EU, Cyprus reach deal on bailout

posted at 8:01 am on March 25, 2013 by Ed Morrissey

The EU avoided a potential fiscal meltdown in the tiny island nation of Cyprus that might have triggered a cascade across Europe in the debt crisis. Instead of giving all depositors a “haircut,” the new plan leaves intact the insured deposits of €100K or less — but everyone else gets the haircut up front:

Cyprus secured a 10 billion euro ($13 billion) package of rescue loans in tense, last-ditch negotiations early Monday, saving the country from a banking system collapse and bankruptcy that could have destabilized the entire euro area.

“We’ve put an end to the uncertainty that has affected Cyprus and the euro area over the past week,” said Jeroen Dijsselbloem, who chairs the meetings of the 17-nation eurozone’s finance ministers.

In return for the bailout, Cyprus must drastically shrink its outsized banking sector, cut its budget, implement structural reforms and privatize state assets, he said. The country’s second-largest bank will be shut down immediately, with all bond holders and people with more than 100,000 euros in their bank accounts there facing significant losses. The measures are likely to deepen the recession in Cyprus and lead to more job losses.

Cypriot officials obviously prefer this to the alternatives, but no one’s high-fiving on the island today:

“It’s not that we won a battle, but we really have avoided a disastrous exit from the eurozone,” said Cyprus’ Finance Minister Michalis Sarris. “A long period of uncertainty and insecurity surrounding the Cyprus economy has ended.”

The eurozone finance ministers accepted the plan, reached after more than 10 hours of negotiations in Brussels between Cypriot officials and the so-called troika of creditors — the International Monetary Fund, the European Commission and the ECB.

CNN followed up with this report earlier in the morning:

So the biggest losers will be the Russians, who tried to pull a fast one on the EU with a Gazprom deal that would have maintained the banking structure that their oligarchs exploit in exchange for Cyprus’ natural-gas rights.  Much of the pain will be felt by those depositors who used Cyprus to launder cash, it seems, but not all of the pain.  The bubble created by that influx of wealth will dissipate, and many ordinary Cypriot businessmen will take a big hit from the confiscation, and then from the loss of demand in the marketplace.

The question becomes this: how long will it take before Cyprus’ version of Beppo Grillo arises to screw up the austerity plan?  Probably not as long as it took in Italy, which may be another reason why the EU and its partners wanted the money up front this time.  Don’t expect the Russians to give up so easily, either.


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Dominoes.

listens2glenn on March 25, 2013 at 8:02 AM

Cyprus.

The gift that keeps on taking.

Electrongod on March 25, 2013 at 8:03 AM

Cyprus.

The gift that keeps on taking.

Electrongod on March 25, 2013 at 8:03 AM

.
That’s in the early running for “thread winner”. : )

listens2glenn on March 25, 2013 at 8:05 AM

Good luck on Monday.

rob verdi on March 25, 2013 at 8:05 AM

Maybe they need a stimulus..
Cash for Clunkers?
New Harleys for their sheriffs?
How about some skylights for their warehouses..

Stimulus is always good in times like these.

Electrongod on March 25, 2013 at 8:06 AM

Shave-And-A-Haircut……….well, you know.

pilamaye on March 25, 2013 at 8:08 AM

A mullet rather than a haircut?

Apt analogy. A mullet by definition is all business in the front and a party in the back. You’ve got to wonder what is going on behind the scenes (particularly within the Russian mob) even as “serious” people are talking austerity and making stupid statements about “A long period of uncertainty and insecurity surrounding the Cyprus economy has ended.” Cyprus got a bailout and without changing some underlying conditions will be as successful as GM in avoiding their ultimate demise.

Happy Nomad on March 25, 2013 at 8:08 AM

Every month we get these “the sky is falling, the sky is falling” stories. The end of Europe, the Euro and western civilization!!!!
All BS.
They always resolve the problem.

Why keep hyping it?

albill on March 25, 2013 at 8:10 AM

Coming to a bank near you someday.

