"Most of my investors are very small --
around €20,000. But it is a lot of money to them. They
are mostly Irish and British expats living in the Middle East and they see value to be had in Irish property now," he said. Mr. Jones said he believed the current crisis signals the "beginning of the end for the euro". He added: "I think what the EU has signaled is that bank deposits are no longer safe. At a single stroke they have reduced the European banking system to third-world status."
For businesses and individuals with substantial funds in the banks in Cyprus this crisis hascaused ruination. As a result of the deal brokered with the IMF/ECB/European Commission
“Troika” large account balances will
be cut by 40% - 80% depending on the bank.
the balance of funds remaining after this
will be frozen until the situation has been fullystabilized. Many believe that it could be months, maybe years, before these client funds arereturned to their rightful owners.What a disaster
the “bailout” turned out to be
for the 50 Irish and British businessmen mentionedabove. In total they will lose approximately 400,000 Euros from their investment projectovernight. Third-
Flight of capital:
Now that the dust has settled somewhat we are being told
that the “markets” have reacted
favorably to the final Cypriot bailout.
However, this crisis is far from over. The “Rubicon” of the sanctity of deposits has been crossed.
In fact in my opinion it is just starting. No Eurogroup bank will ever be trusted again. Many believe that Italy and Spain have similar crises in the making and anxiety within Europe is againstarting to rise. Can
you imagine the “fear factor” welling within
the citizens of Italy and Spainconsidering how ordinary Cypriots have been treated?Rather than wait for protective capital controls to be introduced in Spain and Italy (given thatthere are 3 trillion Euros in private deposits in banks in these two countries) it is expected that
chief executives will start moving funds out of Eurogroup banks immediately. People no longer have any belief that their financial leaders will be able todeal successfully with a possible full blown Mediterranean banking melt-down. Confidence inthe Eurogroup banking system has utterly vaporized such was the degree of mismanagement andincompetence displayed by the ECB board and the IMF on the 18
March last.Given this collapse of confidence, funds have now started to flee the Eurozone. Case in point, Ihave just come across a story in a Dublin newspaper today. This piece announces that the head of one of the largest Irish industrial conglomerates, Cement Roadstone Holdings (CRH), hasinstructed his financial chiefs to move all free bank balances out of the Euro ever Friday andmove it back for business every Monday. How it that for a vote of confidence in the Euro zone?It is my guess that as more and more corporations adopt similar deposit protection measures the
introduction of capital controls throughout all of Euroland will become a self-