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Government Money Grab In Cyprus  
User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Posted (1 year 5 months 3 days 8 hours ago) and read 4996 times:

Kind of surprised that this topic didn't get any attention here, and that it doesn't get much attention in the US, given our great debts. Yes, I know we can always print more money, but still...

What do you think about the idea that a government would try to grab 10% of it's nation's bank funds to try to bail itself and its insolvent banks out of trouble?

Do you think Cyprus knew the measure would be so unpopular that there really wasn't much risk of presenting that to its people, or do you think they honestly thought it might pass?

Where does Cyprus go now that indeed their main banks are insolvent and there's no one around to bail them out at this point?

How long will they keep the banks closed while they try to sort things out?

Has this made you think differently about keeping your money in a bank?

If so, what is your 'plan B'?


Inspiration, move me brightly!
179 replies: All unread, showing first 25:
 
User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 1, posted (1 year 5 months 3 days 6 hours ago) and read 4959 times:

Quoting Revelation (Thread starter):
Kind of surprised that this topic didn't get any attention here, and that it doesn't get much attention in the US, given our great debts. Yes, I know we can always print more money, but still...

Because nobody is laughing. If things go seriously in the tank over here, I could very well see Obama wanting to do the same thing. Wealth is theft, after all...

New Zealand seems to like the idea - they are considering the same course of action. Not many Cypriots on this forum, but we have some Kiwis - what do you guys think of it?

http://www.scoop.co.nz/stories/PA130...style-solution-for-new-zealand.htm

In fact the precedent has already been done in the US, and we Americans sat for it when we allowed the GM bailout to take place where the seniority of bondholders (i.e. people's retirement savings) was ignored and they were screwed while the UAW was made whole.



In a couple of years federal medical spending along with Social Security and interest will, on current paths, reach the total of all tax receipts - and I'm not even going to take into account interest increases when the Fed can no longer hold back the dam on that falling asteroid.

At the outside the market will realize that Congress will never address the underlying issue with medical care because they have steadfastly refused to do so. At that point we will have become Greece and Cyprus.

Look for people to invest increasingly in "safe" assets - such as gold which you can hide under your bed, or explore ways on getting their money to safe harbors such as banks in stable foreign countries. Do you think it was a coincidence that Obama passed FATCA a few years ago? FATCA costs more to enforce than it was ever anticipated to recover in back taxes and penalties back in 2009, but now it is in place when not just the wealthy few, but EVERYONE will try to hide their money from the taxman.

For those who say that our banking system is “strong” and “not corrupt unlike Cyprus” may I ask what the record is on money laundering and intentional obfuscation of the truth with regard to firms such as HSBC and Wachovia (both of which were caught laundering enormous amounts of money) and JP Morgan (which was just grilled, along with the regulators, regarding the “London Whale”) and not one person or institution has been indicted and prosecuted?

There is about $20 trillion in US Retirement “assets.” A “small” 10% “one time” tax levy on those assets would fund the US Deficit a couple of years from now, and I will go out on a limb now and predict that exactly that will be done.
Of course the “one time” aspect will be a lie too, but we Americans will lap that one up as well just like you have all the others.

We all know that someday are entitlement debt will become just to much. It WILL happen as we continue kicking the can down the road. At that point what will government do? Think it can’t happen here?

The fact of the matter is that the purpose of capital supervision in a banking system is to prevent a degrading banking institution from ever going into negative capital and thus having to hit depositors. But the record from 2007 to the present is that our banking regulators, including the FDIC, have repeatedly failed to follow the law on Prompt Corrective Action which mandates that no bank be allowed to go into a negative capital situation. Despite this mandate in the law the FDIC has repeatedly, in virtually every case, shown an actual loss when it has closed a bank during these years - a loss that, if the law is followed, can't happen. Following the law, at worst, a failing bank will repay its depositors using its legally required reserves - which have been allowed by the Fed to themselves be put at risk.

It is simply a matter of time given the endemic corruption and fraud throughout the system before a large institution -- or set of institutions -- is exposed as actually having negative capital and a run occurs which the FDIC and Treasury cannot cover.

We have $20 trillion in IRAs and 401k retirement assets. There are almost $300 trillion floating around in the form of derivatives (the derivative bomb, which nobody understands or wants to deal with). The FDIC insurance fund is only $25 billion.

Have fun - I need a drink now.



Veni Vidi Castratavi Illegitimos
User currently offlineQuokkas From , joined Dec 1969, posts, RR:
Reply 2, posted (1 year 5 months 3 days 5 hours ago) and read 4931 times:

Quoting Revelation (Thread starter):
Yes, I know we can always print more money, but still...

Best method ever of avoiding obligations. Devalue the currency and pay half (if that much) of the debt. Problem for Cyprus is that they are part of the Euro bloc and can not simply pay in worthless paper. Greece has experienced the same quandary with some naively suggesting that they leave the Euro bloc and pay in confetti. Problem is that it doesn't actually solve the problem.

Assume for a minute that Cyprus (or Greece) leaves the Euro. Then what? If the loans are written and to be repaid in Euro, rapid inflation will result unless the debt is written down. If the debts are written in USD, will it be that different? But for the sake of argument, the debts are cleared. What then? Will Cyprus (either the Government - note that it is not the Government of Cyprus that incurred the debts - or Cypriot banks) be able to raise further finance on favourable terms? Those "analysts" who suggest that countries leave the Euro to solve the immediate problem almost without fail do not address what happens next. Why is that, I wonder?

Fortunately the Parliament of Cyprus has voted against the proposal. Of course this does not guarantee that the depositors are safe. If a solution to the problems of the banks is not found, then the depositors are still at risk for the simple reason that they are unsecured creditors.

Falls in the All Ordinaries Index have been attributed to the uncertainty surrounding the proposed "theft" of savers money. I note that their has been an attempt by some media (the Guardian among others) to hint that it was somehow fair because Russians invest their money in Cyprus. Whether or not Russians choose to launder money in Cyprus, why penalise those who have saved for their old age?

We constantly hear from the right-wing that the State can not afford pensions. Due to the rising number of people who are living longer, it is up to the individual to save for their retirement. And then the very same people who tell us this say that we should pay for the losses incurred by their lack of oversight. Am I surprised that there is anger at the politicians and the banks? No way.

Quoting Dreadnought (Reply 1):
Wealth is theft, after all...

I think it was Proudhon who stated "Property is theft", not wealth. He was of course referring to those who secured their income through the labour of others and, historically, who had appropriated property through wars and other acts of dispossession. In short, he wasn't talking about somebody who opened a joint and started selling burgers. Of course, Proudhon was neither Marxist, nor Socialist.  


User currently offlinearrow From Canada, joined Jun 2002, 2676 posts, RR: 2
Reply 3, posted (1 year 5 months 3 days 4 hours ago) and read 4913 times:
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Quoting Dreadnought (Reply 1):
Have fun - I need a drink now.

Have a beer on me. Your analysis is right on the "money" if you'll forgive the pun.

It's one thing for a savings account "theft" program to be put forward by little Cyprus; it's quite another for the idea to be put forward by the EU as a condition of bailout. The money people put in their savings accounts is after-tax money and it's there to make a little (fully taxable) interest (very little these days) and provide some future financial security. Governments everywhere encourage people to do this because the alternative is for the state to go the "cradle to grave" route which has been, I hope, largely discredited.


If you decide to go the "wealth tax" route, you remove entirely the incentive to save. You might as well put your money in a sock and keep it under the mattress. Or buy gold, I guess, but that's very uncomfortable to sleep on. It's no surprise now that Cyprus wants to keep its banks closed for a few more days. But they've already let the genie out of the bottle, and if I had money in a bank in Cyprus, I'd yank it out at the first opportunity -- never mind that the Cyprus parliament voted the move down. I've lost trust.

And frankly, I'd be nervous about money in European banks now, given that the EU thought this was an OK move and in fact made it a requirement. If they can do that to Cyprus, they can also do it to Spain, Ireland, Portugal, Italy, Whoever.

And I agree -- the US is quite capable of doing this as well. Through FATCA, they've already put in place measures designed to steal significant amounts of money from their expatriates (about 7 million folks) through arbitrary and Draconian fines for minor examples of non-compliance that revolve around the bizarre forms you're expected to complete. What's interesting about FATCA is it will steal money not just from the Americans who live in other places, but indirectly from the national economies of the countries in which they all live. Where's the outrage from those countries?

I think we're in for major volatility over the next few years (and I'm tired of reading financial media reports about how the economy is improving -- what a crock!).



Never let the facts get in the way of a good story.
User currently offlineKiwiRob From New Zealand, joined Jun 2005, 7247 posts, RR: 5
Reply 4, posted (1 year 5 months 3 days 4 hours ago) and read 4908 times:

Quoting Dreadnought (Reply 1):
New Zealand seems to like the idea - they are considering the same course of action. Not many Cypriots on this forum, but we have some Kiwis - what do you guys think of it?

It's Green party scare tactics, I doubt the governing National party would do something like this, they'd be out the following election if they tried.

All of the big high street banks operating in NZ are Australian owned, so I'm not sure how this would work in NZ anyway, NZ account holders might be covered by there parent bank and the Australia deposit insurance. There are only 2 NZ owned banks, both fairly small.


User currently offlineQuokkas From , joined Dec 1969, posts, RR:
Reply 5, posted (1 year 5 months 3 days 4 hours ago) and read 4900 times:

Quoting KiwiRob (Reply 4):
I doubt the governing National party would do something like this

Thankfully, at present I don't think that there is any need to consider anything like it in New Zealand.

As far as I am aware, the Australian Government's Deposit Insurance scheme introduced in response to the GFC was time limited to two years and then only up to a maximum of two million dollars. This was reflected in interest rates offered on deposits at the time and for investments over longer terms or larger amounts different rules applied because the Government, understandably, did not wish to write a blank cheque. Insurance on amounts over two million is and was optional, though in practice the banks would encourage it because they benefit.


User currently offlineMD11Engineer From Germany, joined Oct 2003, 13985 posts, RR: 62
Reply 6, posted (1 year 5 months 3 days 4 hours ago) and read 4899 times:

Quoting arrow (Reply 3):
The money people put in their savings accounts is after-tax money and it's there to make a little (fully taxable) interest (very little these days) and provide some future financial security. Governments everywhere encourage people to do this because the alternative is for the state to go the "cradle to grave" route which has been, I hope, largely discredited.

Not really. Cypriotic banks have the reputation of being a bit dodgy and not asking too much where the money invested in them came from. Due to this Cyprus has rthe reputation of being a tax haven, where tax evaders bring their illegal moneys, as well as a place for money laundering for criminal gangs.

Jan


User currently offlinemoo From Falkland Islands, joined May 2007, 3906 posts, RR: 4
Reply 7, posted (1 year 5 months 3 days 4 hours ago) and read 4892 times:

Government isn't in debt, the country is - so who should pay that debt off? The citizens of that country, obviously.

The bailout agreement requires a quick reduction in overall debt held by the country, and the way the government has come up with is a windfall tax rather than a monthly tax.

Come on Cyprus, it's time to pay your obligations!


User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 8, posted (1 year 5 months 3 days 4 hours ago) and read 4884 times:

My bigger question is in spite of the supposed leaks, who exactly came up with this idea, and no I'm not buying that Cyprus politicians came up with it without prodding / leading.
Now let's see Spain, Portugal, Ireland, Italy, France or any of the other major players in the debt service dilema come up or mention doing something similar.


User currently offlinemoo From Falkland Islands, joined May 2007, 3906 posts, RR: 4
Reply 9, posted (1 year 5 months 3 days 4 hours ago) and read 4871 times:

Quoting par13del (Reply 8):

The stuff that I have read explains that there is a huge amount of money stored in unstructured savings accounts in the country that arent currently taxed to any real value, with Cyprus being somewhat of a grey area tax haven to some degree - the idea (I don't know where it came from originally) was to capture taxation of that untapped fund.


User currently offlineQuokkas From , joined Dec 1969, posts, RR:
Reply 10, posted (1 year 5 months 3 days 4 hours ago) and read 4868 times:

Quoting MD11Engineer (Reply 6):
Cypriotic banks have the reputation of being a bit dodgy

Every used car dealer in the world has a reputation of being dodgy. But the proposed tax did not distinguish between those who were honest workers putting a bit of money aside for the old age, workers temporarily located in Cyprus who needed a bank account to receive their pay, or alleged Russian mafia laundering money. It is for this reason that the UK Government took the unprecedented step of guaranteeing that army/navy/air force and other personnel would be compensated if the "theft" went ahead.

Quoting moo (Reply 7):
The citizens of that country, obviously.

The banks have exposure - i.e. the banks have debts. Why should the "citizens" pay? If you borrow more money than you can afford to repay, the bank makes little or no check to see that you can pay, why should someone else forego their retirement income?

The problem with your glib solution is that others are held responsible for the negligence of those who should know better. A major part of the problem is not that residents of Cyprus have borrowed too much, but that Cypriot banks have loaned more overseas than they can cover. Why should an old age pensioner in Limassol or an RAF maintenance worker in Akrotiri be punished because a billionaire in another part of the world wishes to deny responsibility?


User currently offlinemoo From Falkland Islands, joined May 2007, 3906 posts, RR: 4
Reply 11, posted (1 year 5 months 3 days 3 hours ago) and read 4865 times:

Quoting Quokkas (Reply 10):

The answer to my "glib solution" is for those citizens to keep government spending in check.

This bailout is not about rescuing the banks, it's about rescuing the government from its debts. The government spent on behalf of the citizens, so the citizens are liable.


User currently offlinearrow From Canada, joined Jun 2002, 2676 posts, RR: 2
Reply 12, posted (1 year 5 months 3 days 3 hours ago) and read 4857 times:
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Quoting MD11Engineer (Reply 6):
Not really. Cypriotic banks have the reputation of being a bit dodgy and not asking too much where the money invested in them came from. Due to this Cyprus has rthe reputation of being a tax haven, where tax evaders bring their illegal moneys, as well as a place for money laundering for criminal gangs.

I understand that -- but not all Cypriot depositors are that "dodgy." And if you are going to single out jurisdictions that don't ask enough questions about depositors as "tax havens" then you have to put the US in that camp as well. There's something like $20 trillion in foreign investment in the US, and about $3 trillion of that is in the form of bank accounts in places like Florida, California, Nevada, and Delaware.

Those banks also don't ask any questions of their depositors, and the interest that money earns in the US is tax-free, and not reported to the IRS. Foreign depositors are guaranteed privacy. There may well be lots of "dirty" money in Cypriot banks -- but there's lots of "dirty" money in US banks too.

So, if a wealth tax on Cypriot depositors can be justified by the "dirty money" argument, then I guess the same wealth tax should be applied to US banks, based on the "dirty money" argument.



Never let the facts get in the way of a good story.
User currently offlineMD11Engineer From Germany, joined Oct 2003, 13985 posts, RR: 62
Reply 13, posted (1 year 5 months 3 days 3 hours ago) and read 4856 times:

Quoting moo (Reply 11):
This bailout is not about rescuing the banks, it's about rescuing the government from its debts. The government spent on behalf of the citizens, so the citizens are liable.

Actually what happened in this case was that the Cypriot banks got themselves heavily involved in pre-crisis Greece and got burned when the Greek financial crisis surfaced. Similarly the Irish banks gambled heavily on the I rish real estate market and got burned (as did some German banks, which gamled on the American real estate market).
You could say that the savers were attracted by the high yield promised by the Cypriot banks as long as the economy was going through the bubble. Now that the bubble has burst, the banks are blackmailing the government that if they would go bankrupt millions of savers would lose thzeir retirement money, if they wouldn´t get a bailout from the government. Now the Cypriot government doesn´t have the money to bail out the banks by themselves, so they need support by the EU. The choice fror the savers in Cypriot banks is either to lose 10% (but this only applies to big savings accounts) or to lose everything if the banks go bankrupt.

Jan


User currently offlineQuokkas From , joined Dec 1969, posts, RR:
Reply 14, posted (1 year 5 months 3 days 3 hours ago) and read 4852 times:

Quoting moo (Reply 11):
This bailout is not about rescuing the banks,

Dig deeper.

A lot of the problem is linked to supporting the Greek banks. Cypriot financial institutions were major bond-holders for Greek debt, i.e. the problem is not that ordinary people in Cyprus are profligate. The aim was to raise 5.8 billion euro ($7.6 billion) to recapitalize banks and service debt.

A lot of disinformation has been published about Russian oligarchs laundering money but even if that was true (and it may be) how does that make the ordinary worker in Cyprus liable?

