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Stocks turn decidedly lower as Cyprus' ruling party will apparently abstain from the bailout...

Stocks turn decidedly lower as Cyprus' ruling party will apparently abstain from the bailout vote, thus assuring its failure. The ball now moves back to Brussels, where the ECB has threatened to withhold funding from Cyprus' banks if the bailout (and depositor haircut) isn't passed. Stoxx 50 (FEZ) -1.5%, S&P 500 (SPY) -0.5%, the euro (FXE) -0.5%.
Comments (41)
  • Stone Fox Capital
    , contributor
    Comments (5585) | Send Message
     
    Is Cyprus really a 'country'? It doesn't count folks... move along.
    19 Mar 2013, 12:05 PM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Nope, Cyprus doesn't count, but Spain, Italy, Greece, and Portugal do.

     

    Cyprus is a testing ground.
    19 Mar 2013, 01:08 PM Reply Like
  • Macro Investor
    , contributor
    Comments (7079) | Send Message
     
    Indeed, why not screw around with the lives of a million people. They are not Germans, after all.
    19 Mar 2013, 01:09 PM Reply Like
  • DavidTTaylor
    , contributor
    Comments (62) | Send Message
     
    Cyprus crisis will soon blow over, in any case U.S. is not Cyprus and even not Europe.
    In a choice between: being afraid of missing an opportunity as opposed to losing money, even skeptics are being forced into the market.
    I did not missed my opportunity following this positive market recovery signal: http://bit.ly/ZpI3do
    End-of-2012 forecasts are in a good agreement with the actual outcomes.
    19 Mar 2013, 02:22 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    -> Stone Fox Capital: Was Lehman Brother a country?
    19 Mar 2013, 02:28 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    Is Europé the Worlds second largest economy or not? US is in bigger debt-problem then Europé.
    19 Mar 2013, 02:29 PM Reply Like
  • Macro Investor
    , contributor
    Comments (7079) | Send Message
     
    Actually, no. European banks have a far more acute capital problem than US banks.
    19 Mar 2013, 02:32 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    I did not mention banks at all, did I?
    19 Mar 2013, 03:05 PM Reply Like
  • Kyle Spencer
    , contributor
    Comments (990) | Send Message
     
    Cypriot banks account for nearly the same portion of financial/insurance market share (by %) as Irish banks used to. Its the European Cayman Islands.
    19 Mar 2013, 12:11 PM Reply Like
  • ricardorubiosr
    , contributor
    Comments (13) | Send Message
     
    It is a good lesson for all those millionaires who have deposits in that "financial heaven" instead of having them legally in better quality banks in their own countries. Now they have to pay for inflating artificially the Cyprus economy. Cyprus must tax more the clients with millionaire deposits and have a significantly low tax for those middle class people with "normal" deposits. At the end it is a good lesson for those tax evaders and for the countries with "safe heaven" banks. I hope that due to this waiting time they have not been able to move thir deposits to other safe heavens.
    19 Mar 2013, 03:41 PM Reply Like
  • Retired User
    , contributor
    Comments (1803) | Send Message
     
    WaPo Wonk commenter predicts Russian bailout. The door is certainly wide open.
    19 Mar 2013, 12:13 PM Reply Like
  • RMUMM
    , contributor
    Comments (26) | Send Message
     
    what a joke, its not even a pimple on the world economy
    19 Mar 2013, 12:17 PM Reply Like
  • Heliopios
    , contributor
    Comments (150) | Send Message
     
    Except when you take into account the massive amounts of money being held in banks there by the ultra-rich Europeans who don't love their countries enough to fund them [Looking at you, Russian Tycoons]
    19 Mar 2013, 02:00 PM Reply Like
  • Heliopios
    , contributor
    Comments (150) | Send Message
     
    In short: It shakes markets that any government would consider to sieze private assets to fund an EU bailout. Same could happen in a real economy [Spain, Italy] and lead to a domino affect of confidence erosion.
    19 Mar 2013, 02:01 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4084) | Send Message
     
    Time to check your dry powder and selectively put it to work.

     

    This is a gift from the trading gods, govern yourself accordingly !

