Eurocrats demand their pound of flesh!

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Cyprus Update


by Stephen Lendman


It’s all over but the post mortems. Eurocrats demanded their pound of flesh. Cypriot officials surrendered.

They sold out their people. They deserve better. Expect greater than ever hard times. Expect growing poverty, unemployment and despair. Expect public anger. At issue is whether it’ll bubble up and explode.
Zero Hedge headlined “Next Up For Cyprus: Depression.” It forecasts real GDP declining over 20% by 2017. “Risks are clearly on the downside.” Ahead expect more bailout help needed.
With tongue in cheek perhaps, European Commission economic chief Olli Rehn said “It’s clear the depth of the financial crisis in Cyprus means the near future will be very difficult for the country and its people.”
He omitted saying Cyprus’ trouble is protracted. Ordinary people will suffer most. Responsible solutions weren’t chosen.
They’d have softened crisis conditions if implemented. They’d have hastened recovery. They’d have mitigated pain and suffering. Bailing out bankers matters most.
“Congratulations Cyprus.” Sacrificing sovereign rights benefits German Chancellor Angela Merkel. Her September reelection chances improved.
Der Spiegal commentator Armin Mahler headlined “Euro Bailouts: Savers Be Warned – Your Money’s Not Safe.”
Germans are worried for good reason. Banker bailouts harm their security. “At times like these, the only thing that is certain is that nothing is certain.”
Even savings accounts aren’t safe. Nations teetering on bankruptcy may seize them. Guarantees protecting them aren’t worth the paper they’re written on.
Post-WW II, Germans learned lessons the hard way. They were charged extra real estate taxes. Compulsory mortgages reflected them. They had no say.
Governments prohibit owning gold during currency crises. People are forced to exchange it for depreciating fiat money.
Other troubled Eurozone countries may levy asset charges. Doing so makes ordinary people bear burdens they didn’t cause.
German savings are shrinking in real terms. It’s because of ECB money printing madness and near-zero interest rates.
German life and retirement insurance policies pay less than originally promised. It reflects “creeping expropriation.” It’s financial tyranny.
Expect much worse times ahead. Eurocrats assure it. Headlines explained it. The Financial Times said “EU ministers approve Cyprus bailout deal.”
Lasting damage was done. Cypriot restructuring assures Eurocrats will provide a $10 billion euro bailout. Doing so leaves Cypriot public debt sustainability and its economy unaddressed.
Cypriot troubles matter. The genie’s out of the bottle. What Cypriots face can spread anywhere. Savings accounts aren’t safe. Bank runs may follow.
Commerzbank chief economist Jorg Kramer suggested “a one-time property tax levy” for Italy. He also proposed a 15% tax on financial assets.
Britain’s Independence party leader Nigel Farage said Eurocrats “crossed a line.”
“Even I didn’t think that they would stoop to actually stealing money from people’s bank accounts.”
“There is going to be a big flight of money and that flight of money won’t just be from Cyprus. It will be from the other eurozone countries, too.”
“There are 750,000 British people who own properties, or who live, many of them in retirement, down in Spain.”
“Now that we see the EU is prepared to resort to anything to keep alive their failing euro project, our advice to expats living down in the Mediterranean must be, ‘Get your money out of there while you’ve still got a chance.’ ”
The Prodigal Greek listed major legislative provisions. Here’s what a cash economy looks like, it said:
“Restrictions in daily withdrawals
Ban on premature termination of time savings deposits
Compulsory renewal of all time savings deposits upon maturity
Conversion of current accounts to time deposits
Ban or restrictions on non cash transactions
Restrictions on use of debit, credit or prepaid debit cards
Ban or restriction on cashing in checks
Restrictions on domestic interbank transfers or transfers within the same bank
Restrictions on the interactions/transactions of the public with credit institutions
Restrictions on movements of capital, payments, transfers
Any other measure which the Finance Minister or the Governor of Cyprus Central Bank see necessary for reasons of public order and safety”
Laiki Bank will close. It’s Cyprus’ second largest and most troubled.