What we seem to be experiencing is pressure from banks to get Governments to underwrite their debts, reinforced by pressure from the EU and pushing fringe members to cough up to protect those in the core areas. Punish Cyprus to protect banks in the stronger EU countries. This has little, if anything, to do with wastrel Cypriots living it up. Why else would the British Government move to protect its citizens working in Cyprus?

[Edited 2013-03-20 11:33:07]

[Edited 2013-03-20 11:34:28]

User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 15, posted (1 year 5 months 3 days 1 hour ago) and read 4787 times:

Quoting Quokkas (Reply 14):
What we seem to be experiencing is pressure from banks to get Governments to underwrite their debts, reinforced by pressure from the EU and pushing fringe members to cough up to protect those in the core areas. Punish Cyprus to protect banks in the stronger EU countries. This has little, if anything, to do with wastrel Cypriots living it up. Why else would the British Government move to protect its citizens working in Cyprus?

All good points but it dances around the central issue. With the EU fully behind this confiscation of assets - the message is clear:

In the EU, private property is NOT sacrosanct.



Veni Vidi Castratavi Illegitimos
User currently offlineQuokkas From , joined Dec 1969, posts, RR:
Reply 16, posted (1 year 5 months 3 days ago) and read 4760 times:

Quoting Dreadnought (Reply 15):
In the EU, private property is NOT sacrosanct.

Has it ever been anywhere? The very notion of taxes on any kind of property assumes otherwise. A basic premise of a property tax is that you hold property under some sort of licence and can be taxed upon it for the "greater good", be that buying B52s or paying pollies salaries.

Of greater interest would be proposals to not only deal with the immediate crisis but to ensure than innocent parties are affected in future. I freely admit that I do not know how the problem (and I don't mean the immediate issue of Cyprus) can be resolved. But I do note that those who assume they do have the answer, never go further than somebody else should pay. Why is that that those who incur the debt should be exempt from any pain? Remember that those who accrue debt are not necessarily those who wish to.

If you wish to buy the latest Lamborghini but can't afford it, why should I pay simply because we live in the same country or share the same birth date?


User currently onlinelewis From Greece, joined Jul 1999, 3623 posts, RR: 5
Reply 17, posted (1 year 5 months 3 days ago) and read 4760 times:

Quoting arrow (Reply 3):
And frankly, I'd be nervous about money in European banks now, given that the EU thought this was an OK move and in fact made it a requirement. If they can do that to Cyprus, they can also do it to Spain, Ireland, Portugal, Italy, Whoever.

What they basically said to all bank account holders in the problematic states of the EZ was "get your money out of your accounts ASAP", this can happen to you too. They placed the foundations for a huge bank run. Per usual, politicians who have no clue and do not think of repercussions before opening their mouths. The fact that the EU political elite though this was a great idea says a lot about the intellect of all the people moving the strings during the crisis.

Quoting MD11Engineer (Reply 6):

Not really. Cypriotic banks have the reputation of being a bit dodgy and not asking too much where the money invested in them came from. Due to this Cyprus has rthe reputation of being a tax haven, where tax evaders bring their illegal moneys, as well as a place for money laundering for criminal gangs.

There are other tax havens where people stash untaxed wealth, sometimes of questionable origin . Switzerland, Luxembourg, Channel Islands, even London. But I forgot, this is where N.Europeans stash their wealth so those tax havens are fine, right?

The foreign press has been to hasty to label all Cypriot bank account holders as money launderers and tax-haven seekers. In addition to that, every single Russian that wanted to place their money in Cypriot banks is apparently an oligarch money launderer. When you need to clean up the banking system, you investigate and act accordingly, you don't punish all depositors in a country!

Quoting Quokkas (Reply 14):
A lot of the problem is linked to supporting the Greek banks. Cypriot financial institutions were major bond-holders for Greek debt, i.e. the problem is not that ordinary people in Cyprus are profligate. The aim was to raise 5.8 billion euro ($7.6 billion) to recapitalize banks and service debt.

Exactly. Cyprus and its banks were forced to accept a haircut to its Greek bonds, which created a huge hole in their finances that now needs a bailout to be solved.

Quoting Quokkas (Reply 14):

A lot of disinformation has been published about Russian oligarchs laundering money but even if that was true (and it may be) how does that make the ordinary worker in Cyprus liable?

It doesn't. The plan would also take money from all depositors, regardless of the source of that money (which can range from disability/unemployment benefits to pensions). It also didn't look at whether a specific bank was healthy or not. A bank customer who had just been given a loan would have part of it confiscated and at the same time would be asked to pay all of it (plus interest of course) back. How crazy is that?

Quoting par13del (Reply 8):
My bigger question is in spite of the supposed leaks, who exactly came up with this idea, and no I'm not buying that Cyprus politicians came up with it without prodding / leading.

An interesting article on how things unraveled:

http://www.guardian.co.uk/world/2013.../cyprus-bank-bailout-nicos-germany

After the summit, it was a he said/she said discussion once again. I wonder, aren't official minutes kept in such cases?

Quoting moo (Reply 9):
the idea (I don't know where it came from originally) was to capture taxation of that untapped fund.

An approach they could have taken would be to tax the interest given on these accounts, which would not go against the unwritten banking rule of "do not touch depositor money" and would not create such an issue on bank trust. I just want to wait and see how things will unravel once Cypriot banks finally open for business. I expect a huge capital flight out of Cyprus so whether or not the parliament approves the measure, the Cypriot economy is toast and no matter how many bailouts come their way, the Cypriots will never be able to pay it back just by relying on the other sector of their economy, which is tourism.


User currently offlineflyingturtle From Switzerland, joined Oct 2011, 2359 posts, RR: 13
Reply 18, posted (1 year 5 months 2 days 23 hours ago) and read 4738 times:

Reminds me of something we already had some decades ago in Europe...

...the government forcing people to buy war bonds.      

Quoting Dreadnought (Reply 15):
In the EU, private property is NOT sacrosanct.

The guarantee of private property is the smaller problem here.

The problem is that Frau Merkel has, through her speaker, said that all bank accounts would be safe. This has reassured the population and enterprises so that they keep their money available to the financial markets. Now the proposal that Cyprus should grab a percentage of all bank accounts is sending tremors through Europe, and will lead the population to withdraw their money rather early than too late.

Liquidity problems anyone? After all, you hardly get any interest anymore on bank accounts. People keeping their € at home? It will be en vogue again...


David



Keeping calm is terrorism against those who want to live in fear.
User currently offlineMD11Engineer From Germany, joined Oct 2003, 13985 posts, RR: 62
Reply 19, posted (1 year 5 months 2 days 23 hours ago) and read 4733 times:

Quoting lewis (Reply 17):
Switzerland, Luxembourg, Channel Islands, even London. But I forgot, this is where N.Europeans stash their wealth so those tax havens are fine, right?

I haven´t heard that they are in trouble. Also, you don´t know about the German customs checks at the borders between Germany, Luxembourg and Switzerland. Switzerland, Luxembourg, Austria and the Channel Islands are pretty much out of fashion as tax havens today due to international cooperation.

Jan


User currently onlinelewis From Greece, joined Jul 1999, 3623 posts, RR: 5
Reply 20, posted (1 year 5 months 2 days 23 hours ago) and read 4714 times:

Quoting MD11Engineer (Reply 19):
I haven´t heard that they are in trouble.

I'm taking about the issue of pointing fingers at countries because apparently they accept lots of money in their banks without caring about the origin and about taxing them. Whether they are in trouble is irrelevant. Cyprus is NOT in trouble because it hosts foreign wealth, they have been doing this for decades and never kept it a secret.It is in trouble due to its exposure to Greek debt. The fact that it hosts so much foreign capital just makes it impossible for them to deal with saving their banks and it is not the cause. But, I guess the mantra of the naughty southerner has to somewhat be made to stick in the Cyprus case as well. How else are they going to explain it? Say that the haircut of Greek bonds was a disaster and all it did was move the debt elsewhere?

Asking for punitive measures that will destroy the Cypriot economy as much as a default would is not the answer and follows no logic whatsoever - let alone the bank run and capital flight that has been initiated. As a German taxpayer who is being told that is funding this bailout, you should be demanding that Cyprus is left in a position to be able to pay back at some point. Throw the Cypriot economy in the trashcan and you can kiss the bailout money goodbye in advance.

Quoting MD11Engineer (Reply 19):
Also, you don´t know about the German customs checks

Apparently Germany needs to look internally as well, based on what I have been reading about domestic money laundering:
http://www.dw.de/germany-a-safe-haven-for-money-laundering/a-16343313

Quote:

According to a study published by the Tax Justice Network that examined 70 countries, Germany is one of the biggest havens for tax evasion - ranking even before Switzerland, the Cayman Islands, Luxembourg or Jersey.

Yup, those places are indeed getting out of fashion.

[Edited 2013-03-20 14:50:15]

User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 21, posted (1 year 5 months 2 days 23 hours ago) and read 4714 times:

Quoting lewis (Reply 17):
An approach they could have taken would be to tax the interest given on these accounts, which would not go against the unwritten banking rule of "do not touch depositor money" and would not create such an issue on bank trust. I just want to wait and see how things will unravel once Cypriot banks finally open for business. I expect a huge capital flight out of Cyprus so whether or not the parliament approves the measure, the Cypriot economy is toast and no matter how many bailouts come their way, the Cypriots will never be able to pay it back just by relying on the other sector of their economy, which is tourism.

That could have been an avenue they could have gone down for sure.

There was no way the people were going to accept that deal and neither should the everyday people have to. The people to target are the ones with numerous accounts of laundered money that is mostly Russian. The Cypriot government are to blame for alot of this also. As usual and the same was in Greece its the everyday innocent citizen on the street that suffers.

Quoting flyingturtle (Reply 18):
Now the proposal that Cyprus should grab a percentage of all bank accounts is sending tremors through Europe, and will lead the population to withdraw their money rather early than too late.

Tremors for sure. After this no one in any European country can feel safe. Even my own bank account is not safe anymore.

Quoting MD11Engineer (Reply 19):
Also, you don´t know about the German customs checks at the borders between Germany, Luxembourg and Switzerland. Switzerland, Luxembourg, Austria and the Channel Islands are pretty much out of fashion as tax havens today due to international cooperation.

If you think that tax evasion and secret accounts are gone from these countries you live in a dream world.


User currently offlineAesma From France, joined Nov 2009, 6585 posts, RR: 9
Reply 22, posted (1 year 5 months 2 days 20 hours ago) and read 4644 times:

If I had money I wouldn't have money but a loan on a house, can't take a haircut that easily.

Quoting arrow (Reply 3):
It's one thing for a savings account "theft" program to be put forward by little Cyprus; it's quite another for the idea to be put forward by the EU as a condition of bailout. The money people put in their savings accounts is after-tax money and it's there to make a little (fully taxable) interest (very little these days) and provide some future financial security. Governments everywhere encourage people to do this because the alternative is for the state to go the "cradle to grave" route which has been, I hope, largely discredited.

Tax is one of the problems. There is little to none. And we can see here but also in "northern" Iceland and Ireland, that such policy doesn't prevent banks from going bust. It's high time, especially in the eurozone, to equalize taxes, or at least have small brackets, from VAT to capital gains and corporate taxes.

Quoting par13del (Reply 8):
My bigger question is in spite of the supposed leaks, who exactly came up with this idea, and no I'm not buying that Cyprus politicians came up with it without prodding / leading.
Now let's see Spain, Portugal, Ireland, Italy, France or any of the other major players in the debt service dilema come up or mention doing something similar.

Yes, I wonder too, and I don't think politicians are to blame, unless the objective was to sink the Cypriot government, that is. Politicians would have seen right away that this was a very bad idea, I suspect bureaucrats.



New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 23, posted (1 year 5 months 2 days 19 hours ago) and read 4630 times:

Quoting Quokkas (Reply 10):
Quoting MD11Engineer (Reply 6):
Cypriotic banks have the reputation of being a bit dodgy

Every used car dealer in the world has a reputation of being dodgy. But the proposed tax did not distinguish between those who were honest workers putting a bit of money aside for the old age, workers temporarily located in Cyprus who needed a bank account to receive their pay, or alleged Russian mafia laundering money.

On the way home (hooray for podcasts!) I heard from a Cypriot MP of the ruling party that the higher 10% tax on the accounts with more than EUR 100,000 was done so with the intention of targeting the money launderers.

The Cypriots themselves know/admit/proclaim that their banking sector is a tax haven, and this MP stated one thing that's a key point in the current behind the scenes negotiations is how to keep this money in Cyprus, because if it all leaves at once that too will cause the banks to collapse!

One should say then why did they do one thing to make those people nervous, and the thought was that all would rather take a 10% haircut rather than lose it all via bankruptcy.

The MP said quite clearly that the Cyprus President only agreed to the "tax" at 4AM because he was being told by "the Germans" that all ECB funds would be stopped before the banks opened Tuesday at 8AM.

Quoting Quokkas (Reply 10):
It is for this reason that the UK Government took the unprecedented step of guaranteeing that army/navy/air force and other personnel would be compensated if the "theft" went ahead.

Now that's an "under-reported" fact.

Quoting Quokkas (Reply 10):
The banks have exposure - i.e. the banks have debts. Why should the "citizens" pay?

I'm no expert, but from what I understand, if the banks fail, there is no economy. The failing banks could all close, but of course then they take 100% of their depositor's "money" with them so there's no money for new (local or international) banks to come in and manage, and without money there's no (local or international) trade. The Cypriot Pound could be re-instated for local trade, but no foreign entity would be interested in trading them.

The depositor's "money" doesn't really exist. The banks do not have cash or any other form of asset that could be used to repay the depositors.

The government's (other) problem is that all the losses in the economy in general and the banking sector in particular mean it's not collecting enough tax revenues to pay for the greatly increased social burdens, and because of this, no one is willing to buy their government bonds because they don't see how Cyprus can pay them back in the future.

Quoting arrow (Reply 12):
And if you are going to single out jurisdictions that don't ask enough questions about depositors as "tax havens" then you have to put the US in that camp as well.

Discussion of other country's banking situations is quite off-topic and should be in another thread, IMHO, otherwise this degrades into a "But Mommy, Johnny's doing it too!" kind of discussion.

Quoting MD11Engineer (Reply 13):
Now that the bubble has burst, the banks are blackmailing the government that if they would go bankrupt millions of savers would lose their retirement money

Blackmail or not, it's the truth.

Quoting OA260 (Reply 21):
The people to target are the ones with numerous accounts of laundered money that is mostly Russian.

I suppose, but if all the large account holders (Russian or otherwise) take their money out the banks will collapse just as surely, and it's not at all clear if the large account holders have violated any EU or Cypriot laws, even if their own government might ask them exactly where all that money came from.

However it seems to be driving the Germans crazy that "their" money would be used make sure that Russian tax dodgers don't lose their money. The Cypriot MP's response to this was that Cypriot banking practices were well known when Cyprus entered the EU.

Quoting lewis (Reply 17):
The plan would also take money from all depositors

The last form of the rule was going to be nothing taken from accounts under EUR 20k, then 6.75% for 20k to 100k and then 10% for 100k and above.



Inspiration, move me brightly!
User currently onlinelewis From Greece, joined Jul 1999, 3623 posts, RR: 5
Reply 24, posted (1 year 5 months 2 days 18 hours ago) and read 4614 times:

Quoting Revelation (Reply 23):

The last form of the rule was going to be nothing taken from accounts under EUR 20k, then 6.75% for 20k to 100k and then 10% for 100k and above.

Still wouldn't look at whether:

-The account is held in a healthy bank.
-The account is owned by a Cypriot national or a foreign national.
-The account's balance came from a recently obtained loan, paychech, retirement, life savings, already-taxed income.
-Whether it is a corporate or personal account.
-The source of the capital is dubious or not.

Whatever the final % was, along with the thresholds, the capital flight and bank run would still occur. We will just see what happens when the banks open, whenever that is.

Quoting Revelation (Reply 23):
The Cypriot MP's response to this was that Cypriot banking practices were well known when Cyprus entered the EU.

The practices have pretty much been the same for the past four decades, never causing a problem for Cyprus. Also something to consider, those same Cypriot banks that are now at the brink of collapse passed the so called EU "stress tests" performed after the crisis started with flying colors.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 25, posted (1 year 5 months 2 days 18 hours ago) and read 4697 times:

It's pretty clear that the wealthier EU countries - particularly Germany, I expect - are getting fed up with pouring money into the weaker ones; money which, in the case of countries like Cyprus, is highly unlikely ever to be repaid.