     

    ;)
    19 Mar 2013, 12:18 PM Reply Like
  • RMUMM
    , contributor
    Comments (26) | Send Message
     
    a gift sandride a driller in sw usa dropped over 4% on the announcment
    19 Mar 2013, 12:30 PM Reply Like
  • alsobirdman
    , contributor
    Comments (355) | Send Message
     
    Yes it was, F and G. Took advantage and added some more SAN. I hope the fear continues.
    19 Mar 2013, 06:13 PM Reply Like
  • Retired User
    , contributor
    Comments (1803) | Send Message
     
    You don't understand the situation. Failure of Cypriot banks could whack 2% of Russia GDP, and Cyprus exit from Eurozone would spark bank runs in Greece, Spain, Portugal, Italy -- which ignites crash of U.S. derivatives. Eurogroup finance ministers look like total idiots on this one.
    19 Mar 2013, 12:22 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    I'm not buying that scenario. The Russians that shelter their money in Cyprus are doing so because they have to have somewhere to put all the cash from their producing cows, which will keep producing. If the Russian oligarchy were smart, they'd make an agreement to tax such cows less and incentivize the reinvestment of some of that money locally instead of socking it into "offshore" casinos.
    19 Mar 2013, 12:39 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4084) | Send Message
     
    I remember the stories that Greece was going to default , Spain , Italy Portugal would follow, the Euro was going to par. ETc, ETc, ETc.

     

    If one sold on that news , you missed the entire rally. Everyone of those headlines presented a tremendous buying opportunity. Those countries are still here, and so is the U.S. market trading near all time highs.

     

    Ah, but wait, now they say that THIS time will be different. The "Fear" gauge is ramping up on this one .

     

    Can we get a correction , absolutely, as we are trading approx. 10% over 200 day MA. on the indices.

     

    But Cypress as an issue , Please !!!!
    19 Mar 2013, 12:44 PM Reply Like
  • Retired User
    , contributor
    Comments (1803) | Send Message
     
    You still don't get it. Cyprus is an English rule of law jurisdiction that big Russian companies like Norilsk Nickel use to execute and transact $B deals with global customers. Has nothing to do with penny ante money laundering or Russian expats.
    19 Mar 2013, 12:46 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    Then perhaps Russia ought to adopt and commit to a viable rule of law jurisdiction, not to mention tax efficiency. These events can be catalysts for change, or at least those losing significant amounts of money ought to look at it that way. Bailouts (or 'ins') achieve nothing but continued moral hazard.
    19 Mar 2013, 12:49 PM Reply Like
  • Retired User
    , contributor
    Comments (1803) | Send Message
     
    Good comment at FTAlphaville: "The only solution to this is that Cyprus leaves the Eurozone and becomes part of the ruble zone. The Russian central bank provides the liquidity to Cypriot banks, deposits are safeguarded, and we have the first exit of a country from the Eurozone."

     

    No way the Russian bear becomes a vegetarian. They have guided missile cruisers en route to Cyprus.
    19 Mar 2013, 01:04 PM Reply Like
  • Guardian3981
    , contributor
    Comments (1849) | Send Message
     
    While I am not one to take every blimp and turn frantic that it will be a huge issue, we also need realize that any issue like this has the potential to ignite into a major problem.

     

    Whether it does or not is another story. What if this situation causes citizens accross Europe to withdraw from the Banks, then what?

     

    People need to realize that almost every major crisis the world has ever seen started off as a very small problem. The challenge is whether it can or will be contained or not. People thought Hitler could be contained with a few initial concessions, next thing you know he has control of nearly all of Europe.

     

    Between Europes poor energy outlook and their monetery policy, their growth prospects look grim. Since they do not really use QE, the only way they can get out of their mess is to tax more somewhere.
    19 Mar 2013, 12:32 PM Reply Like
  • Macro Investor
    , contributor
    Comments (7079) | Send Message
     
    "Since they do not really use QE, the only way they can get out of their mess is to tax more somewhere. "

     

    Precisely. This is why Bernanke is a genius.
    19 Mar 2013, 01:16 PM Reply Like
  • pipopipo
    , contributor
    Comments (38) | Send Message
     
    "What if this situation causes citizens accross Europe to withdraw from the Banks, then what?"

     

    I think wealthy European in the southern countries are not going to sit and wait to see what is next, although a lot of capital already moved into northern European banks. Italy, Spain, Portugal could be next. Earlier at a press conference,Dijsselbloem, socialist and president of the Euro group, did not want to give journalists an answer to the question "if this could happen to other countries". He refused, stating that it could cause "unrest" in the financial market. He also stated that there is no such thing as a European bank deposit guarantee, so indirectly he is telling us that your money in any EU bank can be taken at will ?!?!
    19 Mar 2013, 01:55 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    A default is a valid route. This assumes the larger stakeholders take their share of losses/pain, restructure and move on.
    19 Mar 2013, 12:33 PM Reply Like
  • pipopipo
    , contributor
    Comments (38) | Send Message
     
    agreed, its the only thing that makes sense, but I dont understand why the EU finance ministers didnt think of this before?
    19 Mar 2013, 01:57 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    Question is not about Cyprus that makes stockmarkets crash, it is about the Euro survival or not that makes stockmarkets crasch. Euro countries tries to put the responsability and blame the smallest country whitin the Euro-area for the fall of the Euro, and it looks like they have IMF:s support for doing it.

