This process is nothing new since it has happened in other countries -- namely Iceland, Ireland, Portugal and Greece. In other words, domestic account holders in Cyprus are going to have to pay deposit insurance guarantees directly because the Cypriot banks don't have the money -- and neither does the Cypriot government.
Thus bank account holders will be paying 6-9% as deposit insurance against their own deposits. After all Cyprus has been in negotiation for a Euro bailout for a year. This is nothing new for the Cypriot people or foreign depositors in Cypriot banks.
So where will the Russian KGB mob money go -- even though a 10% haircut can be considered chump change for them, i.e. just the cost of "doing business"?
The Russian government effectively browbeat the Germans over the issue. This is simply old animosity and old fear, namely that the Germans are afraid of the Russians.
The Russians put the arm on the German government because the real ECB decisions on bailouts are made by the Germans and Uncle Vlad (Putin) said you've got to guarantee the deposits of all the Russian KGB mob money in Cypriot banks -- or we Bolsheviks are going to go on the march again.
After all nothing scares the Huns like the prospect of marching Bolsheviks.
They just decided to use the same format that has been used before. The Cypriot government obviously wants all of their bank accounts domestic and foreign to be guaranteed.
The Cypriot banks were all beyond the point of no return. They were no different that Portugal, Ireland and Greece, the other so-called PIG nations. The Cypriot banks also held a lot of bad Greek paper and that became a bone of contention with the Turks since Cyprus is still partitioned. They didn't want to make good on defaulted Greek debt.
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* AL MARTIN, author of "The Conspirators: Secrets of an Iran Contra Insider," is an Independent Political-Economic Analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. He is also currently trading the commodity futures market day and night and has a teleconferencing service to facilitate transactions in the markets. This is a service for independent experienced traders.
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