to distance yourself from anger." - The Dalai Lama

        by auron renouille on Tue Mar 19, 2013 at 03:30:35 PM PDT

        [ Parent ]

        •  Cyprus has an executive President (4+ / 0-)
          Recommended by:
          auron renouille, AoT, JesseCW, mrkvica

          What you say is true of Parliamentary systems, when there is a stable majority. However Cyprus does not have such a system. It chose, when it became independent from the United Kingdom, not to have a Westminster style government.

          There is no man alive who is sufficiently good to rule the life of the man next door to him. Sir Rhys Hopkin Morris, M.P.

          by Gary J on Tue Mar 19, 2013 at 04:48:54 PM PDT

          [ Parent ]

          •  Thank you, I stand corrected :). *blush (0+ / 0-)

            "The first drawback of anger is that it destroys your inner peace; the second is that it distorts your view of reality. If you come to understand that anger is really unhelpful, you can begin to distance yourself from anger." - The Dalai Lama

            by auron renouille on Tue Mar 19, 2013 at 04:51:36 PM PDT

            [ Parent ]

    •  that was my idea too (0+ / 0-)

      that that was a poison pill thing. That someone wanted this to go down.

      Currently, the Cypriots (govt) blame Schaeuble (German FM) and Schaeuble blames the Cypriot govt.

      It is a possible hypothesis - that Cyprus govt, which above all doesnt want to cross its business partners, and having vainly fought against depositor taxation, then made it so that it was sinkable.

      possible, not proven. Counterhypotheis putting blame on German govt says that they wanted the culprits (vagabund capital) to pay too. Thats also plausible, but the german govt has no bone to pick with small-depositor cypriots, they were pushing for getting at the big fish, not small fish.

      So far ... its personal preference what to believe ...

    •  I get a warm, fuzzy feeling inside (2+ / 0-)
      Recommended by:
      neo11, JesseCW

      When I read that statement of altruistic sentiment from the IMF. But, it could be that Legarde was just spouting some bullshit for the press. It's Cypriot banks that are failing. The IMF wants Cyprus to prop up the banks — to have Cyprus cover their losses.

      I say they're more concerned about Bundesbank's exposure to Cyprus bank bonds and derivatives that concerns them more than they are for the well-being of the little people citizens of Cypress.

      "Societies strain harder and harder to sustain the decadent opulence of the ruling class, even as it destroys the foundations of productivity and wealth." — Chris Hedges

      by Crider on Tue Mar 19, 2013 at 04:23:37 PM PDT

      [ Parent ]

  •  This is what Democracy looks like. (1+ / 0-)
    Recommended by:
    neo11

    Well done Parliament.

  •  The question is: what happens next? (9+ / 0-)

    I remember Congress rejecting TARP was a huge "no" as well.
      Then they rolled over the very next day.

    Greece was going to put their bailout to a popular vote. Three days later the president was forced out and the government approved the bailout.

      This is only a battle, and our financial masters are playing the "long game".

    ¡Cállate o despertarás la izquierda! - protest sign in Spain

    by gjohnsit on Tue Mar 19, 2013 at 04:04:09 PM PDT

    •  the natural gas angle complicates things (8+ / 0-)

      the Russians may see in all this a golden opportunity to buy Cyprus' resources on the cheap, in exchange for recapitalizing the ailing Cypriot banks on generous terms.

      I presume a side effect of that would be the exit of Cyprus from the eurozone. Because obviously, if you can get another country to float you a loan, you don't need the ECB.

      The Russians have about 42% of their foreign exchange reserves (about $522 billion) in euros. So they could give Cyprus euros, because that's probably the most convenient way to do it. But that's quite extraordinary if the EU would stand by and watch Russia lend euros to Cyprus on much more favorable terms than the EU itself was prepared to give! Would that not be an assault on the eurozone's monetary sovereignty? Surely it would provoke some kind of response.

      And if one nation leaves the eurozone, others will start thinking about it as well. Not to mention the instability that's resulting from this threat to confiscate depositors' assets. At what point does the whole shebang begin to unravel?

      Now the question is whether the Russians think that buying up that natural gas is worth potentially blowing up the eurozone.

      I am betting they think the risk of ripping apart the eurozone is very small, and the gain from acquiring control of Cyprus' natural gas, very big.

      Ironically, it's Cyprus' small size that is making this possible. Russia could never do this for Spain or Portugal or Italy or Greece, it would be too risky and costly to bail out such large countries and banking systems. But for a tiny country like Cyprus? Much less risky, and the upside may be worth the potential downside, in their view.

      It would be truly the most bizarre thing, if it were not popular protest against inequality that brought down the eurozone, but simple self-aggrandizement--a mutually profitable business deal between Cyprus and Russia.

      I don't think the EU has a lot of ammo to keep this deal from going down, if the Cypriot government decides to go with it. And I'm sure the Russians are offering a lot of carrots and they are being very careful not to come across as threatening or bullying. I doubt the EU can match the Russians' offer.

      Between the guy who's threatened to confiscate depositors' savings, and the guy who hasn't, I'd be inclined to deal with the one who hasn't.

      And it may just be that the only way to avoid a bank run in Cyprus, and attendant bank runs across Europe, is to allow the Russians to recapitalize the Cypriot banks. So who knows, even the EU might have to swallow this deal in order to avoid a bank panic.

      "In America, the law is king." --Thomas Paine

      by limpidglass on Tue Mar 19, 2013 at 05:10:41 PM PDT

      [ Parent ]

  •  Backing off from the plan (1+ / 0-)
    Recommended by:
    3goldens

    suggests they saw flaws in the strategy. However, they likely remain committed to the goal.

  •  De facto pound sterling? (4+ / 0-)

    The British government has sent a million pounds in cash, by an RAF aircraft, to ensure that the British forces based in Cyprus and their families can continue to have funds whatever happens to the local banks. The government has said more cash will be sent if needed.

    Arrangements are also being developed to help UK pensioners, resident in Cyprus, to receive pensions otherwise than through Cypriot bank accounts.

    If the Cypriot banks do not soon reopen and the British are the only ones on the island with cash, maybe the answer to the crisis is for Cyprus to use the pound sterling as an emergency currency.

    There is no man alive who is sufficiently good to rule the life of the man next door to him. Sir Rhys Hopkin Morris, M.P.

    by Gary J on Tue Mar 19, 2013 at 04:58:26 PM PDT

  •  Cyprus should be permitted to default (0+ / 0-)

    Either that, or depositors should only get their money back insofar as they can demonstrate its legitimate origin.

    You know, I sometimes think if I could see, I'd be kicking a lot of ass. -Stevie Wonder at the Glastonbury Festival, 2010

    by Rich in PA on Tue Mar 19, 2013 at 05:11:22 PM PDT

  •  If there should be any "haircutting" going on... (4+ / 0-)
    Recommended by:
    Tweedledee5, JesseCW, mrkvica, neo11

    ...It should be to the personal net worth of every corporatist robber baron on the planet.

    "We see things not as they are, but as we are." - John Milton

    by Jasonhouse on Tue Mar 19, 2013 at 05:23:16 PM PDT

  •  Hard to believe there won't be a run (0+ / 0-)

    If I had savings in Cypress, I would move my money elsewhere as soon as I could. I can't imagine that is not what a whole lot of people are going to attempt to do as soon as the "Banking Holiday" ends. If there is indeed a lot of dirty money in Cypress banks, it will be hard to move, so that may be about the only sort of funds left in the banks in short order.

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