>So now they need 17 billion bailout loan. From that, (questionably high) 12-13b amount would go for recapitalizing banks (as per EU
>requirements) and 3-4b for government needs. Securing that loan would be normally business as usual, if it was for some bigger country, but since Cyprus is small and considered less important in macro-economic terms (and possibly some past issues with EU), EuroGroup and 'Troika' insist on giving only what is considered sustainable debt which is 10-11 billion euro, whereas they are requiring remaining amount to be raised locally (5.8 billion) as CAPITAL rather then debt. (Otherwise they would just grant 17b)

I think offering tax shelter to EU and tax non-russian courts plus tax shelter to some others was more important than lefty gov. Isolated Cyprus from the typical help.

>And this is where all hell broke lose!
>This time they (both local politicians and so called 'troika') outdid themselves in stupidity and created worldwide financial mess
>by attacking for the first time in western economic history actual money deposited in bank accounts!
>No less then 'Levy' on all deposits ranging between 3 and 15% ! (or communist style confiscation as some see it) and there you have it!

What was the interest level the past 3-5 years ? My guess is it was higher than in the rest of EU except possibly for greece, as Cyprus banks had to compete with their customers buying greek bonds offering high interest levels. IF so, asking now those who did not have such interest gains for a total bailout might be seen different...

>This whole thing created massive damage over almost meaningless (in Euro terms) amount of 5.8B that they were arguing about originally. Not so much for world stock markets that you are concerned about in particular (just some jitters), but more on long terms confidence/stability. Nobody can now guarantee that we will not see bank-runs in Europe in some future EU bailout (Italy,Spain etc) ,
>and it is almost guaranteed that we will have bank-run here in Cyprus when banks reopen next week.
>(Banks are closed til solution is reached...) Besides that, Cyprus as regional financial services center is now very likely history.
>(Who would ever come and invest money if deposits are not safe ?). So despite offering the loan as help, Europe basically asked Cyprus to commit no less then financial suicide.

Yupp. But IMO more because of the low tax issues. Greek bonds were accepted by ECB last year even though Cyprus debt was much less in %, so something was planned even back then. But a bailout is politically here a veeery hard sell, as other countries already try to ease their financial borders agreed upon at the height of Euro crisis. If interest level for cypriotic customers *was* higher than in the rest of EU getting that interest part as special tax might be argued for, as it would be a kind of windfall without risk if others have to step in for 100%.
And yes, I am aware that there is a lot of disinformation in current media, although I am not certain I can identify more than half.

>Whoever geniuses came up with this idea (not sure who did exactly!) with bank deposits, should be fired at the spot if not worse!
>I am not sure exactly what is the game behind all this, but it is sure very dangerous. (Wish it was stupidity only!)

Here I guess the first draft was planned to fail - too shoddy workmanship. What happens to those poor blokes who just had in their accounts money lent to pay off a house next week ?

>Bare in mind that there are large reserves of natural gas that were found around Cyprus some time ago, then there are piles of Russian money that came here in the past (hence oversized financial sector), then there is story about Russian gas supplies to Europe, then Syrian crises in the neighborhood etc. God knows what is happening behind the scenes right now.

Which is the interesting thing allowing Cyprus to still play a few hands...

I do hope it does not become too interesting for you...

thomas