Medvedev Quotes Lenin While Speaking Against the Cyprus Bailout Deal

Credit: Downing Street / Foter.com / CC BY-NC-NDCredit: Downing Street / Foter.com / CC BY-NC-NDThe Russian prime minister is not happy about the Cyprus bailout deal. At a meeting with deputies Dmitry Medvedev invoked a phrase of Lenin’s in reference to the new agreement. From The Telegraph:

Meeting deputies at his residence outside the city, Russia’s Prime Minister said there was a need to “understand what this story turns into in the long run, what the consequences for the international financial and monetary system will be - and thus, for our own interests as well.”

Mr Medvedev prefaced his comments by addressing Deputy Prime Minister, Igor Shuvalov, with the words: “Let us, Igor Ivanovich, talk about what’s happening with Cyprus. The stealing of the stolen is continuing there, I think.”

The seemingly clumsy phrase was in fact a sharp reference to a quote attributable to Vladimir Lenin, who used it to justify the confiscation of capitalists’ property.

Russians with large deposits in Cypriot banks will be especially hard hit by the recent Cyprus bailout deal. The deal guarantees deposits of under 100,000 euros. However, deposits worth more than 100,000 euros will be affected, with perhaps as much as 30 percent of the deposits being taken to pay for the bailout. The new deal includes a restructuring of Cyprus’ banking sector, with the country’s second largest bank having deposits below 100,000 euros being moved to the Bank of Cyprus and deposits of over 100,000 euros being moved into a “bad bank.”

Under the original deal all accounts in Cypriot banks would have been affected. However, the Cypriot government rejected that deal.

Russians have about 20 billion euros in Cypriot banks, a substantial amount of which will be used by the Cypriot government to raise the amount necessary to secure a 10 billion euro bailout.

Medvedev has touched upon Russian history before while discussing the Cyprus crisis, having earlier said that the E.U. was behaving like the Soviet Union. Unfortunately for Russian citizens with more than 100,000 euros in Cypriot banks it looks like they will be unwillingly contributing to the latest chapter of the euro crisis. 

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  • Almanian!||

    "Cypriot Bank Deal: Women and Children and Russians Hurt Disproportionately!"

  • IceTrey||

    Laiki and BoC have branches in London that remained open and didn't limit withdrawals. The Russian money is long gone.

  • John||

    It is probably beyond their capability. But it would be funny as shit if the Russians pulled a little gun boat diplomacy and showed up with a fleet to take back their assets.

  • R C Dean||

    Well, its the EU and Cyprus, so I suspect one (1) actual gunboat would suffice.

  • John||

    A couple of mobsters with a particularly mean German Shepherd would probably do the trick.

  • Heroic Mulatto||

    Wait, we're talking about the Cyprus that has been on war footing ever since Turkey occupied 1/3 of their island and currently has the U.N. administering a demilitarized zone, right?

  • R C Dean||

    Yeah. And?

    Oh, the UN is overseeing their security. In that case, the mobsters could leave the German Shephed at home.

  • some guy||

    Or the German Shepherd could leave the mobsters at home. Either way would work.

  • albo||

    C'mon, even Russia's paratroopers backed by its half-decayed Mediterrean fleet could take the greek part of Cyprus.

  • Heroic Mulatto||

    I'm not arguing Russia couldn't occupy Cyprus, but it would take more than 1 gunboat and a dog.

  • Lord Humungus||

    two gunboats and a pack of dogs?

  • albo||

    They could get that cool-ass Ekranoplane out of cold storage in the Black Sea. That packs a bunch of anti-ship missiles.

  • Brett L||

    Also, seeing that big old bitch coming in hot would make many an asshole pucker. I wonder if we could build one of those AC-130 CAS platforms on an ekranoplane. That thing would be a badass beach clearing machine.

  • ||

    Russia has always jonesed for a warm water port just so they could take out Cyprus eventually.

  • Randian||

    Clever plan: Russia buys Cyprus as part of the bailout.

  • Heroic Mulatto||

    I bet the British, with their 2 Guantanamo Bay-style military bases on the island, would love that!