Badger40 on March 25, 2013 at 8:12 AM

“We’ve put an end to the uncertainty that has affected Cyprus and the euro area over the past week,” said Jeroen Dijsselbloem

I don’t know Mr. Dijsselbloem, but if he really thinks the uncertainty in Cyprus is over, I must say, I don’t think very highly of the idiot.

rogaineguy on March 25, 2013 at 8:12 AM

Why keep hyping it?

albill on March 25, 2013 at 8:10 AM

This isn’t a newsworthy thing to you, the confiscation AKA stealing, of people’s money?

Badger40 on March 25, 2013 at 8:13 AM

Happy Nomad on March 25, 2013 at 8:08 AM

The Russian mob.Someone will end up in a pair of cement boots.

docflash on March 25, 2013 at 8:14 AM

albill on March 25, 2013 at 8:10 AM

I’m not sure this resolved any problems souch as the symptoms.

Fenris on March 25, 2013 at 8:15 AM

They always resolve the problem.

albill on March 25, 2013 at 8:10 AM

And how did they resolve this one?

Electrongod on March 25, 2013 at 8:17 AM

Happy Nomad on March 25, 2013 at 8:08 AM

.
The Russian mob. Someone will end up in a pair of cement boots.

docflash on March 25, 2013 at 8:14 AM

.
Could the “Russian mob” get to the Federal Reserve Bank managers?

(just a suggestion)

listens2glenn on March 25, 2013 at 8:22 AM

Could the “Russian mob” get to the Federal Reserve Bank managers?

(just a suggestion)

listens2glenn on March 25, 2013 at 8:22 AM

Alas, the Fed is being run by a rival organized crime ring (aka the Obama administration). The Russians won’t act out of professional courtesy and downright fear that the rat-eared devil would drone their arse should they interfere with the fleecing of the American producer to reward the parasite class.

Happy Nomad on March 25, 2013 at 8:26 AM

Well, I think we can all agree that the EU debt crisis is done now.

At least for this week.

Maybe.

Gatsu on March 25, 2013 at 8:27 AM

The problem with socialism is you eventually run out of other people’s money ~ Margaret Thatcher

Europe hasn’t learned that lesson yet. How long before Americans also realize that “Free stuff” we voted for in 2012 ain’t free? Will we as a nation wake up to that before it is too late? Apparently places like Greece, Cyprus, Spain and Portugal have not.

simkeith on March 25, 2013 at 8:34 AM

Well, I think we can all agree that the EU debt crisis is done now.

At least for this week.

Maybe.

Gatsu on March 25, 2013 at 8:27 AM

Yeah well, I guess we can agree on that if we ignore Spain, Greece, and Italy. You know, other tiny members of the Eurozone with major economic challenges. /

We really ought to set up a pool to guess month/nation of the first country to drop out of the Euro. Then a second pool to guess how many months before the Eurozone is dead. Because once this house of cards starts falling there will be little stopping it all come apart.

My guess. Greece in Aug. End of the Eurozone by next March.

Happy Nomad on March 25, 2013 at 8:37 AM

The EU avoided a potential fiscal meltdown in the tiny island nation of Cyprus that might have triggered a cascade across Europe in the debt crisis.

Today.

BigGator5 on March 25, 2013 at 8:39 AM

Europe hasn’t learned that lesson yet. How long before Americans also realize that “Free stuff” we voted for in 2012 ain’t free? Will we as a nation wake up to that before it is too late?

simkeith on March 25, 2013 at 8:34 AM

I don’t think you understand a fundamental fact. The parasites know that this stuff really isn’t free. They don’t care. So long as sluts like Sandra Fluke get’s her contraception, the gays get their legitimization of SSM, the illegals get their amnesty, the pro-murder crowd can continue killing babies, etc……

So long as they get theirs they don’t give a damn who has to pay the freight so long as it isn’t them. They are greedy, selfish, myopic, whores who don’t deserve to live.

Happy Nomad on March 25, 2013 at 8:40 AM

The Fed is transferring 2-3% per year so that $10,000 cash you have in your mattress will only be worth $7,000-8,000 in 10 years.

Wigglesworth on March 25, 2013 at 8:42 AM

Today.

BigGator5 on March 25, 2013 at 8:39 AM

More like for the next few hours. I don’t think Cyprus is as far out of the woods as they seem to think. Does anybody think that the Russians are going to roll over and eat billions in losses from their accounts?

