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The Cyprus Haircut: Here’s What You Need to Know

Mar. 18, 2013 9:45pm Becket Adams

Cypriots protest the proposed EU ‘haircut.’ (Getty Images”.

In response to backlash over a €10 billion deal that would bailout its banks and impose a financial transaction tax on all depositors, the Cypriot government on Monday postponed a vote to finalize the package until Tuesday, giving itself a little more time to amend the agreement.

So let’s go over some of the amendments that have been suggested by EU finance minsters and Cyprus’ leaders.

First, the most controversial part of the original bailout deal included a one-off tax of 6.75 percent for those with less than €100,000 in the bank. For those with more than €100,000, the levy would be about 10 percent.

However, although many in Europe argue in favor of a tax on the “ultra-wealthy,” pretty much everyone balked at the idea of levying a tax on small-time depositors.

“If Cyprus decides to roll back that provision, it could soften the blow domestically and reverse some of the fears that depositors in other peripheral countries could be subjected to the same treatment in the future,” Business Insider’s Matthew Boesler notes.

Indeed, because it’s widely believed that an amendment protecting small-time depositors from heavy levies will silence backlash against the deal, EU leaders have suggested that the one-off tax for people with less than €100,000 in the bank be revised to three percent, according to the BBC.

And this is where we get into the second proposed amendment: Increasing the levy on depositors with more than €100,000.

Euro zone finance ministers have suggested that depositors with €100K — €500K in the bank pay a 10 percent levy while those with more than €500K pay a one-off tax of 15.6 percent.

But here’s the thing: The €100K and above crowd is heavily populated by Russians. Lots of them. In fact, with roughly $31 billion in the country’s banks, Russian banks and businesses account for nearly half of all Cypriot deposits, according to conservative estimates by the Moody’s rating firm.

Russian President Vladimir Putin. (Getty Images).

So, yes, a 10 — 15.6 percent levy on major depositors would go directly for Russian cash. Needless to say, a one-off tax on Russian money probably won’t go over very well in Mother Russia.

“There is no question but upon whom the decision by the Cypriot government … is going to fall most heavily: Russian oligarchs; Russian government officials and Russian criminals,” writes the economist Dennis Gartman in his latest note.

“Cyprus has been their own private Switzerland for many years. Legal and non-legal Russian cash has swamped the banking system in Cyprus since the early 90’s,” he adds. “The beauty of the island; the ease of admission too and exit from the island via boat or plane; the secrecy of the banking laws; the warm Mediterranean climate and the ease of which Cypriot authorities could be bribed and bought all worked to make Cyprus the center of Russian capital flight.”

His note continues:

The Russians… legal and illegal… loved Cyprus for the reasons noted above, not the least of which was the tiny 4% corporate tax rate there. Who would not like that rate? It attracted money relentlessly, with the Russians leading the way. Criminal money especially was attracted to the secrecy laws, sending money to the island to have it “washed” and then either left there on deposit, or returned to other banking centers for “investment” abroad, but “washed” thoroughly and made nearly impossible to be followed and tracked. It was an enterprise that worked to the benefit of the Cypriot government and to the Russians, despite the comment by the new President, Mr. Anastasiades, that Cyprus was and is “not complacent about money laundering.

[…]

One could only laugh as such a comment; of course Cyprus was complacent about laundering. To think otherwise was and is naïve. Ah, but now you’ve stolen Russia money… or soon shall depending upon the vote in the Cypriot parliament… and that is dangerous… very. One does not steal Russian mafia money and get away with it. There are fewer statements of fact that are more certain, more factual, more unyielding than this statement. Russian Mafia figures do not take well to being stolen from, and they take even less well to be made fools of. We see no reason to mince words at this point: People will be hurt over this decision; some shall be killed.”

The Cypriot government will move tomorrow to finalize the bailout deal. We’ll see where things go from there.

Glenn Beck discussed the issue during his show on TheBlaze TV Monday. Watch below:

–

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Featured image Getty Images. This post has been updated.

In CONTROL, Glenn Beck presents a passionate, fact-based case for guns that reveals why gun control isn’t really about controlling guns at all; it’s about controlling us. Find out more HERE.

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Comments (77)

zgomer
Posted on March 18, 2013 at 11:33pm
I hope the Russians kick the cyprus behinds!

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- nzkiwi
  Posted on March 19, 2013 at 4:15am
  They won’t, Zgomer. It is an amusing idea to jab the politicians with but the Russian mafia, for all their vicious ruthlessness, are not stupid.
  
  In the same way that the American mafia did not generally harm even the likes of Dewey, who had made organised crime his special project, the Russian mafia will not kill Cypriot politicians. They are better aware than said politicians of the law of unintended consequences. They know that to attempt such an action will snap the glare of the international spotlight, currently on the politicians, onto themselves. That would be very bad for business as it would kill the goose that is currently laying the golden eggs.
  
