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Posts tagged ‘Cyprus’

Stealth Bail-ins and a Weak Market Confirmed by Dow Theory

By Christopher Quigley

You might think following Angela Merkel’s electoral success last month all was stable in Euroland; unfortunately, nothing could be further from the truth. I have it from reliable sources that Euros continue to flood out of Europe, so much so that Mario Draghi, the president of the European Central Bank, stated publically immediately after the German Elections that “unlimited” amounts of “money” will be available to support the Euro.

However, more worryingly, the specter of being “Cyprused” continues to haunt Euro citizens. Every month the “bail-in” model, placed into law during the Irish presidency, becomes the option of choice to save troubled banks. This phenomenon is not being widely reported yet its use is utterly destroying the faith ordinary Europeans have in their banks. General banking liquidity levels have become so low in England that the policy has now seeped into the sterling area. As reported by The Telegraph last week:

“Bail-in of Sterling Banking System Officially Begins As UK’s Co-Operative Bank to Bail-in £1.5bn With 100% Losses!”

“In the wake of the Cyprus Popular Bank’s depositor bail-in, we alerted Telegraph readers on April 2nd to the fact that bail-ins were coming to the US and UK, as The Fed and BOE had quietly created a resolution authority for unlimited bail-ins for TBTF banks.

Less than 3 months later, the bail-in of the western banking system has officially begun, as the UK’s Co-Operative Bank is seeking a £1.5bn bail-in recapitalization with junior bond holders and investors (including pension funds) facing a complete-100% wipe-out on £370m of permanent interest bearing shares (PIBS) issued by the Co-op.

Co-operative Bank faces nationalization if junior bondholders reject ‘haircut”.

Co-operative Bank’s rescue recapitalization needs the support of £1.05bn – or around 80pc – of the holders of £1.3bn of its junior debt or the lender could end up being nationalized.

Evan Sutherland, the chief executive of the Co-operative Group, called the rescue plan “good news for The Cooperative Group, The Cooperative Bank, its customers and our members.”

He said it meant both investors and the group would make “a joint contribution” to the bank’s recapitalization, without any help from taxpayers.

However, a group of pensioners and other retail investors in the Cooperative Bank are facing massive losses under the rescue.

Astonishingly, the banksters are taking the theft to an extreme not even seen in the Cyprus bail-in: 100% losses!:

Holders of £370m of permanent interest bearing shares (PIBS) issued by the Co-op and Britannia Building Society before its takeover are expected to have their coupons cancelled, making them effectively worthless. Roughly 7,000 retail investors will be affected and the bank said that, on average, they held less than £1,000 in these bonds.

As Diesel BOOM let out of the bag a touch early, the Cyprus bail-in was indeed a template, as bond holders will be bought out with devalued or possibly worthless equity shares:

The Co-operative Group will issue a new £500m bond, paying about 6.5pc annually, to buy out the junior creditors. They will also be given equity in the group as the bank prepares to float up to 50pc of its shares on the stock market later this year. It is the first time that bondholders have been asked to take a haircut to keep a British bank afloat.

While some bond holders suffer 100% losses on the PIBS, Co-Operative Bank won’t have to sell any assets to raise capital

full article at source :http://www.financialsense.com/contributors/christopher-quigley/stealth-bail-ins-weak-market-confirmed-by-dow-theory

Who ran up a €1,600 bill ringing a single mobile number in Pakistan from the Oireachtas?

This story is by Ken Foxe and based on a recent story in the Mail on Sunday: Documents obtained under FOI are below.

A politican is suspected to have run up a bill of more than €1,600 calling a single mobile phone number in Pakistan, an unpublished Oireachtas memo has claimed.

Officials in Leinster House’s telecoms unit estimated that calls to a ‘very small number’ of foreign numbers were costing the taxpayer at least €14,000 per year.

Other costs included an estimated €1,249 bill for calling a mobile in Australia, €581 to a mobile in Lithuania, €381 to a Maltese mobile, €370 to a UK mobile, €366 to a South African landline and €331 to a landline in Cyprus. The officials admitted they were powerless to establish whether the expensive calls – made in 2010 – were legitimate as they don’t track who TDs and Senators call on their taxpayer-funded phones.

But the memo stated it was ‘difficult to imagine’ how they could be genuine. ‘It is difficult to imagine what Oireachtas business would give rise to calls costing €1,621 to a single Pakistani mobile phone number, and it would be irresponsible to consider the possibility that such calls might have been an unintended/improper use of the service provided. Without availabe data it is not possible to make any judgement on the matter……………

full article at source:  http://thestory.ie/2013/01/23/who-ran-up-a-e1600-bill-ringing-a-single-mobile-number-in-pakistan-from-the-oireachtas/

Ireland the next “Bailout “A LA Cyprus on the way !

