Foreclosure compensation checks arrive, but anger some homeowners
Families who endured years of anguish or lost their homes due to banks wrongly reporting they were behind on their mortgage payments are calling the compensation payments resulting from a government settlement, many of which number in the low hundreds, “insulting.” NBC’s Lisa Myers reports.
By Lisa Myers and Rich Gardella
NBC News
Millions of American homeowners who have struggled with foreclosures are now receiving checks for compensation from the companies that serviced their mortgages — part of the federal government’s efforts to resolve the foreclosure crisis. But some of those receiving checks tell NBC News that the payments are an insult that neither punishes the banks enough for “deficient” practices nor helps harmed homeowners recover.
Karen Pooley, 50, of Seattle, told NBC News that she fell behind on her mortgage after losing her job in the building industry in early 2009, and received a notice of default in February 2010.
Pooley said she’s been fighting to save her home from foreclosure for the past three years. Believing that her servicer did not follow legal procedures, she said she has contested the foreclosure through her state’s foreclosure process, and managed to stop three foreclosure sales. She said she also has tried to get authorities to investigate.
Last month, she received her settlement payment, a check for $300.
“It was more than pathetic. It was insulting,” Pooley told NBC News. “I spent more in money on postage providing government agencies with detailed descriptions of what had happened in my case.”
Timothy Platt, 52, a truck driver from Indianapolis, told NBC News he’s also been fighting to save his home from foreclosure the past three years. He claims his servicer made a mistake, declaring he and his wife behind on their mortgage when they were not. Platt is suing the servicer, but has found trying to prove his case frustrating.
“They (the banks) have misrepresented the facts,” he wrote to NBC News in an email last month, “they have insisted on pursuing foreclosure.”
On Thursday morning, Platt emailed NBC News, saying his settlement check had just arrived. It was for $500.
“It’s kind of like a, like a slap in the face,” Platt told NBC News during a stopover in Chicago. “We’ve been trying to work through this for three years now, and we have no help whatsoever, and we’ve lost lots.”
Both homeowners believe their mortgage servicers are in the wrong. Each has gone to court to prevent the servicers from taking their homes. Their respective servicers declined to comment to NBC News.
The compensation payment checks, which range from $300 up to $125,000, are part of the Independent Foreclosure Review Payment Agreement announced in January between federal regulators and 13 mortgage servicing companies, which were subject to enforcement actions for “deficient practices in mortgage loan servicing and foreclosure processing.” Deficient practices have included errors and misrepresentations and the “robo-signing” of documents.
The regulators are the U.S. Treasury’s Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System.
The recipients of the checks are mortgage loan borrowers whose homes were in any stage of a foreclosure process during 2009 or 2010, and whose mortgage servicers were among the 13 companies, or their subsidiaries or affiliates. Compensation payment checks, which began going out April 12, have so far been sent to 3.7 million homeowners. In all, 4.2 million eligible mortgage loan borrowers will receive them.
The 13 servicers are: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.
According to the OCC’s online FAQ about the agreement, the servicers agreed “to provide more than $9.3 billion in cash payments and other assistance to help borrowers. The sum includes $3.6 billion in direct cash payments to eligible borrowers and $5.7 billion in other foreclosure prevention assistance, such as loan modifications and forgiveness of deficiency judgments.”
By comparison, the five largest banks alone – Wells Fargo, Citigroup, Goldman Sachs, JPMorganChase, Bank of America – earned $60 billion in total profits last year.
Payout guided by ‘the matrix’ What determines how much homeowners receive?
The largest payouts – $125,000 – are going to 1,082 members of the military wrongly foreclosed upon, and to just 53 homeowners across the country foreclosed upon even though they never missed a mortgage payment. But most of the recipients – almost 2 million homeowners – will get the smallest payments of $300 to $600.
“In determining the payment amounts,” reads a recent OCC press release, “borrowers were categorized according to the stage of their foreclosure process and the type of possible servicer error. Regulators then determined amounts for each category, using the financial remediation matrix published in June 2012 as a guide, incorporating input from various consumer groups.”)
I think this is a huge story, and it takes very little to tell it. These are the basics on deposit confiscation and how we got there:
■ You know that the EU-forced solution to the failure of banks in Cyprus is to require the Cypriot government to confiscate (“tax”) deposits. That news is everywhere you look; it’s not in dispute or doubt.
Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier…
This is my eighth year as a full time Internet activist. The longer I’m fighting this “War on Evil”, the more I’m concerned with the effectiveness of resistance. No matter what our cause, liberty, false-flag terrorism, free Palestine, debt-free currency, New World Order, Illuminati, chemtrails, vaccination, cancer cures, drug prohibition, or historic revisionism, we must first and foremost make a conscience decision about what’s more important to us, being right or resisting effectively.
Democracy Now! U.S. and World News Headlines for Monday, March 25
Published on Mar 25, 2013
Visit http://www.democracynow.org to watch the entire independent, global news hour. This is a summary of news headlines from the United States and around the world as reported by Democracy Now! on Monday, March 25, 2013. Visit our website to read the complete transcript, search the vast news archive, or to make a donation to support our non-profit news program.
Capitalism in Crisis: Richard Wolff Urges End to Austerity, New Jobs Program, Democratizing Work
Published on Mar 25, 2013
http://www.democracynow.org — As Washington lawmakers pushes new austerity measures, economist Richard Wolff calls for a radical restructuring of the U.S. economic and financial systems. We talk about the $85 billion budget cuts as part of the sequester, banks too big to fail, Congress’ failure to learn the lessons of the 2008 economic collapse and his new book, “Democracy at Work: A Cure for Capitalism.” Wolff also gives FOX news host Bill O’Reilly a lesson in economics 101.
A People’s Revolt in Cyprus: Richard Wolff on Protests Against EU Plan To Seize Bank Savings
Published on Mar 25, 2013
http://www.democracynow.org — The eyes of the financial world are on the small Mediterranean island of Cyprus today. The government of Cyprus has brokered a last-ditch $13 billion bailout deal with European officials to stave off the collapse of its banking sector. Under the deal, all bank deposits above approximately $130,000 will be frozen and used to help pay off the banking sector’s debts. An earlier version of the deal collapsed last week when Cypriots took to the streets to protest paying a tax of up to 10 percent on their life savings. The plan led to mass demonstrations as well as panicked bank withdrawals as Cypriots rushed to protect their savings. “It’s a demonstration of people power in this little corner of the world that’s very impressive and the basis, I think, for some optimism about opposition,” says Richard Wolff, economics professor emeritus at University of Massachusetts, Amherst and visiting professor at New School University. He is the author of several books including most recently, “Democracy at Work: A Cure for Capitalism.”
Germany and The Central Bank are Pressuring Cyprus to steal from it’s citizens as and answer for fiscal irresponsibility. The Central Bank has ordered banks to block citizens access to their own personal accounts. Thereby barring access to their own money. I suppose they are biding their time making sure that people do not empty their accounts before the decision to allow them to steal the money is reached.