  • Tulpa (LAOL-PA)||

    The official Cyprus govt doesn't even control the entire island.

  • ||

    It'll be like Haiti! Or the Dominican Republic, take your pick.

  • Fist of Etiquette||

    The seemingly clumsy phrase was in fact a sharp reference to a quote attributable to Vladimir Lenin, who used it to justify the confiscation of capitalists’ property.

    Lenin is openly ridiculed by Russian leadership now?

  • John Thacker||

    That's the interesting part. He's essentially saying that the EU is justifying stealing the money because it was stolen in the first place (by corrupt Russians here), and accusing them of acting like Bolshies.

  • Gladstone||

    Quite a few left-libertarians and "anarchists" would agree with "stealing the stolen" part.

  • R C Dean||

    The fact that they are moving all large deposits into a single bank tells me they aren't done with them yet.

    At a minimum, of course, there will be (if its not already part of the deal) severe capital controls imposed on those deposits, to keep them from fleeing for safer shores. Which, after this, would be nearly any other shores.

    One thing about the Russians, though: they hold a grudge. For. Ever. The wheel will turn, and Cyprus will pay for this massive theft. The Russians understand "Pour encourager les autres".

  • John||

    Of course they are not done. And they will have to have capital controls. No way would anyone leave their money in a Cypriot bank right now. They stole all of the money.

  • some guy||

    At least they are more honest about it than, say, the Federal Reserve...

  • Sevo||

    "Which, after this, would be nearly any other shores."

    Not sure about this. If you had sizable deposits in any bank in Greece, Portugal, or Italy, would you feel safe?
    I'd be bleeding those deposits down to nothing and given the current interest, burying it in the backyard.

  • some guy||

    I hope you plan on buying gold before burying it in the back yard. If they are willing to steal your electronic money they're also willing to render your paper money worthless.

  • Tulpa (LAOL-PA)||

    safer shores. Which, after this, would be nearly any other shores.

    Lightning never strikes the same place twice.

  • kinnath||

    So what is the argument being made by the thieves here? Is it "your money will be lost when the bank collapses, so we'll take part of that money to save the bank and save the rest of your money as well"?

  • ||

    The argument is that they can.

  • kinnath||

    Because Fuck You That's Why is the fundamental reason of all government action.

    I was asking for the PR version of the story.

  • sarcasmic||

    Basically, yes. The deposits were loaned mostly to the Greeks who have no means of paying them back.

  • Overt||

    I believe that is the argument.

    And...I'm not sure I disagree with such framing.

    Libertarians shouldn't be complaining about the whole "Forfeit 9% of your assets" thing. They should be complaining that these asset holders aren't allowed to be completely wiped out when the banks collapse.

  • John Thacker||

    It's fine, so far as the new deal goes, because those excess deposits never were promised deposit insurance.

    For all the problems with deposit insurance, just ignoring it, as the initial deal with with the small depositors, is certainly wrong.

  • Overt||

    Except the government also cannot honor the insurance. So the insurance company is ALSO bankrupt.

    When an insurance company is bankrupt, during the unwinding procedures, people are usually given cents on the dollar for their outstanding claims.

    Essentially, you have banks going out of business and the insurance behind them unable to pay. A fourth party (EU Bank) is willing to come in and save both entities, by paying back depositors at 90c on the dollar.

    Now Libertarians can argue about whether or not it is appropriate to bail out the insurance/banks. But once you've let that bright line slip by, the complaints about how much money people get to keep is a tiny detail- not the outrage that so many seem to be making it.

  • John Thacker||

    Seems like the government shouldn't have made the promise, then. But it did make the promise to the one set of depositors, but not the others.

  • John Thacker||

    Therefore, the claims that had the promise should be treated ahead of the people that didn't have the promise, no?

  • Overt||

    So let's play this forward. The government shouldn't have insured these assets but they did. Now they are bankrupt. The default status is: bankrupt bank, bankrupt government insurance program and bankrupt depositors. That's the default.

    The fourth party comes in and says "I'm prepared to save 90% of your assets". Should the government say "Fuck off, unless I can get 100%, I am letting everyone go"?