By Thomás O Cléirigh

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As I write this I am hearing on the Irish radio that the finance minster is in Talks to formalise the “Cyprus Bank bail in” system for a European wide execution .If you are an Irish depositor get your money out now as these crooks will be taking a hefty slice of you hard earned money to contribute to the next phase of the Irish Bank bailout madness!

The public are been kept in the dark as to the real ramifications of this so called new fiscal measures, now been formalized to secure the European banking system from total collapse. Make no mistake we the citizens are been set up once again for a massive fall and we will have to foot the bill that is sure to come by the autumn. Allied Irish Bank is Bankrupt and the only way for this toxic corrupt zombie bank to survive will be the wholesale robbery of its customers A LA Cyprus!  I just checked again on the RTE website to hear once again the news podcast but the item is no longer to be found!

The public are been kept in the dark!

See also: http://thepressnet.com/2013/05/13/if-i-provide-proof-that-the-entire-irish-banking-system-is-a-sham/

http://youtu.be/7gwCdgmTttU

AIB And ‘Fraud Of The Highest Order’

scam

This bank [AIB], which is still trading in the US/Ireland and is still accepting deposits and making loans, appears to have some pretty fishy underpinnings.

So begins a an alarming if somewhat baffling blog post by Trading analyst Reggie Middleton posted on Monday night.

In which he claims AIB is falsifying it’s true value through the misuse of one word.

And may be the next bank to be “Cyprus’d”.

Vincent Lebraun explains:

The trouble with this high-level fraud is that it’s so “out-there” that people won’t be able to understand how serious this is.

In the charge document registered with the Irish Company Registration Office, it says that it is in respect of “all present and future liabilities whatsoever” of AIB.

And the charge itself is over “eligible securities”.

However, in AIB’s 2008 annual accounts and the files to the U.S. Securities & Exchange Commission, document 20F (page 223 – 2), it states that the charge was placed in favour of the Central Bank and Financial Services Authority of Ireland over all of AIB’s ‘right, title, interest and benefit present and future in and to certain segregated securities.’

Using the description ‘certain segregated securities’ is completely different to the description all ‘eligible securities.’ This is fraud of the highest order, and it’s so simple (yet so complicated) that they were hoping no-one would notice.

And we don’t have to take this guy’s word for it: he has both documents posted on his site (although he initially posted an Anglo document but has since rectified it and posted the AIB one)…

Anyone?

article source: http://www.broadsheet.ie/2013/04/03/aib-and-fraud-of-the-highest-order/

Comment:

You have been warned get you money out to-day!

Olli Rehn Departs Reality Once Again

by

If one needs an example of out-of-touch, reality-denying and self-satisfied EU Commissioner, travel no further than Olli Rehn. Here’s the latest instalment from Court’s Favourite Entertainer of Things Surreal:
http://europa.eu/rapid/press-release_SPEECH-13-394_en.htm

The speech focuses on what went wrong in Cyprus.

In the speech, Mr Rehn commits gross omissions and conjures gross over-exaggerations.

Nowhere in his speech does Mr Rehn acknowledge that Cypriot banks were made insolvent overnight by the EU (including EU Commission, where Mr Rehn is in charge of Economic and Monetary affairs) mishandling of PSI in Greek government bonds.

Nowhere in his speech does Mr Rehn acknowledge that Cypriot banks were massively over-invested in ‘core tier 1 capital’ in the form of zero risk-weighted sovereign bonds (Greek bonds…………………….

full article at source: http://trueeconomics.blogspot.ie/2013/05/852013-olli-rehn-departs-reality-once.html

The Ongoing Death of the Euro: 1929 in Slow Motion 2

By Christopher Quigley

04/02/2013 It is hard I am sure for Americans to fully comprehend the disaster that played out in the recent Cypriot Euro debacle.

To get a feel for the panic that was swirling about in Europe the week before last I include a quote from the Irish Independent of 22nd March 2013:

Irish property speculators fear for cash in Cypriot account.

“A group of up to 30 Irish property speculators have been left sweating on their investments due to the Cypriot bailout crisis.

The group, mainly Irish nationals living in the Middle East, all invested in a fund to take advantage of the collapse in property prices back home in Ireland.

Under the scheme, each invested €20,000 or more with a property consultancy, which has been seeking to snap up cut-price Irish properties whose value is likely to increase in the coming years.

A further 20 British nationals are also thought to be involved in the scheme.

Investor funds were placed in a Cypriot client account.

