NICK MILLER: ''Very bad, very, very bad,'' says 65-year-old John
Demetriou, rubbing tears from his lined face with thick fingers. ''I
lost all my money.''He had left Cyprus in the early 1970s at the height of its war with Turkey, taking his wife and young children to safety in Australia. He built a life from nothing and, gradually, a substantial nest egg. He retired to Cyprus in 2007 with about $1 million, his life savings.
He planned to spend it on his grandchildren - some of whom live in Cyprus - putting them through university and setting them up. There would be medical bills; he has a heart condition. The interest was paying for a comfortable retirement, and trips back to Australia. He also toyed with the idea of buying a boat.
He wanted to leave any big purchases a few years, to be sure this was where he would spend his retirement. There was no hurry. But now it is all gone.
''If I made the decision to stay, I was going to build a house,'' John says. ''Unfortunately I didn't make the decision yet.
''I went to sleep Friday as a rich man. I woke up a poor man.''
His money was all in the Laiki ''Popular'' Bank which was the main casualty of Cyprus' bailout package set by the European Union. Laiki is to be dismantled. Savings of less than €100,000 are to move to the Bank of Cyprus. Anything more than that will almost certainly be wiped out as the bank is wound down, its remaining assets taken by the bank's creditors.
Last week he heard a rumour that the bank was in trouble and went into Aiya Napa to ask his bank manager - a friend - if he should move his life savings.
''There's no problem, nothing to worry about,'' he was told.
Not so. ''I go to bed and I can't sleep. I walk around, I have a coffee. I am thinking about my family.''
John's tears flow. As he chokes up, his son George, who moved to Cyprus in 1990, explains.
''The whole family, we used to work at the markets. I would work at the markets on the weekend to help my parents while my mates were off having fun. Honest work in honest jobs. Now all that hard work is paying the debts of other people and the government. It's disgusting, to be honest.''
George says he can start again - if things get worse he and his family might move back to Australia.
''But not my dad. He can't go back to Australia. He is not allowed to fly because of his heart, and anyway where would he live? He has no house. He will have €100,000 left to live off. Soon he's not going to have a cent to his name.''
John has a thin hope. His money was sitting in the bank in Australian dollars instead of euros, so he wonders if it would be exempt from the bank's collapse. But the bank's doors are closed, so he doesn't even know to whom he should put that argument.
''For the moment I am 'sitting on charcoal', as they say,'' waiting to see if he gets burnt.
''It's not Russian money, it's not black money. It's my money.''
There are almost 5000 Cypriot-Australians on the island. Most are - or were - self-sufficient veterans of the 1950s engineering boom or the 1974 war who came back to retire or to be with family (John is looking after his 90-year-old mother).
This week Britain stopped paying pensions into Cypriot accounts, advising expatriates to open a British bank account instead.
Australia's high commission in Nicosia has already fielded inquiries from dual nationals seeking advice on their pensions. They were told to set up different payment arrangements, a spokeswoman for the Department of Foreign Affairs and Trade said.
''We expect the main impact will be for Australians who have invested large sums in Laiki Bank or the Bank of Cyprus,'' she said. ''There is no need for special measures at this stage.''
Retirement dreams dashed: John Demetriou. Photo: Nick Miller
Source
banzai7
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Submitted by Tyler Durden: After reading this memo from the Central Bank
of Cyprus sent to bank CEOs on February 11, arguably to put them at
ease, all we can say is "Oooops"...
We'll ignore the contents of the memo, including such statements that "restricting the property rights of depositors" is unconstitutional - that is after all for the people of Cyprus to opine on (we did however have a hearty laugh upon learning that there is a European Convention of Human Rights),
As for the FT article referenced? The following, from February 10, which references a "confidential memo" which foretold the events from two weeks ago with absolute precision :
So far the contagion has been mostly contained, courtesy of epic intervention on behalf of the BIS to keep the EUR stable for the past two weeks. Once again, we doubt this will persist.A radical new option for the financial rescue of Cyprus would force losses on uninsured depositors in Cypriot banks, as well as investors in the country’s sovereign bonds, according to a confidential memorandum prepared ahead of Monday’s meeting of eurozone finance ministers.
The proposal for a “bail-in” of investors and depositors, and drastic shrinking of the Cypriot banking sector, is one of three options put forward as alternatives to a full-scale bailout. The ministers are trying to agree a rescue plan by March, to follow the presidential elections in Cyprus later this month.
By “bailing in” uninsured bank depositors, it would also involve more foreign investors, especially from Russia, some of whom have used Cyprus as a tax haven in recent years. That would answer criticism from Berlin in particular, where politicians are calling for more drastic action to stop the island being used for money laundering and tax evasion.
Labelled “strictly confidential” and distributed to eurozone officials last week, the memo says the radical version of the plan – including a “haircut” of 50 per cent on sovereign bonds – would shrink the Cypriot financial sector, now nearly eight times larger than the island’s economy, by about one-third by 2015.
Senior EU officials who have seen the document cautioned that imposing losses on bank depositors and a sovereign debt restructuring remain unlikely. Underlining the dissuasive language in the memo, they said that bailing in depositors was never considered in previous eurozone bailouts because of concern that it could lead to bank runs in other financially fragile countries.
But the authors warn such drastic action could restart contagion in eurozone financial markets...
At least at this point we know that a Cyprus sovereign debt haircut of 50%, which is noted on the memo as the missing piece to the "sustainability" puzzle, is next.
In the meantime, dear citizens of the world, please enjoy as your central bankers lie to you each and every day, and never forget that everything is under control.
Courtesy of SigmaTV, h/t John Johns, and Yiannis Mouzakis
Source
banzai7
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