Since when is this kind of blatant theft not an unlawful act? Who do they EU and the Central Bank think they are to be coercing the government to commit this crime against it’s people?
Cyprus’s central bank has written to the island’s lenders to ask them to block customer’s transfers and payments, according to reports on the island.
Cypriot website 24h revealed on Sunday that the Central Bank of Cyprus wrote to Cypriot lenders on Saturday, March 16 to ask them to stop all form of payments from their accounts, even those that were from one account at the bank to another.
The measure comes after the Eurogroup asked Cyprus to impose a one-off tax on depositors as part of its bailout.
Kathimerini English Edition understands that the capital controls do not apply to the units of Cypriot banks in Greece. Normal restrictions on cash withdrawals and electronic transfers are in place.
The depositor tax will not apply to Cypriot bank units in Greece but the branches are set to be absored by a Greek lender by Tuesday.
The proposed levy had caused an outcry among many Cypriots
Germany’s finance minister has warned Cyprus that its crisis-stricken banks may never be able to reopen if it rejects the terms of a bailout.
Wolfgang Schaeuble said major Cypriot banks were “insolvent if there are no emergency funds”.
He was speaking after the Cypriot parliament rejected an international bailout deal that would have imposed a one-off tax on bank deposits.
Frantic talks are under way to try to agree an alternative plan.
Leaders of political parties in Cyprus are due to meet later after parliament rejected the controversial levy, proposed as part of a 10bn-euro (£8.7bn; $13bn) bailout package.
The BBC’s Mark Lowen, in Nicosia, says the country is in turmoil and the eurozone’s plan has completely unravelled,
Analysis
Mark Lowen BBC News, Nicosia
There may have been jubilation among many Cypriots at Tuesday night’s parliamentary defeat of the hated banking tax, but now the country faces a tough reality.
The EU bailout has been derailed and Cyprus is edging towards bankruptcy. But talks are also continuing with the EU to find a credible alternative.
The eurozone’s third smallest economy has just sent a resounding message of defiance to Brussels. And the impact will spread far beyond this tiny island.
Not a single MP voted in favour of the controversial deal, sending a clear message to Brussels that the strategy needs a drastic rethink, our correspondent adds.
Late on Tuesday, Mr Schaeuble said that he “regretted” the vote.
“The ECB (European Central Bank) has made it clear that without a reform programme for Cyprus the aid can’t continue. Someone has to explain this to the Cypriots and I think there’s a danger that they won’t be able to open the banks again at all,” he said.
“Two big Cypriot banks are insolvent if there are no emergency funds from the European Central Bank,” Mr Schaeuble added.
Cypriot President Nicos Anastasiades called the talks between party leaders when it became clear that the measure would not be passed by parliament.
Fearing a run on accounts, Cyprus has shut its banks until at least Thursday. The local stock exchange also remains closed.
Cyprus’ banks were badly exposed to Greece, which has itself been the recipient of two huge bailouts.
People line up at an ATM in Nicosia to withdraw cash on Thursday.
Patrick Baz/AFP/Getty Images
The clock is ticking on Cyprus’ fiscal cliff.
The European Central Bank has given the Mediterranean country just four days to come up with its own bailout plan, or a eurozone lifeline to its struggling banks will be severed.
The ultimatum comes after Cypriot lawmakers on Tuesday rejected a highly unpopular proposal put forward by the European Central bank, the European Commission and the International Monetary Fund to give the country’s banks half of a $13 billion bailout package if they can raise the other half from a steep levy on the country’s personal savings accounts.
Since then, the Cyprus government has been struggling to come up with a “Plan B” that will satisfy international lenders. If Cyprus can’t do it by Monday, the ECB will pull the plug on Cypriot banks, which would likely precipitate a collapse of the island’s financial institutions and send shock waves through European and world markets.
Update at 2:40 p.m. ET: Cyprus Bank To Be Restructured:
NPR’s Joanna Kakissis reports that the governor of Cyprus’ central bank, Panicos Demetriades, says country’s second largest bank, Cyprus Popular Bank, will be restructured to forestall its imminent collapse next week. Cyprus Popular Bank has placed a $336 (260 euro) limit on ATM withdrawals.
Our original post:
Kakissis, reporting from the Cypriot capital Nicosia, says the country’s banks were drained by exposure to the Greek debt crisis. But EU and IMF leaders see the island as a haven for offshore investment, especially by wealthy Russians, and want depositors to pay for part of a bailout.
Banks have been closed until Tuesday to prevent a bank run, but ATMs have been restocked so people can withdraw money, Kakissis says.
The Parliament in Cyprus could vote on a plan to raise the $7.5 billion as early as Thursday
Of course people will protest. They have closed the banks and block access to their money. I would dare say it is a very logical reaction to being robbed,wouldn’t you ?
And yet it is typical of this type of strong arm tactic for the victim to be treated as the criminal,while the criminal is protected. Truly ironic is it not ?
Demonstrators outside the House of Representatives yesterday wearing Angela Merkel masks
AROUND 1,000 people gathered outside Parliament yesterday despite a vote on the proposed haircut being postponed until today at 6pm.
Around half of the protesters dispersed quite quickly after receiving news that the vote had been put back, planning on regrouping outside the House today.
“I’m here for the same reason as everyone else to protest the bill and we will come tomorrow and the next day if required,” 56-year-old insurance salesman Lambros Kannaouros said.
“The decision to make the people pay is unfair,” he added.
Petros Heracleous a 26-year-old unemployed protester believed that attempts to restructure the haircut were pre-planned to make the people think that the politicians were trying to change something. “We prefer to keep our pride instead of suffering the repercussions of a haircut,” he said.
Forty-year-old telecommunications regulator, Yiannos Demetriou felt that a haircut would go against human rights and against the Cyprus constitution. “They are trying to take advantage of us so they can take our natural gas and impose a solution to the Cyprus problem that will suit foreign powers,” he said. “If Anastasiades is assuming the political cost of the haircut then he should call for a referendum or even call a general election,” he added.
Cyprus finance minister Michalis Saris arrives to meet his Russian counterpart in Moscow. Photo:
Banks in Cyprus are to remain closed on Thursday and Friday, the government has said, amid continuing uncertainty over an EU bailout that required a 10 per cent tax on savings.
President Nicos Anastasiades will chair a meeting with the parliamentary party leaders tomorrow at 9.30am at the Presidential Palace.
Russian Prime Minister Dmitry Medvedev has criticised the EU and Cyprus’ handling of the country’s ongoing economic crisis, saying they are acting “like a bull in a china shop”, the state-run news agency RIA Novosti reported.
Meanwhile, Prime Minister David Cameron has reaffirmed that any British military or government personnel in Cyprus would not lose their savings due to the crisis.
