CITI: Here's How It Will Probably End Up Going Down In Cyprus

He notes a few things: A full bailout is politically impossible due to German politics. The cost of leaving the Eurozone is too high. There is a risk to other peripheral banks due to the cyprus precedent. Cyprus wants to keep foreign depositors.

So bottom line? Here's what happens:

So some mixture of non-EU money, a substitution of austerity promises for immediate levy cash, terming out and locking in of large foreign depositors would seem to be the intersection set of all interested parties, while eliminating the levy on small deposits and the need for the OED to add a new definition for ‘deposit guarantee’. So as bad as it looks now, both the US and the euro zone have been down rehearsed this piece of theatre in the past.