The problem, in my view, is the Euro itself. Cyprus is stuck with a high-value currency, which doesn't suit its small and not overly efficient economy, which imports more than it exports. If it wasn't in the Eurozone, the solution would be the 'traditional' one - to devalue, making imports more expensive and exports cheaper.

So the only permanent solution would appear to be for Cyprus to phase out the Euro and revert to its own currency. That's probably what a lot of the weaker EU economies will eventually have to do too. The alternative is basically that the wealthier Eurozone countries (particularly Germany) will have to go on pouring money into the poorer ones every few years; so that the poorer ones can go on buying their exports.

Surely a crazy situation?

[Edited 2013-03-20 20:14:57]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineokie From United States of America, joined Jul 2003, 2999 posts, RR: 3
Reply 26, posted (1 year 5 months 2 days 18 hours ago) and read 4692 times:

Quoting Dreadnought (Reply 15):
All good points but it dances around the central issue. With the EU fully behind this confiscation of assets - the message is clear:

In the EU, private property is NOT sacrosanct

Exactly.

Quoting Revelation (Reply 23):
The government's (other) problem is that all the losses in the economy in general and the banking sector in particular mean it's not collecting enough tax revenues to pay for the greatly increased social burdens, and because of this, no one is willing to buy their government bonds because they don't see how Cyprus can pay them back in the future.

Which bore the question what are the tax rates.
20% at the low end 35% at the 60K mark.
14.3% Social Services.
Roughly 5% (mid rate) on property again graduated.
20% on capital gains.

60K at 49.3% would be 29.58K plus property taxes per year.
20K at 34.3% would be 6.86K plus property taxes per year.

Sounds like their tax rates are pretty high. How can they be broke? I have an idea.

Okie


User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 27, posted (1 year 5 months 2 days 8 hours ago) and read 4634 times:

Quoting lewis (Reply 24):
Still wouldn't look at whether:

-The account is held in a healthy bank.
-The account is owned by a Cypriot national or a foreign national.
-The account's balance came from a recently obtained loan, paychech, retirement, life savings, already-taxed income.
-Whether it is a corporate or personal account.
-The source of the capital is dubious or not.

Not sure where you're going with this.

If you're saying the approach should be to only tax foriegn nationals or corporations having funds that can be shown to be of a dubious source that have been held for a long term in an unhealthy bank, then your approach clearly won't work.

The most important flaw is that the banks you suggest collecting from are the ones that are broke! In fact it's exactly these banks (or their successors) who are the ones who will be receiving these taxes you are trying to collect!

Quoting lewis (Reply 24):
The practices have pretty much been the same for the past four decades, never causing a problem for Cyprus.

And the sea wall at the Fukushima Daichi power plant had contained all previous tsunamis...

Quoting lewis (Reply 24):
Also something to consider, those same Cypriot banks that are now at the brink of collapse passed the so called EU "stress tests" performed after the crisis started with flying colors.

As did the Greek banks, but I don't see how the fact that these tests were flawed matters much now.

Quoting NAV20 (Reply 25):
So the only permanent solution would appear to be for Cyprus to phase out the Euro and revert to its own currency. That's probably what a lot of the weaker EU economies will eventually have to do too. The alternative is basically that the wealthier Eurozone countries (particularly Germany) will have to go on pouring money into the poorer ones every few years; so that the poorer ones can go on buying their exports.

Yes, the MP quoted above said the most likely outcome was the re-instatement of the Cyprus Pound if not now then at some point in the future, because all the proposed bailout plans impose unsustainable debts on the nation.

Quoting okie (Reply 26):
Sounds like their tax rates are pretty high. How can they be broke? I have an idea.

You can go with the cynical approaches (tax evasion, incompetent tax collection) or the less cynical approaches (debts that are run up during good times can't be repaid in bad times). Which one are you going with?



Inspiration, move me brightly!
User currently onlinelewis From Greece, joined Jul 1999, 3623 posts, RR: 5
Reply 28, posted (1 year 5 months 2 days 3 hours ago) and read 4593 times:

Quoting Revelation (Reply 27):
Not sure where you're going with this.

If you're saying the approach should be to only tax foriegn nationals or corporations having funds that can be shown to be of a dubious source that have been held for a long term in an unhealthy bank, then your approach clearly won't work.

The most important flaw is that the banks you suggest collecting from are the ones that are broke! In fact it's exactly these banks (or their successors) who are the ones who will be receiving these taxes you are trying to collect!

If you had read the news reports, you would have seen that the only reason the troika suggested involving depositors it is because Cyprus is a tax haven and a money laundering nation (as presented by the press) so the depositors should have some responsibility in this whole mess. Well not all of them and THAT is my point. The whole plan is based on moral grounds so that the German taxpayer can sleep well at night. . If you really want to go after tax dodgers and money launderers, go for it, but don't lump Yiayia Maria with the crooks. Some people have accounts in Cyprus, because, well, they live in Cyprus. That is their only crime and involvement in this whole mess. Also, it DOES matter what depositors get hit. Why should someone holding his life savings in a small and healthy bank have to be burdened with the same costs as someone who is clearly doing funny business with banks. Correct me if I am wrong but I thought there was a thing called justice and that we lived in free societies. Collective punishment does not really fit the purpose of the EU - more like EUSSR - but we have seen over and over again that actions are taken because of spite and not because anyone expects them to work.

Quoting Revelation (Reply 27):
Quoting lewis (Reply 24):
The practices have pretty much been the same for the past four decades, never causing a problem for Cyprus.

And the sea wall at the Fukushima Daichi power plant had contained all previous tsunamis...

I think you know damn well what I mean so no reason for irony. Cyprus was accepted in the EZ as is, no fudged numbers to blame this time, nothing but themselves. The EU knew what they were doing and not once did they raise an eyebrow about the now so-called "unsustainable size of its banking sector", money laundering etc. The EU was actually very fond of Cyprus and its large banking sector.

Quoting Revelation (Reply 27):
Quoting lewis (Reply 24):
Also something to consider, those same Cypriot banks that are now at the brink of collapse passed the so called EU "stress tests" performed after the crisis started with flying colors.

As did the Greek banks, but I don't see how the fact that these tests were flawed matters much now.

It does matter, it shows what a joke the EU has become if all those "brains" working together cannot see the problems within the zone until the shit has hit the fan and is already all over the wall. Those tests were meant to detect such issues with the banks but clearly they did not.


User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 29, posted (1 year 5 months 1 day 18 hours ago) and read 4513 times:

Quoting lewis (Reply 28):

If you had read the news reports, you would have seen that the only reason the troika suggested involving depositors it is because Cyprus is a tax haven and a money laundering nation

I've read lots of news reports and if there are specific other reports to add to the conversation that have credibility, please do.

As above, I've read the Cypriots themselves saying that they are a 'destination bank' of choice and want to remain so.

Quoting lewis (Reply 28):
The whole plan is based on moral grounds so that the German taxpayer can sleep well at night. .

Isn't the real problem that the German tax payer will sleep just fine at night if Cyprus goes under, and Cyprus needs to do something to change the situation?

Quoting lewis (Reply 28):
Some people have accounts in Cyprus, because, well, they live in Cyprus.

Some people had accounts in Leeham Brothers for various reasons reasonable/legal too.

Quoting lewis (Reply 28):
Why should someone holding his life savings in a small and healthy bank have to be burdened with the same costs as someone who is clearly doing funny business with banks.

Because if they don't, it's their nation that will be stuck with no economy once the Cyprus Pound that won't buy anything outside of Cyprus is re-imposed?

Quoting lewis (Reply 28):
Collective punishment does not really fit the purpose of the EU - more like EUSSR - but we have seen over and over again that actions are taken because of spite and not because anyone expects them to work.
Quoting lewis (Reply 28):
I think you know damn well what I mean so no reason for irony. Cyprus was accepted in the EZ as is, no fudged numbers to blame this time, nothing but themselves. The EU knew what they were doing and not once did they raise an eyebrow about the now so-called "unsustainable size of its banking sector", money laundering etc. The EU was actually very fond of Cyprus and its large banking sector.
Quoting lewis (Reply 28):

It does matter, it shows what a joke the EU has become if all those "brains" working together cannot see the problems within the zone until the shit has hit the fan and is already all over the wall. Those tests were meant to detect such issues with the banks but clearly they did not.

Ok, above you argue that Cyprus should be treated fairly by others, yet now you say the EU should be liable because they weren't smart enough to figure out all the risks involved in adding Cyprus to the EU?

Do people in Cyprus really think this line of reasoning will get them anywhere?



Inspiration, move me brightly!
User currently offlineoffloaded From United Kingdom, joined Apr 2009, 871 posts, RR: 0
Reply 30, posted (1 year 5 months 1 day 8 hours ago) and read 4458 times:

Quoting NAV20 (Reply 25):

It's pretty clear that the wealthier EU countries - particularly Germany, I expect - are getting fed up with pouring money into the weaker ones; money which, in the case of countries like Cyprus, is highly unlikely ever to be repaid

We do hear a lot about how fed up the Germans are about subsidising everyone else, but the reality is that in part thanks to the weaker EZ members, the euro being weaker has kept German exports booming for years. Germany is a huge exporting country and the last thing Germany needs a strong euro.

Germany also knew damn well how many countries fiddled the figures to join the euro in the first place. Politics above economic sense. Also massive lack of oversight has to where billions upon billions of EU structural funds were going. I've seen plenty of examples in my 20 years in Portugal. It often goes like this on the south: €10million for project X. Half of the money just disappears through backhanders, commissions, fees, licences etc, so project X either gets finished on the cheap, or simply doesn't get finished at all, and in a few years things start falling apart because there is no money to maintain it.

Quoting OA260 (Reply 21):
Tremors for sure. After this no one in any European country can feel safe. Even my own bank account is not safe anymore.

If they'd got away it in Cyprus, they would try it elsewhere.



To no one will we sell, or deny, or delay, right or justice - Magna Carta, 1215
User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 31, posted (1 year 5 months 1 day 5 hours ago) and read 4421 times:

Quoting offloaded (Reply 30):
If they'd got away it in Cyprus, they would try it elsewhere.

Indeed.

Another interesting development but not surprising.

(Reuters) - Piraeus Bank has been chosen to take over the Greek branches of Cypriot lenders that are being sold to shield the Greek banking system from the island's crisis, two bankers with direct knowledge of the negotiations said on Friday.

Shares of Piraeus were up 20 percent in afternoon trading on speculation of the takeover.

http://www.reuters.com/article/2013/...prus-piraeus-idUSL6N0CED3720130322


User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 32, posted (1 year 4 months 4 weeks 1 day 23 hours ago) and read 4338 times:

Quoting lewis (Reply 28):
If you had read the news reports, you would have seen that the only reason the troika suggested involving depositors it is because Cyprus is a tax haven and a money laundering nation (as presented by the press) so the depositors should have some responsibility in this whole mess.
Current news reports state that "the message coming from Brussels and Berlin is that the money has to come from the banking sector and investors who have benefited from high interest rates over recent years".

More to your point, "Germany is essentially writing the rules for the eurozone", and "Germany has also made it clear that it will no longer accept an economy within the eurozone that is dominated by its status as an economic tax haven".

So, it substantially backs the statement of yours that I quoted.

Quoting lewis (Reply 28):
Well not all of them and THAT is my point.
Quoting lewis (Reply 28):
If you really want to go after tax dodgers and money launderers, go for it, but don't lump Yiayia Maria with the crooks.

If Yiayia has more than EUR 100k in the wrong bank, it's about to get whacked by 25%

Quoting offloaded (Reply 30):
If they'd got away it in Cyprus, they would try it elsewhere.

It looks like they are about to. Watch for the flight of any remaining large account holders in Portugal, Italy, Spain, etc.



Inspiration, move me brightly!
User currently offlineokie From United States of America, joined Jul 2003, 2999 posts, RR: 3
Reply 33, posted (1 year 4 months 4 weeks 1 day 20 hours ago) and read 4308 times:

Quoting Revelation (Reply 32):
It looks like they are about to. Watch for the flight of any remaining large account holders in Portugal, Italy, Spain, etc.

But the Germans are saying the Euro is good for a thousand years. 

Sorry, could not resist.

The situation is not much different than the US four years ago. Banks making bad loans when times were good.
Times are not good now. The banks largely attracted the deposits they have by the high interest rates they paid in order to make the bad loans. You can question the morals of those depositors if you wish but the point is that it is their money just like Yiayia Maria's money.

Cyprus is going to have to put some skin in the game before the EU or IMF help them out. Those big deposits look like an easy mark which still is not going to leave the Cypriots in a sustainable situation as long as you continue to spend more than your revenues.

Okie


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 34, posted (1 year 4 months 4 weeks 1 day 20 hours ago) and read 4292 times:

According to this story a solution has been 'agreed':-

"Politicians in Cyprus have reportedly agreed a new one-off levy on savers in order to secure a European bailout.

"The measures, yet to be confirmed by the country's President, include a 20% tax on savers with deposits over 100,000 euros at the country's largest bank, the Bank of Cyprus.

"A 4% tax on deposits over 100,000 euros would be levied at other banks, a senior Cypriot official told Reuters.

"Cyprus has to raise 5.8bn euros by Monday or face being kicked out of the single currency.

"Eurozone finance ministers are due to meet on Sunday evening to see if the numbers Cyprus has agreed with its international lenders add up."


http://www.skynews.com.au/businessnews/article.aspx?id=857241

It seems as if the latest 'solution' is broadly to double the levy on customers of the Bank of Cyprus, and halve it on people using other banks. I don't know enough about the Cyprus banking setup to know how that change might make the levies more 'acceptable'?



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineokie From United States of America, joined Jul 2003, 2999 posts, RR: 3
Reply 35, posted (1 year 4 months 4 weeks 1 day 19 hours ago) and read 4285 times:

Quoting NAV20 (Reply 34):
It seems as if the latest 'solution' is broadly to double the levy on customers of the Bank of Cyprus, and halve it on people using other banks. I don't know enough about the Cyprus banking setup to know how that change might make the levies more 'acceptable'

It is just the Bank of Cyprus and a few others that are in non recoverable issues with bad loans, real estate of all things does that ring a bell.
The main reason for the big depositors was they were paying higher interest rates to cover questionable loans, normal business decisions by the depositors. As with all things there is risk.
That is the reasoning behind the higher levies at those banks.

Cyprus just can not print money like the US so the only way to produce 5.8bn euros is to take the citizens money from their bank account and call it a tax. Right now the US is printing twice that amount of money per week to cover losses at Fannie Mae and Freddie Mac it is called QE3. Somewhere, some one is going to have to pay the piper, the Cypriots just have no way to print the money to pay their bills.

Okie


User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 36, posted (1 year 4 months 4 weeks 1 day 19 hours ago) and read 4282 times:

Quoting Revelation (Reply 32):
If Yiayia has more than EUR 100k in the wrong bank, it's about to get whacked by 25%

And why should he get whacked? That money could be his life savings on which he was hoping to retire soon.

If the government can prove that the money was illegally acquired, fine. But such an act on people who have done nothing wrong is criminal, and is in clear breach of Article 7 and probably in breach of Protocol 1 of Article 1 of the European Convention on Human Rights.



Veni Vidi Castratavi Illegitimos
User currently offlineokie From United States of America, joined Jul 2003, 2999 posts, RR: 3
Reply 37, posted (1 year 4 months 4 weeks 1 day 18 hours ago) and read 4266 times:

Quoting Dreadnought (Reply 36):
And why should he get whacked? That money could be his life savings on which he was hoping to retire soon.

It is called taking money from those who have it and giving it to those who do not. It is called a tax and when they have no money to take then I suspect they will go after property wealth (vehicles, houses, beads and trinkets) sort of like the IRS.

It will be interesting how far this will cascade and where it will stop.
I am sure many Cypriots will make a run on the banks to get their savings out so the government can not have direct access to the funds. Then the banks will fail because they have no funds. The best I can tell there is no insurance for small depositors. The government will still need money to operate and pay social services and government pensions.

You can rest assured there is people in other countries in the EU that are going to take measures since the government seems to be able arbitrarly take funds from bank accounts.

Okie


User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 38, posted (1 year 4 months 4 weeks 1 day 17 hours ago) and read 4251 times:

Quoting okie (Reply 37):
It is called taking money from those who have it and giving it to those who do not. It is called a tax

It's called double-taxation. People earned money, paid taxes, and put a little away each year, believing that they have paid their due, as far as taxes are concerned. It's not right to whack them again - effectively a retroactive tax.

Quoting okie (Reply 37):
I am sure many Cypriots will make a run on the banks to get their savings out so the government can not have direct access to the funds.