  • CatoTheElder||

    It is an outrage when one considers that deposit insurance is a fraud perpetrated by government.

    But you're right if you maintain that deposit insurance is a good and essential function of government.

  • Overt||

    I don't understand that. Whether you believe insurance is good or not, the insurance company cannot pay the depositors back. Even if this stuff were completely voluntary- that is, depositors could choose to insure themselves or not- there is always the risk that the insurance company would get a black swan event and be unable to pay back its claims.

    So the outrage is in deciding to bail out the insurance company- not in the % haircut that claim recipients get back.

  • R C Dean||

    The problem here isn't that the depositors will lose due to the shitty condition of these banks (although that is a problem, since these banks have been thoroughly gamed by the EU via the Greek bailout and EU seal of approval - they all passed the recent stress tests).

    If the depositors were to lose money because the banks collapsed, those would be business losses. Very different from the government seizing money.

  • Overt||

    That's just window dressing to me. Either the government seizes these assets and doles them out as a part of a bankruptcy proceeding, or they seize 9% or whatever and leave the rest of the accounts alone.

    To me, this is like someone agreeing to pay back my bonds/investment at 90 cents on the dollar. I don't like it, but some people should be happy they are even getting THAT back.

  • CatoTheElder||

    They're getting a better deal than GM bondholders got from His Oneness.

  • Adam330||

    It certainly seems more fair to make the depositors take a hair cut rather than have some poor German income tax payer foot the bill. But why should the depositors be the only ones to take a hit while the bank's other creditors get paid?

  • Invisible Finger||

    As far as I know, the bondholders ARE going to be wiped out this time.

    Invest and deposit in a bank that purchases shit for assets, you are taking a risk.

  • John||

    Serious question. If the Russians showed up with an Aircraft Carrier group and said "give us our money or we are bombing until we get it back", could you really blame them? I wouldn't.

  • Overt||

    The problem I have is that these banks are collapsing. The default condition is that these people don't get ANY money back because the banks are out of business.

    So Russians showing up with aircraft carriers is like you walking into Enron with a shotgun and demanding your money back.

  • John||

    There is some money there. It is just who gets priority in getting what is left. And the Island itself has to be worth something. They could pay reparations like Germany did.

  • Overt||

    This is the banks which are private, right? So russians showing up trying to get "priority" in the unwinding of a private entity is the same bullshit that Obama pulled when he used the full faith and ass kicking of the US to unwind Chrysler and GM. I didn't like it then, and I wouldn't like it for the Russians.

    These banks did something stupid and they are now failing. Cypriots and Russians depositing in those banks should honestly be happy with everything above 0 that they get back, since those banks don't even have PENNIES on the dollar to repay those deposits.

  • John||

    But it is the government who is determining who gets priority. And the country with the nuclear weapons probably has some leverage in that.

  • Overt||

    If your argument is "Might makes right" I guess I won't disagree.

    If you are asking if it is morally acceptable for a government to use threat of force to change the rules of a jurisdiction, then you won't find me agreeing.

    When you put money in an investment in a certain jurisdiction, you agree to the rules of that polity. That means in a dispute, you are at their mercy. To after the fact try to take over the government in order to get the prioritization you like is not morally acceptable.

    And by the way, let's remember that while the Cypriot government is determining priority, they are also preventing the bank from failing whatsoever. If these banks don't get their bailout money, we won't be talking about a 10% haircut. It will be much, much worse.

  • Invisible Finger||

    But it is the government who is determining who gets priority.

    Only to a very small extent. The government is trying to ensure small depositors don't take a haircut. Basically the govt is trying to insure deposits up to a certain amount even though the deposits aren't legally insured. But the depositors aren't getting shifted into any different priority than the law already specifies.

  • Restoras||

    How much did the Germans end up paying? Didn't it end up being a small fraction of what was demanded? Not to mention it ended poorly for the 'victorious' allies.

    Of course, Cyprus is no Germany when it comes to military power, whcih leads me to beleive Cyprus could be more of a Serbia circa June 1914. That said, I am amazed at how long this game of kick the can has gone on.

