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The Mousetrap of Banking

bank_cyprus Pick up a stone off the ground, turn it upside down and you will soon discover another thriving virus of corruption lurking under it. To the dismay of citizens, a fine web of dishonesty has deeply infiltrated into the social structure of Cyprus. In the absence of Rule of Law, and left untapped, corruption grew into gigantic proportions. It has touched the nation’s basic fabric and tainted government officials and the executive power.
When the highest authority in the land, as the president, publicly tries to influence the course of justice by attempting to instruct the Attorney General how to deal with the findings of an official inquiry in an alleged case of corruption that involved the Assistant Attorney General, and where the same Assistant Attorney General in response, lashes back and launches his own corruption charges for investigation by the police against his own boss – the Attorney General – then one recognizes how corruption has lodged itself deep into the chambers of the executive power and those in authority, who are meant to uphold the law.
The revelation of such behavior by the three highest constitutional authorities in the land means there is little hope for the Republic of Cyprus to operate on the principle of Rule of Law but rather on elected dictatorship or Rule of Man driven by political cronyism.
Looking at the string of corruption scandals one cannot help but ask: what has gone so badly wrong in Cyprus to reach this low state of affairs?
There are a number of factors at play but in the absence of law and justice anything is possible. In preparation for EU membership, the opening of the financial market – which would allow the free movement of capital without restrictions – transformed society forever. At the launch of the Cyprus Stock Exchange, kleptocracy instantly dug its snout deep into the trough. Bad financial practices ultimately triggered the Cyprus Stock Market scam at the start of 1996. Without proper legislation in place to stop theft, it was the beginning and the end of the Cypriot economy. The government and the Central Bank of Cyprus proved incapable (or unwilling) to properly regulate either the financial sector or the Stock Exchange.
A wild frenzy ensued: insider-trading tips for shares and promises of instant riches infiltrated most households. Credit went wild and, intoxicated by the nectar of wealth, the banks and the government took an active role and campaigned to encourage citizens to invest their live’s savings on buying shares. The slogan was “ buy, buy, buy” and soon “financial consultants” went door-to-door peddling riches to unsuspecting citizens. Naively, people borrowed heavily from willing banks and put up their homes as collateral to purchase shares – after all, the government assured them it was safe and investing into “Cypriot companies” would also help the country prosper – so they were told!
Without too many questions asked, money was handed out like candy. The irresponsible financial practice generated obscene profits for the banks and massive bonuses for managers and others – the sky was the limit.
When the hype was ripe for the kill, the banks and an elite kleptocracy dumped their over-inflated shares forcing the market to take a nosedive and crash; a crash that left citizens holding useless certificates with billions of debt to those same banks. The trap was then sealed – banks were in a position to control an entire nation through economic bondage generated by crippling debt. It was a perfect ploy of domination based on pure greed.
Sir Josiah Stamp, Director of the Bank of England from 1928 to 1941 and the 2nd richest man in England at the time stated: “Bankers own the Earth. Take this great power away from them, for then this world would be a better and happier world to live in. But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit.”
Across the Atlantic, Thomas Jefferson, the author of the Declaration of Independence (1776) and the third President of the United States, stated: “If the American people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless.”
No wiser and farsighted words have ever been spoken. Banks in Cyprus had become the new masters of the country and as long as they controlled credit; interest rates; and money supply; they were untouchable and no government dared to stop them. But the insatiable desire of banking greed did not stop there. The property market provided the greatest windfall yet to come.
A collusion between banks, solicitors and land developers (Cyprus Golden Triad) established their own financial rules and terms of execution based on fleecing the market. In fact, the Cyprus Golden Triad was born out of pure gluttony and the hysteria of instant richness became unstoppable. Cyprus has changed from a land with principles to a land of connivances. Even grandmothers with a piece of land soon turned land developers and the 15% man appeared everywhere; in restaurants; offices; hotels and in the streets. Nothing moved unless cash in brown envelopes was handed over! A black market economy reached new heights.
Unsuspecting homebuyers – mostly foreign nationals – became the prime targets. The trickery as not to issue title deeds on completion of the property sale was a well-orchestrated cunning scheme of the entire devious plan of action. The Golden Triad and sales agents convinced buyers that this was how things were done in Cyprus; as long as the sale was recorded with the land registry, title deeds were not mandatory and unsuspecting buyers become perfect victims for exploitation.
Today there are in excess of 100,000 properties without title deeds. Some homeowners ended up losing their homes, which have already been paid for or they are asked to pay for them again due to the developer’s trickery and bank’s involvement in the scam. Yet banks do not accept any responsibility or blame for encouraging such deviousness that went on for years. To this day, the government is unwilling to take on the banks and has failed to rectify this immoral practice.
Equally, the Central Bank of Cyprus on the other hand, together with the European Central Bank both turned a blind eye to the mounting fraudulent banking activities that occurred on the island. A Deloitte EU Report on the Cypriot bank sector reported that “there were very compelling cases and suspicious transactions” that involved billions. In fact, the banking establishment and prominent law firms became the hub for illegal money transactions and yet none were ever questioned or prosecuted.
But there were worse things to come. Cyprus became the perfect candidate for the Troika’s initiative to introduce “bail-in” – a pet project of the international monetary establishment. If proved successful, the same blueprint of action was to be used against other countries in demand for Troika loans.
The Cypriot government did not object to the Eurogroup “bail-in” conditions and without consultation after the Anastasiades election win, signed on the dotted line for a 10 billion Troika loan. Anastasiades adopted the Troika’s austerity plan as his own party manifesto; he shut the banks and, like a thief in the night, went on a thievery spree and emptied people’s bank accounts; cropped workers’ salaries; put hundreds of people in redundancy; emptied pension funds and much, much more. No economic thievery on such a massive scale has ever been attempted before by an elected government to save a corrupt banking system.
The robbery even went one step further.
The Eurogroup demanded that Cyprus Laiki Bank (bad bank) be put into bankruptcy and all its debts be transferred to the Cyprus Bank (good bank). Under normal conditions, once declared into bankruptcy, debts are erased and all remaining assets or cash are shared between all creditors; not in this case! Laiki’s 10 billion ELA debts to the ECB were not erased but instead passed on to the Cypriot taxpayer. That was a perfect mousetrap and the government injected billions (from the Troika loan) to shore up the new “good bank.” In fact, this sleight of hand has cost the nation and taxpayers over 50 billion euros; debts that will take generations to repay – if ever.
If that was not ruinous enough, the banks (with government support) now demand to have the legality to make mass repossessions and sell properties as “toxic loans” to hedge funds on the international market. Just like the Lehman Brothers’ 600 billion frauds did in the USA that forced millions of homeowners to the streets. Many homeowners in Cyprus will soon join them.
It is hoped that one day common sense will prevail and finally clip the wings of the banking institutions. Putting proper legislation in place to protect citizens against bad banking practices would be a good start but no such revolutionary leadership exists on the island – it’s not born yet.
The final curtain on Cyprus will fall when banks start home repossessions and entire families are thrown out into the streets. The outcome is very unpredictable but equally, violent mass uprisings cannot be excluded.

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