The government has placed restrictions on withdrawals to avoid just that.

Quoting okie (Reply 37):
You can rest assured there is people in other countries in the EU that are going to take measures since the government seems to be able arbitrarly take funds from bank accounts.

What the EU has done is provide moral justification to all the financial safe havens in the world, from Switzerland to Bahamas to Macau. I guarantee that many people, upper-middle class to uber-rich, will expand their efforts to hide their money in places the government can't reach it - which is ironic because most of them had decided in the past few years that it was not really worth the effort and expense, and more funds were coming out into the open.



Veni Vidi Castratavi Illegitimos
User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 39, posted (1 year 4 months 4 weeks 1 day 17 hours ago) and read 4241 times:

Quoting okie (Reply 37):
It is called taking money from those who have it and giving it to those who do not. It is called a tax and when they have no money to take then I suspect they will go after property wealth (vehicles, houses, beads and trinkets) sort of like the IRS

To be fair, the US does the same to dead people. They just complain a bit less.

Quoting Dreadnought (Reply 38):
What the EU has done is provide moral justification to all the financial safe havens in the world, from Switzerland to Bahamas to Macau.

   And set up a veritable death spiral for Eurozone countries.

Already devoid of means to set monetary policy, governments would have to take austerity measures and try to raise taxes while wealth flows away as quickly as possible. There would be effectively no means of escape from that economic disaster.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinePyrex From Portugal, joined Aug 2005, 3977 posts, RR: 28
Reply 40, posted (1 year 4 months 4 weeks 1 day 17 hours ago) and read 4242 times:

Quoting Dreadnought (Reply 38):
What the EU has done is provide moral justification to all the financial safe havens in the world, from Switzerland to Bahamas to Macau

Exactly right. The reason people have money in Swiss bank accounts is precisely for this reason - preservation of principal. Because they know that, throughout history, no government other than the Swiss one has resisted the urge to steal their own citizen's hard-earned cash. They are basically like insurance policies for when your own government gets too greedy. What the European politicians did was basically give people a justification, and lead to even greater capital flight from Europe.



Read this very carefully, I shall write this only once!
User currently offlineMillwallSean From Singapore, joined Apr 2008, 1241 posts, RR: 6
Reply 41, posted (1 year 4 months 4 weeks 1 day 16 hours ago) and read 4221 times:

Quoting offloaded (Reply 30):

We do hear a lot about how fed up the Germans are about subsidising everyone else, but the reality is that in part thanks to the weaker EZ members, the euro being weaker has kept German exports booming for years. Germany is a huge exporting country and the last thing Germany needs a strong euro.

Hmm, and if you read up the germans, the dutch, the finns all explain what a weak and strong Euro is. And when you get its 1.3 or 1.4 as it has been for the last few years the Euro is strong, too string and the exporters suffer.
You see the US is by printing an absurd amount of new money paying their debts but this absurd amount of money also keeps their currency artificially low.
That means the chinese wont move their currency any further and the string exporters in Europe struggle to compete for some projects.

+++++++++++++++++++++

I struggle to understand why the south always need to complain so much about reductions in wealth and welfare.
fact is you cant pay more money than you have. Instead of playing politics do what Iceland, Latvia and Estonia did when they were in trouble.
Sort the mess out and realise that living beyond the means or have banks that have done so )ie lack of governance) means that there is a price to pay.
Fast and drastic cuts is the answer. In latvia most people lost 30% of their incomes, rents went down, the nation crumbled but instead of proitests and beingd ragged kicking and screaming the Latvians put their head down, worked hard and suffered and now the economy has rebounded, people are getting a better income and the government is balancing its books. Latvias economic outlook has changed drastically since 5 years ago.
A show of morale and of a attitude that the best way to sort a problem is by action. I salute Latvians and Icelanders.
But the south?
Still refusing to accept changes and politicians that play against them for their own personal benefit.
Greece is complaining, protesting and playing politics yet they continue to loose money. Its absurd, write a budget that balances the books. Nothing else.

The south must accept that they cant have the same welfare society as the north on 50% of the income. You can only spend as much money as you get. before the Euro they kept on doing this, printing and printing money and living in a pseudoworld. That has ended even though the EU bailed out Greece a couple of times.

Cyprus is in the same situation as Iceland and Ireland. It didn't have oversight of its banks and the banks have put the state in a hopeless situation. To big too fail on a national scale.
However Cyprus is dodgy when it comes to Russian money. Its from here Maxwell enterprises were run to give an example. Ive heard that they expect over 75% of the accounts that will be taxed are owned by foreigners ie people from outside the EU...



No One Likes Us - We Dont Care.
User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 42, posted (1 year 4 months 4 weeks 1 day 10 hours ago) and read 4159 times:

Quoting MillwallSean (Reply 41):
I struggle to understand why the south always need to complain so much about reductions in wealth and welfare.

So you are saying that in Northern Europe this does not exist right?


User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 43, posted (1 year 4 months 4 weeks 1 day 8 hours ago) and read 4136 times:

Its Sunday and some form of deal has been agreed in Cyprus where they will be raiding the bank accounts of depositors, president flying to Brussels to finalize. I am not quoting links because the details in terms of the amount and who are affected are not central to my question, which is:
Now that the underpinings of the Cyprus economy has been removed what is the future of the country, do they revert to farming, attempt manufacturing what exactly is in the future?
Do the framers of this raid actually believe that once people have access to their funds even if only on a limited basis that they will not start moving it all out of the country to somewhere else, and will continue to make new deposits?

The UK should watch the results closely over the next few months, or specifically the City, as they would be able to see whether their fear of new EU taxes on financial transactions in London will act as a deterrent to futrue prospects.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 44, posted (1 year 4 months 4 weeks 1 day 8 hours ago) and read 4126 times:

Quoting par13del (Reply 43):
Do the framers of this raid actually believe that once people have access to their funds even if only on a limited basis that they will not start moving it all out of the country to somewhere else

My guess is that said 'framers' are just in a state of panic, par13del. Running around in circles........

One question, though. It's a long time since I last visited Europe, but when I did I of course used the Euro. But I never actually read the small print on the notes. Are Euros legal tender in all Eurozone countries, or are they designated as 'Cypriot Euros,' or 'Italian Euros,' or whatever?

Reason is, if I lived in Cyprus, and the Euros I owned were 'Cypriot Euros,' the moment the banks open, I'd probably get myself a shopping bag (or a briefcase  ), and draw out everything in cash. Then I'd buy myself an air ticket to somewhere financially 'safer' (probably Switzerland), change the money into a safer currency (probably Swiss francs or US dollars), and deposit the lot.

Come to think of it, even if Euros are valid 'Eurozone-wide,' I'd probably do that anyway. Even if the Euro is 'Europe-wide,' it's pretty well certain to end up 'a lot worse for wear' as this situation develops........

[Edited 2013-03-24 06:03:34]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 45, posted (1 year 4 months 4 weeks 1 day 8 hours ago) and read 4116 times:

Quoting NAV20 (Reply 44):
Then I'd buy myself an air ticket to somewhere financially 'safer' (probably Switzerland), change the money into a safer currency (probably Swiss francs or US dollars), and deposit the lot.

One thing with politicians, they always look out for the masses, in this case they know that the masses cannot up and leave the country, so yes they expect some to leave but the majority have no choice but to weep and wail and stay where they are.
Problem is that the masses are not the ones who have grown the economy to where it is today, its like going on welfare, once there unless you fight its hard to get off as most sponsors prefer you there as it also acts as a form of control and power.

I wish Cyprus well, everyone is banking on the world economy to pick up before the damaging effect of their financial moves become pemanent or ingrained.


User currently offlineMD11Engineer From Germany, joined Oct 2003, 13985 posts, RR: 62
Reply 46, posted (1 year 4 months 4 weeks 1 day 7 hours ago) and read 4118 times:

Quoting Dreadnought (Reply 36):
And why should he get whacked? That money could be his life savings on which he was hoping to retire soon.

On the other hand the depositor expected an interest on this money if everything would have gone well. With Cyprus being a tax haven (and therefore very little to no incomne or capital gains tax), would this gain have been shared with the public? After all Cypriotic banks attracted foreign investors from other countries by demanding very little to no tax and high interest rates. So why should now tax payers from other countries, where there exist such taxes, bail out this investor, who obviously made a wrong decision? To me it looks like "privatise the profits and socialise the losses".
I can understand that the local granny with a few 10 k in the bank probably doesn´t have the knowledge to understand the traps of banking business, but somebody who deliberately brings a larger amount of money to Cyprus and expected a high yield should have understood the risks involved.

Jan


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 47, posted (1 year 4 months 4 weeks 1 day 7 hours ago) and read 4117 times:

Quoting par13del (Reply 45):
One thing with politicians, they always look out for the masses, in this case they know that the masses cannot up and leave the country, so yes they expect some to leave but the majority have no choice but to weep and wail and stay where they are.

True enough, par13del. But I should have said that, if I lived in Cyprus, I wouldn't necessarily leave the country; I'd just make sure that my savings were 'out of reach,' and then go home..........



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 48, posted (1 year 4 months 4 weeks 1 day 7 hours ago) and read 4104 times:

Quoting MD11Engineer (Reply 46):
would this gain have been shared with the public?

So you believe that the government of Cyprus created a tax haven for banks without putting in any benefit for themselves??, the government is the public no, as they are voted in by the public.
Now whether the government let's the funds trickle down to the man in the street is another story, but no way did the banks set up tax havens in the nation without the consent and agreement of the government of the day.


User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 49, posted (1 year 4 months 4 weeks 1 day 6 hours ago) and read 4069 times:

Seems the current state of play is:

Quote:

Good assets would be merged with Bank of Cyprus - the largest lender - and the toxic assets will stay in Laiki. Administrators will then be appointed to liquidate those assets. The bank will not be closed but will be hugely reduced in size.

The source said a 20% levy would be imposed on deposits over 100,000 euros (£85,000) in Bank of Cyprus in exchange for shares in the bank.

A 4% levy would then be imposed on deposits of more than 100,000 euros in other banks. This would need to be approved by parliament but enough MPs have already given their backing to ensure it would pass.

Our correspondent says that the changes, should they pass, would cut Cyprus's banking sector by between a third and a half.

Ref: http://www.bbc.co.uk/news/world-europe-21916102

Quoting Dreadnought (Reply 38):
effectively a retroactive tax

No doubt, but the money must be raised...

Quoting par13del (Reply 43):
Now that the underpinings of the Cyprus economy has been removed what is the future of the country, do they revert to farming, attempt manufacturing what exactly is in the future?

The underpinnings have been getting eroded for the last several years. In other words, the patient has been sick for years, and it's just now that the patient is about to die and the heirs have to deal with the consequences.



Inspiration, move me brightly!
User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 50, posted (1 year 4 months 4 weeks 1 day 5 hours ago) and read 4067 times:

Quoting par13del (Reply 43):

Its Sunday and some form of deal has been agreed in Cyprus where they will be raiding the bank accounts of depositors, president flying to Brussels to finalize.

Ridiculous that the Steve Miller Law looks like it will actually happen. I'd expect an idea like this from some raging socialist, but usually there's some smarter people there to stop it.

Quoting MD11Engineer (Reply 46):
On the other hand the depositor expected an interest on this money if everything would have gone well. With Cyprus being a tax haven (and therefore very little to no incomne or capital gains tax), would this gain have been shared with the public?

It's private gain, they shouldn't have to share it with the public.

Quoting MD11Engineer (Reply 46):
After all Cypriotic banks attracted foreign investors from other countries by demanding very little to no tax and high interest rates.

Tax competition is a very good thing.

Quoting MD11Engineer (Reply 46):
So why should now tax payers from other countries, where there exist such taxes, bail out this investor, who obviously made a wrong decision?

That's your fault for joining the Eurozone and letting places like Cyprus join too. If I were European, I'd be strongly anti-EU and anti-Euro because it takes too much sovereignty from countries and lets exactly this happen.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 51, posted (1 year 4 months 4 weeks 1 day 5 hours ago) and read 4053 times:

Quoting Revelation (Reply 49):
The underpinnings have been getting eroded for the last several years. In other words, the patient has been sick for years, and it's just now that the patient is about to die and the heirs have to deal with the consequences.

I agree the patient has been sick for a while, but do you propose euthanasia versus treatment? In this case, is the patient really dying or are those doing the diagnosis also looking at ridding themselves of another place where people can escape the tax man, do these doctors really follow the creed of do no harm? The key to economic recovery from the GFC appears to be taxes, so if folks are hiding money in Cyprus banks, why not go after them?
Tax shelters in the Caribbean are also under threat, so it is something we are also looking at closely.

What is troubling is that no ones seems to have seen this crisis coming, so now to fix the problem we must throw out the baby with the bath water, at the end of the day, if these measures are implemented to save the banks, will Cyprus and the other countries who go through this really be viable countries contributing to the world in the future or just regions of consumers living from day to day.


User currently offlineQuokkas From , joined Dec 1969, posts, RR:
Reply 52, posted (1 year 4 months 4 weeks 1 day 4 hours ago) and read 4057 times:

The problem that I have with a general "creaming off" is that it makes no distinction between good and bad banks - i.e. those banks that can meet their obligations and those who can't, and it ignores the fact that due to EU pressures to bail out other banks, Cypriot banks bought bonds they may not have wished to. In all of this the depositors had no say, yet the proposal is to punish those depositors.

Cyprus has been trying to reach some sort of arrangement in Russia but these efforts have not produced any results. Some analysts are concerned that if investments by Russians are targeted than Russia may respond by imposing penalties on European companies trying to do business in Russia. It is estimated that Russians have some €30Bn invested and if 25% of that is taken you can imagine that Russia would not be all too pleased. While talk of turning off the gas to Europe has been ruled out, there has been discussion that life could be made difficult by "police raids" and imposing special taxes.

Not only could Russia make things awkward for European (and Germany may be the prime candidate) but they could be even more resistant to any move by the EU to support the removal of Assad in Syria. Of course, when push comes to shove, the EU would prefer Assad to remain in place rather than lose a €few billion in Cyprus. Although, let us be honest, in the scheme of things, Cyprus is small-fry compared to the debts racked up in other countries.

The presence of Russian investors does make a more punitive stance more "morally" - read politically - acceptable to the masses (as can be evidenced in this thread), particularly against the background of the upcoming elections in Germany, where the SDP would not wish to be seen supporting the bail-out of Russian mafia and will no longer support Merkel on the issue of bailouts for fear of an electoral backlash.


User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 53, posted (1 year 4 months 4 weeks 1 day 3 hours ago) and read 4035 times:

Quoting par13del (Reply 51):
In this case, is the patient really dying or are those doing the diagnosis also looking at ridding themselves of another place where people can escape the tax man, do these doctors really follow the creed of do no harm?

Despite what various charters probably say, the 'doctors' in this case aren't altruists. Earlier info I've posted says that Dr. Germany is steering the process and feels that those who benefitted from the high interest (and what goes unsaid is low tax) should participate in the bailout.

Quoting par13del (Reply 51):
The key to economic recovery from the GFC appears to be taxes, so if folks are hiding money in Cyprus banks, why not go after them?

Because that takes time, and because the necessary information needed to verify identity probably wasn't collected when the accounts were established.

Quoting par13del (Reply 51):
What is troubling is that no ones seems to have seen this crisis coming

My Cypriot friends certainly saw it coming.

They felt however that a levy of any sort would not happen because other nations would be so afraid of it happening to them too that they would prevent it.

Seems those other nations are mighty silent.

As above, it'll be interesting to see if we see money flee from other weaker nations.

Quoting par13del (Reply 51):
if these measures are implemented to save the banks, will Cyprus and the other countries who go through this really be viable countries contributing to the world in the future or just regions of consumers living from day to day.

The issue is they aren't viable now.

However one may ask if they will be viable enough to pay back this current bailout package, and if not, what's the point?



Inspiration, move me brightly!
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 54, posted (1 year 4 months 4 weeks 1 day 1 hour ago) and read 4012 times:

Quoting Revelation (Reply 53):
However one may ask if they will be viable enough to pay back this current bailout package, and if not, what's the point?

One less voice to sit at the discussion table and one more person to care for????


User currently offlineAR385 From Mexico, joined Nov 2003, 6175 posts, RR: 30
Reply 55, posted (1 year 4 months 4 weeks 23 hours ago) and read 3971 times:
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Quoting par13del (Reply 43):
Do the framers of this raid actually believe that once people have access to their funds even if only on a limited basis that they will not start moving it all out of the country to somewhere else, and will continue to make new deposits?
Quoting NAV20 (Reply 44):
Reason is, if I lived in Cyprus, and the Euros I owned were 'Cypriot Euros,' the moment the banks open, I'd probably get myself a shopping bag (or a briefcase ), and draw out everything in cash.

