Cyprus President Justifies 40 to 100% "Haircut" as "Best Interest of the Cyprus People and EU"

Rejoyce! Cyprus is saved!

From what, you may ask?

Who cares? They will take 40% of uninsured (over 100,000 euros) deposits at one bank, and take 100% of such deposits at another bank so that they can pay international creditors, and say "it's for the people of Cyprus".

It's for the people of Cyprus but the Cypriot Parliament doesn't need to vote, says Germany's fin min Wolfgang Schaeuble.

Stock market futures jump on this merry news of yet another save for the large financial institutions in Europe and the US.

(Photo is Cyprus President Nicos Anastasiades emerging from the meeting, from Nikkei.)

From Bloomberg News (3/24/2013):

Cyprus Said to Reach Tentative Deal to Avert Default

Cyprus agreed to the outlines of an international bailout, paving the way for 10 billion euros ($13 billion) of emergency loans and eliminating the threat of default.

The accord between Cyprus and the “troika” representing international lenders was reached in overnight talks in Brussels and ratified by finance ministers from the 17-nation euro area.

“It’s in best interest of the Cyprus people and the European Union,” Cyprus President Nicos Anastasiades told reporters.

...The agreement calls for Cyprus Popular Bank Pcl (CPB) to be shut down and split. The Bank of Cyprus Plc would take over the viable assets of the failed bank along with 9 billion euros in central bank-provided emergency liquidity aid, according to three EU officials who asked not to be named because talks are ongoing.

Deposits below the EU deposit-guarantee ceiling of 100,000 euros will be protected, and a loss of no more than 40 percent will be imposed on uninsured depositors at the Bank of Cyprus, two EU officials said. Uninsured depositors at Cyprus Popular would largely be wiped out, two other officials said.

(Full article at the link)

Much more and with appropriate sarcasm at Zero Hedge (who still shows me ANA's horrendous "maid" with contact-lens-augmented blank eyes).

I wonder how Cyprus residents react to this wonderful news. Since most of their savings are guaranteed (under 100,000 euro) and it will be mostly Russians who will get wiped out, will they breathe a sigh of relief?

Or will some of them recall what one Nazi camp survivor said long time ago?

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Cyprus Utterly Rejects EU Demand for Deposit Haircut, ECB Says It Will Still Help "Within Certain Limits"

Whatever that means. The stock market algos liked this help "within certain limits", and Dow Jones Industrial ended up 3 points up for the day.

The amended "deposit tax" would have exempted accounts with less than 20,000 euros but taken money from all else. (More at Reuters.)

Cypriot Parliament vote on "deposit tax" (AP, 3/19/2013):

In favor: Zero
Against: 36
Abstentions: 19

Abstentions were from the ruling party.

ECB's comment (Reuters, 3/19/2013):

After Cyprus vote, ECB says ready to offer liquidity within rules

BERLIN (Reuters) - The European Central Bank said on Tuesday after Cypriot lawmakers overwhelmingly rejected a key element of a proposed bailout that it was in contact with its IMF and EU partners and remained committed to providing liquidity within certain limits.

"The ECB takes note of the decision of the Cypriot parliament and is in contact with its troika partners," the bank said in a statement. "The ECB reaffirms its commitment to provide liquidity as needed within the existing rules.

By the way, I think I know now why the reporting on the deposit confiscation in Cyprus has been very much subdued and equivocal in Japan. Japan is about the only country in the world that instituted the one-off, much more punitively progressive tax on wealth including bank deposits successfully, right after the World War II under the US occupation (GHQ) in 1946.

Anyone with the accumulated wealth (not necessarily in cash, but in goods and real properties) of 100,000 yen (probably today's 100 million yen, or about US$1.05 million) got 10% of it taken by the government. Unlike Cyprus, it was progressive, and the highest bracket was 90%. The 90% confiscation of one's wealth was justified by GHQ as "punishment" for profiting from the war. It didn't matter to them that most people whose wealth were confiscated had nothing to do with profiting from the war.

Roosevelt "New Dealers" in GHQ must have felt very righteous doing it, who went on to take away farmland from the large land-owning farmers in 1947 for the sake of "fairness". (Never mind that not all farmers wanted to be the land-owning farmers...)

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