Local news in Cyprus is reporting an escalation in the protests that have begun in the wake of attempts by EU chiefs to confiscate the savings of depositors. The news of possible bank closures has enraged the public. It appears that in order to keep things under control, the Central Bank is discussing a possible bank merger rather than a full shut down.
The Central Bank of Cyprus today intervened to quash frantic reports that Cyprus Popular Bank is to be closed down.
The reports sent hundreds of Cyprus Popular Bank employees and holders of the bank’s bonds out into the streets. Police deployed a strong force outside the Bank’s headquarters in the capital Nicosia to prevent them smashing into the building. (Source)
Here is a video showing police in riot gear on the scene:
Cyprus Broadcasting Corporation says the following:
The European Central Bank today said it had decided to allow the Central Bank of Cyprus to keep providing banks with emergency funding until this coming Monday.
An ECB statement said that thereafter, Emergency Liquidity Assistance can only be considered if a rescue programme is in place that would ensure the solvency of the banks involved. (Source)
Meanwhile, President Anastasiades supposedly has a Plan B ready:
Cyprus’s political leadership today decided on a package of measures dubbed “plan B” to avert a financial meltdown, as the finance minister is engaged in rescue talks with Russian officials in Moscow….
No details of the plan were immediately announced, but Averof Neophytou, a close associate of President Nicos Anastasiades said that there had been a unanimous decision to establish a “Solidarity Fund”. (Source)
Recent photos of the protests were posted at ZeroHedge, which you can see HERE. One protester can be seen holding a sign that says, “Where is the solidarity?”
We’ll keep you posted as this develops. Previous updates and videos can be found below…
ATMs in Cyprus were drained over the weekend, electronic transfers were halted, and riots ensued following a decision by European Union chiefs to raid private savings accounts to help pay for the country’s $13 billion bailout. It was believed that there were plans to stretch a bank holiday to at least one week, while the exact measures were decided upon. However, yesterday the Cypriot parliament rejected the scheme outright, leading many to speculate that this would be the start of something even worse.
Sure enough, much like the U.S. Federal Reserve threatened martial law and blood in the streets if Congress didn’t accept sweeping bailouts in 2008, now Germany is saying that Cypriot banks might never reopen after parliament’s decision:
Germany’s finance minister, Wolfgang Schaeuble said major Cypriot banks were “insolvent if there are no emergency funds,” according to a BBC report, meaning savers might lose all their money if no deal was reached. (Source)
There is extreme worry that if the banks do reopen, capital flight is all but assured. Meanwhile, similar confiscation schemes are being proposed for Italy and New Zealand (more on that below), spurring questions about which other nations are in line for a “haircut” . . . perhaps better called “the chopping block.”
Whether or not Cyprus gets its bailout in one form or another — perhaps from Russia — this is a precedent-setting crisis that is already leading to such a level of distrust in Cyprus that merchants are even refusing credit card payments. This is indeed shaping up to be a potential “Lehman Brothers Moment” with ramifications that could extend even beyond the troubled nations of Europe.
The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risk of a wider run on savings.
….
In a radical departure from previous aid packages – and one that gave rise to incredulity and anger across the country – euro zone finance ministers forced Cyprus’ savers to pay up to 10 percent of their deposits to raise almost 6 billion euros.
Cyprus president Nicos Anastasiades agreed to the deal, which completely reversed his previous assurances that it would not happen. It sets a very dangerous precedent for future bailouts. As if brutal austerity wasn’t enough, the EU is now demanding a bailout tax making citizens and expat depositors alike personally liable for government and private bank debts. Reuters also notes that according to a draft of the legislation, criminal penalties of up to 3 years in jail and 50,000 euros could be imposed upon anyone who doesn’t comply.
Most of the 10 billion euros will go to bail out Cypriot banks, which took a blow when their substantial holdings of Greek government bonds were written down as part of that country’s second bailout.
Britain has 60,000 depositors in Cypriot banks, including thousands of military and government personnel stationed on the island. George Osborne highlighted that Cypriot banks in England would not be subjected to the tax (originally proposed at 6.75% for accounts under 100,000 Euros; 9.9% for those over 100,000), but expat depositors apparently will – government and military excluded:
George Osborne vowed today that those serving in Britain’s military or government in Cyprus will be protected after European finance chiefs ordered an unprecedented raid on personal bank accounts.
Up to 60,000 British savers are to lose thousands of pounds each as expats in Cyprus have their savings decimated in part of a painful bid to bail out the bankrupt island.
The Chancellor said the financial situation in Cyprus was ‘an example of what happens if you don’t show the world that you can pay your way’, adding: ‘We are not part of the bailout.’ (Source)
The tax is being justified as a last-ditch effort to raise money and keep Cyprus from supposedly causing a domino effect across the Eurozone as indebted nations begin to collapse. Cyprus had set itself up as a strong banking center for investors, but many are outraged over Anastasiades’ about-face:
Those affected will include rich Russians with deposits in Cyprus and Europeans who have retired to the island, as well as Cypriots themselves.
“I’m furious,” said Chris Drake, a former Middle East correspondent for the BBC who lives in Cyprus. “There were plenty of opportunities to take our money out; we didn’t because we were promised it was a red line which would not be crossed.”
“I’ve lost several thousand,” he told Reuters.
ZeroHedge reports that it is those “rich Russians” who could wind up angriest. Eurogroup had suggested that depositors under 100,000 euros should maintain their insurance against such a scheme, but it is possible that larger depositors will absorb their percentage by moving the top percentage tax to 15.6%.
The Eurogroup will give Cyprus more flexibility on bank levy, and that Cyprus should safeguard depositors under €100,000, even as the full €5.8 billion deposit goal must still be hit.
….
(The) Russian response to the discovery that haircuts on big deposits just rose from 9.9% to over 15.6% will hardly be warm and cuddly. Now may be a good time to ban gun (and plutonium) sales to angry Russian billionaire oligarchs. (Source)
However, the changes continue today, 3/19.
The President just proposed the ‘levy’ on deposits begin at EUR 20,000 just hours ahead of today’s planned vote.
CYPRUS REVISED BILL SEES NO LEVY ON DEPOSITS UP TO EU 20,000
However, it is still theft of private property which appears to be the philosophical stumbling block for the parties involved and therefore today’s vote appears to be delayed:
ANASTASIADES TO MEET PARTY LEADERS 9 AM TOMORROW: SPOKESPERSON
CYPRUS PARLIAMENT BANK-LEVY VOTE MAY HAPPEN TOMORROW, CYBC SAYS (Source)
Members of the troika of international lenders arrive at the Presidential Palace yesterday (Christos Theodorides)
THE government yesterday ordered banks to stay shut until next week as it toyed with the idea of re-submitting a proposal on tax deposits – at a much lower rate than the previous scheme – as it scrambled to avert a financial meltdown.
The government was yesterday trying to find alternative solutions after parliament on Tuesday rejected the terms of a bailout from the European Union and turned instead to Russia for a lifeline.