As of a few hours ago, no one can withdraw more than 100 Euro per day from any account in Cyprus, initially, for all of next week.



MGGS
User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 56, posted (1 year 4 months 4 weeks 23 hours ago) and read 3970 times:

Quoting AR385 (Reply 55):
As of a few hours ago, no one can withdraw more than 100 Euro per day from any account in Cyprus, initially, for all of next week.

Wow. To me, this is just beyond the pale. I don't see how anyone can completely trust any EU bank in the future when the precedent of a freeze and skim action has been set. I hope the market punishes Europe severely for this.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 57, posted (1 year 4 months 4 weeks 22 hours ago) and read 3957 times:

Quoting BMI727 (Reply 56):
freeze and skim action has been set

Well long gone are the days when the saying was '' Your money is safer in the banks''. Thats for sure. Nothing would surprise me now. Anyone in any EU country could wake up one day and find their savings have been taxed 5-20% . They say its a one off and exceptional but exceptional has a habbit of returning.


User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 58, posted (1 year 4 months 4 weeks 22 hours ago) and read 3959 times:

Quoting AR385 (Reply 55):
As of a few hours ago, no one can withdraw more than 100 Euro per day from any account in Cyprus, initially, for all of next week.

How long can they maintain that restriction, the key is what is going to happen when they remove and or raise the limits, a liquidity crisis should be expected.

Quoting BMI727 (Reply 56):
I hope the market punishes Europe severely for this.

EU markets may actually go up, Cyprus economy stabilized, one less tax haven to worry about, Euro looking at one less "malcontent" threatning to leave, no demonstrations in other EU nations protesting the principle of what is being done in Cyprus, those are all positive signs for the EU.


User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 59, posted (1 year 4 months 4 weeks 22 hours ago) and read 3940 times:

Quoting par13del (Reply 58):
EU markets may actually go up, Cyprus economy stabilized, one less tax haven to worry about, Euro looking at one less "malcontent" threatning to leave, no demonstrations in other EU nations protesting the principle of what is being done in Cyprus, those are all positive signs for the EU.

For the actual stock markets, I agree. They love stability, or at least the appearance of stability. Remember how the markets rallied when Bear Stearns went out of business.

Overall though, I imagine that the banking market will kill Europe as capital flees for safer places to be stored. I suspect that there will be some good times in Switzerland.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 60, posted (1 year 4 months 4 weeks 19 hours ago) and read 3924 times:

So they did a deal !

Cyprus Rescue Deal Wins Eurozone Approval

The plan will see the creation of a "good bank" and a "bad bank". The Popular Bank of Cyprus, known as Laiki, will effectively be shut down.
Deposits below 100,000 euros in Laiki will be transferred to Bank of Cyprus. Deposits above 100,000 euros, which under EU law are not insured, will be frozen and will be used to resolve debt.

http://news.sky.com/story/1069277/cy...rescue-deal-wins-eurozone-approval

[Edited 2013-03-24 18:30:30]

User currently offlineokie From United States of America, joined Jul 2003, 2999 posts, RR: 3
Reply 61, posted (1 year 4 months 4 weeks 19 hours ago) and read 3914 times:

Thanks OA260
It does not indicate in the article the amount of money in Laiki above 100,000 per customer. Should we guess the the number is above 5bn since that number has been thrown around. One would suspect some pretty unhappy depositors with large sums of money.


Okie


User currently offlineAesma From France, joined Nov 2009, 6585 posts, RR: 9
Reply 62, posted (1 year 4 months 4 weeks 18 hours ago) and read 3900 times:

Quick poll :

Do you actually save in the form of money on a bank account ? It seems silly unless there is a great interest rate, which doesn't happen in most countries (but did in Cyprus, causing the current trouble).

French people are big savers (second only to Japanese I believe) but it's all in bonds, life insurance, investments, real estate... A bank account doesn't get you any return.

Quoting okie (Reply 37):
The best I can tell there is no insurance for small depositors.

There is an insurance in each eurozone (or EU ?) country for the first 100K€. Problem is, since the banking union is still in the future, so far it was insured by each government. And since Cyprus is in bankruptcy...

Quoting Dreadnought (Reply 38):
It's called double-taxation. People earned money, paid taxes, and put a little away each year, believing that they have paid their due, as far as taxes are concerned. It's not right to whack them again - effectively a retroactive tax.

Well, they also elected their leaders and let the situation get to the current point (you know, like in our respective countries). Or put their money there to flee their country's tax (Russia is in a fit but also asking for a list of tax evaders...).

Quoting Pyrex (Reply 40):
Exactly right. The reason people have money in Swiss bank accounts is precisely for this reason - preservation of principal. Because they know that, throughout history, no government other than the Swiss one has resisted the urge to steal their own citizen's hard-earned cash. They are basically like insurance policies for when your own government gets too greedy. What the European politicians did was basically give people a justification, and lead to even greater capital flight from Europe.

Well, the US (and others), by printing money, is also taking value out of every holder of dollars, but I don't see any outrage.

BTW, I saw a TV report the other day about this situation, and there was a woman in the street talking to others in front of an ATM. She looked wealthy enough, and was lamenting the fact that the parliament had rejected the initial proposal, because she understood that the alternative to losing 6,5/10% was losing 100%.

Also, don't forget what happened in Greece and elsewhere. Instead of taking 10% of the money people had on the side, they reduced salaries by 20/30%, same for pensions, even the smallest ones, laid off 30% of the public workers, etc. Most of these people didn't have money on the side to help them through the tough times !



New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 63, posted (1 year 4 months 4 weeks 18 hours ago) and read 3890 times:

Quoting Aesma (Reply 62):
Also, don't forget what happened in Greece and elsewhere. Instead of taking 10% of the money people had on the side, they reduced salaries by 20/30%, same for pensions, even the smallest ones, laid off 30% of the public workers, etc. Most of these people didn't have money on the side to help them through the tough times !

So these people do have funds to take care of themselves during a rainy day and it is being taken away, so what's the difference, now the government who is broke will now have to take on the additional burden and of taking care of more of their citizens, so where is the money going to come from, the EU?


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 64, posted (1 year 4 months 4 weeks 18 hours ago) and read 3890 times:

Quoting Aesma (Reply 62):
Do you actually save in the form of money on a bank account ?

Yes (and, oddly enough, my savings account contains about $A120,000 - almost exactly Euro100,000  ). Interest rates in Australia remain at quite satisfactory (i.e. high) levels. That leads me to think that the E100,000 'protection limit' is far too low. I'm just about 'as ordinary as they come' - I expect that there are lots of 'equally-ordinary' Cypriots with savings exceeding that figure.

Can't get my head fully around what the EU lot has agreed yet - but it looks as if people with less than Euro100,000 in their accounts in the two affected banks will be 'protected,' those with more will have to wait and see what is left to be shared out to them (if anything) from what the two banks concerned have left on their books after the 'wash-up.'

"The agreement involves breaking up the island's second largest lender Laiki (Popular Bank).

"And the Bank of Cyprus, the island's No.1, will take a major "haircut" - a forced wipeout of investment value, on all deposits of more than 100,000 euros ($A124,898).

"The Bank of Cyprus, with one third of all holdings, survives, but at a massive price for investors - and the bank holds most of the island's offshore Russian deposits.

"But the new agreement backs off from last week's collapsed deal to hit all savers in all banks on the island.

"Smaller account-holders will be covered by the EU's deposit guarantee legislation, which runs to the 100,000-euro threshold: it is those above that level who face big losses overnight."


http://news.smh.com.au/breaking-news...us-rescue-deal-20130325-2gp6j.html

There's one other (rather revealing) paragraph lower down in the story:-

"A major sticking-point throughout the talks was the ECB's demand for the Bank of Cyprus to pay a nine billion-euro Laiki bill due to Frankfurt, which appeared to have been accepted."

So it looks as if Cyprus won't get the promised E9-billion aid package (presumably mainly funded by Germany) until it uses the assets of the two Cypriot banks concerned to repay the E9-billion it has already received?

Funny old world........

[Edited 2013-03-24 20:25:23]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineAesma From France, joined Nov 2009, 6585 posts, RR: 9
Reply 65, posted (1 year 4 months 4 weeks 17 hours ago) and read 3882 times:

Quoting par13del (Reply 63):
So these people do have funds to take care of themselves during a rainy day and it is being taken away, so what's the difference, now the government who is broke will now have to take on the additional burden and of taking care of more of their citizens, so where is the money going to come from, the EU?

If you don't understand the difference between losing 10% of your savings compared to 30% of your income, I can't help you. The consequences for the economy of the country are also a consideration, you weren't spending your savings so at "worst" you'll save more, at "best" you'll start spending to avoid the next tax. With 30% less income, forget about buying anything outside the minimum, crashing the economy.

And yes, the EU is loaning 10 billions, some will come out of my pockets. I'd rather it didn't go to the Russian mob.



New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently offlineAR385 From Mexico, joined Nov 2003, 6175 posts, RR: 30
Reply 66, posted (1 year 4 months 4 weeks 17 hours ago) and read 3877 times:
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Quoting Aesma (Reply 62):
Well, the US (and others), by printing money, is also taking value out of every holder of dollars, but I don't see any outrage.

The US has had the good sense not to enter into daft agreements where it relinquishes the control of its monetary policy.



MGGS
User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 67, posted (1 year 4 months 4 weeks 17 hours ago) and read 3872 times:

Quoting Aesma (Reply 62):
Do you actually save in the form of money on a bank account ?

I'm pretty sure most of my grandmother's money is saved in CD's, but I'm not certain.

Quoting Aesma (Reply 62):
Well, they also elected their leaders and let the situation get to the current point (you know, like in our respective countries).

Foreign account holders didn't.

Quoting Aesma (Reply 62):
Or put their money there to flee their country's tax (Russia is in a fit but also asking for a list of tax evaders...).

So, just because you think somebody is a shady character it's okay to rob them? That didn't even work in Ocean's Eleven.

Quoting Aesma (Reply 62):
Well, the US (and others), by printing money, is also taking value out of every holder of dollars, but I don't see any outrage.

First, there is outrage. That's why there's all the hand wringing about the deficits. Secondly, many investors aren't just sticking around with dollars but finding more exotic investments (could just be stocks or gold) to try and fight any potential inflation. You can't say that Americans are not uneasy with the idea or trying to protect themselves.

Quoting Aesma (Reply 62):
Also, don't forget what happened in Greece and elsewhere. Instead of taking 10% of the money people had on the side, they reduced salaries by 20/30%, same for pensions, even the smallest ones, laid off 30% of the public workers, etc. Most of these people didn't have money on the side to help them through the tough times !

First, they should have. Second, taking the measures you mention do not torpedo the integrity of the local banks nor do they risk sending a tidal wave of money away to other countries.

Quoting Aesma (Reply 65):
If you don't understand the difference between losing 10% of your savings compared to 30% of your income, I can't help you.

One is a pay cut. The other is a robbery.

Quoting Aesma (Reply 65):
The consequences for the economy of the country are also a consideration,

It appears that at no point did they consider the fact that now no banks in the EU can be trusted. And when it comes to banks, trust is all they have at the end of the day.

Quoting AR385 (Reply 66):
The US has had the good sense not to enter into daft agreements where it relinquishes the control of its monetary policy.

   But there is FATCA, so poor financial legislation is not a European peculiarity.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinemariner From New Zealand, joined Nov 2001, 25071 posts, RR: 85
Reply 68, posted (1 year 4 months 4 weeks 16 hours ago) and read 3867 times:
Support Airliners.net - become a First Class Member!

I wonder what would happen if there was no rescue package and if Cyrus had to leave the EZ and/or default.

I'm sure it would be ugly, but part of me thinks it might be better than this procession of bailouts.

mariner



aeternum nauta
User currently offlinePyrex From Portugal, joined Aug 2005, 3977 posts, RR: 28
Reply 69, posted (1 year 4 months 4 weeks 16 hours ago) and read 3866 times:

Quoting Aesma (Reply 62):
Well, the US (and others), by printing money, is also taking value out of every holder of dollars, but I don't see any outrage.

You're clearly not looking at the right places...

Quoting Aesma (Reply 62):
laid off 30% of the public workers,

And still has way too many...



Read this very carefully, I shall write this only once!
User currently offlinena From Germany, joined Dec 1999, 10677 posts, RR: 9
Reply 70, posted (1 year 4 months 4 weeks 11 hours ago) and read 3818 times:

So someone with 99999 in the bank will still have 99999 now, while the one with 100001 will have 70000? Unfair math. Lets hope its mostly Russian Millionaires money thats lost...

User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 71, posted (1 year 4 months 4 weeks 11 hours ago) and read 3819 times:

Quoting okie (Reply 61):
One would suspect some pretty unhappy depositors with large sums of money.

Indeed . The good thing is the poorest of society have been protected and that Im thankful for. Say you have life savings of only 2-3K then Im glad these people were protected. People that were not having dodgy bank accounts and tax havens. Of course there will be hard working Cypriots and Ex Pats who have worked hard and have made over 100K and that will be hard too on them. I do think it was the only option which has some sort of fair outcome.


User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 72, posted (1 year 4 months 4 weeks 10 hours ago) and read 3776 times:

Biggest issue I take from the deal is the quote below from the BBC story on the issue, thank the stars gun boat diplomacy is no longer practised.
"One key element of the deposit tax, demanded by the IMF, is that it should not require approval by the Cyprus parliament"

Quoting Aesma (Reply 65):
And yes, the EU is loaning 10 billions, some will come out of my pockets. I'd rather it didn't go to the Russian mob.

No one seemd to complain when that Russian mob money was being used to bolster the fortunes of the banking system throughout the EU, I trust in addition they have put a "wink and nod" in place to ensure that no other bank within the union accepts the mobs money, would hate to have to do this all over again in some other EU country.

So a recession is expected for a number of years, let's hope the government starts preparing their citizens for what's to come in the long haul.
Wish them well.


User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 73, posted (1 year 4 months 4 weeks 10 hours ago) and read 3767 times:

Quoting na (Reply 70):
So someone with 99999 in the bank will still have 99999 now, while the one with 100001 will have 70000? Unfair math. Lets hope its mostly Russian Millionaires money thats lost...

A fairer way would be allow 100K then anything else over that is taken into account. So if you had 100001 only 1 would be taxed at the rate.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 74, posted (1 year 4 months 4 weeks 9 hours ago) and read 3744 times:

Quoting na (Reply 70):
So someone with 99999 in the bank will still have 99999 now, while the one with 100001 will have 70000? Unfair math. Lets hope its mostly Russian Millionaires money thats lost...
Quoting OA260 (Reply 73):
A fairer way would be allow 100K then anything else over that is taken into account. So if you had 100001 only 1 would be taxed at the rate.

The press reports aren't clear yet. But my guess is that it will indeed only be the amount over E100,000 that will be taxed at 'around' 30%.

Deposits above 100,000 euros, which under EU law are not insured, will be frozen and hit with the levy of around 30% to resolve the debt crisis."

http://uk.finance.yahoo.com/news/cyp...-deal-wins-eurozone-030855574.html

Mind you, that's savage enough anyway, IMO. As I said earlier, E100,000 isn't exactly a lot of money to help finance your retirement these days........

[Edited 2013-03-25 04:47:47]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 75, posted (1 year 4 months 4 weeks 7 hours ago) and read 3722 times:

Quoting NAV20 (Reply 74):
Deposits above 100,000 euros, which under EU law are not insured, will be frozen and hit with the levy of around 30% to resolve the debt crisis."

Resolve? I'll bet anyone that, 5 years from now, Cyprus will be just as much in the crapper as it is now, and they will be thinking about having another go at depositors' accounts (those that are left).

Any takers?

FACT: You cannot solve a government's financial problems by giving it money.



Veni Vidi Castratavi Illegitimos
User currently offlineAesma From France, joined Nov 2009, 6585 posts, RR: 9
Reply 76, posted (1 year 4 months 4 weeks 7 hours ago) and read 3715 times:

Quoting mariner (Reply 68):
I wonder what would happen if there was no rescue package and if Cyrus had to leave the EZ and/or default.

I'm sure it would be ugly, but part of me thinks it might be better than this procession of bailouts.

mariner

It would be a procession of aid instead, because Cyprus' economy is not uncompetitive, it is nonexistent outside finance.