However, the account cannot currently be accessed after banks on the Mediterranean island closed their doors last weekend.

And hundreds of thousands of euros could be wiped off the value of the fund should the Cypriot government cave in to pressure from the EU and IMF for a levy on bank deposits as part of a bailout deal.

Richard Jones (37), a project finance consultant from Ballyhaunis, Co Mayo, who is involved in the scheme, flew in to Cyprus earlier this week in an attempt to withdraw the cash before any proposed levy on the account.

“I came over yesterday because the banks were due to reopen, but they didn’t,” he told the Irish Independent.

“I found it hard to get into a hotel room here. Everything has been booked up by the Russians coming in to withdraw their cash. That just confirmed my decision to come out as there will be an almighty run on the banks once they reopen.”

He said the clients’ funds were held in a Cyprus bank because the country “has been seen as a gateway for investment from the Middle East into Europe”.

“Most of my investors are very small — around €20,000. But it is a lot of money to them. They are mostly Irish and British expats living in the Middle East and they see value to be had in Irish property now,” he said.

Mr. Jones said he believed the current crisis signals the “beginning of the end for the euro”.

He added: “I think what the EU has signaled is that bank deposits are no longer safe. At a single stroke they have reduced the European banking system to third-world status.”

full article at source:http://www.financialsense.com/contributors/christopher-quigley/ongoing-death-euro

see also http://www.marketoracle.co.uk/Article39752.html

The ongoing death of the Euro: 1929 in slow motion.

The following is an article from Netzoners ” citizen reporter “financial correspondent.

Mr  Christopher M. Quigley B.Sc., M.M.I.I., M.A.

It is hard I am sure for Americans to fully comprehend the disaster that was the recent Cypriot Euro debacle.

Yesterday, Monday the 25th. March we were told that “the day has been saved”. The Euro is again “on solid” ground. “Ordinary depositors, with balance up to 100,000 Euro, have had their funds guaranteed”. “What a difference 14 days make” we are being told.

To get a sense of the panic that was swirling about in Europe last week I include a quote from the Irish Independent of 22nd March 2013:

Irish property speculators fear for cash in Cypriot account.

“A group of up to 30 Irish property speculators have been left sweating on their investments due to the Cypriot bailout crisis.

The group, mainly Irish nationals living in the Middle East, all invested in a fund to take advantage of the collapse in property prices back home in Ireland.

Under the scheme, each invested €20,000 or more with a property consultancy, which has been seeking to snap up cut-price Irish properties whose value is likely to increase in the coming years.

A further 20 British nationals are also thought to be involved in the scheme.

Investor funds were placed in a Cypriot client account.

However, the account cannot currently be accessed after banks on the Mediterranean island closed their doors last weekend.

And hundreds of thousands of euros could be wiped off the value of the fund should the Cypriot government cave in to pressure from the EU and IMF for a levy on bank deposits as part of a bailout deal.

Richard Jones (37), a project finance consultant from Ballyhaunis, Co Mayo, who is involved in the scheme, flew in to Cyprus earlier this week in an attempt to withdraw the cash before any proposed levy on the account.

“I came over yesterday because the banks were due to reopen, but they didn’t,” he told the Irish Independent.

“I found it hard to get into a hotel room here. Everything has been booked up by the Russians coming in to withdraw their cash. That just confirmed my decision to come out as there will be an almighty run on the banks once they reopen.”

He said the clients’ funds were held in a Cyprus bank because the country “has been seen as a gateway for investment from the Middle East into Europe”.

“Most of my investors are very small — around €20,000. But it is a lot of money to them. They are mostly Irish and British expats living in the Middle East and they see value to be had in Irish property now,” he said.

Mr. Jones said he believed the current crisis signals the “beginning of the end for the euro”.

He added: “I think what the EU has signaled is that bank deposits are no longer safe. At a single stroke they have reduced the European banking system to third-world status.”

For businesses and individuals with substantial funds in the banks in Cyprus the 100,000 Euro guarantee is of little benefit. As a result of the deal brokered with the IMF/ECB/European Commission “Troika” large account balances will be cut by up to 30%. What’s more the balance of funds outside the “cut” will be frozen until the situation has been fully stabilized. Many believe that it could be months maybe years before these client funds are returned to their rightful owners.

What a disaster the “bailout” turned out to be for the 50 Irish and British businessmen mentioned in the opening quote. In total they will lose approximately 300,000 Euros from their investment project overnight. Third-world status indeed.

Flight of Capital:

Now that the dust has settled somewhat we are being told that the “markets” have reacted favorably to the Cypriot bailout news.