“We don’t have days or weeks, we have only hours to save our country,” Averof Neophytou, ruling DISY deputy chairman, told reporters as crisis talks in Nicosia dragged into the evening.
Neophytou tried to get the message through to other parties.
“I believe we will not be the cursed generation of politicians who will let our country go bankrupt,” Neophytou added.
It was suggested yesterday that the government may submit a bill today proposing a haircut on deposits but at lower rates than legislation that was rejected by parliament on Tuesday.
MPs threw out a proposed tax on bank deposits in exchange for a €10-billion bailout from the EU, a stunning rejection of the kind of strict austerity accepted over the past three years by crisis-hit Greece, Portugal, Ireland, Spain and Italy.
The tax — 6.7 per cent on deposits under €100,000 and 9.9 per cent on deposits over €100,000 — was designed to fetch the government €5.8 billion.
The shortfall from the lower rates could be covered by nationalising the provident funds of semi-state companies.
Bank of Cyprus vice president Evdokimos Xenophontos said the situation could be reversed but warned against touching foreign deposits.
“We cannot do it to foreign depositors who trusted us. This could be theft,” he told reporters after meeting President Nicos Anastasiades last night.
Xenophontos said only Cypriots must foot the bill in exchange for bank warrants, better interest rates, etc.
“If we protect them (foreigners) even if they leave, they will come back. We lived through an invasion and we overcame the difficulties on our own,” he said.
THE NUMBER of non-Cypriots living on the island number over 170.000, the vast majority of whom would have Cypriot bank accounts and are would be affected by a deposit haircut.
The full figure of 170,383 is from the population census carried out by the statistical services in October 2011, published in January this year.
Of the 170,383 non-Cypriots living in Cyprus at the time, 106,270 were EU citizens and 64,113 were non-European. From the European citizens, statistics show that the number of Greeks was the highest at 29,321, then Britons at 24,046, Romanians 23,706, and Bulgarians 18,536.
From the non-European citizen, Filippinos numbered 9,413, Russians 8,164, Sri Lankans 7,269, and Vietnamese 7,028.
Greeks, Romanians and Bulgarians mainly resided in Nicosia while most UK citizens resided in coastal areas such as, Paphos during the research period. The majority of Russian citizens resided in Limassol.
From the non-European citizens the majority lived in Nicosia.
“The population census is carried out once every ten years,” Georgia Ioannou, a statistics officer said. “Since 1982, we have been conducting this survey on October 1. We do not do the survey during the summer period as many people are on holiday and we also do not want to visit people’s homes during Christmas or Easter,” she said.
“We use the traditional method of going from home to home with a questionnaire. We mark down all residents of Cyprus who have been in the country for more than one year or are planning to stay for over a year,” Ioannou said.
The population of Cyprus during the latest population census was 840,407 people, 431,627 were women compared to 408,780 men. From the 106.270 European citizens, 53,607 were men and 52,663 were women. From the 64,113 Non-European citizens, the women were 41,114 and men were 22,999.
ATMs in Cyprus were drained over the weekend, electronic transfers were halted, and riots ensued following a decision by European Union chiefs to raid private savings accounts to help pay for the country’s $13 billion bailout. It was believed that there were plans to stretch a bank holiday to at least one week, while the exact measures were decided upon. However, yesterday the Cypriot parliament rejected the scheme outright, leading many to speculate that this would be the start of something even worse.
Sure enough, much like the U.S. Federal Reserve threatened martial law and blood in the streets if Congress didn’t accept sweeping bailouts in 2008, now Germany is saying that Cypriot banks might never reopen after parliament’s decision:
Germany’s finance minister, Wolfgang Schaeuble said major Cypriot banks were “insolvent if there are no emergency funds,” according to a BBC report, meaning savers might lose all their money if no deal was reached. (Source) There is extreme worry that if the banks do reopen, capital flight is all but assured. Meanwhile, similar confiscation schemes are being proposed for Italy and New Zealand (more on that below), spurring questions about which other nations are in line for a “haircut” . . . perhaps better called “the chopping block.”
Whether or not Cyprus gets its bailout in one form or another — perhaps from Russia — this is a precedent-setting crisis that is already leading to such a level of distrust in Cyprus that merchants are even refusing credit card payments. This is indeed shaping up to be a potential “Lehman Brothers Moment” with ramifications that could extend even beyond the troubled nations of Europe.
The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risk of a wider run on savings.
….
In a radical departure from previous aid packages – and one that gave rise to incredulity and anger across the country - euro zone finance ministers forced Cyprus’ savers to pay up to 10 percent of their deposits to raise almost 6 billion euros.
Cyprus president Nicos Anastasiades agreed to the deal, which completely reversed his previous assurances that it would not happen. It sets a very dangerous precedent for future bailouts. As if brutal austerity wasn’t enough, the EU is now demanding a bailout tax making citizens and expat depositors alike personally liable for government and private bank debts. Reuters also notes that according to a draft of the legislation, criminal penalties of up to 3 years in jail and 50,000 euros could be imposed upon anyone who doesn’t comply.
The Cypriot central bank has denied reports today that stricken Cyprus Popular Bank, the island’s second-largest lender, is to be closed down, Reuters is reporting.
“We deny these reports. Efforts are under way right now to find the best possible solution for this bank,” Central Bank spokeswoman Aliki Stylianou told state television.
A man reads a note on the shutters of a Cyprus Popular Bank (CPB) branch informing customers that the bank will remain closed. Credit: Reuters
Cyprus pins hopes on creation of solidarity fund as ECB threatens to cut off lending
Political leaders in Cyprus have agreed that their country should form an investment fund to raise the capital needed to agree a bailout with the eurozone and International Monetary Fund and avert a collapse of its banking system.
The deputy leader of Cyprus’s conservative DISY party Averof Neofytou announced the agreement within a few hours of the European Central Bank saying that it was set to cut off lending to insolvent Cypriot banks on Monday.
“We will find a solution,” said Neofytou. “We have no other choice. We are making a united effort to avoid our country’s bankruptcy and I think we will succeed.”
Nicosia plans to create a fund collateralized by state assets, possibly including natural gas revenues, church property and social security fund reserves. A proposal is due to be submitted to the House of Representatives on Thursday evening.
A government official who declined to be named told Bloomberg that some kind of deposit tax was not being ruled out.
Meanwhile, Finance Minister Michalis Sarris continued talks in Moscow, with Cyprus hoping there would be Russian interest in Cypriot banks or in contributing to the investment fund being created.
Sarris told Cypriot state broadcaster that he would meet two Russian ministers on Thursday evening and that the main aim would be to convince Moscow to invest in the wealth fund to be set up by the Nicosia government.
“We are asking for help clearly, but something that would make also economic sense for Russia,” Sarris told reporters earlier.
Cyprus is also asking Moscow to extend the maturity of an existing 2.5-billion-euro loan. Sarris said that Russia was unable to provide Cyprus with a new loan.
Neofytou said that Cyprus would welcome Russian assistance but still needed to balance this against the requirements of remaining in the eurozone.
