UPDATE: Cyprus Protesters and Bank Employees Clash With Police

UPDATE: Cyprus Protesters and Bank Employees Clash With Police

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Activist Post

Local news in Cyprus is reporting an escalation in the protests that have begun in the wake of attempts by EU chiefs to confiscate the savings of depositors. The news of possible bank closures has enraged the public. It appears that in order to keep things under control, the Central Bank is discussing a possible bank merger rather than a full shut down.

The Central Bank of Cyprus today intervened to quash frantic reports that Cyprus Popular Bank is to be closed down. 

The reports sent hundreds of Cyprus Popular Bank employees and holders of the bank's bonds out into the streets. Police deployed a strong force outside the Bank's headquarters in the capital Nicosia to prevent them smashing into the building. (Source)

Here is a video showing police in riot gear on the scene:
The Great Cyprus Bank Robbery by Financial Terrorists: http://youtu.be/YDXtHsz2q6Q via @youtube
Cypriots Rush Banks To Get Cash Out Facing Immediate EU Bailout Tax!: http://youtu.be/OYbuWZv8EkE via @youtube

Cyprus Broadcasting Corporation says the following:

The European Central Bank today said it had decided to allow the Central Bank of Cyprus to keep providing banks with emergency funding until this coming Monday. 

An ECB statement said that thereafter, Emergency Liquidity Assistance can only be considered if a rescue programme is in place that would ensure the solvency of the banks involved. (Source)

Meanwhile, President Anastasiades supposedly has a Plan B ready:

Cyprus's political leadership today decided on a package of measures dubbed "plan B" to avert a financial meltdown, as the finance minister is engaged in rescue talks with Russian officials in Moscow.... 

No details of the plan were immediately announced, but Averof Neophytou, a close associate of President Nicos Anastasiades said that there had been a unanimous decision to establish a "Solidarity Fund". (Source)

Recent photos of the protests were posted at ZeroHedge, which you can see HERE. One protester can be seen holding a sign that says, "Where is the solidarity?"

We'll keep you posted as this develops. Previous updates and videos can be found below...

ATMs in Cyprus were drained over the weekend, electronic transfers were halted, and riots ensued following a decision by European Union chiefs to raid private savings accounts to help pay for the country's $13 billion bailout. It was believed that there were plans to stretch a bank holiday to at least one week, while the exact measures were decided upon. However, yesterday the Cypriot parliament rejected the scheme outright, leading many to speculate that this would be the start of something even worse.

Sure enough, much like the U.S. Federal Reserve threatened martial law and blood in the streets if Congress didn't accept sweeping bailouts in 2008, now Germany is saying that Cypriot banks might never reopen after parliament's decision:

Germany's finance minister, Wolfgang Schaeuble said major Cypriot banks were "insolvent if there are no emergency funds,” according to a BBC report, meaning savers might lose all their money if no deal was reached. (Source)

There is extreme worry that if the banks do reopen, capital flight is all but assured. Meanwhile, similar confiscation schemes are being proposed for Italy and New Zealand (more on that below), spurring questions about which other nations are in line for a "haircut" . . . perhaps better called "the chopping block."

Whether or not Cyprus gets its bailout in one form or another -- perhaps from Russia -- this is a precedent-setting crisis that is already leading to such a level of distrust in Cyprus that merchants are even refusing credit card payments. This is indeed shaping up to be a potential "Lehman Brothers Moment" with ramifications that could extend even beyond the troubled nations of Europe.

Previous updates and videos can be found below...

Reuters reported earlier that,

The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risk of a wider run on savings.
....
In a radical departure from previous aid packages - and one that gave rise to incredulity and anger across the country - euro zone finance ministers forced Cyprus' savers to pay up to 10 percent of their deposits to raise almost 6 billion euros.

Cyprus president Nicos Anastasiades agreed to the deal, which completely reversed his previous assurances that it would not happen. It sets a very dangerous precedent for future bailouts. As if brutal austerity wasn't enough, the EU is now demanding a bailout tax making citizens and expat depositors alike personally liable for government and private bank debts. Reuters also notes that according to a draft of the legislation, criminal penalties of up to 3 years in jail and 50,000 euros could be imposed upon anyone who doesn't comply.

The New York Times reports:

Most of the 10 billion euros will go to bail out Cypriot banks, which took a blow when their substantial holdings of Greek government bonds were written down as part of that country’s second bailout.

Britain has 60,000 depositors in Cypriot banks, including thousands of military and government personnel stationed on the island. George Osborne highlighted that Cypriot banks in England would not be subjected to the tax (originally proposed at 6.75% for accounts under 100,000 Euros; 9.9% for those over 100,000), but expat depositors apparently will -- government and military excluded:

George Osborne vowed today that those serving in Britain's military or government in Cyprus will be protected after European finance chiefs ordered an unprecedented raid on personal bank accounts. 

Up to 60,000 British savers are to lose thousands of pounds each as expats in Cyprus have their savings decimated in part of a painful bid to bail out the bankrupt island. 