  That is not to say that they won’t try other means against the weaker political links. Generally, though, I think that they will just sit back and let the Russian politicians, who doubtless also have money there, do their dirty work for them.
  
  What the Cypriots should do is toss this imbecilic idea, pushed on them by EU technocrats, out the nearest window. Attempting to put a shine on this turd, as they are now doing, is not helping at all and is likely making things worse.
  
  Having banks full of money is an asset to their economy, if they would but realise it, and they are listening to people who have their own agenda and care not a jot for Cyprus.
  
  They should act boldly, decisively, and entirely in their own interests.
  
  Report this comment
- redfish52
  Posted on March 19, 2013 at 7:50am
  I’m sure Vlad had to give his buy in before this was even considered.
  
  Report this comment
- Frederick_Douglass_Republican
  Posted on March 19, 2013 at 7:57am
  Look to the increasingly communist EU. The EU is overstepping its bounds and has been for many years. The EU even has its tentacles in USA.
  
  Report this comment
- kenboo1
  Posted on March 19, 2013 at 10:20am
  If we take all the money out of the banks, the Fed will just print more to replace it adding to the inflationary pressures already being applied. Banks wont be stressed… Only when money is no longer accepted will the fed be powerless…
  
  If we ever needed a strong senate unchained from the parties it is now… http://www.repeal17.net.
  
  Report this comment
- Silvertruth
  Posted on March 19, 2013 at 10:41am
  The mafia and other organized crime would take the hit as a cost of doing business. They will not go after politicians. The military could just take them out on suspicion and the mafia cannot stand against a military force.
  
  Organized crime understands the pecking order. They are masters of it.
  
  Report this comment
- woodyee
  Posted on March 19, 2013 at 12:08pm
  What they do to depositors, REGARDLESS of legal status, will set a precedent that WILL apply to ALL.
  
  They can perfume it all they want; sooner or later they’ll “need” to raid the accounts again, and that time, no one will be spared. It is the way of thieving governments, like ours.
  
  I can hardly wait for the banks to open; they can wait until next MONTH, and it won’t prevent the giant sucking of money that’s going to occur there, so fast, as to create a vacuum which will make it unsafe to wear toupee’s…
  
  Report this comment
Jake Dog2
Posted on March 18, 2013 at 11:27pm
There is a bad moon raising!

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AMERICA4EVER
Posted on March 18, 2013 at 11:16pm
Here is some info on gun laws in Cyprus. It doesn’t look good for them.
http://www.gunpolicy.org/firearms/region/cyprus

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AMERICA4EVER
Posted on March 18, 2013 at 11:12pm
@LAKEHARTWELLSAILOR
Yes, they are not well armed due to very restrictive gun laws.

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- 2ndAmdmt
  Posted on March 18, 2013 at 11:42pm
  It’s more than 1 gun for every 3 people and that is probably just known/registered guns. They rank 6th for rate of ownership/100 civilians out of 179 countries. Not too bad.
  
  Report this comment
mexneck
Posted on March 18, 2013 at 11:10pm
There’s going to be a lot of barrels filled with cement in the waters around Cyprus if their guberment goes through with it.

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dublinthewagons
Posted on March 18, 2013 at 11:00pm
Just think about the gold that belongs to Germany, the Netherlands a other countries that we have squandered away and now they want it back. We are in the same boat with Cyprus.

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13th Imam
Posted on March 18, 2013 at 10:43pm
The place is a small rock in the Med Sea. They could raise the bank fees and have enough left over for a case of bottle rockets. This is just another money grab, and Vlad isn’t gonna like it. Badda Bing

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- Cemoto78
  Posted on March 18, 2013 at 11:09pm
  What is up with all these countries wanting to take more and more money from the wealthy? Seems the Obama plan has spread worldwide. Excluding those who have made their fortune from nefarious means, I guess being successful in this day and age from working hard, saving, investing, are just foolish when lazy welfare entitlement clowns believe it’s really their money you have been making.
  
  Report this comment
P.Tfamily
Posted on March 18, 2013 at 10:39pm
Take Glens advice, but it is not enough. You can make alot of money helping people
http://www.youtube.com/watch?v=9MyDd1hPDtw&feature=youtu.be

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The_Fifth_Column
Posted on March 18, 2013 at 10:30pm
This is going to get nasty, very nasty! How in the world can you call something like this a tax? You “tax” the public to bail out two banks. You cant call this anything but thievery, any way you slice it. The Russians have approximately $31 Billion in deposits there. They will lose somewhere in the neighborhood of $310 to $465 Million Dollars in this theft, depending on the percentage they decide to steal.
The Russian Government, let alone the Russian Mob, are not going to take this laying down. This sort of Horse**** starts wars. I wouldn’t blame then a bit.