And yes, I'm discovering that Cyprus was allowed in the eurozone precisely because it was a way to wash dirty money that would then be invested in the EU. At the time, nobody asked the EU citizens for their opinion. However now that we're asked money, there is no way to convince people that after the bailout things should resume as before, so one way or another Cyprus had to change.

And Russians would be far less interested if the currency was local and not the euro.



New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently offlinemariner From New Zealand, joined Nov 2001, 25071 posts, RR: 85
Reply 77, posted (1 year 4 months 4 weeks 1 hour ago) and read 3624 times:
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Quoting Aesma (Reply 76):
It would be a procession of aid instead, because Cyprus' economy is not uncompetitive, it is nonexistent outside finance.

So what happened?:

http://www.theglobeandmail.com/news/...uss-banking-status/article9938368/

"Once a thriving country with virtually no unemployment and steady economic growth, Cyprus is now among the most distressed places in Europe with unemployment pushing 16 per cent, a stagnant real-estate market and an economy expected to shrink this year for the second year in a row."

If it was once a "thriving economy" why can it not be so again? Was the turn away from primary industry (and light industrial) to a services based economy the culprit?

mariner



aeternum nauta
User currently offlineoffloaded From United Kingdom, joined Apr 2009, 871 posts, RR: 0
Reply 78, posted (1 year 4 months 3 weeks 6 days 22 hours ago) and read 3581 times:

"Cyprus deal is model for future bailout" reports The Indepenendent quoting European officials.

As I have bank accounts in Portugal, albeit not at the level currently being robbed in Cyprus, it's time to consider a plan B.

This is not a monetary union, it's a common currency area.



To no one will we sell, or deny, or delay, right or justice - Magna Carta, 1215
User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 79, posted (1 year 4 months 3 weeks 6 days 21 hours ago) and read 3567 times:

Quoting offloaded (Reply 78):
"Cyprus deal is model for future bailout" reports The Indepenendent quoting European officials.

As I have bank accounts in Portugal, albeit not at the level currently being robbed in Cyprus, it's time to consider a plan B.

I'd start looking at a bank in Liechtenstein. Not necessarily a secret numbered account, just an account in a bank in a country that will never do such a thing.



Veni Vidi Castratavi Illegitimos
User currently offlineAR385 From Mexico, joined Nov 2003, 6175 posts, RR: 30
Reply 80, posted (1 year 4 months 3 weeks 6 days 21 hours ago) and read 3542 times:
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This "deal" is bound to cause serious trouble in Spain, Portugal, Greece, Italy and any other country requiring a bailout in the near future. It´s also bound to have bad long term effects. One of the reasons why the savings rate in Latam has been so low is that people remember how they grabbed their money throughout the region during the 80s. through exactly the same process.

Quoting Dreadnought (Reply 79):
I'd start looking at a bank in Liechtenstein.

Panama is nice throughout the year.



MGGS
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 81, posted (1 year 4 months 3 weeks 6 days 18 hours ago) and read 3518 times:

Quoting Dreadnought (Reply 75):
Resolve? I'll bet anyone that, 5 years from now, Cyprus will be just as much in the crapper as it is now,

In fairness, Dreadnought, it was the journalist who used the word 'resolve,' not me! I agree that Cyprus - and a number of other countries with weak economies - will constantly need more bailouts. Probably at intervals of less than five years.

Quoting offloaded (Reply 78):
This is not a monetary union, it's a common currency area.

Agree entirely, offloaded. In my view the Eurozone can only go one of two ways from here. Either they introduce a 'genuine' central bank (which would basically require all member countries to join a political union, effectively giving up most of their sovereignty); or (hopefully orderly) arrangements must be set set up to allow the countries with weaker economies to phase out the Euro and revert to their own currencies, which they can then devalue as necessary to achieve a sensible balance between imports and exports.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineAR385 From Mexico, joined Nov 2003, 6175 posts, RR: 30
Reply 82, posted (1 year 4 months 3 weeks 6 days 17 hours ago) and read 3512 times:
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Quoting NAV20 (Reply 81):
Either they introduce a 'genuine' central bank (which would basically require all member countries to join a political union, effectively giving up most of their sovereignty); or (hopefully orderly) arrangements must be set set up to allow the countries with weaker economies to phase out the Euro and revert to their own currencies, which they can then devalue as necessary to achieve a sensible balance between imports and exports.

Not only the central bank. They would require a fiscal policy union, if you like. That goes along the lines of giving up most sovereignity, as you say, and I don´t think that would happen. Although you could argue that in essence, Germany has taken up that role.

Your other suggestion of being able to come in and out of the Euro would simply not work. I can imagine every government wanting to gain votes doing that. The risk of moral hazard would be too high too. It would render the single currency idea useless.

The Euro and the EU were a great idea on paper but nobody had the guts to do what was needed for it to work in practicality. Now we are seeing the consequences.



MGGS
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 83, posted (1 year 4 months 3 weeks 6 days 17 hours ago) and read 3504 times:

Quoting AR385 (Reply 82):
It would render the single currency idea useless.

The only difference between us, AR385, is that I reckon the idea of the Euro (saddling 'weak' economies with a 'hard' currency) IS useless...........



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineAR385 From Mexico, joined Nov 2003, 6175 posts, RR: 30
Reply 84, posted (1 year 4 months 3 weeks 6 days 16 hours ago) and read 3499 times:
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Quoting NAV20 (Reply 83):
The only difference between us, AR385, is that I reckon the idea of the Euro (saddling 'weak' economies with a 'hard' currency) IS useless...........

No, NAV20, you are right and I share your view. It was a bad idea from the start. I just don´t get why they doggedly want to stick with it.



MGGS
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 85, posted (1 year 4 months 3 weeks 6 days 15 hours ago) and read 3480 times:

Fair enough, misunderstanding, AR385!

One advantage we have in Australia is that we're basically 'a day ahead' of the rest of the world - it's afternoon Tuesday here. So here's quite a good article from my 'local' newspaper - the Melbourne Age - opening the discussion on the likely 'aftermath' of this God-awful mess, Especially the (almost inevitable, and quite possibly Europe-wide) 'run' on ALL the banks, as soon as they open:-

http://www.theage.com.au/business/wo...k-force-losses-20130325-2gp41.html



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineAR385 From Mexico, joined Nov 2003, 6175 posts, RR: 30
Reply 86, posted (1 year 4 months 3 weeks 6 days 14 hours ago) and read 3477 times:
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Interesting article, NAV20, thanks. I don´t see how a Cypriot economic meltdown will be averted in say, 5 or 6 months´ time. This is just a band-aid.


MGGS
User currently offlineMD11Engineer From Germany, joined Oct 2003, 13985 posts, RR: 62
Reply 87, posted (1 year 4 months 3 weeks 6 days 10 hours ago) and read 3436 times:

Quoting Dreadnought (Reply 79):
I'd start looking at a bank in Liechtenstein. Not necessarily a secret numbered account, just an account in a bank in a country that will never do such a thing.

So who should pay for bailing out the affected banks, which got themselves into trouble through no fault but their own?
We could also let the banks go bankrupt, but in this case the depositors would lose EVERYTHING and the Cypriot economy would truly be in the toilet.

Jan


User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 88, posted (1 year 4 months 3 weeks 6 days 8 hours ago) and read 3400 times:

Quoting NAV20 (Reply 81):
Agree entirely, offloaded. In my view the Eurozone can only go one of two ways from here. Either they introduce a 'genuine' central bank (which would basically require all member countries to join a political union, effectively giving up most of their sovereignty); or (hopefully orderly) arrangements must be set set up to allow the countries with weaker economies to phase out the Euro and revert to their own currencies, which they can then devalue as necessary to achieve a sensible balance between imports and exports.

At this point in the game, having the failed economies move to their own currencies pretty much takes them out of the international economy and would make a mockery of the 'one Europe' goal of the EU.

Quoting AR385 (Reply 82):
The Euro and the EU were a great idea on paper but nobody had the guts to do what was needed for it to work in practicality.

If you mean some sort of mandatory "sequestor" for nations who do not meet their agreed-upon spending targets, maybe you are right.

Quoting MD11Engineer (Reply 87):
So who should pay for bailing out the affected banks, which got themselves into trouble through no fault but their own?
We could also let the banks go bankrupt, but in this case the depositors would lose EVERYTHING and the Cypriot economy would truly be in the toilet.

That's it, in a nut shell. The reality is that it'd be bad symbolically if anyone crashed out of the Euro, but the small size of Cyprus makes it almost painless to make an example out of it, since it only represents 0.2% of the EU economy. Also the fact that the "hair cut" will be taken largely by people/corporations from non Euro currency nations makes it even easier to send a message to the other 99.8% of the EU economy without impacting that economy.

Quoting NAV20 (Reply 85):
So here's quite a good article from my 'local' newspaper - the Melbourne Age - opening the discussion on the likely 'aftermath' of this God-awful mess

Love the bankers jargon in the quote below.

Wonder how the aforementioned Yiayia Maria will know what "resolved" means?

Yet somehow all these years she was supposed to understand that she was getting a favorable interest rate because her Cypriot bankers were buying Greek debt denominated in Euros but paid at a higher rate than other Eurozone debt because international financiers were counting on the Germans to bail out the Greeks?

Quote:

Details of the deal in a statement from euro zone finance ministers:

1. Laiki will be resolved immediately - with full contribution of equity shareholders, bond holders and uninsured depositors - based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework.

2. Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time.

3. The good bank will be folded into Bank of Cyprus (BoC), using the Bank Resolution Framework, after having heard the Boards of Directors of BoC and Laiki. It will take 9 bn Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalisation has been effected, and may subsequently be subject to appropriate conditions.

4. The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.

5. BoC will be recapitalised through a deposit/equity conversion of uninsured deposits with full contribution of equity shareholders and bond holders.

6. The conversion will be such that a capital ratio of 9 per cent is secured by the end of the program.

7. All insured depositors in all banks will be fully protected in accordance with the relevant EU legislation.

8. The programme money (up to 10 billion euro) will not be used to recapitalise Laiki and Bank of Cyprus.



Inspiration, move me brightly!
User currently offlineJJJ From Spain, joined May 2006, 1817 posts, RR: 1
Reply 89, posted (1 year 4 months 3 weeks 6 days 8 hours ago) and read 3390 times:

Quoting Revelation (Reply 88):
If you mean some sort of mandatory "sequestor" for nations who do not meet their agreed-upon spending targets, maybe you are right.

There was such a mechanism, the euro stability pact which started with a deficit target of 3% (and debt ratio of max 60%) to be progressively lowered to zero deficit by 2006 (this is something that was passed in 1997, btw), and included a penalty of 0,2% of the country's GNP plus some variable for those countries that did not comply.

What happened? that back then it was the likes of France, Germany and the UK the ones who wouldn't meet the spending and/or debt target so the conditions had to be relaxed, and interest rates lowered to boost their economies. Those low interest rates allowed peripheral countries to borrow like crazy and overheat their own economies and we know what happened then.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 90, posted (1 year 4 months 3 weeks 6 days 8 hours ago) and read 3391 times:

Quoting Revelation (Reply 88):
At this point in the game, having the failed economies move to their own currencies pretty much takes them out of the international economy and would make a mockery of the 'one Europe' goal of the EU.

Since when was there ever 'one Europe,' Revelation? Europe's had the Napoleonic Wars, the Crimean War, the Franco-Prussian War, and two 'world' wars (my father had the dubious distinction of serving in both of those, in the infantry of all places - and even I 'did duty' as a 'target' in the second one). To my mind its diversity, and the 'variety' of the place - often enough, on touring holidays, my friends and I used to catch the ferry to Belgium, drive through Luxembourg, and find a 'Zimmer Frei' to spend the night in in Germany, all on the first day - is the best thing about it. Or WAS, in those far-off days........

Seems like posting a link to an Aussie newspaper generated some interest. Nearly midnight here and tomorrow's 'Age' is on the net. This is its prediction of what will happen next:-

"Cyprus is to keep its banks shut for at least two more days, as relief from the agreement on a financial rescue package turned to concern over an extended bank run.

"Confidence in the eurozone took a hit after a European politician who helped broker the island's financial bailout warned bank accounts in other countries could be raided to fund future rescues.

"Markets slid sharply on the news, especially in Spain and Italy, and analysts said the comments would make businesses more wary about investing in Europe.

"Cypriots have two more sleepless nights deciding whether they can trust their banks, or should put all their hard-earned euros under the mattress - and making do in the meantime on a dwindling supply of cash from ATMs.

"In return for a €10 billion ($12.3 billion) loan, the European Union has demanded one of the island's biggest banks be shut down, and uninsured depositors with more than €100,000 face massive losses. The island's biggest bank deposits above €100,000 will be frozen, then levied for cash to recapitalise the bank."


Read more: http://www.theage.com.au/world/fear-...-20130326-2gs6h.html#ixzz2OeM0DRrN

[Edited 2013-03-26 06:26:20]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 91, posted (1 year 4 months 3 weeks 6 days 8 hours ago) and read 3390 times:

Quoting MD11Engineer (Reply 87):
So who should pay for bailing out the affected banks, which got themselves into trouble through no fault but their own?

Well did all the banks in the EU suffer the same fate, some of the blame has to fall on them and their depositors. When the entire nation is used to ease the pain of a few without first consultation and agreement it leaves a sour taste and makes those footing the bill feel marginal, especially as those doing the grab were also responsible for proper oversight of the banking industry.
If the pain of these massive bailouts were being felt by the man in the street in Germany for example, do you really believe the Chancellor would be front and center of all these reclamation projects?

Everyone assumes that the citizens of the country want their country to go belly up to preserve themselves, so no one is interested in taking sensible proposals to them with the truth, the whole truth and nothing but the truth, most are playing a political agenda for a power grab.
At the end of the day, the people who will be doing the suffering and paying the bulk of the bill is the man on the street, he/she will be denied a good living via a decent job with benefits and pay for the next few decades, why do we believe that they cannot see this reality and would voluntarilly take tough measures to preserve their country and way of life, do we believe that patriots only exist in a war situation?


User currently offlineQuokkas From , joined Dec 1969, posts, RR:
Reply 92, posted (1 year 4 months 3 weeks 6 days 8 hours ago) and read 3385 times:

Quoting Revelation (Reply 23):
Now that's an "under-reported" fact.

Took a while for me to get back to it, but here is the announcement: http://www.guardian.co.uk/world/2013...prus-savings-levy-british-deposits

Quoting Revelation (Reply 88):
taken largely by people/corporations from non Euro currency nations

And mainly from people who are deemed to be "politically acceptable" targets - Russians - although large deposits from other countries in the two mentioned banks are also affected. I doubt that an argument that investors from Japan, the United States or China were all tax-cheats would have floated, had they been the prime investors. I would imagine that the response from those countries would have been much stronger too.

The problem with using the Russian mafia excuse is that funds on deposit in Cyprus were often in "transition". Now some of these accounts may have been suspect, but others were for legitimate purposes and were used for receiving payments from EU companies and for investing elsewhere in the EU. One Russian who has indicated that he will lose money is Alexander Lebedev, owner of the Britain's Evening Standard and Independent newspapers. It remains to be seen how this affects future investment in Cyprus.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 93, posted (1 year 4 months 3 weeks 6 days 7 hours ago) and read 3378 times:

Only thing is, Quokkas, with respect, that article is dated 17th. March. People with less than E100,000 in the banks will no longer be subject to any levy. But it's good news that any British people (or British firms) holding larger deposits will be protected; at the moment no-one knows how much they will be slugged for.

Any room for hope that Gillard will offer similar protection to ordinary Australian people/firms? Melbourne's just about Australia's 'Greekest' city......... plenty of 'Cypriot Aussies' here 

[Edited 2013-03-26 06:35:23]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineQuokkas From , joined Dec 1969, posts, RR:
Reply 94, posted (1 year 4 months 3 weeks 6 days 7 hours ago) and read 3369 times:

Quoting NAV20 (Reply 93):
Only thing is, Quokkas, with respect, that article is dated 17th. March.

I am aware of that but posted the link to support what was described by another poster as "a under-reported fact". I don't think it was the intention of the poster to cast doubt but I wished to confirm that I wasn't simply making things up as I go along.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 95, posted (1 year 4 months 3 weeks 6 days 7 hours ago) and read 3366 times:

Fair enough, mate........  


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineAesma From France, joined Nov 2009, 6585 posts, RR: 9
Reply 96, posted (1 year 4 months 3 weeks 6 days 5 hours ago) and read 3323 times:

Protecting military personnel is one thing, but that doesn't apply to British citizens in general. Yesterday there was one on the French TV news, saying he would reconsider living there with wife and children, even if he rather enjoyed it. The tone being "I might still stay for the weather/way of life".

