cypress bank bailout news headlines hit the media over the weekend and it is already effecting the market, which is not even open yet.
European central bankers are exacting a high price for the cypress bank bailout, but, ultimately it is the Cypriot people who will pay the price. Greece, which is in a fiscal devil's circle itself, sent as muchh as 5 billion euros to Cyprus, reportedly to help the Cypriot banks meet cash requirements.
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But it may all be in vain if there is a bank run, where angry people have already been dunned for 10 percent of their savings accounts--and won't be able to withdraw money from their accounts.
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. Since then news of the cypress bank bailout has hit the media headlines and across the globe, in a horrible ground hog day like event that happened a few years ago.
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. So do not expect this cypress bank bailout news to simple go away anytime soon.
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| cypress bank bailout |
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.
The so-called bail out deal has already cost Cypriots billions of dollars, as the Eurozone's 10 percent levy on bank accounts came into effect. Angry desitors can't get the rest of their money out of the bank, due the bank holiday which now extends to Wednesday.
The Eurozone "levy" on Cypriot banks is roughly one third of the nation's GDP, according to some sources. Imagine, how that would affect the US. According to Wikipedia:
The economy of the United States is the world's largest national economy and the world's second largest overall economy, the GDP of theEU being approximately $2 trillion larger. Its nominal GDP was estimated to be $15.8 trillion in 2012 ,[1] approximately a quarter of nominal global GDP.[2] Its GDP at purchasing power parity is the largest in the world, approximately a fifth of global GDP at purchasing power parity.[2]
Imagine if the US economy was (and is) in such financial straits that some entity bailed us out, but only if they levied one third of our GDP as payment. That would be a third of $15.8 trillion dollars. That would be roughly $5.2 trillion dollars. If the Cypriots are screaming, what would we be doing?
News of the bailout right now sunday night have the markets down by over 20 pts. So it is no doubt this is a serious problem on the minds of many, and we have been warning the market has been overbought in the last few weeks.
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cypress bank bail
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