“We cannot reject any form of help but we are in the euros and we need the continue support of the ECB for liquidity,” he said. “Any support is welcome but we should not forget that we are in Europe and we need European institutions to stabilize our economy.”
I seem to recall a country that was also being pressured to accept the terms of a bailout. Its people were upset and angered over the aspect of having to bailout a bank for their fiscal irresponsibility. The government listened to it’s People and rejected the terms of the bailout. Lo and behold the world did not implode and they are still there. Doing quite nicely I might add….
When I first heard Iceland was allowing its taxpayers to vote on whether or not they should repay $5.7 billion that one of its defunct banks owes the U.K. and Netherlands, the angry taxpayer in me took hold and I hoped that they’d vote against repaying.
Turns out the Icelanders felt the same the resentment and said so today when they voted down a deal to repay the British and Dutch. Their rejection essentially revolts against the idea that taxpayers should be held responsible for banks’ financial problems.
Think about it this way, if given the choice back in 2008, would you have paid your share to save AIG, or any other financial institution, and in turn its creditors?
The situation in Iceland is a little trickier than that since the institution in question was a bank, Landsbanki Islands, whose depositors included folks from Britain and the Netherlands. When Landsbanki Islands blew up in 2008 leaving depositors without their money, the British and Dutch government stepped in and bailed out their respective depositors to keep them from panicking.
Now though, those governments want that money back. And since whatever assets are left of Landsbanki Islands are not enough to recover the total $5.7 billion, the people of Iceland are left footing what remains of the bill–estimated to be around $2 billion.
Help comes from Finland, Norway, Denmark and Sweden
The IMF will pump about $827 million into the Icelandic economy immediately
The goal is to stabilize the country’s finances and shore up its currency
Iceland is facing severe recession after a series of bank failures in October
(CNN) — Nordic countries agreed to lend struggling Iceland $2.5 billion to help it recover from a series of crippling bank failures, bolstering a $2.1 billion aid package from the International Monetary Fund, their governments announced Thursday.
Prime Minister Geir Haarde has been trying to drum up support for Iceland’s bailout.
“This is a first step to get Iceland out of its current serious financial and economic situation,” the governments of Finland, Norway, Denmark and Sweden announced in a joint statement. “The banking crisis in Iceland is of unprecedented proportions and has serious implications for the country’s economy.”
The statement follows the IMF’s decision on Wednesday to pump about $827 million into the Icelandic economy immediately, with another $1.3 billion coming in eight installments. Both moves are aimed at stabilizing Iceland’s finances and shoring up its currency, which plummeted after a series of bank failures in October.
Iceland sought IMF help after its government was forced to nationalize three banks to head off a complete collapse of its financial system. Trading on the country’s stock market was suspended for nearly a week, economic growth nearly flatlined and inflation jumped to more than 12 percent.
“As a result,Iceland is facing a severe recession, given the high debt level in the economy and significant dependence of the private sector on foreign currency and inflation-indexed debt,” John Lipsky, the IMF’s acting chairman, said in a statement announcing the decision.
A look at what Putin gains—newfound economic might
It’s mere coincidence, of course. But to Vladimir Putin, the man who called the Soviet Union’s demise the “greatest geopolitical catastrophe” of the 20th century, just the thought of saving Iceland’s hide must seem like redemption.
In 1986 Iceland hosted the Reykjavik summit between Ronald Reagan and Mikhail Gorbachev, a meeting momentous for its unplanned evolution into a conversation on nuclear disarmament between the two leaders—but also as a catalyst for the 1991 August coup against Gorbachev that sparked the USSR’s implosion.
“It was a sign of change in the Soviet Union, in many ways in the decline of the Soviet Union,” says Shamil Yenikeyeff, a Russia expert at the Oxford Institute for Energy Studies.
ARC DE TRIOMPHE
Now Reykjavik is asking Moscow for a $5.5 billion emergency loan to prop up its economy after its banking system collapsed two weeks ago amid the global credit disaster. And Russia is positioned, as a revitalized once-superpower flush with cash, to rescue Iceland, a NATO member praised for its chart-topping living standard! To Putin and the Kremlin, could there be a sweeter arc to the last two decades of Russian history?
That may be putting it a bit too strongly: even if Moscow grants the loan, Iceland will need a lot more cash, probably from the International Monetary Fund’s pocket. Still, Putin’s famous lament suggests a partial answer to the question that’s abounded since reports of the loan surfaced: What’s Russia after here?
True, $5.5 billion isn’t a staggering sum for a country with around 100 times as much in cash reserves. Nor is the loan a done deal: agreement wasn’t reached in the first round of negotiations last week. But the gesture alone—even the possibility—is significant. After all, Russia was a financial and political basket case just 10 years ago and has its own economic woes at the moment.
Pride, surely, isn’t the only prize: the seas of the “High North” are rich in fish and energy resources, and Moscow needs to show the world it’s a good global citizen after trouncing Georgia this summer. But for a leadership keenly aware of Russia’s less than auspicious place in modern history texts, this is an opportunity to further demonstrate that indeed there is a new world order, and it’s not the one George H.W. Bush foresaw in 1990.
Our current financial situation was not bred out of incompetence, but by design
DHS Insider update: It has begun
- Doug Hagmann (Bio and Archives) Tuesday, March 19, 2013Canada Free Press
Much like my high-level source within the U.S. Department of Homeland Security outlined in a series of interviews beginning last year, the orchestrated collapse of the U.S. dollar and the entire world’s economic system has begun. The first shots in a global economic take-over were fired in Cyprus as my esteemed colleague and founding editor of Canada Free Press, Judi McLeod laid out in frank detail in her column yesterday and her follow up today.
Please read it and heed her advice, or suffer the consequences of your own normalcy bias that such an event will not happen in the United States, Canada, or from wherever you might be reading this. It will, and the plan appears to be on schedule for a shot across the bow later this spring here in the West, with a more aggressive take-over starting sometime this fall, according to my source.
The Plan
To those needing a quick refresher, the plan is quite simple and can be summarized by the Clinton-era quip attributed to political strategist James Carville, “the economy, stupid” and the June 9, 2010 statement by former Obama czar Van Jones, Socialist extraordinaire, “top down, bottom up, inside out.” It is a plan for a one world Communist economy where the “middle class” will be wiped out through a series of events that will have the same ultimate effect as we are seeing in present day Cyprus.
Doug Hagmann’s Insider series
Based on the events in Cyprus, it should be quite clear to even the most vocal critic of the legitimacy of the information provided to me by my source within the DHS as published on this web site is no longer at issue. The U.S. dollar, the backbone of world currencies and the proverbial firewall preventing the erosion of our national sovereignty, is the ultimate target of a takedown by the global banking interests controlled by a handful of banks and families of the “royal elite.”