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- LakeHartwellSailor
  Posted on March 18, 2013 at 10:35pm
  Coming to a country VERY near you…actually, you may be standing on it right now.
  
  Report this comment
- zenjak
  Posted on March 18, 2013 at 10:40pm
  Russian Mafia vs. EU….I have to root for the mafioskis on this one. They’re less corrupt and dangerous.
  
  Report this comment
- nzkiwi
  Posted on March 19, 2013 at 4:17am
  That’s an amusing observation, Zenjak, and probably not too far from the truth…
  
  Report this comment
- Cogent1325
  Posted on March 19, 2013 at 10:44am
  The only reason this is getting so much attention is because it is so blatant. Don’t you realize the same effect has been happening since 1913 in the US due to inflation and money printing by the Federal Reserve? It’s called the law of supply and demand. When the federal reserve prints money it dilutes the total supply thus reducing the value of the dollar overall. This is why a gallon of gas used to cost 4 cents and today it costs around $4.00. Inflation is NOT normal OR necessary. All it does is make citizens poorer by extracting value from incomes and savings accounts.
  
  Also, with the latest QE1, QE2 and QE Unlimited (quantitative easing a.k.a. printing tons of money) this has been increasing at alarming rates. The central bank of the US is STEALING YOUR SAVINGS and DILUTING YOUR SALARY. Don’t you get it? Wake up America!
  
  Report this comment
dublinthewagons
Posted on March 18, 2013 at 10:29pm
Russian Mafia will handle cypress banking & political problems.
Who cares. Our polititians will meet with like endings. Who cares.
Not i

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- LakeHartwellSailor
  Posted on March 18, 2013 at 10:36pm
  As you put your fingers in your ears and say out loud, “LALALALLALLALAALLALALALALALLALALALALALALLALA”
  
  You don’t think ahead alot do you?
  
  Report this comment
- dublinthewagons
  Posted on March 18, 2013 at 10:49pm
  Lake: Oh yes I have. have you. This has been coming for years while the sheep sleep.
  I am prepared.
  
  Report this comment
Whatmeworry-never
Posted on March 18, 2013 at 10:28pm
Coming soon to your bank. Crappy thing is doing it in secret the closing the banks, purely criminal.

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angeleyes63
Posted on March 18, 2013 at 10:28pm
It won’t be long until it arrives here. Hold on it’s going to be a bumpy ride

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- dublinthewagons
  Posted on March 18, 2013 at 10:35pm
  Just a little bump in the road for Barry. Lol
  
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TOPOFTHEGAME
Posted on March 18, 2013 at 10:26pm
Do any of you remember when the 65 year old president of the IMF (can’t think of his name) came from Europe for a IMF meeting in New Yorka few years ago. He was first charged with raping a hotel maid, but later acquitted of that rape. He had to resign from the IMF because of the pending charges. Christine Legarde from Paris France has degrees in Pol Science and a law degree 1974 from Paris France. She first worked for Congr. Wm Cohen and in 1981 went on to Chicago law firm and worked in the law offices of Baker-McKenzie. The point for all of the above is our pRESIDENT IN CHIEF ( not many people know her background) appointed Christine LeGarde as head of the IMF from Paris France (no connections) and knew her well enough to help her lead the NWO crowd. I believe all of the above was done to put Le Garde in help destroy our money system in the world. She doing a good job of it it’s starting in Cypress

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- LEFT_NY_4_GOOD
  Posted on March 18, 2013 at 10:56pm
  B i n g o
  
  Report this comment
- fedlibertarian
  Posted on March 19, 2013 at 1:48am
  nice
  
  Report this comment
sta
Posted on March 18, 2013 at 10:24pm
So does anyone know if electronic transfers still worked?
How about Paypal type payments? Those are supposed to be instant transfers.

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- StandingOnMyHead
  Posted on March 18, 2013 at 11:22pm
  According to earlier reports, everything has been frozen until they vote on this, hence the “bank holiday”, they are not allowing any kind of transfers.
  
  Report this comment
wordsofwisdom
Posted on March 18, 2013 at 10:22pm
This is how world events start. One stupid policy that starts a landslide & next thing you know is we are in world wide insanity that eventually leads to killing & destruction. This could be the shot heard around the world that is the beginning of the “The End Times” http://youtu.be/vgDkznPS4zI

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- soybomb315_II
  Posted on March 18, 2013 at 10:44pm
  yea, seems like it is always a shot or someone lighting themselves on fire that starts something crazy
  
  Report this comment
Snowleopard {gallery of cat folks}
Posted on March 18, 2013 at 10:20pm
I think Cyprus may undergo a revolution in short order against its own government.

