The Morning Rant
26/03/13 -- It's my birthday! That's the most important bit out of the way. Other more mundane stuff includes the overnight grains mixed to a little lower. The pound is up above 1.18 against the euro as we all pour over the details of the Cyprus bailout deal.
That's if you can find any details that is. Anyone with less than EUR100,000 in savings in Cypriot banks won't take a hit is about all we know. Anyone with over that amount will take a big hit, although the exact percentage is apparently not yet decided.
Anyone wanting to draw their under EUR100,000 deposits out straight away might face a struggle though. The Beeb last night were reporting vaguely that "financial controls" would remain in place for a short period, without elaborating what these controls might be. This morning the Beeb say that "temporary measures will be placed on transactions when they (the banks) reopen" - and that won't be until at least Thursday. Nobody seems to know what these "temporary restrictions" will be, or how long "temporary" is however. Or if they do, they aren't telling.
Undoubtedly they will be setting a limit on how much of your money you can actually withdraw, which will not go down well at all with the public. The whole thing reminds me of a sketch on Not The Nine O'Clock News many years ago where Rowan Atkinson goes into the bank only to be told that his shoebox where they keep all his money has been stolen. Unfortunately I can't find it on YouTube otherwise I'd post a link to it up.
Suppose you were just about to buy a villa in Cyprus and had deposited EUR250,000 in the Laiki Bank at the beginning of the month to fund the transaction? Now you haven't got EUR250,000 any more, so the deal is off, and presumably when the banks finally do re-open they will only let you take out what little is left of it bit by bit?
Cypriot businesses, many of which are now operating on a cash only basis by all accounts, can't operate under those conditions can they?
The government appear to be saying "your EUR100,000 is safe, don't worry, there isn't a problem as long as you don't all want to draw it out at the same time. Because if you do, we haven't actually got it." In other words "Your shoebox has been stolen."
So if you can't trust the banks, who can you trust? That seems to be the clear message coming out of this one. As Agrimoney point out this morning the Dutch finance minister, who as head of the Eurogroup played a key role in the Cyprus talks, really put his foot in it by suggesting that "the deal offered a template for sorting out future eurozone banking problems."
So, what you are saying is that this has been a bit of a test case on a relative minnow, and now that you're happy with how smoothly everything has gone, then this could be the way that any such future banking problems are resolved when one of the bigger boys gets into trouble? Great! Luckily I'm a spender not a saver, otherwise there'd be a run on Lloyds TSB this morning never mind the Bank of Bleeding Cyprus.
