The Cyprus Bail-In Blows Up: President Urges Complete Bailout Overhaul
Cyprus' President Nicos Anastasiades has realized (as we warned), too late it seems for the thousands of domestic and foreign depositors who were sacrificed at the alter of monetary union, that the TROIKA's terms are "too onerous." Anastasiades has asked EU lenders to unwind the complex restructuring and partial merger of its two largest banks leaving EU officials "puzzled", according to a letter the FT has uncovered, as "essentially, he is asking for a complete reversal of the program." The EU officials claim that the failure to prepare for the bailout’s impact was partially the fault of Mr Anastasiades’ government, which voted down a first agreed rescue before succumbing to a similar deal nine days later.
The FT goes on to note that although the letter does not request it explicitly, Mr Anastasiades is in effect asking for further eurozone loans on top of the existing EUR10bn sovereign bailout – something specifically ruled out by a German-led group of countries at the time. The return of beggars-can-be-choosers we presume - or just token gestures to recovery some populist support as the enemy of my enemy is my friend.
As we noted here, it seemed pretty obvious where this was going to end - obvious that is to everyone except Europe's victory-claiming politicians.
It seems the ongoing flood of capital (despite controls) and collapse of the economy that we discussed here is occurring at ever increasing pace - and demanding even more gold be sucked out of their vaults...
"Unless Cyprus implements some controls that truly work, at this pace its entire banking system will be completely deposit-free in under one year. And it will need to sell much more than all its gold to continue keeping the Troika happy and in compliance with all the future (because there will be many more) bailouts."
In other words, anyone who has been paying attention to the facts on the ground, in this case represented by the epic collapse in dpeosits, would be well aware of the inevitability of this happening; and that in a continent in which the link between the banking sector and the sovereign is stronger than an umbilical, it was only a matter of weeks or most months before Cyprus pulled an Oilver Twist once again.
Via The FT,
Cyprus’ president has asked eurozone leaders for a complete revamp of his country’s €10bn bailout, warning Nicosia may not be able to meet the rescue’s current terms because it has harmed the country’s economy and banking system even more than expected....“[T]he economy is driven into a deep recession, leading to a further rise in unemployment and making fiscal consolidation all the more difficult,” Mr Anastasiades wrote to the heads of three EU institutions and the International Monetary Fund.“I urge you to review the possibilities in order to determine a viable prospect for Cyprus and its people.”...A senior eurozone official directly involved in the Cypriot talks said EU officials were “puzzled” by the letter...“Essentially, he is asking for a complete reversal of the programme,” the official said, adding that the failure to prepare for the bailout’s impact was partially the fault of Mr Anastasiades’ government...Although the letter does not request it explicitly, Mr Anastasiades is in effect asking for further eurozone loans on top of the existing €10bn sovereign bailout – something specifically ruled out by a German-led group of countries at the time.
No explicit M.A.D. "we'll leave the Euro" threats aside from the implicit view that this is not a viable path for his people...
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