  • John||

    The Germans paid a ton, that is until they inflated their currency and made all of the payments worthless.

  • Restoras||

    Yes they did pay but the payments were restructured several times, right? In the end total reparations were a fraction of what was demanded/agreed to at the end of the war.

    And then, yes, they did run the printing presses.

  • some guy||

    No, the default position would be for a bankruptcy court to divvy out remaining funds proportional to legitimate claims. So, each depositor would end up losing the same percentage.

    This is different from you going vigilante at Enron because you ostensibly have a legal recourse in dealing with Enron (the US court system). Russia has no legal recourse here.

  • Overt||

    Sure, but a collapsing bank would have far fewer assets to dole out to these people at the end than a bank that was saved with a bailout.

    Essentially the people orchestrating the bailout are saying, "Which would you prefer, 20 cents on the dollar, or 90 cents and a share of equity in the bank?"

    I'm not saying that any of this is kosher. I'm just saying that once you accept the premise of a bailout of a failing bank, trying to apply any Libertarian principles to the followup activities is silly.

  • Restoras||

    I will make it legal!

  • albo||

    If you did that, at least you could take all the furniture and a few secretaries as compensation.

    Maybe the Russians could take a few shiploads of olives or whatever they grow on Cyprus.

  • R C Dean||

    The amazing thing is that Cyprus itself isn't broke, or even close. Its basically the cork in a huge bottle of natural gas.

  • sarcasmic||

    Or I could be wrong.

  • albo||

    Gas the Russians have, and lots of it.

    Besides, hydrocarbons are murder. Why do you hate Mother Gaia.

  • T||

    Why do you hate Mother Gaia.

    Because she's a cranky old bitch?

  • sarcasmic||

    I don't think Cyprus has much of an economy other than banking.

  • Brett L||

    "I want my fucking money, but I'll settle for all of the Aeron chairs and computers in the building."

    Works for me.

  • Heroic Mulatto||

    Oh, wait until the Chinese are at our door....

  • John||

    I wish them luck with that.

  • A Serious Man||

    Don't they only have one aircraft carrier that they bought second-hand from the Russians?

  • Heroic Mulatto||

    Don't they only have one aircraft carrier that they bought second-hand from the Russians?

    2 actually, which they are using for reverse-engineering. By 2020, they hope to have 3 to 5 of their own built.

  • A Serious Man||

    2020. By then the US Navy would have introduced the Gerald R. Ford-class into service as the most advanced aircraft carrier in the world.

  • Restoras||

    Right. With a full complement of F/A-18s that have been in service for just...30 years?

    And what the fuck is up with naming a class of carriers after a president who is probably remembered most as being parodied as a bumbling fool by Chevy Chase?

    Besides, China isn't interested in North America. Siberia, and Southeast Asia, on the other hand...

  • BakedPenguin||

    The islands in the the South China Sea. Or more specifically, the natural gas and oil deposits thought to exist beneath them.

  • Stormy Dragon||

  • R C Dean||

    Aircraft carriers are close to being as outdated as battleships were in WWII. Talk about high-value targets.

    If we ever get into a no-fooling shooting match, our military's obsession with relatively fragile technology is going to cost us big-time.

  • Not an Economist||

    People have said that before. Remember what was said about the first Iraq War? Lots of respected military minds thought it would be an extremely tough fight. While it wasn't easy, it wasn't all that hard either, taking no where near as long or as many casulties as the experts thought.

  • Heroic Mulatto||

    You don't need luck when you have a population fit for military service that is equal to the entire population of the country you're fighting.

  • Brett L||

    Just how are they going to get here? Ask the Persians what good numbers are when you can't maneuver your enemy to a broad field.

  • John||

    In 500 BC maybe. But in 2013, the age of nuclear weapons and combined arms, human wave attacks probably won't be too effective.

  • Heroic Mulatto||

    human wave attacks probably won't be too effective

    It wouldn't have to be effective to sell the Chinese on it. I suspect it would be like that episode of Star Trek where Kirk goes to that overpopulated planet.

  • WTF||

    How'd that numerical advantage work out against the Japanese?

