Well, three days into spring and I cannot not write about what is going on in Cyprus.
A rescue-plan which consists of simply taking a cut of people’s savings…. and not a small cut either. When I first heard this, it was on the French main channel’s evening news. Though they did talk about it for quite a while, they only wanted to talk about the “noise” it was starting to create and did not even get to the key piece of information that would be the obvious question for any professional journalist to raise: how much? Well, the first plan was just under 7% from all deposits and 9.9% for the higher amounts!!
Wow, that was a real bomb. The riot police in Cyprus had to deal with some pretty upset people, among which bank employees who had heard the rumour that their bank would be closed in a few hours and had hit the streets to protest. And those protesters are only warming up.
That first plan was rejected by parliament (yeah, big surprise!) and now they have until tomorrow to come up with something different. Guess what that now is: 20% on deposits at one of the nation’s biggest banks (Bank of Cyprus) and 4% on all uninsured deposits in all banks, including foreign ones. Yes, you read that right, some might get 24% shaved off their deposits.
Now that is quite something. So on the theory side, the people who were dumb enough to save money and even more foolish to deposit it in a bank will have to pay: UNBELIEVABLE! This is “le bouquet”…. really way over the top! Historically, quite some governments simply confiscated the savings of their people in the past, but this is going to be a historic precedent of “substantial” consequences.
On the practical side, a lot of that money in Cyprus is let’s say… shady. It is rumored that there has been quite a flurry of meetings at the highest level at the Kremlin over the past week (official Russian deposits figure in Cyprus is around USD 30 billion). And no less than all-mighty Gazprom has jumped in with a proposal to pump in some money. For the record it would be through its bank, officially majority-owned by their pension fund (Gazfond) but managed under mandate by a Saint-Petersburg bank co-founded by friends of Vladimir Putin. No further comment!
Hmmm, the mess this will create among Russian oligarchs is going to be really interesting to follow. Many legitimate business people will get hurt as well, but the implications such a move will have are potentially enormous. And some will not forgive and put their considerable means into action to throw oil on the fire…
Talking about Russians and their ways to settle scores, I shall slip-in the fact that Boris Berezovsky was found dead in the UK yesterday. Police qualifying it as “unexplained” at this moment. Let’s see what the autopsy will bring up….
Now what will be the next ideas to find money? God knows… Maybe we shall soon be talking about the “Savers’ Spring of 2013”, where people who have money saved anywhere will take to the streets and trigger some kind of revolution…. yeah, dream on!
This is certainly the beginning of something…. and does not smell like good news if you want my opinion!
Hold on tight and watch the next elections…