Violating the Norm
For the third straight trading session on Wall Street, investors nervously track
developments in Cyprus. To have a government make a decision to attach savings
of depositors that were to be secure, is shocking. The decision to attach
ordinary people's savings violates the 'norm', 'expectations' and 'values'
guiding Western democracies for a very long time. Investors sidelined are
worried about ramifications from upcoming developments in Cyprus.
Banks in Cyprus, the smallest eurozone country to be bailed out, will remain
closed until Thursday to prevent a bank run, before the 56-member Parliament
votes on a demand from lenders, to seize a percentage of bank depositors'
accounts to pay for a bailout of the country's banks and government. Plan
details sent shockwaves throughout the euro area as it was the first time bank
accounts of depositors have been directly targeted. Security of savings in any
bank is certainly to be questioned. Cyprus's low-tax regime is a reason
depositors are expected to share the cost of the bailout of the banks, which
have been hit hard by their over-exposure to bad Greek debt. Reportedly, nearly
a third of all deposits in Cypriot banks are believed to be held by Russians.
Parliament's finance committee proposed that deposits below 20,000 euros
($25,900) would not be touched; deposits between 20,000 euros and 100,000 euros
($129,290) would face a 6.75% charge and deposits above 100,000 euros would see
9.9% of their deposits taken over by the government. Cypriots confidence in the
banking system will be shaken, should the plan take effect. Additionally,
European policymakers will have set a new precedent that could be repeated in
the future, keeping depositors on edge as to the safety of their money. Panicos
Demetriades, Cyprus central bank governor recommended that no accounts below
100,000 euros ($129,290) be touched since that level represents amount of
savings that are supposed to be insured, if a bank collapses. "The credibility
of, and trust in the banking sector depends on this," said Demetriades, who
conceded that he expects at least 10% of deposits to be withdrawn when the banks
eventually re-open. Andreas Charalambous, a senior official at the ministry
said, "Because of the size of the estimated bailout needs, the burden on those
above 100,000 euros would be such that it would again impact small people
because it would destroy the ability of the country to attract foreign
investment." Failure to pass the bill could mean no bailout money from the
eurozone or the IMF which would lead to bankrupting Cyprus resulting in
reignited concerns in financial markets over the single currency's future thus,
putting deposits in the country's banks under even more threat. On Tuesday, the
parliament in Cyprus rejected a proposed tax on bank deposits, 36 parliament
members voted against the controversial tax and 19 parliament members abstained.
The U.S. Department of Commerce on Tuesday reported new U.S. home construction
rose by 0.8% during February to a seasonally adjusted annual rate of 917,000.
The reports showed modest gains for single-family homes and apartments, as
longer-term trends also signaled a housing market that continues to strengthen.
From the same period in 2012, new U.S. home construction in February was higher
by 28%. New U.S. home construction for single-family homes rose 0.5% to a rate
of 618,000 in February for the highest level since June 2008. Starts for
structures with at least five units increased 0.7% to a rate of 285,000. A sign
of future demand in building permits, rose 4.6% in February to a rate of
Milestone for Millennium-Traders, we are extremely proud to be one of the top 1%
most viewed LinkedIn profiles for 2012.
Offers on Subscriptions, monthly rates at low as $75 per month plus, weekly
subscriptions now available.
on Day Trading with confirmed subscription to our Free
One week trial
Day Trading Rooms
for stocks, futures, forex and options.
available for stocks, futures, forex and options traders.
focus on NYSE, NASDAQ and AMEX.
focus on YM, NQ, TF and ES.
based on New York trading session focus on GBPUSD, USDCAD, USDJPY, EURUSD,
GBPJPY, USDCHF, EURJPY, EURAUD, AUDJPY, CHFJPY, EURCAD, GBPCAD and AUDUSD.
available to subscribers weekdays starting at 9am ET.
Detailed historic performance for all calls is available on our
Opt-in to our
sent via email, first trading day of the week which includes recap of markets
from previous week and what is ahead for the upcoming trading week.
provides new trading subject every month.
Free Chat Rooms
- penny stocks, options, stocks, futures and forex! Chat with other traders any
time, day or night, 24-hours a day.
Mar 19, 2013