Happy Nomad on March 25, 2013 at 8:43 AM

Yeah well, I guess we can agree on that if we ignore Spain, Greece, and Italy. You know, other tiny members of the Eurozone with major economic challenges. /

We really ought to set up a pool to guess month/nation of the first country to drop out of the Euro. Then a second pool to guess how many months before the Eurozone is dead. Because once this house of cards starts falling there will be little stopping it all come apart.

My guess. Greece in Aug. End of the Eurozone by next March.

Happy Nomad on March 25, 2013 at 8:37 AM

We joke, but I really get the feeling that the bulk of the EU leadership has been ignoring the PIIGS, dealing with them only when absolutely necessary. “It’s not a crisis until it is!”

While I am not a betting man (horrid luck on that front.) I would agree with the house of cards scenario, the problem with the whole EU/Euro experiment is that they are treating all of these guys equal weight under the currency, and that just does not work when each country keeps its own national interest at heart.

Gatsu on March 25, 2013 at 8:45 AM

I read the Cypriot banks will not open until tomorrow. Any bets on a run? Who would keep their money in a bank there now? Oh wait! You can’t take it all out any more. You’re limited to a certain amount.

That’s a form of theft too.

dogsoldier on March 25, 2013 at 8:51 AM

The US has been eying/setting up basically the same thing for at least 10 years…with a test run of bailing out our Too Big to Fail banks.

Obama flexed his muscle and anger at the famous Switzerland reputation of Bank Secrecy (AKA Bank Privacy), and the Swiss rolled over like a trained pet. Hillary had eyed Homes as a source for funding Gov’t, before the housing collapse. Rumors about the Gov’t taking over or part of 401k’s and other types of retirement accounts have been floating around for a long time also. Voters have already shown support for Communism by electing Obama twice, and Hillary “It Takes a Village” Clinton waits her turn. Own stocks? Well, the U.S. Securities and Exchange Commission (Federal Agency) controls Them.

Too late now…

Karmi on March 25, 2013 at 9:00 AM

Wholesale confiscation of private property and assets, for the good of the state — it’s the socialist way.

farsighted on March 25, 2013 at 9:02 AM

The Russian mob is now using ‘found dead in a bath tub’ as their preferred method of eliminating problems. Ooops, that’s the Russian govt preferred method. My bad. Hard to tell them apart these days. This stim for Cyprus will only be a temporary fix as it sounds as if they have a lot of not free market problems. We’re headed in the same direction, with the same solution. Our debt does matter.

Kissmygrits on March 25, 2013 at 9:03 AM

Every month we get these “the sky is falling, the sky is falling” stories. The end of Europe, the Euro and western civilization!!!!
All BS.
They always resolve the problem.

Why keep hyping it?

albill on March 25, 2013 at 8:10 AM

What problem? /

HiJack on March 25, 2013 at 9:06 AM

There are two possible outcomes for Cyprus – Russians pulling out, and Russians going all-in. None of these is going to be pleasant. However, if Putin has half a brain – and I presume he does, being a tyrant and a former KGB honcho – he’ll place the blame where it belongs, i.e. Brussels and Berlin, and start a round of saber-rattling. Honestly, if a World War III were to erupt between Russia and EU, I’d be hard pressed to choose a side.

Archivarix on March 25, 2013 at 9:09 AM

I’m going to Walmart to get some popcorn, does anybody need anything?

newportmike on March 25, 2013 at 9:31 AM

I’m going to Walmart to get some popcorn, does anybody need anything?

newportmike on March 25, 2013 at 9:31 AM

Yes. A smooth round stick to bite on, and a lot of lubricant. when it spreads, we’ll all need it.

Archivarix on March 25, 2013 at 9:45 AM

cut its budget

Wait, a socialist EU wants a country to cut its budget? It’s almost as if outrageous overspending is seen as a problem. Would never work here.

rbj on March 25, 2013 at 9:51 AM

Psssst. Hey Ed. A mullet IS a haircut. It’s a bad haircut.

