CCK's Blog: March 2013

Cyprus requested $18B from EU and IMF to help bail out its bankrupt banks. EU/IMF agreed to provide $10 on condition Cyprus come up with $8B on their own.

Cyprus decided to bankrupt and reconstitute their 2 largest banks resulting in estimated 30-40% loss by the banks' depositors with balances more than EUR100,000

About 40% of affected accounts were held by foreigners and mostly Russians (allegedly dirty Russian mafia, KGB etc). Russian government was pissed and publicly called in robbery.

May be it is the Europeans (EU) and Americans (who control the IMF) way of making the Russians pay back for defaulting on their bonds (mostly held by who else?) a dozen years ago.

At same time, Russian oil company Rosneft just completed deal with BP that will make Rosneft the world largest oil company and BP owning about 20% of Rosneft.

On day that Rosneft made its $12B or $16B final payment to BP, the Jewish Russian oligarch Bereszovsky living in exile in UK and who had been bad mouthing Russian President Putin and calling for his overthrow were reported to have 'hung' himself.

The next day, Bereszovsky's rival Jewish Russian oligarch who is supposedly friendly to Putin was reported to have be called in by the US FBI for questioning.

All just coincidents or are we seeing the first signs of some new re-alignments?

Background on Cyprus

Cypriot banks' assets are more than 7 times the country's US$18B GDP and almost 20% of that (or 120% of GDP equivalent) was 'invested' by their 2 largest banks in Greek bonds that went into default last year with 76% haircut.

That means the 2 Cypriot banks lost more than $5B from just the Greek default! In addition, they also have losses from a burst housing bubble (like everywhere else in US and Europe).

With a government debt of 100% GDP and a sinking economy, the Cypriot government was in no position to bailout the banks and therefore asked for assistance from EU and IMF of about $16B.

EU and IMF were willing to provide $10B on condition that Cyprus come up with the rest and bank depositors are made to pay partly for the banks' losses.

Cyprus govenment initially wanted to tax all bank depositors about 7% (for account balance less than EUR100,000) and 10% (above EUR100,000) but parliament rejected it and after street protests.

Final plan implemented was to take a cut from accounts with balances more than EUR100,000 in the 2 bankrupt banks instead of all banks in the country.

In standard banking laws in most countries, depositors are considered as creditors of a bank and if the bank goes bankrupt the losses will be paid for from shareholders' capital, bondholders, and then depositors in that order.

So the EU/IMF insistence that depositors be made to pay for it is in accordance with standard banking laws and is the proper way of handling bankrupt banks as opposed to bailing out the failed banks including shareholders etc. using taxpayers' money which was what the US, UK, Ireland and Greece did.

However, Cyprus happened to be a banking haven to a lot of foreigners and specifically non-EU foreigners like rich Russians, Lebanese etc. who make up about 40% of the deposits in their banks.

Some reports said that Russians and British people are the 2 largest groups. Given that many Russian Jewish oligarchs live in UK, the 'British' may well be Russian too.

BP vs US
2010 Gulf of Mexico oil spill. BP charged and paid $billions of settlement but case still not closed in 2013...

UK banks vs US
2012 Barclays charged with LIBOR manipulation and UK MP said US working against 'interest of the City' (City is term used to mean the UK banking industry)

2013 HSBC charged with money laundering for Iran and Mexican drug traffickers

1990s Russian Crisis and Default
After the collapse of the USSR in 1989, the Russian economy collapsed in late 1990s as result of the weak economy and mismanagement under Boris Yeltsin.

As result, many Russian resource assets ended up in the hands of so-called oligarchs many of whom happened to be 30+ year old Jewish Russians with dual citizenship or residency in Israel or UK.

How did 30+ year olds Russians come up with so much money or have such great enterpreneurial skills to 'build up' their businesses so quickly from nowhere? Unlikely, of course. More likely explanation: they got financial help from and were working for foreign Jewish financiers to scoop up those prized assets.

President Putin called those oligarchs 'thieves' and tried to recover many of the assets from them. The more cooperative ones like Abramovich 'returned' by various ways and 'national service'. But others like Khodorkosvky tried to fight back but then had their assets re-nationalised and jailed or like Bereszovsky escaped abroad before Putin got to them.

Khodorkovsky owned the largest Russian oil company Sibneft which was seized by Russian government who renamed it Rosneft ('neft' means oil in Russian).

In 1990s Bereszosky was a top official to President Boris Yeltsin who presided over the 1990 crisis. He reportedly supported the ascent of Putin because he thought he could 'control' him but it backfired. Putin went after the oligarchs and their ill gotten assets instead.

In 2011 Bereszovsky sued Roman Abramovich for $billions supposedly due to him from Russian assets cheated from him by the latter.

http://en.wikipedia.org/wiki/1998_Russian_financial_crisis

Russia-BP Rosneft Deal
2012 BP ended their TNK-BP partnership with a group of Russian oligarchs. They 'agreed' (see oligarch background above) to sell TNK-BP to Rosneft controlled by Russian government.

CCK's Blog

Thursday, March 28, 2013

Linking Cyprus, Russia and BP

Saturday, March 02, 2013

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