The plan for a global currency or a one world economic order is a matter that transcends political parties. Those who continue to argue in the Republican-Democrat meme are doing nothing more than providing entertainment to distract people from the real issue, that of the global elite versus the rest of us. The top of the pyramid in this Ponzi scheme is filled with members of both U.S. political parties who are systematically pillaging us and our future generations into financial debt, bondage and slavery. It is a plan that has been in the works for centuries. The problem, however, is that we have been conditioned not to think that big. Yet, the lie is that big.
The parties
Our current financial situation was not bred out of incompetence, but by design. The occupancy of Barack Hussein Obama as the putative President of the United States was a plan in the making long ago, to usher in this oppressive system where we will be left at the mercy of the global ruling class. It is not by accident that we have been prevented from knowing exactly who this man is, from the controversy of his birth records to his college transcripts and even his social security number. Contrary to what the state-controlled media wants you to believe, these questions have never been answered with any measure of authenticity.
The Obama Economy: Americans are drawing down their 401(k)s for nonretirement needs in record numbers, just as Social Security goes bust. This portends poverty for millions as the White House fiddles. Cat food, anyone?
One out of four U.S. workers with 401(k) retirement savings accounts has been forced to cash them out or borrow from them at high costs just to stay solvent.
The Washington Post, citing a report from financial advisory firm HelloWallet, said the withdrawals have drained $70 billion, or an astonishing near-quarter of the total $293 billion, in America’s retirement accounts “undermining already shaky retirement security for millions of Americans.”
It comes at a bad time, because as Monday’s Page 1 IBD story by Jed Graham warned, as of this year, new retirees will outlive Social Security’s official trust fund, a bankruptcy that will force a 25% cut in benefits.
Some 69% of retired workers already are dependent in “major” part on Social Security as their main retirement income, according to a 2012 study by the Employee Benefit Research Institute, with worker savings off sharply for those in the below-$35,000 income bracket.
Why is this happening? It’s tempting to blame workers financial incompetence for these early cashouts, as some of the Post’s quoted experts do. But harder evidence points to Obama’s economic policies.
For one thing, jobs remain scarce.
A tax penalty for withdrawals as high as 45% suggests workers are most likely to be cashing out from necessity, not irresponsibility. The withdrawals coincide with a sharp rise in workers taking early retirement or going on disability simply because they can’t find jobs and their unemployment benefits have run out.
Another problem is Social Security itself and its low returns on contributions. U.S. workers contribute 12.4% of their income to Social Security, but get retirement checks so low they must direct another 5% to 10% to 401(k)s, eating into their take-home pay.
And that’s before the looming 25% cut in benefits. In privatized systems, such as Chile’s, workers put just 10% of their incomes toward personal retirement accounts. They don’t need extra 401(k)s, as their private pensions yield close to 80% of their working salaries.
The Cato Institute notes that the Obama administration’s high-tax, high-regulation, anti-business climate has depressed many stocks, which in turn has depressed the values of 401(k)s in addition to its tax hikes on capital gains. Worker pensions have been hit just as hard as “the rich,” providing an incentive to withdraw from 401(k)s as investments decline.
Incredibly, the Democratic intelligentsia’s response has been to declare that the withdrawals prove a need for a government takeover of private accounts.
Congressional Democrats constantly threaten to expropriate 401(k)s and replace them with Argentine-style “guaranteed retirement accounts.” Alarmed savers on Internet financial bulletin boards have started talking of emptying their 401(k)s as a defense.
But the problem isn’t financially foolish workers. It’s bad policies that make the problems worse. And none of this is being discussed rationally in Washington.
Even so, as sure as the sun will rise, it’s a coming disaster for millions of people in America who will spend their retirements in shocking poverty.
(Reuters) – Cypriot President Nicos Anastasiades said on Saturday a levy on bank depositors was a painful decision he had to make in order to obtain financial aid, or else the island’s economy would have gone bankrupt.
Anastasiades, elected three weeks ago with a pledge to negotiate a swift bailout, said refusal to agree to terms would have led to the collapse of the island’s two largest banks.
The president said he would make a state address on Sunday, when the island’s parliament was scheduled to meet in an emergency session to decide whether to approve the measure.
The eastern Mediterranean nation becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the euro zone for financial aid.
But in a radical departure from previous aid packages – and one which triggered fury across the island – euro zonefinance ministers forced Cyprus’s savers to forfeit up to 10 percent of their deposits to raise almost 6 billion euros.
“On Tuesday … we would either chose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis,” Anastasiades said in a written statement.
Had Cyprus chosen the “catastrophic scenario”, he said, from Tuesday one of the two distressed banks would have ceased to operate since the European Central Bank had already decided to terminate provision of emergency liquidity assistance (ELA).
“The second bank would suspend its work, and neither could avoid collapse,” he said.
Although he did not name the banks, he was referring to Cyprus Popular Bank, the recipient of the ELA facility for months, and Bank of Cyprus, the island’s largest bank.
If the banks collapsed, he said, the state would be obliged to compensate depositors with a bill potentially reaching 30 billion euros, which the state would be unable to pay.
Thousands of Cypriots converged on automatic teller machines on Saturday to withdraw cash, leaving many inoperative by mid-afternoon. Co-operative credit societies, normally open for business on Saturdays, were forced to close to prevent a run on deposits.
(Reporting by Michele Kambas; Editing by Jason Webb)
Cyprus’ savers bear brunt of unprecedented bailout
By Annika Breidthardt and Robin Emmott and Michele Kambas
BRUSSELS/NICOSIA | Sat Mar 16, 2013 7:52pm EDT
(Reuters) – The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risk of a wider run on savings.
The eastern Mediterranean island becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the euro zone for financial help during the region’s debt crisis.
In a radical departure from previous aid packages – and one that gave rise to incredulity and anger across the country – euro zonefinance ministers forced Cyprus’ savers to pay up to 10 percent of their deposits to raise almost 6 billion euros.
Parliament was due to meet on Sunday to vote on the measure, and approval was far from assured.
The decision prompted a run on cashpoints, most of which were depleted by mid afternoon, and co-operative credit societies closed to prevent angry savers withdrawing deposits.
Almost half Cyprus’s bank depositors are believed to be non-resident Russians, but most queuing on Saturday at automatic teller machines appeared to be Cypriots.
President Nicos Anastasiades, elected three weeks ago with a pledge to negotiate a swift bailout, said refusal to agree to terms would have led to the collapse of the two largest banks.
“On Tuesday … We would either choose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis,” Anastasiades said in written statement.
In several statements since his election, he had previously categorically ruled out a deposit haircut.
“My initial reaction is one of shock,” said Nicholas Papadopoulos, head of parliament’s financial affairs committee. “This decision is much worse than what we expected and contrary to what the government was assuring us, right up until last night,” he told Reuters, without saying whether he would back the measure or whether he thought it would pass.
Papadopoulos is vice-chairman of the Democratic Party, a partner in Cyprus’s centre-right ruling coalition and whose support in parliament will be crucial to pass any haircut.