  • Heroic Mulatto||

    How'd that numerical advantage work out against the Japanese?

    Apples and oranges. The Sick Man of Asia has gotten well.

  • A Serious Man||

    Bad news if we wanted to invade and occupy China, not such bad news when we have nukes and the most powerful navy in world history.

  • Heroic Mulatto||

    Of course I agree that we have naval superiority but in a conflict with China we would be forced into a conventional war unless we were willing to risk nuclear retaliation from the Chinese.

  • Restoras||

    Not too mention that while we may have the most powerful navy the Chinese won't need to match that capability to accomplish whatever it is they want to accomplish in Asia.

  • some guy||

    Modern war is all about air superiority, which we have right now. The number of men you have with rifles is irrelevant unless you can get them all within rifle range of your enemy.

  • Restoras||

    Sure, but all you need to do is deny air superiority right? You don't actually have to have air superiority yourself and if you deny your enemy that advantage it changes the chess match, right?

  • Tulpa (LAOL-PA)||

    Unless the combatants are both lacking an air force, someone will always have air superiority.

  • Almanian!||

    FUCKING MONGORIANS!

  • Tulpa (LAOL-PA)||

    PRC isn't nearly ready for a full-blown confrontation with the US right now. They're in a similar position to the Empire of Japan in the 1930s; they need access to fuel resources, agricultural land, and women. That can be gotten by intimidating their neighbors while the mighty US is run by incompetent ADD clowns who are more concerned with looting the treasury at home than anything else.

  • Heroic Mulatto||

    That's true, but who are they going to intimidate that isn't already in bed with the U.S. militarily? Mongolia? Burma? Cambodia? Laos is already a de facto Chinese vassal state. I guess they could go with their old standby, Vietnam, but those resources will only get you so far.

  • Restoras||

    How about Indonesia? Japan is broke...how about them? Phillipines?

  • Heroic Mulatto||

    Japan, S. Korea, the Philippines, and Thailand are all officially designated "major non-NATO allies," so we're pretty much on the hook if they get attacked. As you said downthread about chess matches, to the Chinese, it's more like a game of weiqi (Go), which is why they are so fucking paranoid being surrounded by MNNAs.

  • BakedPenguin||

    I'm not sure how intimidated Vietnam would be. They have a pretty big army, good defensive terrain on their border, and a history of doing well against the Chinese.

  • Tulpa (LAOL-PA)||

    a history of doing well against the Chinese.

    A long time ago.

  • Restoras||

    Technically yes, they are major allies, but wasn't Poland technically an ally of Great Britain and France? I mean, eventually it worked out that Poland got its freedom back, after 6 years of Nazi occupation followed by 45 years of Red Army occupation.

    Point being, if the Chicoms decide that thier massive population of males with no hope of ever finding a wife in China would make a good occupation army in 5-10 years, or whatever the demographic time frame is, their is nothing we can do to stop them.

  • Tulpa (LAOL-PA)||

    Hence the comment about current, and forseeably future, US "leadership". We were technically obligated to defend our people in Benghazi, too.

    If I'm the Phillippines I don't know how much I'm willing to risk a confrontation with PRC over undersea natural gas fields, based on my faith in BO taking a break from golf long enough to counter a Chinese invasion.

  • sarcasmic||

    Here's the problem. The banks don't have the money. It's not there. They lent it to Greeks who defaulted on the loans.

  • sarcasmic||

    This is why I'm not a big fan of fractional reserve banking.

    When things go bad, they go really bad.

  • albo||

    Putin is such an awesome ventriloquist.

  • Almanian!||

    That make me chuckle

  • Drake||

    I like this story because there are no good guys, and everyone is totally fucked.

  • albo||

    Seriously. It's like watching Carrot Top get into a three-way knife fight with Donald Trump and Susan Rice.

  • R C Dean||

    I'd like it more if I didn't think this was just a test case for converting savings to the use of the State everywhere else.

  • Invisible Finger||

    This method is a lot more honest than the present Federal Reserve System where purchasing power is covertly stolen (via inflation of the money supply) for use by the state.