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- dublinthewagons
  Posted on March 18, 2013 at 10:33pm
  Correct snow. Our polititians are too stupid to take heed. Let them eat cake.
  
  Report this comment
Beachmastermax
Posted on March 18, 2013 at 10:15pm
Cyprus is borrowing $13 billion, next week the Russians pull out $31 billion, the week after that the hunters arrive.

Yeah, this is going to go well.

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Top Hat
Posted on March 18, 2013 at 10:09pm
Glenn, here is the only story you need to know: Banking cabal steals money from taxpayers, gives to bankers! Government supports the bankers and the Government. When threatened, Government protects itself and the bankers.

US Version: Corzine steals 1.8 Billion, US Government (our Non-Justice Department rules that a clients cash in accounts no longer belongs to the client/customer, it belongs to the bank/investment company. In reality, no different.

Yes, there are other stories, but this is the most powerful

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- rickc34
  Posted on March 18, 2013 at 10:17pm
  Stolen Russian Mafia money? Hmmm …Obama did it…what are you going to do to him?
  
  Report this comment
soybomb315_II
Posted on March 18, 2013 at 10:08pm
bailouts are hell….we havent even felt ours yet

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- The_Fifth_Column
  Posted on March 18, 2013 at 10:39pm
  Bailouts with taxpayer money is pretty bad, but this bailout is with bank private deposits from all over Europe as well as the US. It wont be paid back. It’s just free money to two banks.
  
  Report this comment
Cavallo
Posted on March 18, 2013 at 10:03pm
I wonder how many bureaucrat’s families will end up sleeping with the fishes when he Russian Mob retaliates? Also, the article doesn’t say if they shut down electronic transfers, or froze the accounts. Even when my bank is closed it doesn’t stop me from making an electronic debit.

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- AMERICA4EVER
  Posted on March 18, 2013 at 10:51pm
  @WFO
  I looked at Cyprus gun laws and they are very restrictive. It doesn’t look like the population there will have much recourse. Probably will be the Russians. Another reason our government wants to take any weapon that would level the playing field.
  
  Report this comment
- The_Fifth_Column
  Posted on March 18, 2013 at 10:57pm
  It was reported that the banks set aside the money from each account so transfers of the so called tax didn’t happen. I don’t know about the balance remaining.
  
  Report this comment
BlackCrow
Posted on March 18, 2013 at 9:56pm
Well this time if the Russians roll through the Fulda gap they will have good reason. It had been 70 years since there has been a war in Europe, seems like they are over due. But this time let them hash it out., we have other fish to fry.

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- Sgt Lamb
  Posted on March 19, 2013 at 6:53pm
  and the 11th ACR isn’t there to even, slow them down………………..
  
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PoliticallyRightUs.Com
Posted on March 18, 2013 at 9:54pm
This is THEFT plane and simple!!!

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- missdagnytaggart
  Posted on March 18, 2013 at 10:02pm
  How long will it be before this happens to us?
  
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Cavallo
Posted on March 18, 2013 at 9:52pm
So what happens to Cyprus WHEN all the Russian money goes to someplace in the Carribean? Would you keep your money there after they rape 10% of it?

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- sta
  Posted on March 18, 2013 at 10:23pm
  Belize!
  
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Istandalone
Posted on March 18, 2013 at 9:52pm
“And while many in Europe argue in favor of a tax on the “ultra-wealthy,” pretty much everyone balked at the idea of levying a tax on small-time depositors.”

Yeah, tax the rich but not the sort-of rich. Bloody hypocrites!

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LakeHartwellSailor
Posted on March 18, 2013 at 9:50pm
This is like watching preview trailers of movies to come out soon. Cyprus…then perhaps Greece…..maybe a few more European countries….but mark my words, the US will follow given our current trajectory.

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- neverending
  Posted on March 18, 2013 at 9:56pm
  Couldn’t agree more.
  
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- LakeHartwellSailor
  Posted on March 18, 2013 at 10:33pm
  I was doing some rudimentary searches, but really didn’t find a clear cut answer. Does anyone know if the citizens of Cyprus are relatively unarmed?
  
  Report this comment
- FightingBear
  Posted on March 18, 2013 at 10:54pm
  The US will not go after bank accounts …they will go after 401K’s.
  
  With the stiff penalties (10% + Income taxes on the money you pull out) for early withdrawal from a 401K, you will have the option to either let the Feds take 10% off the top, or loose 10% + Income Tax on the whole shebang to close the 401K and move the money elsewhere.
  
  Either way they’ve got you!
  
  Given the state of the economy…I suspect there is more to be had by attacking the 401K’s as opposed to the actual individual bank accounts of a population who largely live paycheck to paycheck on credit.
  
  Report this comment

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