Parliament was expected to convene from 1600 local (1400 GMT) on Sunday to discuss the emergency legislation. Without parliamentary approval, a haircut cannot take place.
Analysis: Cyprus bank levy risks dangerous euro zone precedent
By Mike Peacock
LONDON | Sun Mar 17, 2013 12:55pm EDT
(Reuters) – A hit imposed on Cypriot bank depositors by the euro zone has shocked and alarmed politicians and bankers who fear the currency bloc has set a precedent that will unnerve investors and citizens alike.
After all-night Friday talks, euro finance ministers agreed a 10 billion euro ($13 billion) bailout for the stricken Mediterranean island and said since so much of its debt was rooted in its banks, that sector would have to bear a large part of the burden.
In a radical departure from previous aid packages – and one that gave rise to incredulity and anger across Cyprus – the ministers are forcing the nation’s savers to pay up to 10 percent of their deposits to raise almost 6 billion euros.
The European Central Bank’s pledge to buy euro zone government bonds in unlimited amounts if needed has calmed the beleaguered currency bloc for the past five months. But if investors fear the Cypriot template could be repeated in any future rescues, that calm could be shattered.
Without a bailout, Cyprus would default, which could unravel the investor confidence fostered by the ECB.
Politicians, bankers and analysts said the levy could undermine banks in other euro zone countries, even though the ministers insisted it was a one-off and Cyprus represents just 0.2 percent of euro zone economic output.
“The unprecedented move is an extreme measure, and in our view it will spread some panic across the EMU periphery, and we cannot rule out some capital outflows,” said Annalisa Piazza at Newedge Strategy.
“In the short run we expect some effects on periphery’s (bond yield) spreads and some weakening of the euro cannot be ruled out,” Piazza said.
The decision sent Cypriots scurrying to the cash points, most of which were emptied within hours. Most have been unable to access their bank accounts since Saturday morning, a move unlikely to engender calm.
Euro zone policymakers made a point of saying they would monitor any signs of money moving out of Cyprus but did not say how they might react in the event.
“For us, Cyprus is systemically relevant. Despite the small size of the economy, disorderly developments in Cyprus could undermine the important progress made in 2012 in stabilizing the euro zone,” ECB policymaker Joerg Asmussen said after the Eurogroup meeting concluded before dawn on Saturday.
A Cypriot bank holiday on Monday will limit any immediate reaction. The deposit levy – set at 9.9 percent on bank deposits exceeding 100,000 euros and 6.7 percent on anything below that – will be imposed on Tuesday, if voted through in parliament.
That is not certain to happen, but fear of the alternative – probable default – will focus minds.
TROOPS whose savings are set to be ransacked in a European Union bank raid will get full compensation from the Government, George Osborne said yesterday.
Cyprus is in financial turmoilThousands of military personnel stationed in Cyprus are expected to be among British expat victims of a swingeing levy of up to 10 per cent on bank deposits. It has been imposed by the Cypriot government as part of a £9billion EU bail-out deal.Up to 60,000 UK citizens could lose part of their nest eggs in the astonishing move designed to shore up the debt-laden Cypriot economy.
The Chancellor announced that troops and UK government officials in Cyprus will get compensation. But most expats will get nothing.
Mr Osborne said on the BBC’s Andrew Marr Show: “For people serving in our military and our government out in Cyprus, we are going to compensate anyone affected by this bank tax.”
Treasury officials estimate that around 3,000 UK military personnel and 150 civil servants live in Cyprus.
The Chancellor has moved quickly to ease the fears of Britons
For people serving in our military and our government out in Cyprus, we are going to compensate anyone affected by this bank tax.
Chancellor George Osborne
Under the bail-out plan, a 10 per cent levy will be imposed on deposits of £85,000 or more and 6.75 per cent on lower sums. Cypriot government ministers will today debate whether to proceed with the measure, which has been sanctioned by EU officials.British expats, who are estimated to have £1.7billion in deposits and could lose up to £170million as part of the levy, were furious yesterday.
Sue Hall, 54, a British businesswoman living on the island, feared her firm could lose around £3,500.
She said: “It is outrageous. This is down to the EU, they are picking on Cyprus because it’s a small country.”
Cypriot President Nicos Anastasiades speaking to the people of Cyprus in a televised address
Dennis Wheatley, 78, a former postman from Coventry, pleaded with the Prime Minister to help pensioners. He says the tax will cost him around £1,300. “I came here because I wanted a wonderful life in retirement,” he said. “David Cameron should be making sure pensioners are looked after.”
Michael and Jennifer Garbett, from Castleford, West Yorkshire, said it made them question why they are living in Cyprus. Mr Garbett, 68, a retired publican, said: “We will be stung. I reckon it could result in lots of people going back home.”
Panic was spreading yesterday as savers queued at cash machines. One customer parked his tractor outside a bank in Limassol in frustration.
Cypriot bank officials said depositors could access all their cash – except the amount due in the levy.
MOSCOW, March 18 (RIA Novosti) – Russian President Vladimir Putin believes the Cypriot government’s plans to impose a one-off levy on all bank deposits as part of a bailout deal to get much-needed loans from international creditors would be “unfair, unprofessional and dangerous,” Kremlin spokesman Dmitry Peskov said Monday.
Putin held a meeting Monday with administration staff and economic aides to discuss economic developments in the eurozone, Peskov said.
“In assessing a possible decision to impose an additional tax on bank deposits in Cyprus, Putin said this decision, if made, would be unfair, unprofessional and dangerous,” Peskov quoted Putin as saying.
The European Union and the IMF agreed on Saturday to bail out Cyprus’ debt-laden economy and grant the island nation a loan worth 10 billion euros ($13 billion) in return for the government’s obligation to tax all deposits kept at Cypriot banks.
Under the terms of the bailout deal, Cyprus will have to impose a levy of 6.75 percent on deposits of less than 100,000 euros and 9.9 percent on deposits with greater amounts. Cypriots reacted with shock and rushed to cash machines to withdraw their savings, but many machines refused to pay out.
Cypriot President Nicos Anastasiades said he had to choose between the “catastrophic scenario of disorderly bankruptcy and the scenario of a painful but controlled management of the crisis.”
The bailout plan has yet to be approved by Cyprus’ parliament, with the vote on the bank deposit levy scheduled for Tuesday.
Russian banks are heavily exposed to Cyprus risk as they had around $12 billion on deposit with Cypriot banks at the end of last year, with Russian corporate deposits accounting for another $19 billion, according to estimates by Moody’s international rating agency.
Russian Prime Minister Dmitry Medvedev echoed Putin’s comments on the Cyprus bailout deal, comparing the proposed tax on bank deposits to “the confiscation of other people’s money.”
“Quite strange and controversial decisions [are] being made by some EU member states. I mean Cyprus. Frankly speaking, this looks like the confiscation of other people’s money,” Medvedev said, speaking at a meeting of the supervisory board of national development bank Vnesheconombank.