IronDioPriest on March 25, 2013 at 10:06 AM

I’m going to Walmart to get some popcorn, does anybody need anything?

newportmike on March 25, 2013 at 9:31 AM

Every box of ammo on the, oh well, never mind.

tom daschle concerned on March 25, 2013 at 10:17 AM

Every month we get these “the sky is falling, the sky is falling” stories. The end of Europe, the Euro and western civilization!!!!
All BS.
They always resolve the problem.

albill on March 25, 2013 at 8:10 AM

Sure they do. Like they did from 1914-1945. Of course, we had to help them “resolve the problem”. We also helped them “resolve the problem” from 1945-1989, the one the USSR posed. There was also a related problem in the late 1940s we helped them resolve with the Marshall Plan. And so on and so forth.

farsighted on March 25, 2013 at 10:38 AM

I heard that the US is involved in the Cyprus deal to punish the Russians who intercepted one of their profitable covert Afgahni drug shipments.

The US also wants the prception that we are untouchable, to continue to prop up the dollar

audiotom on March 25, 2013 at 10:43 AM

I’m going to Walmart to get some popcorn, does anybody need anything?

newportmike on March 25, 2013 at 9:31 AM

Fishing tackle for bluegills. ;]

MelonCollie on March 25, 2013 at 10:45 AM

meanwhile back in the US

media ‘crickets’

audiotom on March 25, 2013 at 10:50 AM

I heard that the US is involved in the Cyprus deal to punish the Russians who intercepted one of their profitable covert Afgahni drug shipments.
audiotom on March 25, 2013 at 10:43 AM

why do you think John Kerry made an unscheduled trip to Afganistan last week.

coincidence perhaps?

audiotom on March 25, 2013 at 10:52 AM

Be very worried! (commenter at the Wapo):

hello dude
6:53 AM PDT
What Cyprus has done is exactly what needs to be done here: tax bank deposits over $100,000, and tax brokerage accounts over $200,000. Tax them at 40%. 80% of the brokerage accounts are held by people who are in the top 5%, so taxing those accounts at 40% will only hurt the rich. And no, there will be no bank runs because folks won’t have anywhere else to put their money – America is still the safest on earth & too big to fail.

Do it now because it’s the right thing to do………

This is the mentality of our youth, the new socialist progressive, who understands nothing about economics, and believes “hurting the rich” will not have any effect on the poor or the middle class. That’s right, let’s confiscate 40% of depositor’s earnings and expect no impact on the whole financial system. My lord, is this our future?

Rovin on March 25, 2013 at 11:15 AM

My lord, is this our future?

Rovin on March 25, 2013 at 11:15 AM

I’m afraid so. That’s been the overall trend for about a century.

farsighted on March 25, 2013 at 11:22 AM

My lord, is this our future?

Rovin on March 25, 2013 at 11:15 AM

Him and libteraltarian loons like ZachV who treat the Bible as toilet paper and think morals can be pulled out of a hat.

People like him are the reason the Puritans were religious to the point of theocratic socialism at first. They didn’t want their children growing up to be rootless fools with the IQ of a cabbage and subscribing to whatever loonery seemed right to them.

MelonCollie on March 25, 2013 at 12:14 PM

“Haircut with a shovel” ready project.

anikol on March 25, 2013 at 12:21 PM

Stealing of the stolen money will not be tolerated :)

anikol on March 25, 2013 at 12:21 PM

Well you know, because there comes a time when apparently you saved all the money you’ll ever need. 100000 euros seems like enough for anyone to live off of for 20,heck 30 years. / s

can_con on March 25, 2013 at 12:44 PM

… mullet …

That word was new to me, so I looked it up.

3. a sucker, especially of the genus Moxostoma.

’nuff said

FlatlanderByTheLake on March 25, 2013 at 12:59 PM

My lord, is this our future?

Rovin on March 25, 2013 at 11:15 AM

Yes. The progs have owned K-12 for a generation. This is what they teach.

slickwillie2001 on March 25, 2013 at 1:06 PM

Now Germany has broken another taboo, forcing Cyprus to siphon money out of bank accounts to earn its 10 billion-euro ($13 billion) rescue. The markets’ snap reaction was the same, turning the Mediterranean island into the latest threat to the stability of the euro area.

It looks like a botched and improvised job, and unprofessional — groping in the dark without much consideration of what sort of signal it sends,” said Alessandro Leipold, a former International Monetary Fund official who is now chief economist at the Lisbon Council research group in Brussels. “That’s no way to really run a crisis.”