Quoting par13del (Reply 91):
Everyone assumes that the citizens of the country want their country to go belly up to preserve themselves, so no one is interested in taking sensible proposals to them with the truth, the whole truth and nothing but the truth, most are playing a political agenda for a power grab.
At the end of the day, the people who will be doing the suffering and paying the bulk of the bill is the man on the street, he/she will be denied a good living via a decent job with benefits and pay for the next few decades, why do we believe that they cannot see this reality and would voluntarily take tough measures to preserve their country and way of life, do we believe that patriots only exist in a war situation?

Well bailing out the banks has consequences however it's done. Everyone agrees that not bailing out the banks has worse consequences, the US proved that to those doubting it. In the long run, to help the economy shift to something more sensible, it might still make sense to get out of the euro for Cyprus, but doing that now would be a disaster.



New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 97, posted (1 year 4 months 3 weeks 6 days 5 hours ago) and read 3321 times:

Quoting JJJ (Reply 89):
There was such a mechanism, the euro stability pact which started with a deficit target of 3% (and debt ratio of max 60%) to be progressively lowered to zero deficit by 2006 (this is something that was passed in 1997, btw), and included a penalty of 0,2% of the country's GNP plus some variable for those countries that did not comply.

Interesting to see how the discipline they failed to impose on themselves is now causing such mayhem in smaller economies because the money speculators gambled that the national debt of the PIGS would be made whole by the rest of the Eurozone. Seems that gamble paid off for quite a while, no?

Quoting NAV20 (Reply 90):
Since when was there ever 'one Europe,' Revelation?

Never, of course, but I still presume that's the goal of the EU?

Seems they thought they could have the benefit of being one large trading block without the negatives of having to catch the weaker economies when they stumbled? I'm not sure the way the speculators have benefited from all of this was all that well understood, but I'm told continuously here that we should all be innately familiar with the ways of high finance and it's our fault not theirs when we wake up and find that the cookie jar has been raided.

Quoting NAV20 (Reply 90):
"In return for a €10 billion ($12.3 billion) loan, the European Union has demanded one of the island's biggest banks be shut down, and uninsured depositors with more than €100,000 face massive losses. The island's biggest bank deposits above €100,000 will be frozen, then levied for cash to recapitalise the bank."

Which is quite a difference than the original proposal, which was for every depositor in every Cyprus bank to take a haircut. Now we see only depositors with > EUR 100k in the one bank getting whacked.

I'm not at all sure about the strategy behind all of this. It seems the Cypriot leaders wanted the whole nation to share the pain in order to not chase off the offshore banking business, but (a) they soundly refused, and (b) IMHO it never would have kept those off-shore customers on board.

Quoting par13del (Reply 91):
When the entire nation is used to ease the pain of a few without first consultation and agreement it leaves a sour taste and makes those footing the bill feel marginal, especially as those doing the grab were also responsible for proper oversight of the banking industry.

As above I think the goal was to preserve the offshore banking business and in turn the national economy, but as above I think that would not have come to fruition anyway.

Quoting Quokkas (Reply 92):
I doubt that an argument that investors from Japan, the United States or China were all tax-cheats would have floated, had they been the prime investors. I would imagine that the response from those countries would have been much stronger too.

In any case, we hear it's hard to tell what money is legit or not. We hear there were legit reasons to want to set up a business in Cyprus: low taxes, reasonable infrastructure and workforce, EU zone protections. Unfortunately it's hard to know which buisnesses were there for legit reasons.

Quoting Quokkas (Reply 92):
It remains to be seen how this affects future investment in Cyprus.

From what I read, a lot of the smart money left Cyprus a while ago, when the first hints of contagion from the Greek crisis were becoming known. I read that Singapore seems to be a destination of choice for capital flight.

Quoting Quokkas (Reply 94):

I am aware of that but posted the link to support what was described by another poster as "a under-reported fact". I don't think it was the intention of the poster to cast doubt but I wished to confirm that I wasn't simply making things up as I go along.

Thanks for the post, and I did not ever mean to suggest you made anything up. My comment was echoing what you said, which was that it was indeed unusual for the UK to go as far as guaranteeing the funds of its military and foriegn service personnel, and indeed strange that not many saw significance in that.



Inspiration, move me brightly!
User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 98, posted (1 year 4 months 3 weeks 6 days 4 hours ago) and read 3314 times:

Quoting Revelation (Reply 88):
If you mean some sort of mandatory "sequestor" for nations who do not meet their agreed-upon spending targets, maybe you are right.

You have to wonder just how much sovereignty European countries will be willing to give up. Are people really going to be okay with cutting the military or lowering benefits because Germany says so?

Quoting Quokkas (Reply 92):
And mainly from people who are deemed to be "politically acceptable" targets - Russians - although large deposits from other countries in the two mentioned banks are also affected.

That's basically it, from what it seems. Find the people who can't or won't fight back and hit them.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 99, posted (1 year 4 months 3 weeks 6 days 4 hours ago) and read 3311 times:

Quoting BMI727 (Reply 98):
You have to wonder just how much sovereignty European countries will be willing to give up. Are people really going to be okay with cutting the military or lowering benefits because Germany says so?

If Germany pays the bills, hell yeah!



Veni Vidi Castratavi Illegitimos
User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 100, posted (1 year 4 months 3 weeks 6 days 3 hours ago) and read 3304 times:

Quoting Dreadnought (Reply 99):
If Germany pays the bills, hell yeah!

You'd think that at some point somebody might question whether or not Germany really has their best interests in mind.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineoffloaded From United Kingdom, joined Apr 2009, 871 posts, RR: 0
Reply 101, posted (1 year 4 months 3 weeks 6 days 3 hours ago) and read 3302 times:

Quoting BMI727 (Reply 98):
Find the people who can't or won't fight back and hit them.

I wouldn't want to be a bank manager in Cyprus when the Russian clients start showing up! "Ah, Mr. Makarov and Mrs. Kalashnikov, its about your account....."
.....

Would it be possible create a system similar to South Africa in the 80s when there was a Financial Rand/Blocked Rand?
From wiki: The financial rand system provided for two exchange rates for the rand, one for current account transactions, and one for capital account transactions for non-residents.[2] Investments made in South Africa by non-residents could only be sold for financial rand, and limitations were placed on the convertibility of financial rand into foreign currencies



To no one will we sell, or deny, or delay, right or justice - Magna Carta, 1215
User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 102, posted (1 year 4 months 3 weeks 6 days 3 hours ago) and read 3319 times:

Quoting BMI727 (Reply 100):
You'd think that at some point somebody might question whether or not Germany really has their best interests in mind.

Which should in turn cause them to attempt to be more self sufficient and not become dependent on someone else paying their bills.

Hmmmm, I wonder what that reminds me of...



Veni Vidi Castratavi Illegitimos
User currently offlineAesma From France, joined Nov 2009, 6585 posts, RR: 9
Reply 103, posted (1 year 4 months 3 weeks 6 days 3 hours ago) and read 3320 times:

Quoting BMI727 (Reply 98):
You have to wonder just how much sovereignty European countries will be willing to give up. Are people really going to be okay with cutting the military or lowering benefits because Germany says so?

Actually the idea is that you can, as a country, manage things as you wish, you just have to balance the budget. Seems pretty reasonable to me. And it's not really Germany calling the shots, but rather the markets, by not lending to countries that can't manage to balance their budget (or by lending at high rates).

Now about the military a debate is starting here, because we spend more than EU average (the UK does, too), but we feel we're protecting the EU (like in Mali, or with our nuclear arsenal), so should get recognition (money) for that.



New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently offlineMD11Engineer From Germany, joined Oct 2003, 13985 posts, RR: 62
Reply 104, posted (1 year 4 months 3 weeks 6 days 3 hours ago) and read 3321 times:

I think the only solution is to legalise a strict separation of consumer banks for the man on the street, where he can keep his current account for his salary and his bills, deposit his savings in low to medium risk schemes and get a low level loan or mortgage (up to a few € 100,000 e.g. for a house) and investment banking, where the big boys, who hopefully know what they are doing, can do their high risk gambling. For the consumer banks, they would have to be able to guarantee the saver´s deposits.
And banks should never again become so big that they can blackmail whole economies.

Jan


User currently offlineoffloaded From United Kingdom, joined Apr 2009, 871 posts, RR: 0
Reply 105, posted (1 year 4 months 3 weeks 6 days 3 hours ago) and read 3317 times:

I was looking at that Jan but then we get this:

Implicit guarantee subsidy

Since the full amount of the deposits and debts of "too big to fail" banks are effectively guaranteed by the government, large depositors view deposits with these banks as a safer investment than deposits with smaller banks. Therefore, large banks are able to pay lower interest rates to depositors than small banks are obliged to pay.
In October 2009, Sheila Bair, at that time the Chairperson of the FDIC, commented:
"'Too big to fail' has become worse. It's become explicit when it was implicit before. It creates competitive disparities between large and small institutions, because everybody knows small institutions can fail. So it's more expensive for them to raise capital and secure funding."
Research has shown that banking organizations are willing to pay an added premium for mergers that will put them over the asset sizes that are commonly viewed as the thresholds for being too big to fail.



To no one will we sell, or deny, or delay, right or justice - Magna Carta, 1215
User currently offlineMD11Engineer From Germany, joined Oct 2003, 13985 posts, RR: 62
Reply 106, posted (1 year 4 months 3 weeks 6 days 3 hours ago) and read 3313 times:

Quoting offloaded (Reply 105):
Implicit guarantee subsidy

Since the full amount of the deposits and debts of "too big to fail" banks are effectively guaranteed by the government, large depositors view deposits with these banks as a safer investment than deposits with smaller banks. Therefore, large banks are able to pay lower interest rates to depositors than small banks are obliged to pay.
In October 2009, Sheila Bair, at that time the Chairperson of the FDIC, commented:
"'Too big to fail' has become worse. It's become explicit when it was implicit before. It creates competitive disparities between large and small institutions, because everybody knows small institutions can fail. So it's more expensive for them to raise capital and secure funding."
Research has shown that banking organizations are willing to pay an added premium for mergers that will put them over the asset sizes that are commonly viewed as the thresholds for being too big to fail.

Then it has to be done through legal means (no matter if the banks are moaning). It can´t be that all financial losses are in the end guaranteed by the tax payer (no matter from which country he comes).
If necessary through taxation: Tax banks from a ceratin size higher than smaller banks (equivalent to the risk the taxpayer carries when he has to rescue them) and use the anti-trust laws.

Jan


User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 107, posted (1 year 4 months 3 weeks 6 days 2 hours ago) and read 3300 times:

Quoting Aesma (Reply 103):
Actually the idea is that you can, as a country, manage things as you wish, you just have to balance the budget.

And that idea is a concession of basic sovereignty. Two of the things countries can do is set monetary policy and create a budget, and the management of a budget encompasses pretty much everything. Having the power for those things lying with supranational entity robs states of much of what makes them states in the first place.



Why do Aerospace Engineering students have to turn things in on time?
User currently onlineprebennorholm From Denmark, joined Mar 2000, 6417 posts, RR: 54
Reply 108, posted (1 year 4 months 3 weeks 5 days 20 hours ago) and read 3250 times:

Quoting BMI727 (Reply 98):
You have to wonder just how much sovereignty European countries will be willing to give up.

When they joined the Euro they were willing to give up fiscal sovereignty to the ECB. When you join a club, then you stick to the club rules, or you should not be surprised to be helped to follow the rules, or be expelled from the club.

Quoting BMI727 (Reply 98):
Are people really going to be okay with cutting the military or lowering benefits because Germany says so?

Since Germany is the only sizable eurozone country with fairly healthy economy, then Berlin is the only place where it is relevant to go begging.

Germany can change that. I have many German friends who in the open propose that Germany should maybe leave the eurozone and revert to Deutschmark. They see how comfortable it is to sit in London, Copenhagen, Stockholm or the seven other EU non-eurozone countries and not get yelled at day by day.

When the Euro was introduced, then I voted "yes" for Denmark to join the Euro. Today I could kick myself in the a€€ for that stupidity. Luckily 53% of the voters were smarter than me, so we (and the nine other non-eurozone countries) are mostly spectators to the drama.



Always keep your number of landings equal to your number of take-offs, Preben Norholm
User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 109, posted (1 year 4 months 3 weeks 5 days 9 hours ago) and read 3194 times:

Quoting BMI727 (Reply 107):
And that idea is a concession of basic sovereignty. Two of the things countries can do is set monetary policy and create a budget, and the management of a budget encompasses pretty much everything. Having the power for those things lying with supranational entity robs states of much of what makes them states in the first place.

To be fair, EU rules don't set a budget, they limit the amount of debt that can be carried as a percentage of the nation's GDP. They don't tell them how to reach that target. Also, the nation is free to carry less debt if they should choose to!



Inspiration, move me brightly!
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 110, posted (1 year 4 months 3 weeks 5 days 8 hours ago) and read 3182 times:

Here's 'tonight's' contribution from 'tomorrow's' Melbourne Age:-

"The voice of Cypriot accountant Katy Michaelidou is shaky as she contemplates the future. ''People are going to struggle,'' she says. ''We are going to take a big hit.''

"Her nerves are justified.

"Imagine the federal government going to Western Australia tomorrow and saying: ''Hey, you know your mining industry? We don't think it's sustainable in the long term. So, tomorrow, we're going to shut most of it down.''

"The economy of Cyprus has rested on three sturdy legs: a thriving banking and financial services sector, a fat public service and tourism.

"Thanks to the terms of a financial rescue insisted on by the European Union, the country has to work out how it's going to stand with one of those legs knocked clean off and another sawn in half.

"After the war that led to the division of the island in 1974, Cyprus had to rebuild its economy almost from scratch. Like other islands with limited resources it chose to be a tax haven, offering low company tax, no tax on dividends, high interest rates and a relaxed attitude to the kind of money these policies attracted.

"Cash flooded in. Companies, many Russian, set up on the island, and locals prospered on fees and giving legal and financial advice.

"The capital, Nicosia, is awash with BMWs, Audis and businessfolk in expensive sunglasses and nice suits who read their iPads in the streetside cafes.

"But bad bets on Greek debt triggered a banking crisis, the government ran out of money and this week Europe stepped in with a ''rescue'' package that wiped out confidence in local banks.

"Capital controls have been imposed and big investors will pay hefty levies. Cyprus' reputation as a safe place to park funds has been destroyed. That money will leave.

"Ms Michaelidou's firm has three employees, low overheads and, luckily, no Russian clients. Most of its clients are Czech firms wanting low taxes, and the accountants were smart enough to move them out of the Bank of Cyprus before accounts were frozen."


Read more: http://www.theage.com.au/world/cypri...-20130327-2gumm.html#ixzz2Ok8ZR7lP

The article makes an excellent point about the Turkish military invasion in the 1970s. Given that, as far as I understand the situation, the northern half of the island is still largely 'Turkish,' and un-cooperative, the Cypriots have done well to get as far as they have, in terms of 'recovery,' since then.

But I guess all that modest 'progress' is probably going to end now?

[Edited 2013-03-27 05:50:16]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 111, posted (1 year 4 months 3 weeks 5 days 6 hours ago) and read 3149 times:

Quoting NAV20 (Reply 110):
The article makes an excellent point about the Turkish military invasion in the 1970s. Given that, as far as I understand the situation, the northern half of the island is still largely 'Turkish,' and un-cooperative, the Cypriots have done well to get as far as they have, in terms of 'recovery,' since then.

But I guess all that modest 'progress' is probably going to end now?

Well for sure there are going to be huge changes of lifestyle in cyprus. It was always a very expensive place compared to Greece. They relied on and got well heeled people staying in the numerous 5 star resorts and golf courses. Trends changed and they out priced themselves of alot of the market. Very similar to Greece in some ways. They are going to have to do what Greece has done and lower their prices,offer incentives and get their tourists back. So far this year Greece is seeing high advanced bookings due to an exhaustive campaign by EOT ( Greek Tourism ) . Everyone has to learn to live at a lessor standard than they have been used to. Cyprus will be no different.

As is Greece the infrastructure is something that will hold them in good stead. There are always benefits to things and foreign tourists are the winners here. Ireland is another example of having to adapt. Prices here for hotels and accomodation and a large campaign to get the diaspora to come back are all things being done this year to get money back into the tourism economy.


