Everyone who lives in Cyprus and who stuffed money in their mattress instead of depositing it in banks – just increased  the value of their assets by up to 10%…

On Friday, late at night after the markets had closed, and alarming decision was reached by the European Union Finance Ministers.  Depositors in Cyprus banks will be forced to give the collective state up to 10% of their bank accounts.  It’s called “a haircut”.   In exchange for their money, people with money in the bank will be given equivalent amounts of potentially worthless bank stock.

Fearing a run from depositors the banks remained closed on Saturday;  Monday is a traditional bank holiday – but they know the storm is coming, so the Cyprotic Cabinet has also declared Tuesday a bank holiday.

The Cypriot cabinet has declared Tuesday a bank holiday, for fear of capital flight, and this may even be stretched to Wednesday, as depositors are certain to withdraw huge sums from the Cypriot banks after the haircut imposed.

Nicosia postponed from Sunday to Monday the tabling in Parliament of the bill including the measures for the Cypriot bailout – including a bank account haircut and a tax hike on interest and corporate earnings – but the European Central Bank insists on a rapid voting because there are already signs a domino effect will follow across European lenders and markets from Monday.

There is genuine fear of market unrest on Monday morning when stocks may crumble in the eurozone and bank accounts in other southern European bank may suffer.

Skai radio reported on Sunday that the Bank of Greece has sent between 4 and 5 billion euros to Cyprus in order to help Cypriot banks respond to cash requirements by their clients.   (link)

Yes, you read that right.   Consider the stupidity; Greece is sending money to Cyprus to bail out the pending run on the banks.   ((((scuse me?))))

SUMMARY:   The financial sh!t is about to hit the proverbial EU fan …cash withdrawals are not allowed for the time being… ATM machines have been disabled.   Along with loans adding up to 10 billion euros from the European Support Mechanism, Cyprus will have to find another 7-7.5 billion euros from privatizations and from a 6.75 percent one-off haircut on all bank accounts with a balance up to 100,000 euros, rising to 9.9 percent on accounts exceeding 100,000 euros… Depositors will get shares of the banks… in return for the capital lost… there is a levy on interest, too, and an increase in the 10 percent corporate tax… Tax on interest will amount to between 20 and 25 percent.

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