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Sunday, March 17, 2013

Cyprus Bailout: Bank Depositors To Get Instant 6.75% - 10% Tax Before Banks Reopen This Week

By Susan Duclos

Guess those tax hikes Greek lawmakers decided to raise on the wealthy in January 2013,  to "prevent" all other citizens from further "pain," and called it a a vital fiscal reform” that would avert additional across-the-board cuts to workers and pensioners, just wasn't going to be enough.

Depositors in Cypriot banks will be hit with a one-off tax on their savings, as part of a €10 billion ($12.96 billion) bailout for the Mediterranean island from the euro zone and the International Monetary Fund.
The deal, announced early Saturday, marks the first time in the euro zone's five-year-old financial crisis that depositors in bloc's banks will lose money. Accounts with more than €100,000 will be taxed at 9.9%, those with less at 6.75%, raising an expected €5.8 billion for the near-bankrupt nation.
"This decision should not be compared to the ideal, but to the very real possibility that much more money could have been lost in bankruptcy of the banking system or indeed of the country," Cypriot Finance Minister Michalis Sarris told reporters, looking strained after 10 hours of often-fraught negotiations.
Mr. Sarris said the Cypriot Parliament would adopt the taxes over the weekend and the money would be extracted from accounts before banks take up business Tuesday. Monday is a public holiday.
"We have taken immediate measures so that electronic transfers cannot take effect before banks reopen on Tuesday," said the minister, who took office just two weeks ago.
The levy will see deposits of more than 100,000 euros in Cypriot banks hit with a 9.9 percent charge when lenders re-open their doors on Tuesday after a scheduled bank holiday on Monday. Under that threshold and the levy drops to 6.75 percent.

To guard against capital flight, Cyprus took immediate steps to prevent electronic money transfers over the weekend.

At one cashpoint in the capital Nicosia, a pensioner couple said they had visited several automatic teller machines without success. "We are trying to pull as much as we can," one told Reuters, reaching for a wallet containing four debit cards.

"I'm extremely angry. I worked years and years to get it together and now I am losing it on the say-so of the Dutch and the Germans," said British-Cypriot Andy Georgiou, 54, who returned to Cyprus in mid-2012 with his savings.

"They call Sicily the island of the mafia. It's not Sicily, it's Cyprus. This is theft, pure and simple," said a pensioner.
This next quote takes the cake.

In Brussels, Dutch Finance Minister Jeroen Dijsselbloem said it would not otherwise have been possible to save Cyprus's financial sector which, compared with national economic output, is more than twice as big as the EU average.

"As it is a contribution to the financial stability of Cyprus, it seems just to ask for a contribution of all deposit holders," Dijsselbloem, who chaired the ministerial meeting, told reporters.

Ask??? Contribution???

Doesn't sound like anyone asked the citizens who were saving money in the banks. That implies permission.

Contribute is to give, but this is being taken.
Excellent detailed analysis on this situation over at Zero Hedge.
 Quote of the day goes to Jazz Shaw over at Hot Air:

But don’t you worry. It could never happen here, at least if you listen to Paul Krugman and company. Just keep on running up the debt and I’m sure everything will work out just fine.