However, this crisis is far from over. The “Rubicon” of the sanctity of deposits has been crossed.

No Eurogroup bank will ever be trusted again. Many believe that Italy and Spain have similar crises in the making and anxiety within Europe is starting to rise again. Can you imagine the “fear factor” welling within the citizens of these countries looking at how ordinary Cypriots have been treated?

Rather than wait for protective capital controls to be introduced in Spain and Italy it is expected that focused entrepreneurs and savvy chief executives will start moving funds out of their Euro accounts and Eurogroup banks. People no longer have any confidence that their financial leaders will be able to deal successfully with a full blown Spanish or Italian banking melt-down. To understand this perception one must comprehend the degree of incompetence displayed by the European Central Bank. The astonishing mismanagement and lack of insight shown during the Cypriot crisis was so clear for all to see that confidence in the Eurogroup banking system has utterly vaporized.

Why? Let us look at a few simple figures.

The total private banking deposits in the two main Cypriot banks was “only” about 68 billion Euros. As of last December private sector banking deposits in Italy was 1.497 trillion Euros and in Spain 1.52 trillion Euros.

On the 18th. March the ECB was alarmed with regard to deposit destruction and capital flight from Cyprus.  In order to protect this “base” it closed all banks indefinitely and intimated that all banking deposits were going to share in a “cut” to recapitalize the crippled financial institutions. In one fell swoop Brussels destroyed the primacy of the 100,000 Euros deposit guarantee scheme which supposedly applied to ALL Euro account holders within the Eurozone. When the dust settled the final deal agreed did protect this 100,000 Euros deposit level but, as we have already noted, some individuals and many businesses and corporations were eventually “robbed” of 30% of total deposits. If this was the ECB’s reaction to “save” banks with only 68 billion Euros of private deposits many concerned citizens cannot even begin to comprehend how Brussels intends to deal with any similar crisis that may develop in Spain and Italy which has a deposit base of 3 trillion Euros.

Are you beginning to get the picture?

This issue is not vacuous chatter. I have just read a story in a Dublin newspaper stating that the head of one of the largest Irish industrial conglomerates has instructed his financial chiefs to move all free bank balances out of the Euro ever Friday and move it back for business every Monday. When questioned about this practice the chief executive’s answer was: “Everybody is starting to do it. Fool us once shame on you, fool us twice shame on ourselves”.

How it that for a vote of confidence in the Euro zone?

It is my guess that as more and more corporations execute such deposit protective measures many will soon begin to limit the funds they actually return to Euroland every Monday. Such a development would make the introduction of capital controls a self-fulfilling certainty. With capital controls in place the Brussels/Berlin trap will be set. In such a scenario it will be finally comprehended that the Euro really is not a currency as such (it is my contention that it never was) but rather a fixed exchange rate mechanism. It is about time the ECB emperor was seen to have no clothes.

I fervently believe events will show that the Cypriot “deposit robbery” was a seminal event in European social history. Confidence once taken from a “currency” cannot be restored. When the financial controllers of Google Europe, Apple Europe, Microsoft Europe, McDonalds Europe, Facebook Europe, Microsoft Europe, IBM Europe, Oracle Europe etc. gradually wake up and have the epiphany that 20% – 30% of their corporate banking deposits could be up for grabs in a future Italian or Spanish crisis (Cypriot banking a-la Angela Merkel style) the writing will surely be on the wall for the Euro project.

The free movement of capital is a bulwark “right” of the European Common Market. Introducing capital controls to “save” the Euro is the total antithesis of such free trade rights. At such a juncture the decision will have be made whether to save the European Common Market or save the Euro. I think at this point the result is obvious. It is just a matter of time and a few more mis-handled “crises”. The European Common Market operated very well for over four decades without a common currency. It is time some brave European statesmen make some tough choices and commence opting for community solidarity and social cohesion rather than economic hara-kiri.

Accordingly, a colleague of mine has written an open letter to the Prime Minister of Ireland today. This letter urges Premier Kenny to establish an emergency finance committee to develop a plan of action to save the Irish banking system should the Eurogroup fail. His letter summons the government to act without delay and requests that contacts be made at the highest level with friendly American and British Commonwealth institutions to prepare for the possible need for an alternative Irish currency to the Euro. Such a currency would act as a back-stop to the financial tsunami currently rising within the sub-terrain depths of ECB mendacity and European Commission incompetence. Preparation for such an eventuality may seem “pie-in-the-sky” but to be fore-warned is to be fore-armed and if the bungled Cypriot deposit grab is anything it is just such a fore-warning.

© Christopher M. Quigley 26th. March 2013

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