The Chancellor said the financial situation in Cyprus was ‘an example of what happens if you don't show the world that you can pay your way’, adding: ‘We are not part of the bailout.’ (Source)

The tax is being justified as a last-ditch effort to raise money and keep Cyprus from supposedly causing a domino effect across the Eurozone as indebted nations begin to collapse. Cyprus had set itself up as a strong banking center for investors, but many are outraged over Anastasiades' about-face:

Those affected will include rich Russians with deposits in Cyprus and Europeans who have retired to the island, as well as Cypriots themselves. 

"I'm furious," said Chris Drake, a former Middle East correspondent for the BBC who lives in Cyprus. "There were plenty of opportunities to take our money out; we didn't because we were promised it was a red line which would not be crossed." 

"I've lost several thousand," he told Reuters.

ZeroHedge reports that it is those "rich Russians" who could wind up angriest. Eurogroup had suggested that depositors under 100,000 euros should maintain their insurance against such a scheme, but it is possible that larger depositors will absorb their percentage by moving the top percentage tax to 15.6%.

The Eurogroup will give Cyprus more flexibility on bank levy, and that Cyprus should safeguard depositors under €100,000, even as the full €5.8 billion deposit goal must still be hit. 

.... 

(The) Russian response to the discovery that haircuts on big deposits just rose from 9.9% to over 15.6% will hardly be warm and cuddly. Now may be a good time to ban gun (and plutonium) sales to angry Russian billionaire oligarchs. (Source)

However, the changes continue today, 3/19. 

The President just proposed the 'levy' on deposits begin at EUR 20,000 just hours ahead of today's planned vote. 

CYPRUS REVISED BILL SEES NO LEVY ON DEPOSITS UP TO EU 20,000 

However, it is still theft of private property which appears to be the philosophical stumbling block for the parties involved and therefore today's vote appears to be delayed: 

ANASTASIADES TO MEET PARTY LEADERS 9 AM TOMORROW: SPOKESPERSON 

CYPRUS PARLIAMENT BANK-LEVY VOTE MAY HAPPEN TOMORROW, CYBC SAYS (Source)

Cyprus is now the fifth country seeking a bailout, but the extraordinarily high depositor tax is unprecedented. Eurozone citizens and outside investors might not see the tax as the confidence-inspiring measure that government asserts it to be. Rather, citizens everywhere will view it as a clear signal that other governments are ready to follow suit and are extremely unclear about who will ultimately be affected, thus destroying confidence in the entire banking system. The "Russian billionaire" angle might be used to forestall more widespread outrage, but it is still new ground to go directly after depositors ... and not all affected depositors will be Russian billionaires, especially at a starting point of 20,000 euros.

"This is theft, pure and simple," one pensioner told Reuters. Yes it is.



And here's some colorful commentary about this:



A final vote from Cyprus' parliament has been postponed several times, and now appears to be set for 9 AM Wednesday. Arm twisting by banksters continues to work toward the necessary 33% approval to solidify wealth confiscation. The latest poll shows that 71% of Cypriots want to reject the scheme.

Follow #Cyprus depositors as they vent their fury through social media:

http://www.zerohedge.com/news/2013-03-17/cyprus-depositors-vent-fury-through-social-media

And for those who believe that something like this could not happen throughout Europe, or even in the United States, Tyler Durden of ZeroHedge posits that the Rubicon has been crossed and "wealth taxation" is a topic that is likely to grow in popularity among banking oligarchs. Although in the U.S. wealth taxation might take a slightly different form than what is being proposed for Cyprus.

So, if the US was to go the Cyprus route, and begin impairing balance sheet liabilities to remark assets, there would be precious little space (with just $4.3 trillion in total other funding liabilities), before one would need to start eating into the deposit base, should Congress decide to implement a very "fair and just" financial asset tax in the US next. 

Will Congress do this? Obviously, nobody can answer that question now. However, it was "absolutely certain" as recently as 48 hours ago that Cyprus too would see no depositor "bail in" either. Then things changed rapidly. What is known, is that according to the same BCG chart we showed last night, the necessary debt-reduction needed in the US to reach a sustainable debt level, was over $8.2 trillion using debt numbers as of 2009... 

... Since then consolidated US debt has risen by over $5 trillion. 

Which means that if, indeed, the US proceeds with its own wealth tax, then deposits may well be one "wealth class" that gets impaired. Of course, since in the US other financial assets, namely the stock market, account for a far greater proportion of household net worth, it is quite possible that instead of impairing deposits at US banks, which already subsist solely due to the Fed's $2 trillion in excess reserves, the government may instead choose to generously tax simply 30% of all of your stock holdings, and achieve the same "wealth transfer" result. (Source)

In fact, this type of asset taxation is already being proposed for Italy, as stated by Commerzbank's chief economist, Jörg Krämer :

"A tax rate of 15% on financial assets would probably be enough to push the Italian government debt to below the critical level of 100% of gross domestic product." So there you have it, the 'new deal' in Europe, as we warned, is 'wealth taxes' and testing the "capacity of Cypriots" appears to be the strawman on what the public will take before social unrest becomes intolerable. (Source)

New Zealand is also considering a Cyprus-like solution for their bank failures.

"Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts," said Green Party Co-leader Dr Russel Norman. 

The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank. 

Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat. 

While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions. (Source)

One thing is for certain, banksters and their government partners are in no position to earn any