He added that Russia may have to reconsider its relationship with Cyprus if the island nation introduces the controversial tax on bank deposits, but did not clarify what specifically he had in mind.
Updated with Medvedev’s comments and Cyprus parliament’s decision to postpone voting until Tuesday.
UN ambassador Susan Rice votes at a security council meeting on imposing a fourth round of sanctions against North Korea. Photograph: Spencer Platt/Getty Images
The United Nations security council has voted unanimously to punish North Korea for last month’s nuclear test with a toughened sanctions regime, hours after Pyongyang threatened to unleash a pre-emptive nuclear strike on the United States.
Secretary general Ban Ki-moon, a former South Korean foreign minister, said the resolution “sent an unequivocal message to [the North] that the international community will not tolerate its pursuit of nuclear weapons“.
The decision by the 15-member council followed lengthy negotiations between the United States and China, the North’s main ally. Measures range from tightened financial restrictions to cargo inspections and an explicit ban on exports of yachts and racing cars to the North, but experts say the real issue is enforcement.
North Korea immediately rounded on the UN with more threats, saying it would cancel a non-aggression pact with the South and end other bilateral measures such as a hotline between Pyongyang and Seoul.
China’s UN ambassador Li Baodong said Beijing, Pyongyang’s main trading partner, wanted to see “full implementation” of the resolution.
Susan Rice, the US ambassador to the UN, told reporters that the measures would “bite hard”. She added: “North Korea will achieve nothing by continued threats and provocations.”
A foreign ministry spokesman in Pyongyang had threatened to launch “pre-emptive nuclear strikes on the headquarters of the aggressors” because Washington was pushing to start a nuclear war against it, in a statement hours before the UN vote.
Experts do not believe the North has managed to produce a warhead small enough to be mounted on a missile that could reach the US. They also pointed out that the original Korean language version referred to “invaders” rather than merely the “aggressors” of the English translation.
Jennifer Lind, associate professor of government at Dartmouth College in New Hampshire, said that while the statement was disturbing, “North Korea has a long history of bluster and issuing threats that of course it does not carry out, [such as] its long term threats of turning Seoul into a sea of fire.”
Earlier this week the North threatened to cancel the 1953 armistice that ended the Korean War.
Thursday’s resolution condemns the North’s third nuclear test “in the strongest possible terms” as a flagrant breach of previous resolutions, which bar it from testing or using nuclear or ballistic missile technology and importing or exporting material for the programs.
North Korea cancels non-aggression pact with South
The Associated Press
Posted: Mar 7, 2013 9:06 PM ET
Last Updated: Mar 8, 2013 2:42 AM ET
North Korea has cancelled its nonagression agreements with the South and cut off a direct hotline with as well Thursday. (Jon Chol Jin/AP)
North Korea is cancelling a hotline and a non-aggression pact with South Korea and reiterating past threats in anger over a UN Security Council vote to impose more sanctions on the North for its third nuclear test.
The statement the North issued Friday comes after the council leveled tough, new sanctions targeting the North’s economy and leadership. North Korea already has threatened of a pre-emptive nuclear strike on the United States.
North Korea says it will retaliate with “crushing strikes” if enemies intrude into its territory. It also says it is voiding past nuclear disarmament statements between North and South Korea.
By EDITH M. LEDERER and HYUNG-JIN KIM Associated Press
UNITED NATIONS March 7, 2013 (AP)
The U.N. Security Council responded swiftly to North Korea’s latest nuclear test by punishing the reclusive regime Thursday with tough, new sanctions targeting its economy and leadership, despite Pyongyang’s threat of a pre-emptive nuclear strike on the United States.
The penalties came in a unanimous resolution drafted by the U.S. along with China, which is North Korea’s main benefactor. Beijing said the focus now should be to “defuse the tensions” by restarting negotiations.
The resolution sent a powerful message to North Korea’s new young leader, Kim Jong Un, that the international community condemns his defiance of Security Council bans on nuclear and ballistic tests and is prepared to take even tougher action if he continues flouting international obligations.
“Taken together, these sanctions will bite, and bite hard,” U.S. Ambassador Susan Rice said. “They increase North Korea’s isolation and raise the cost to North Korea’s leaders of defying the international community.”
The new sanctions came in response to North Korea’s underground nuclear test on Feb. 12 and were the fourth set imposed by the U.N. since the country’s first test in 2006. They are aimed at reining in Pyongyang’s nuclear and missile development by requiring all countries to freeze financial transactions or services that could contribute to the programs.
North Korea kept up its warlike rhetoric Friday after the U.N. vote, issuing a statement saying it was canceling a hotline and a nonaggression pact with rival South Korea.
North Korea’s Committee for the Peaceful Reunification of Korea, the country’s arm for dealing with cross-border affairs with Seoul, said it will retaliate with “crushing strikes” if enemies intrude into its territory “even an inch and fire even a single shell.” It also said it was voiding past nuclear disarmament agreements between North and South Korea.
South and North Korea agreed in a 1992 joint declaration not to produce, test or use nuclear weapons. North Korea has since conducted three nuclear tests.
The resolution also targets North Korea’s ruling elite by banning all nations from exporting expensive jewelry, yachts, luxury automobiles and race cars to the North. It also imposes new travel sanctions that would require countries to expel agents working for sanctioned North Korean companies.
The success of the sanctions could depend on how well they are enforced by China, where most of the companies and banks that North Korea is believed to work with are based.
The Pentagon is warning North Korea to stop its provocative actions after Pyongyang threatened a preemptive nuclear strike against the United States. Defense Department officials say that despite the North’s successful nuclear tests, they doubt it is able to deliver on its threats.
Bellicose threats from North Korea are nothing new, but this is the first time Pyongyang has threatened a direct nuclear hit on the United States.
The threat comes in response to new U. N. sanctions supported by the U.S., its allies and China — after Pyongyang conducted its third nuclear test last month.
“The resolution tabled today will take the U.N. sanctions imposed on North Korea to the next level, breaking new ground and imposing significant new legal obligations,” said U.S. U.N. Ambassador Susan Rice.
It is also a reaction to U.S. and South Korean joint naval exercises that the U.S. says are routine, but which the North claims are preparations for a U.S. nuclear attack.
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Much like my high-level source within the U.S. Department of Homeland Security outlined in a series of interviews beginning last year, the orchestrated collapse of the U.S. dollar and the entire world’s economic system has begun. The first shots in a global economic take-over were fired in Cyprus as my esteemed colleague and founding editor of Canada Free Press, Judi McLeod laid out in frank detail in her 
Cyprus is in financial turmoil
The Chancellor has moved quickly to ease the fears of Britons
Cypriot President Nicos Anastasiades speaking to the people of Cyprus in a televised address
Russian Ruble, Stocks Nosedive on Cyprus Debt Crisis
North Korea has cancelled its nonagression agreements with the South and cut off a direct hotline with as well Thursday. (Jon Chol Jin/AP) 