     

    Do you wonder why politics in Cyprus refuses to take the descissions they wants them to take? I do not.
    19 Mar 2013, 12:46 PM Reply Like
  • Tack
    , contributor
    Comments (12441) | Send Message
     
    Did the EU make Cypriot banks offer absurd 11% rates on CD's? They made their bed. Let them suffer or sink. The implications for the remainder of Europe, or the world, are zero, despite the usual idiotic hysteria.
    19 Mar 2013, 01:04 PM Reply Like
  • pipopipo
    , contributor
    Comments (38) | Send Message
     
    Not exactly, if EU finance minister decide that they can claim citizens bank deposits in a member state, it will cause serious unrest in EU financial markets. A bankrun in the other southern EU states is enough make some serious waves in other markets.
    19 Mar 2013, 02:00 PM Reply Like
  • Alex Trias
    , contributor
    Comments (552) | Send Message
     
    If Cyprus OKs a "one time" tax on insured deposits, it may spark a run on the banks across Europe. In a macro sense, confidence in the banking sector will tumble, with damaging consequences across Europe. Turning down these bailout terms is good for banking sector from that standpoint.

     

    The question is whether refusing the bailout terms will send the Cyrpus banking system into insolvency, causing after effects that could cascade through the system. Ultimately, a 10 billion Euro bailout could end up looking more like a 60 billion Euro bailout. We've seen it all before, though. Financially incompetent Europeans shooting themselves in the foot, and paying for it in spades after. Yet somehow they keep limping on, and the world goes on without them. If you believe that nothing ever really changes in Europe, then this time around will probably be no different from the last. Bottom line: if markets sell off, it will be another great buying opportunity.
    19 Mar 2013, 12:47 PM Reply Like
  • Macro Investor
    , contributor
    Comments (7079) | Send Message
     
    Brilliant move by the Cypriots. Let's now see how much balls Merkel has. I bet she will fold and bail out Cyprus regardless.

     

    Pushback is the only thing bullies respect.
    19 Mar 2013, 01:04 PM Reply Like
  • change is the only constant
    , contributor
    Comments (1718) | Send Message
     
    I agree pushback is the only thing bullies respect. But the Germans are not bullies here. The benefits of EU membership are being tested. BOTH could reasonably say (farewell?) enough of the euro.
    19 Mar 2013, 01:21 PM Reply Like
  • GregSoon
    , contributor
    Comments (150) | Send Message
     
    They (the Troika) need to just let any of the EU states that are going to default, to default. Stop these bailouts, they are destroying everyone's confidence.
    19 Mar 2013, 01:28 PM Reply Like
  • Macro Investor
    , contributor
    Comments (7079) | Send Message
     
    I am sure a series of defaults will build confidence, eh?
    19 Mar 2013, 01:34 PM Reply Like
  • GregSoon
    , contributor
    Comments (150) | Send Message
     
    If not a bailout, then a Cyprexit. A default of a country with a population 1/5 of NYC would be good for the EU.
    19 Mar 2013, 01:39 PM Reply Like
  • Macro Investor
    , contributor
    Comments (7079) | Send Message
     
    That would set a nice precedent for the Italians. Ready for an Italian exit?
    19 Mar 2013, 02:09 PM Reply Like
  • Tack
    , contributor
    Comments (12441) | Send Message
     
    On upward-trending days, SA is like Sleepy Hollow, but the lunacy that pops up in commentary on virtually any day with a little downward volatility is simply astounding. It never ceases to arrive nor fails to amaze.
    19 Mar 2013, 02:42 PM Reply Like
  • SteveO99
    , contributor
    Comments (4) | Send Message
     
    i'm one of those doom chasers tack - non savy, non financially educated, who gambled (note gamble, not invest) on world destruction in mid 2011. i'm becoming more discouraged that reading articles here will educate me...it is mostly french...i'm so under now, my calculus continues to conclude that i need to wait for some correction before cutting my losses...meanwhile, record highs. it is funny, as i find myself so drawn to the doom and gloom articles. i don't enjoy checking my balence these days.
    19 Mar 2013, 03:05 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    A must Watch!

     

    http://bloom.bg/11fxf5F-Aw79nWd1QH~jz5tVDF7cR...
    19 Mar 2013, 03:11 PM Reply Like
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