Schadenfreude on March 25, 2013 at 1:18 PM

My lord, is this our future?

Rovin on March 25, 2013 at 11:15 AM

Nah, it’ll be much worse.

Schadenfreude on March 25, 2013 at 1:19 PM

albill on March 25, 2013 at 8:10 AM

What a dummy you are. You sound as ‘sharp’ as Al Sharpton.

Schadenfreude on March 25, 2013 at 1:22 PM

Why have we not threatened mortal action yet?

tom daschle concerned on March 25, 2013 at 1:29 PM

I doubt there will be 1/10 the deposits in Cypriot banks a month from now as burned folk get what is left of their money out of the country.

How can one manage a modern state without a banking system?

Cyprus killed theirs.

Who will be next.

JIMV on March 25, 2013 at 1:37 PM

Every month we get these “the sky is falling, the sky is falling” stories. The end of Europe, the Euro and western civilization!!!!
All BS.
They always resolve the problem.

Why keep hyping it?

albill on March 25, 2013 at 8:10 AM

Slapping a Band-Aid on the economic cancer followed by the EU proclaiming ‘all is well’ does not ‘resolve’ anything except the question as to how economically illiterate the folk in the EU actually are.

JIMV on March 25, 2013 at 1:39 PM

Why keep hyping it?

albill on March 25, 2013 at 8:10 AM

This isn’t a newsworthy thing to you, the confiscation AKA stealing, of people’s money?

Badger40 on March 25, 2013 at 8:13 AM

Hey, now, the confiscation is not of ‘people’s money’, but mainly of laundered Russian mob money, so why do yo even care? Most of that money was not made legally anyways.. Besides, I have no sympathy for any of the European countries, they all run big governments, at some point their citizenry have to accept that the govts will ‘steal’ their money to cover the deficits that they run because people want the govt to be involved in all aspects of their lives…so your sympathy is wrongly placed…they/the European folks won’t learn their lesson until their personal pockets are hit…I was born and raised there and I know all too well that mindset.

jimver on March 25, 2013 at 1:54 PM

Slapping a Band-Aid on the economic cancer followed by the EU proclaiming ‘all is well’ does not ‘resolve’ anything except the question as to how economically illiterate the folk in the EU actually are.

JIMV on March 25, 2013 at 1:39 PM

Very, mostly brainwashed by the EU propaganda…

jimver on March 25, 2013 at 1:57 PM

When the Cypriot economy collapses, anyone with money in a bank or assets held by any financial institution will remove their cash or assets. They won’t want to, but if the alternative is to risk it being stolen….

dogsoldier on March 25, 2013 at 2:37 PM

“….so your sympathy is wrongly placed…they/the European folks won’t learn their lesson until their personal pockets are hit…I was born and raised there and I know all too well that mindset.”

jimver on March 25, 2013 at 1:54 PM

Just in case you don’t “get it” jimver, the worry is that the U.S. government will attempt these tactics long before the “lesson” is learned over there. Given Obama’s and our liberal progressive policies that have unfolded just in the past four years, can we positively say “it won’t happen here”?

Rovin on March 25, 2013 at 4:30 PM

To put this in very short terms, the EU is using the Cypriot banks’ overexposure to the Greek crisis to get the Russians to fund the Eurozone bailouts (oh, and also eliminate the Euro-denominated “easy” banking system that Cyprus used to be better than average).

Steve Eggleston on March 25, 2013 at 4:35 PM

I suppose I should mention the reason the Russians adopted Cypriot banks – the Russian banking system is so corrupt that not even the gangsters or government entities (though I may be repeating myself) trust it.

Steve Eggleston on March 25, 2013 at 4:41 PM

You just gotta know somewhere in the WH, Obama is leaning over VJ asking “can we do this too VJ?•

can_con on March 25, 2013 at 4:55 PM

You just gotta know somewhere in the WH, Obama is leaning over VJ asking “can we do this too VJ?•

can_con on March 25, 2013 at 4:55 PM

She leans over and pats him on the head and says “yes Barry, you can do anything because you are so wonderful”. He smiles and goes back to doing his brackets.

slickwillie2001 on March 25, 2013 at 6:57 PM