On Saturday night March 16th, 2013 about 10 pm my network of trusted contacts began firing off notices via twitter to my cell regarding Cyprus and the Cypriot people getting whacked by an austerity measure.
The details of the Cyprus austerity measures…an immediate haircut
Depositors of greater than 100k euro will receive a 9.9% tax and those of less than 100k euro will pay a 6.75% tax. This tax is effective immediately and will be frozen by the banks and not allowed to be withdrawn. Resident Cypriots taking a haircut will be given equal amounts of bank stocks to make up for their loss. Foreigners are out of luck and much of the deposits are of Russian decent.
Break in :
The Wall Street Journal reports mid afternoon Sunday that there may be flexibility in the tax rates.
The ECB is on record now (very early Monday morning US time) that the smaller deposits may not be taxed.
Is Cyprus actions the template moving forward?
The key issue is not as much Cyprus, but the possibility that this is the stick of austerity measure creating contagion and a banking run i.e. Is this what other countries may be forced to do? Neighboring EU countries are certain to take note.
- 1.1 million population (World Bank)
- GDP ~ $25 billion (CIA Factbook)
- Total deposits about 68 billion euro (Central Bank)
- Population 77% Greek, 18% Turkish (CIA Factbook)
As you can see, a smaller country by most rankings, but is this the template for austerity?? If so, I would not want to be a banker in countries of similar situations.
Have a Great day!
JK214-706-4300 http://www.jkfinancialinc.com 8222 Douglas Ave # 590 Dallas, TX 75225