March 26. Cyprus as “template”. Watch out below….
–A couple of quotes: “What we’ve done last night is what I call pushing back the risks,” said Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers. From Moody’s: “the negotiations send messages to depositors and investors that will undermine the resilience of the euro area financial system to future shocks.”
–Dijsselbloem’s initial comments sent Italian stocks and peripheral banks and the euro plunging: “If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’. If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders”. However, the comments were later retracted. When he said “Cyprus was a template” what he meant to say is that “Corzine is the template”, in that it has become socially acceptable to use depositor money to cover losses on sovereign bonds. Bloomberg reports this morning that BRICs plan a New Bank to bypass the World Bank and IMF. I guess they don’t feel comfortable with the current template.
–ZeroHedge ran a piece yesterday (citing Reuters) indicating that Russians still had access to funds in Cyprus Banks during the bank holiday: “No one knows exactly how much money has left Cyprus’ banks, or where it has gone. The two banks at the centre of the crisis – Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus – have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia’s Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks’ largest depositors.” Perhaps that’s why the Cypriot banks remain closed. Total protonic reversal (Dr Ray Stantz).
http://www.zerohedge.com/news/2013-03-25/have-russians-already-quietly-withdrawn-all-their-cash-cyprus
–JGB’s (ten yr) at new low of only 54 bps today.
–Today’s US news includes Durables expected +3.5%, New Home Sales at 425k, and Consumer Confidence.
