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View Diary: Bank Run in Cyprus, Will it Spread to Southern Europe? (322 comments)

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  •  Everyone agrees on what's happening: (2+ / 0-)
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    nchristine, Cliss

    Wall Street Journal:

    Cyprus is finally getting a bailout, and what an instant classic of euro-crisis dysfunction it is. Nine months after Nicosia first requested a rescue, the deal that emerged Saturday is slapdash, short-sighted and manhandled by politics.

    The novelty of Saturday's deal is that, for the first time in the euro crisis, depositors will contribute to the cost of recapitalizing banks. As we went to press, the plan was for Nicosia to extract €5.8 billion via a one-off 9.9% "stability levy" on deposits larger than €100,000 and a 6.75% levy on deposits smaller than that. The International Monetary Fund will pitch in €1 billion, and the European Stability Mechanism lends the rest, for a total of €10 billion.

    Recapitalizing the banks -- is that the job of the small savers?  When the banks are profitable again, are the small savers going to receive large checks?  hahaha

    By the way, these small savers -- under 100,000 euros -- are in guaranteed accounts.  How do one explain "your account is guaranteed up to 100,000, but oh! we've taken nearly 7% anyway?"

    Same link as above:

    ... by apparently sparing senior bank bondholders, the euro zone has again shown that no principle is above political meddling. The cleaner solution would have been a 20% haircut on deposits over €100,000, with writedowns on all bank debt. This would have respected creditor hierarchy and, by not trampling on deposit insurance, honored the rule of law.
    But no, can't have that pesky rule of law getting in the way when bank bondholders are to be protected.

    See what I mean?  Little people have to sacrifice so the big people don't.  Real nice.

    Speculation of global implications?  Not sure about that, but this blatant money-grab is roiling the waters.

    "The law is meant to be my servant and not my master, still less my torturer and my murderer." -- James Baldwin. July 11, 1966.

    by YucatanMan on Mon Mar 18, 2013 at 12:08:50 AM PDT

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