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Business

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.

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Comments (77)

teapartyconservatism
Posted on March 21, 2013 at 6:42pm
Israeli President Believes Obama Would Order Attack on Iran if Necessary

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Joblo
Posted on March 21, 2013 at 3:52pm
I really would like Glenn Beck to speak about this link. This is becoming serious

http://canadafreepress.com/index.php/article/53842

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Airtranman
Posted on March 19, 2013 at 9:08pm
******* off Russian mobsters. Only thing worse is stealing their money. Hope the Cypriot officials who will be implementing this suicide wish : (A) personally invest in Kevlar. (B) update their life insurance policies….to the max. Death benefit allowed under their policies. (C) tell their wives and children they love them EVERY day before they leave home…..possibly for the last time. Personally, I’m rooting for the Rooskies.

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stloocardsfan
Posted on March 19, 2013 at 4:16pm
Jay Carney declined to say anything negative about the confiscation of private money. Be ready to get yours here in America.

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Ruckus_Tom
Posted on March 19, 2013 at 11:30am
Cypriot and EU officials implementing this better have some taste testers. A little polonium-210 does not do a body good.

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OniKaze
Posted on March 19, 2013 at 10:28am
I posted this in another article… But it also applies to this story… I may be wrong, but think about this…..

When will this farce come to an end?? When will the people of the U.S. wake up and realize that our lives are NOT controlled by the whim’s of Washington D.C…. What they are trying in Cyprus will be tried here (they did it before in the 30′s with the Mass Gold collection of the U.S. government) once the government “thinks” it has most of the guns that would be used to resist…

Simple plan..

1. Wreck the economy. (Check)
2. Make the people desire “Change”. (Check)
3. Wreck the Economy further while making it look like progress. (Check)
4. Increase Public unrest. (Check)
5. Confiscate or Bans Weapons. (In Process)
6. Close the Boarders from people leaving the country, making them prisoners in their own land. (Just wait…)
7. Wealth Confiscation. (Cyprus anyone?? That is a test to see if they can do it here…)
8. Wealth redistribution to those who the government favors. (They have been beating this drum for years)
9. Once massive public unrest takes firm hold, Change from Democratic Republic to a police / Fascist State. (End Game…)

Who doesn’t see this coming?? From what I can tell, they (The string pullers) are about half-way to what they want… I will keep my guns.. When they come for my money and possessions, I will need it..

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JoeSix-Pack
Posted on March 19, 2013 at 9:08am
I’ll bet they want to think about it. No need to “Pass this so that YOU can find out what is in it”?

Between the resistance at home and abroad about taxing bank deposits like this and the Russian connection, I am surprised that this has gone this far. I will be surprised even more if they go through with it.

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VetMike
Posted on March 19, 2013 at 8:44am
Dig the hole you are standing in then demand someone else get you out. When did bad decisions and poor planning on your part become an emergency?

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BehindBlueEyes
Posted on March 19, 2013 at 7:59am
Its not nice to fool mother Russia. If this goes through there will be bodies everywhere.
It makes no sense. They are going to destroy themselves and their banking industry. Who in their right mind is going to trust banks with their money?

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NoMoMrNiceGuy
Posted on March 19, 2013 at 7:59am
So let’s do some math.

Population  828,000
Population above 18  579,600

If Russia’s 31 Billion according to the story is 50% of the deposits then there is a safe assumption that the total bank deposits are 62 Billion.

Here we have to make a larger assumption. How many more are above 100k? Let’s just say 50% of the deposits are greater than 100k
At a 10% levy against them that would be 3.1 billion

If the remaining 50% are then taxed at 6.5% then the levy would be 2 billion.

So, let me get this straight. The EU and the IMF are LENDING them 10 Billion and demanding 5 billion be taken from the people and given to the EU and IMF.
This is then reducing the EU and IMF’s risk to 5 Billion and strapping the people with not only a 10 Billion payback but the loss of their 5 billion to boot

Sounds fair to me.

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P4cooler
Posted on March 19, 2013 at 7:03am
Obama always uses the liberal words “everyone needs to pay their fair share”. Obama and the states ts love the idea of nationalizing our 401K s. That’s the same as Cyprus stealing our hard earned money. The most gentle way I can tell to Obama and his Democrats is….Go To HELL! …. put that in your NSA data base

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ObserverOnTheHill
Posted on March 19, 2013 at 6:25am
Ah yes, the “banksters” are at it again. Blow up the system you developed and make the hard working savers pay. Maybe the average person is too afraid to take action but I don’t believe the Russian mob will be.

