Cyprus In Layman’s Terms
In case you’ve heard it and didn’t understand or have been living under a rock, in terms of financial news, not that everyone pays attention to financial news, the tiny nation of Cyprus is doing something unprecedented. They are stealing depositors money.
The news is reporting it and the most casual way possible. If they told you exactly what was going on, and what other options were available, a widespread panic would ensue.
So here’s the basics of this report. The tiny nation of Cyprus, basically serves as the offshore banking for much of Europe. They are the Cayman Islands of Europe. People deposit their huge sums there, and pay very little taxes. Because the island’s banks gets huge sums of money, they thought to make even more money by investing it themselves. Who did they invest in? Greece. Wait, are you thinking what I’m thinking? That’s right, Greece is insolvent and can’t pay its creditors, including Cyprus.
So Cyprus, the not so bright, invested in a failed economy. Cyprus banks hold far more money than the actual government of Cyprus even has, to a magnitude of 10. There is nothing that the government of Cyprus could do to stop the bleeding of the banks. But wait, there’s more.
Remember I said they had huge deposits from people? A very large portion of that comes from two sides. On one side are the British. On the other side are the Russians. Talks started by the Eurozone powers. When the smoke cleared, they came up with a plan that could potentially start WWIII. Yes, that’s 3.
They decided they would steal money from the bank depositors, instead of the banks giving up its money making interests. So, the every day Cypriots are being stolen from.
But wait, that’s not all, Russia is pissed. They weren’t included in the Eurozone negotiations. Russia also has huge deposits in Cypriot banks. Russia offered [threatened] their own negotiation: take a Russian bailout and give Russia rights to the offshore gas of Cyprus.
Almost no one is reporting this last little bit.
But, the big thing that you and I should worry about, is that the Eurozone powers decided they would just steal depositor’s money, instead of forcing the bank to cut their profits or investments. The bank is literally stealing from depositors instead of being wiped out. In my opinion, depositors are not really investors. They are not sophisticated people that have gone over bank holdings and portfolios before handing over their paychecks. They are just stashing their money for safe keeping. If Eurobank wants to make investors take a loss, that is one thing, but depositors? That’s just robbery.