  • John||

    I like it because it is fun to be on the side of Russian autocrats for once. Yeah, they are evil. Yeah they stole all of that money. But they have style.

  • some guy||

    Someone please explain why Cyprus would steal 30% of 20B Euro in order to get a 10B Euro bailout when it could just steal 50% of the 20B Euro straight out? What's the point of going through Germany on this?

  • John Thacker||

    Having the EU backing what you're doing.

  • John Thacker||

    Though going through the EU is giving them a second class currency, a euro that isn't really convertible to other euros, but which is still aligned to German economic needs, not Cypriot needs.

  • Sevo||

    Just guessing that the E20B isn't sufficient and the Cypriots are looking for more down the road.

  • Brett L||

    I suspect the Cypriots aren't stupid enough to steal from Russians, but the Germans don't give a fuck. Pretty much all the Germans who remember how little fun dealing with homicidal Russians can be are in nursing homes now.

  • Tulpa (LAOL-PA)||

    East Germany still existed 22 years ago.

  • Brett L||

    Right. And those Russians slunk away. The guys in the German armies that got smashed in Russia and Poland might have a different opinion.

  • Restoras||

    Weren't most of those guys killed or march off to work camps? No one was ever heard from again either way.

  • Tulpa (LAOL-PA)||

    You know who else smashed armies in Russia and Poland....

  • Jgalt1975||

    Gustavus Aldophus?

  • Stormy Dragon||

    My brother throwing a temper tantrum because he sucks at Risk?

  • R C Dean||

    The Russians still control Europe's natgas supplies, and will for a few more years at a minimum.

    I wouldn't be surprised if they didn't set up a mechanism to make whole the people whose funds were confiscated, and fund it with a surcharge on natural gas.

  • albo||

    And I'm sure the valve that controls the gas to Germany is going to mysteriously fail a lot next winter.

  • CatoTheElder||

    Since the EU won't honor Russia's Euro deposits in Cypriot bank, maybe Russia should price natural gas in gold and demand delivery of physical metal.

    That would screw the EU royally, particularly Germany.

  • kinnath||

    Long term, it's a bad idea to fuck with people that are already crazy paranoid about both the west and the east.

  • BakedPenguin||

    Especially since many of the Russian billionaires are directly connected to Gazprom.

  • Tim||

    At least there's no garbage talk about "paying a little more to help out" and "common sense measures".

  • Ron||

    Funny how the left here also considers any corporate profit to be monies stolen from the workers. How long before they decide to take corporate savings. I already read one article in the UK Gaurdian suggesting such a thing before. Cyprus decided to steal peoples money.

  • Anonymous Coward||

    Russians have about 20 billion euros in Cypriot banks, a substantial amount of which will be used by the Cypriot government to raise the amount necessary to secure a 10 billion euro bailout.

    If this were the case, why not just take the 20 billion outright, use 10 to recapitalize the banks and keep the rest?

    You've shot the public confidence in your banks no matter which course you take. The question becomes do piss off only the Russians (by threatening to steal only their money), the Russians and the Cypriots (by threatening to steal from both parties), or the entire EU and Russia (by threatening to steal from Russians and Cypriots, then taking a bailout from the ECB)?

  • Invisible Finger||

    You've shot the public confidence in your banks no matter which course you take.

    that is a feature, not a bug.

  • Tulpa (LAOL-PA)||

    Prescient E-Trade commercial: reverse bank robbery.

  • ||

    Went to CNN to see how the market did today. Bad because of Cyprus. Read this in comments:

    Dr_Venture • 22 minutes ago −
    Capitalism has now failed Europe
    Capitalism has now failed 90% of all working Americans.
    Capitalism will soon fail Asia.

    Capitalism is a 20th century concept that does NOT work in the 21st century.
    Time for something NEW !!!

    Derp.

  • Jgalt1975||

    Well, it is Dr. Venture!

  • Almanian!||

    Wow! Sounds liyk a balanced plan, dude! LOL!

    www.cypresisfucked.de/omfg

  • SumpTump||

    That guy really makes a lot of sense dude.

    www.MaxAnon.tk

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