THE BIG FRAUD IN CYPRUS

Cyprus cartoon image - viliardos.comEuropean banks were speculating at the expense of their counterparts in Cyprus, with money borrowed from the ECB at close to zero rates – when their dirty game was finally coming to an end, they managed to secure the necessary time to avoid a loss, with the help of the ECB.      

‘’The cold blooded rape and premeditated murder of Cyprus, would not have been possible, without the «help» of internal «collaborators». The persistence of its citizens to stay in the same house with their rapists and murderers though, is definitely masochistic – since it is rather likely that they will continue to get raped and murdered, for many years to come’’.

Many wonder about the future of the Euro zone, apparently sensing that something is not going well – with mistakes and omissions happening far too often.

However, it is something entirely different if a problem is being created by mistake, than it being generated deliberately – especially when these problems are directly linked to major frauds, as seen in the case of Cyprus (according to foreign media). In particular the following:

Both before and after Greece’s debt write off (PSI), the Cypriot government continuously stressed out that this process would threaten its banks – while the problems of its financial sector were already common knowledge.

In any case, no later than early 2012, the two major local banks (Laiki Bank and Bank of Cyprus), should have (a) either gone bankrupt (as in the case of Iceland), (b) or been rescued, through some kind of bailout package – restructure, recapitalize or go through any other related process, since the losses in their balance sheets were estimated at 11 Billion Euros (an amount corresponding to almost 60% of the country’s GDP).

But if this were to happen, i.e. if the Euro-zone would have reacted properly and timely, other financial institutions would encounter major problems – mainly because in early 2012 the Euro-zone banks, especially German and French ones, were still keeping deposits in Cypriot banks of around 20 Billion Euros (although they had already withdrawn large amounts in 2011 – see Chart I).

cyprus deposit timeline diagramm - viliardos.comIn Chart I, the black line represents investments-deposits of German and French banks in Cyprus, which massively withdrew their money in 2011. The red line represents deposits held by Cypriot businesses and individuals. Finally, the yellow line represents Russian deposits, while the green line represents deposits outside of the Euro-zone.  As seen clearly, only the black line showed a sharp decline of investments-deposits – while others either remained stable or increased slightly.

Furthermore, in 2012 the Euro-zone should have had agreed to either rescue Cyprus (Bailout), or to restructure the Cypriot banks – because the Cypriot financial system was dying. But this actions, would damage both French and German banks – which would be forced to participate in the «confiscation» of deposits.

In this context, it is clear that the «Troika*» delayed the rescue of Cyprus, i.e. the «Bailout», until a «Bail-in» had become mandatory («Bail-in», as the participation of shareholders, bondholders, as well as depositors in order to rescue the banks is known). (*A special Euro-zone committee, which was formed in order to control if governments are imposing all the required austerity measures. It was given the name «troika», after it first set foot on Greek soil during the Greek bailout. A «troika» is a cart pulled by 3 horses and is now used to describe the three controllers that «visit» the governments).

In Greece the rescue process was much shorter, because the banks of the two leading Euro-zone countries had withdrawn faster – since 80% of the loan money the country received before the initiation of the PSI, was in essence returned back to Greece’s honest partners.

Now, in comparison with 2010, European banks managed to withdraw a total of 50 Billion Euros from Cyprus, before the «confiscation» was decided – a sum that without any doubt contributed greatly to the disease, as well as to the subsequent financial meltdown of Cyprus.

Possibly, the remaining 10 Billion Euros that are still in Cyprus won’t undergo any write-offs – because they are probably placed in other banks and not in Cyprus Bank or Laiki Bank (the other fraud).

Besides that, not all European banks are equally «networked» with Political powers – so maybe some did not have the required internal information, with the help of which they could promptly withdraw their money.

 

THE REASON DEPOSITS-INVESTMENTS WHERE MADE IN CYPRUS

French and German banks, because of low interest rates, could not achieve the required profitability in their countries – through the provision of loans there. But if they placed their money in Cyprus, either as savings or as time deposits, with a 1 year maturity, they could achieve rates between 2.8% and 4.9% – when interest rates in their countries were only 0.55% (Table I).

Table I image (TFOC) - viliardos.comOf course, to earn more, they would normally have to leave their money in Cyprus for a longer period, judged by the rates seen in table I – so that they can receive their interest and not pay a fee for closing their positions pre-maturely. Therefore, one can only assume that they did not withdraw all their placements immediately, because they did not want to pay the fee – so they had to wait for another year.

Of course, German and French banks could not risk something like this (paying a fee, because of the need for a pre-mature exit), if they did not have the help of the European Central Bank (ECB) – and therefore of its commanders, the governments of Germany and France.

 

CONCLUSION

In conclusion, the rescue of Cyprus is nothing more than a «disgusting» insider information story and a fraud.

In general terms, European banks speculated against Cyprus, with money borrow from the ECB at a zero interest rate. Later, when their dirty game seemed to end, they managed to secure the necessary time to avoid a loss – with the help of the ECB.

If this is not corruption of the worst kind, compared to which the political corruption in Cyprus itself seems of minor importance, then what is it? Why should ordinary citizens of Cyprus (Greece, Ireland, etc.) pay the bill of this incredible deception?

On the other hand, can the banking, political and fiscal union, without which the euro is doomed, ever work under these conditions?

Finally, how can we have «partners» who behave in this way, deceiving on the one hand their own citizens and on the other all the rest of us Europeans?

PS: It is obvious that if we want to preserve the Euro, peace and democracy in our continent, there is only one way: Germany leaving the Euro-zone.

As it turns out, the British were right when they said that their decision not to participate in the common currency was based on the fact, that it is impossible to have a future with Germany as a «partner».

The incredible «mercantilistic» wage dumping applied by the country, so that it can achieve surpluses in its trade balance, living at the expense of all the other states and intensifying «European asymmetries», is being proven once again from the official protests of Belgium to the European Commission.

In particular, when Belgium’s finance minister visited slaughterhouses in his country, he always heard the same complaints: workers from Eastern Europe work 60 hours per week in German slaughterhouses, paid 400-600 Euros per month – the worst of course, is that this is not considered illegal, since there is no legislation protecting a minimum wage in Germany.

Businesses in Belgium (and also in France and the Netherlands) are likely to go bankrupt, because they cannot compete with their counterparts in Germany. For example, always according to Belgium’s finance minister, it is cheaper to transport Belgian calves to Germany, process them there and transport them back to Belgium to sell them.

There are 7.5 Million low-paid workers in Germany, working for 3-4 Euros per hour, mostly uninsured – resulting in accusations from Belgium for unfair competition.

As far as the other «manipulations» of Germany are concerned, the behavior of its banks in Cyprus is typical – unfortunately with the involvement of certain French banks.

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