Its 4.2 billion euro deposits over 100,000 euros go into a bad bank. Perhaps they’ll be entirely lost. Laiki’s junior and senior bondholders are impacted. They face stiff haircuts. They may be wiped out.
Laiki deposits under 100,000 euros shift to Bank of Cyprus. It’s the nation’s largest lender. It’ll be sharply downsized. It’ll be completely restructured.
It’s deposits over 100,000 euros will be frozen. Significant losses may follow. Bailout funds won’t be used to recapitalize it. Large deposit holder “bail-in” funds will be used. Enough will assure EU-mandated capital levels are met.
Simon Nixon is Wall Street Journal’s European Heard on the Street editor. On March 25, he headlined “Cyprus Bailout May Not Be Last.”
Calamity was averted short-term. Terms imposed were tougher than originally imposed. Expect funds raised to fall short of what’s needed. Expect Cyprus’ economy to falter.
Perhaps expect its government to fall. It lost legitimacy selling out to Brussels.
Important uncertainties remain. Policies imposed on the state’s two largest banks “inflicted grave damage on Cyprus’ credibility as an offshore financial center.”
Shrinking its financial sector assures “profound consequences for the rest of” its economy. Greater banking losses look certain.
Temporary capital controls may become permanent. Severe loss of confidence assures further bailout help. It’s shattered economy won’t recover for years.
Perhaps it’ll never be the same. Eurocrats and complicit Cypriot officials bear full responsibility. Apologies won’t be forthcoming. It remains to be seen how ordinary people react.
Cyprus travel guides describe an ancient land. It’s famous for archeological sites and beautiful beaches. It’s a popular tourist destination.
Joining the EU gave it confidence. Cypriots know doing so was misguided. They’re trapped under Eurozone straightjacket rules. They’re responsible for problems they didn’t create.
Their living standards won’t ever be the same. Nor will idyllic Cyprus. It’s a zombie country. It’s obituary remains to be written. Perhaps it’ll never be the same again. For sure it won’t be short or intermediate term.
Cyprus’ economy failed. It remains to be seen how badly it craters. An enormous amount of wealth will be confiscated. Doing so reflects grand theft.
Its financial services sector is dysfunctional. Restructuring dismantles it in real time. Doing so assures a huge economic knock-on effect.
Market analyst Graham Summers said “Cyprus put another nail in the coffin of democracy and capitalism.”
Its leaders bypassed parliament doing so. In crisis times, rule of law principles don’t matter.
Eurocrats earlier deposed elected officials. It replaced them with unelected technocrats. They imposed diktat authority on Cyprus. Doing so reflects financial tyranny.
It’s an “economic act of war. A sovereign nation has now officially seen its government superseded by an outside governing body.”
How Cypriots react remains to be seen. Thousands of jobs will be lost. Force-fed austerity will increase. Personal savings aren’t safe. Nor are other investments.
“(W)e’re approaching a time (when) open wealth confiscation has been put on the table.” Going forward expect it.
“The only thing between Europe and a total banking collapse are bank runs.”
If enough depositors take their money and run, Eurocrats are helpless to respond.
Cypriot conditions are combustible. Public outrage matters. Change depends on people power regaining what’s lost. It remains to be seen if Cypriots are up to the challenge.
Stephen Lendman lives in Chicago. He can be reached at [email protected].
His new book is titled “Banker Occupation: Waging Financial War on Humanity.”
Visit his blog site at
Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.
It airs Fridays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

About the Author: Stephen Lendman lives in Chicago. He can be reached at [email protected]. He writes for and
He is also author of the celebrated books “Banker Occupation: Waging Financial War on Humanity” and “How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War“.
Lendman also hosts his own blog at
He is host of a progressive radio show with cutting-edge discussions and distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network. It airs Fridays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening. It airs Fridays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived


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