Market Watch

Russia's Involvment in Cyprus

Looks like we are getting a little more than we bargained for with the Cyprus fiasco. Jim Sinclair at King World News gives his take HERE


“The wire reports on the Cyprus situation are working overtime to try to make the case that 80% of the deposits belong to the people of Cyprus, and only 20% of the deposits belong to the Russians.  That’s absolutely false.  After 1985, when the ‘Robber Barrons’ of Russia took over the general economics of Russia, that was the transformation from the KGB to private business.  The primary place for exported Russian funds was Cyprus.

“What’s just happened is the IMF has backed up, lauded, supported, and publicized, as if it were a victory, the taking of 10% of what really turns out to be 80% of Russian ‘black money.’  Russian ‘black money’ is KGB money, now in business.  The leader of Russia (Putin) was a former KGB official.  Whose money do you think they have taken?  This is the biggest mistake the IMF could possibly have ever made.”

It’s very dangerous in doing business with the Russians, to lose their money.  Revenge will be very much a part of the motivation for what happens from this point forward.  This type of event will take us out of the $1,500s and we may never see those prices again in our lifetimes.”

Have you ever danced with the Devil by the pail Moon light?

Update from Hedge/Reuters

Reuters headlines crossing the closing tape, supposedly out of a (very credible) Greek source, according to whom the Eurogroup will give Cyprus more flexibility on bank levy, and that Cyprus should safeguard depositors under €100,000…

Finally, the Russian response to the discovery that haircuts on big deposits just rose from 9.9% to over 15% will hardly be warm and cuddly.

And updated again HERE

It now seems sure that the ongoing discussion in Cyprus’ government will see a “no” vote as the WSJ is reporting a rather stunning gamble by the Cypriots (and by Cypriots we mean European leaders) to force the Russians to bear the brunt of the cost of the bailout. The non-resigned Cypriot FinMin is heading to Russia to propose a deal that includes imposing a 20% to 30% levy on Russian-held deposits in Cypriot banks, which could cost them billions of euros. In exchange, Russia will be given equity in Cyprus’s future national gas company and some additional strategic benefits in the sector, while Russian investors would be given control of the board of directors at Cyprus’s banks. The apparent quid pro quo in this deal does nothing to hide the fact that private property was stolen and while pointing fingers just at the Russians may play well for PR purposes, it is described as “a long shot” as the Kremlin notes, “it’s practically impossible to talk without knowing details.”