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PAUL GULLO
Posted on March 19, 2013 at 6:00am
I was looking at Exxon in Cyprus.
They are invested pretty big there.
Cyprus also has a 500,000 man active military , and its an island.
I think that’s why they are the 1st of many in this government strong arm scheme , because they are vulnerable.
There supply’s can be shut off instantly.
Scary to think what would happen next.
Natural rights kick in I assume.

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katzkiner
Posted on March 19, 2013 at 5:19am
Vlad will get the money back for the Russians. Nobody, nobody, steals from the Bear. What were they thinking?

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fedlibertarian
Posted on March 19, 2013 at 1:57am
At this point some of you are unfortunately taking the bait to defend the rich or the Russo mob or blame the Cypriots, bla bla…. Taking sides… Hate… Anger…. Blindness. Relax; enjoy the ride. This is all part of the master plan: private central banks provide easy credit to blow up the bubble which they eventually burst by tightening credit at which point they own whatever it is they want. Guess what? America’s capitalist pig bubble will burst soon enough, count on it, its in the works. Unbridled greed never ends well. But first… a war… Isis ra el v. Iran? Something in Asia perhaps? War is such nice profit especially when funding both sides, why not? Ever wonder why we keep sending trillions to Saudis who are the biggest sponsors of ‘terrorism’? Rothchilds and their ilk aren’t kidding about this NWO/population reduction thing. Yeaahhhhh, just a conspiracy theory, nothing to see here, back to sleep. Who’s on Dancing With the Retards tonight? Sleep. Obey. Consume. Gangnam style.

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janmil200
Posted on March 19, 2013 at 12:25am
And maybe the Russian big boys were tipped off and have already made their run.

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media-bias-steals-elections
Posted on March 19, 2013 at 12:01am
Russian false flag on the heels of a record day stock market rise in the United States? Russian false flag to get money out of bank accounts and into the world market business community and get people to spend money they are sitting on for retirement?

Possibly, don’t worry about it, talk about it? Talk about what happens if that was done elsewhere, like China? Brazil, or Mexico? In the old days, they did not talk about things like this, they threw the bankers in jail cells? What happened in 2008, gave these same people incredible power that should be moderated in the future?

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Salamander
Posted on March 18, 2013 at 11:56pm
Oh no, now I’ll have to move ALL MY MONEY to THE BAHAMAS from CYPRESS! I wonder where OBAMA KEEPS HIS STASH? I’d almost bet the same bank as Mitt Romney. But, no, he probably keeps it with George Soros and Michael Bloomberg!

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Salamander
Posted on March 18, 2013 at 11:53pm
We need a Constitutional Amendment to make it unlawful to collect ‘funds’ through private businesses and banks! People think we should tax business so they don’t have to pay, but they don’t realize that the citizens ALWAYS pay in the end! By taxing businesses and collecting taxes through business, like the telephone tax, and even ‘payroll tax’, the unconsionable amouts are hidden from the scrutiny of the voter! Can you imagine how much better our elections might work if Tax Day were November 3rd, collected every other year, to coincide with national elections? No withholding–you need to FEEL THE PAIN every other year! Whammo, $10,000 bi-annual tax bills for $30,000 a year wage-earners! Now, THAT would get our attention!

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Salamander
Posted on March 18, 2013 at 11:47pm
Glenn, I know you have problems with ‘The Fed’ as in OUR Federal Reserve Bank. But, consider for a moment: if we hadn’t had ‘The Fed’, Congress would have been running the show and people like Charlie Rangel, Barney Frank, Chris Dodd, and such would have been running the show! The Fed as such isn’t the problem, but it has become so by being so closely aligned with Washington! Rather, it should be more aligned with our economy, the cost of money and how to grow both without causing inflation! I think The Fed is worth a closer look–to see what is wrong AND what is right about it! At least it didn’t go the way of The Post Office!

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GoodStuff
Posted on March 18, 2013 at 11:43pm
Who cares about Europe. Let em collapse.

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Vision Harry
Posted on March 18, 2013 at 11:37pm
Several months from now we will find that our dear leader has already “stimulated” this little hiccup in the master plan. I really don’t fore see anything improving without a global reset. Keep your powder dry my friends.

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