User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 112, posted (1 year 4 months 3 weeks 5 days 4 hours ago) and read 3134 times:

Quoting prebennorholm (Reply 108):
When they joined the Euro they were willing to give up fiscal sovereignty to the ECB. When you join a club, then you stick to the club rules, or you should not be surprised to be helped to follow the rules, or be expelled from the club.

Exactly, which is why if I were European I would be extremely anti-Euro and anti-EU. Some of the things states have to cede control of go too far.

Quoting Revelation (Reply 109):
To be fair, EU rules don't set a budget, they limit the amount of debt that can be carried as a percentage of the nation's GDP.

The EU does only limit flexibility. But, apparently they can also force a tax, which is a privilege previously reserved for the state.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineAesma From France, joined Nov 2009, 6585 posts, RR: 9
Reply 113, posted (1 year 4 months 3 weeks 5 days 3 hours ago) and read 3119 times:

They can't force the tax, the parliament will vote on it. The simple truth is that the alternative is bankruptcy of the banks and the state. I haven't seen anybody proposing a better solution. Well, there was the idea to sell the country to Russia...

As for the euro, there was a referendum on it, people voted in favor of it.



New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 114, posted (1 year 4 months 3 weeks 5 days 3 hours ago) and read 3120 times:

Quoting NAV20 (Reply 110):
Imagine the federal government going to Western Australia tomorrow and saying: ''Hey, you know your mining industry? We don't think it's sustainable in the long term. So, tomorrow, we're going to shut most of it down.

In all regards except the outcome, that's a terrible analogy.

Quoting NAV20 (Reply 110):
fat public service

Everyone knows that's not sustainable. It's not clear if that has been cut back enough yet.

Quoting NAV20 (Reply 110):
bad bets on Greek debt

Interesting circle. Russians move money to Cyprus banks, Cyprus banks buy Greek debt.

Quoting NAV20 (Reply 110):
Cyprus' reputation as a safe place to park funds has been destroyed. That money will leave.

  

Quoting NAV20 (Reply 110):
But I guess all that modest 'progress' is probably going to end now?

Interesting how we're not hearing about any real reform to the banking rules. In theory Cyprus would be all right if they just relied on the low taxes and lax banking regulation to draw the money in, the problems came when they got themselves overexposed by buying Greek debt in order to draw money via high interest rates. Now that they've taken money out of customer accounts, no one will be coming back for a very long time. There's far too many other 'safe' havens out there, which presumably is why they needed the high interest to draw in the money.

Quoting OA260 (Reply 111):
It was always a very expensive place compared to Greece. They relied on and got well heeled people staying in the numerous 5 star resorts and golf courses. Trends changed and they out priced themselves of alot of the market.

A lot of that high end stuff comes with being a tax haven. Big rollers like to go visit their money every so often and have a good time doing so. Now it all will be wound down and as you say prices must fall to draw tourists instead of high rollers, and both of these have less money to spend these days, so prices will really need to fall.



Inspiration, move me brightly!
User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 115, posted (1 year 4 months 3 weeks 5 days ago) and read 3099 times:

Quoting Revelation (Reply 114):
so prices will really need to fall.

Oh they will for sure. I quite fancy a nice week in the Intercontinental Aphrodite Hills  

Looks like the offers are already in   Free HB would be unheard of at this place!

http://www.aphroditehills.com/cyprus/offers/hotel-offers/


User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 116, posted (1 year 4 months 3 weeks 4 days 19 hours ago) and read 3056 times:

Quoting Aesma (Reply 113):
They can't force the tax, the parliament will vote on it.

It is a requirement of this bail out that it not be put to a vote.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 117, posted (1 year 4 months 3 weeks 4 days 19 hours ago) and read 3063 times:

Here's the next step - literally shiploads of Euros arriving in Nicosia; but Joe Public will only be allowed to withdraw E300 a day:-

"When banks in Cyprus reopen after a nearly two-week lockdown on the bailed-out country it will be under draconian controls, the first of their kind in the eurozone.

"Finance Minister Michalis Sarris issued a decree on Wednesday for temporary limits on daily withdrawals to 300 euros ($A370) to prevent the 'collapse of credit institutions'.

"The central bank confirmed that branches shuttered since March 16 - leaving homes and businesses short on cash - would open on Thursday.

"Five shipping containers reportedly filled with billions of euros were reportedly delivered to the central bank in Nicosia late on Wednesday."


http://www.skynews.com.au/world/article.aspx?id=858476



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 118, posted (1 year 4 months 3 weeks 4 days 18 hours ago) and read 3058 times:

Quoting NAV20 (Reply 117):
"Finance Minister Michalis Sarris issued a decree on Wednesday for temporary limits on daily withdrawals to 300 euros ($A370) to prevent the 'collapse of credit institutions'.

That is a tacit yet unmistakable admission that the banking system has been recklessly disemboweled and now the officials are doing what they can to keep it alive.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 119, posted (1 year 4 months 3 weeks 4 days 15 hours ago) and read 3052 times:

Quoting BMI727 (Reply 118):
Quoting NAV20 (Reply 117):
"Finance Minister Michalis Sarris issued a decree on Wednesday for temporary limits on daily withdrawals to 300 euros ($A370) to prevent the 'collapse of credit institutions'.

That is a tacit yet unmistakable admission that the banking system has been recklessly disemboweled and now the officials are doing what they can to keep it alive.

The idea is to stop people from taking their money out to escape the tax. But I understand that there were no such limitations on withdrawals from overseas, so much of the Russian money, which was the main target of this affair, was apparently withdrawn over the past couple of weeks.



Veni Vidi Castratavi Illegitimos
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 120, posted (1 year 4 months 3 weeks 4 days 10 hours ago) and read 3015 times:

Quoting Dreadnought (Reply 119):
so much of the Russian money, which was the main target of this affair, was apparently withdrawn over the past couple of weeks.

If such is the case one would expect some move to re-institute the tax on the lower deposit levels, I would expect it to go way below the 100K level with a smaller percentage amount to have collective punishment, or to spread the pain.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 121, posted (1 year 4 months 3 weeks 4 days 10 hours ago) and read 3016 times:

Quoting Dreadnought (Reply 119):
The idea is to stop people from taking their money out to escape the tax.

Have to disagree to an extent, Dreadnought. I think they're anxious to stop even people with savings under the E100,000 level taking too much of their money out too - in that event, the banks would just run out of cash........

All going calmly so far, thankfully. Quite big queues, but no disturbances..........

http://www.guardian.co.uk/business/2...risis-cyprus-banks-reopen-security

[Edited 2013-03-28 04:14:12]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 122, posted (1 year 4 months 3 weeks 4 days 8 hours ago) and read 2978 times:

Quoting NAV20 (Reply 121):
All going calmly so far, thankfully. Quite big queues, but no disturbances..........

The issue here may be that since other countries in the EU which use the Euro did not have its citizens doing a run on their banks after the grab was announced or when the heads of the Troika stated that this was a template for the future,
that Cyprus while angry may have just accepted the inevitable.
The only people who seem to have a big issue is the investors in the markets, and the man in the street is already blaming them for a lot of the GFC anyway so who cares about them.


User currently offlineArrow From Canada, joined Jun 2002, 2676 posts, RR: 2
Reply 123, posted (1 year 4 months 3 weeks 4 days 5 hours ago) and read 2944 times:
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Quoting NAV20 (Reply 121):
Have to disagree to an extent, Dreadnought. I think they're anxious to stop even people with savings under the E100,000 level taking too much of their money out too - in that event, the banks would just run out of cash........

The limits are designed to prevent a one-day run on the banks that might collapse them all. A more interesting question, going forward, will be how much money (and from where) will be deposited in Cyprus banks. Not a sou, I would suggest, and that means a long term, relentless decline in assets. Just ask yourself, would you open an account in a Cyprus bank today? And if you already had an account, would you put any more money at risk?

That's what happens when you try to steal money from savings accounts. Fool me once, shame on you, fool me twice, shame on me.

I don''t see a happy end to this. I wonder, too, if there's any stress on that long-festering Greek-Turk detente that has been in place for a few years now. I remember 30-40 years ago when Canadian peacekeepers were perpetually stationed in Cyprus to keep the two factions from ripping each others throats out. Haven't seen much mention of that.

[Edited 2013-03-28 09:00:27]

[Edited 2013-03-28 09:02:26]


Never let the facts get in the way of a good story.
User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 124, posted (1 year 4 months 3 weeks 4 days 4 hours ago) and read 2925 times:

Quoting Arrow (Reply 123):
The limits are designed to prevent a one-day run on the banks that might collapse them all.

Sure, but that assumes that people forget about this in one day. I don't think they will. Not the smart people anyway.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineArrow From Canada, joined Jun 2002, 2676 posts, RR: 2
Reply 125, posted (1 year 4 months 3 weeks 4 days 2 hours ago) and read 2907 times:
Support Airliners.net - become a First Class Member!

Quoting BMI727 (Reply 124):
Sure, but that assumes that people forget about this in one day. I don't think they will. Not the smart people anyway.

I agree. When I say a one-day run, all I'm saying is that if the controls were lifted, that would happen. The controls will be in place for a long long time, in my opinion. But there will still be a steady drip, drip of asset drainage with no inputs to counter it (other than the bailout money). Long term, Cyprus is toast as a financial centre.



Never let the facts get in the way of a good story.
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 126, posted (1 year 4 months 3 weeks 3 days 18 hours ago) and read 2855 times:

Pretty sad 'human interest' story here. Brings home what that (far too low) 'E100,000 limit' looks like doing to a lot of relatively-ordinary people:-

''Very bad, very, very bad,'' says 65-year-old John Demetriou, rubbing tears from his lined face with thick fingers. ''I lost all my money.''

"John now lives in the picturesque fishing village of Liopetri on Cyprus' south coast. But for 35 years he lived at Bondi Junction and worked days, nights and weekends in Sydney markets selling jewellery and imitation jewellery.

"He had left Cyprus in the early 1970s at the height of its war with Turkey, taking his wife and young children to safety in Australia. He built a life from nothing and, gradually, a substantial nest egg. He retired to Cyprus in 2007 with about $1 million, his life savings.

"He planned to spend it on his grandchildren - some of whom live in Cyprus - putting them through university and setting them up. There would be medical bills; he has a heart condition. The interest was paying for a comfortable retirement, and trips back to Australia. He also toyed with the idea of buying a boat.

"He wanted to leave any big purchases a few years, to be sure this was where he would spend his retirement. There was no hurry. But now it is all gone.

''If I made the decision to stay, I was going to build a house,'' John says. ''Unfortunately I didn't make the decision yet.

''I went to sleep Friday as a rich man. I woke up a poor man.''


Read more: http://www.theage.com.au/national/i-...-20130328-2gxab.html#ixzz2OtQftTQ2



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 127, posted (1 year 4 months 3 weeks 3 days 7 hours ago) and read 2843 times:

Quoting NAV20 (Reply 126):
Pretty sad 'human interest' story here. Brings home what that (far too low) 'E100,000 limit' looks like doing to a lot of relatively-ordinary people:-

I feel that the limit is too low and that the EU is setting a very bad precedent for the future of the Euro, but one does have to ask why one would put one's entire fortune in one bank and presumably in just one account.

I abhor the lack of responsibility the banking sector takes. They seem to think we should all be masters of high finance and be able to understand a system that they themselves go to great lengths to obfuscate for their own benefit. After the GFC they felt no remorse for destroying the economy and smugly talked of themselves as 'too big to fail'. It's a classic case of capitalizing profits and socializing risks.

In this case we read the chap was getting enough interest to afford trips abroad and some would suggest that alone should have suggested to him that it was all too good to be true and he should have smelled a rat?

On the other hand, one does need to do some common sense things like know the limit to which an account is insured and find ways to diversify in case insurance is not honored.



Inspiration, move me brightly!
User currently offlineiakobos From Belgium, joined Aug 2003, 3313 posts, RR: 35
Reply 128, posted (1 year 4 months 3 weeks 3 days 5 hours ago) and read 2817 times:

http://www.ekathimerini.com/4dcgi/_w...rticles_wsite1_1_29/03/2013_490679

As if the Cypriots didn't know how the system works...and this is (likely) only the tip of the iceberg.


User currently offlineMD11Engineer From Germany, joined Oct 2003, 13985 posts, RR: 62
Reply 129, posted (1 year 4 months 3 weeks 3 days 4 hours ago) and read 2797 times:

Quoting Revelation (Reply 127):
In this case we read the chap was getting enough interest to afford trips abroad and some would suggest that alone should have suggested to him that it was all too good to be true and he should have smelled a rat?

I could also say that he is lucky. If the bank hadn´t been saved and went bankrupt he really would have lost everything, not just 30% of his savings.

Jan


User currently onlineRevelation From United States of America, joined Feb 2005, 12415 posts, RR: 25
Reply 130, posted (1 year 4 months 3 weeks 3 days 2 hours ago) and read 2779 times:

Quoting MD11Engineer (Reply 129):
If the bank hadn´t been saved and went bankrupt he really would have lost everything, not just 30% of his savings.

That's a workable figure, although the exact percent isn't known.

Quote:

Cyprus's second largest bank - Laiki Bank - will be closed down and deposits above 100,000 euros moved into a "bad bank". Deposits below 100,000 euros will be moved into Bank of Cyprus, the country's biggest bank, which is being significantly restructured.

Deposits at Bank of Cyprus of more than 100,000 euros are being frozen.

At both banks, deposits above 100,000 euros will be used by the government to contribute billions towards the bailout. It is not clear how much of the money will be taken, but a government spokesman has suggested customers should expect about 40% of the balance to be converted into bank shares.

Ref: http://www.bbc.co.uk/news/business-21922110

Of course, one might think that a government spokesman could be giving an optimistic view...



Inspiration, move me brightly!
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 131, posted (1 year 4 months 3 weeks 2 days 18 hours ago) and read 2739 times:

On the evidence of previous articles, Reuters appear to have pretty good sources. But, given the consequences of this rumoured massive reduction in balances over E100,000 held in the two banks concerned, I for one sincerely hope that they've got it wrong on this occasion:-

"(Reuters) - Big depositors in Cyprus's largest bank stand to lose far more than initially feared under a European Union rescue package to save the island from bankruptcy, a source with direct knowledge of the terms said on Friday.

"Under conditions expected to be announced on Saturday, depositors in Bank of Cyprus will get shares in the bank worth 37.5 percent of their deposits over 100,000 euros, the source told Reuters, while the rest of their deposits may never be paid back.

"The toughening of the terms will send a clear signal that the bailout means the end of Cyprus as a hub for offshore finance and could accelerate economic decline on the island and bring steeper job losses.

"Officials had previously spoken of a loss to big depositors of 30 to 40 percent."


http://www.reuters.com/article/2013/...s-parliament-idUSBRE92G03I20130330



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 132, posted (1 year 4 months 3 weeks 2 days 3 hours ago) and read 2686 times:

Quoting Arrow (Reply 125):
Long term, Cyprus is toast as a financial centre.

Agree
As per the link below from the BBC, they are now talking about 60%, my question, how is it legal to make someone an investor in a business without their consent, they should at least be given the option of loosing a set amount on the dollar if the business is not going belly up. Other question, how long are they going to force persons to be investors, one would assume that as soon as given a chance the stocks would be sold. Pity the schools whose deposit are over 100,000, I'm guessing some preferential treatment (possible corruption) will be involved.
http://www.bbc.co.uk/news/business-21982652
Now


User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 133, posted (1 year 4 months 3 weeks 2 days 3 hours ago) and read 2681 times:

Quoting par13del (Reply 132):
As per the link below from the BBC, they are now talking about 60%, my question, how is it legal to make someone an investor in a business without their consent,

They've already frozen accounts and stolen money out of them. I'm guessing that legality isn't a consideration.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 134, posted (1 year 4 months 3 weeks 2 days 2 hours ago) and read 2668 times:

Quoting BMI727 (Reply 133):
They've already frozen accounts and stolen money out of them. I'm guessing that legality isn't a consideration.

Legality may be an issue but the laws of the country may prevent a filing of wrong until you can prove the extent of your loss. Add the time for the courts to play around with the case and a year or two can pass, time which the politicians hope will see the financial situation turn around and paying compensation will not a problem.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 135, posted (1 year 4 months 3 weeks 18 hours ago) and read 2616 times:

Quoting par13del (Reply 132):
my question, how is it legal to make someone an investor in a business without their consent, they should at least be given the option of loosing a set amount on the dollar if the business is not going belly up.

I expect that the matter is now classed as a case of twin 'bank failures,' par13del. Banks do occasionally fail, and the depositors can only expect to 'recover' whatever money the banks have left. A very similar situation ('IndyMac') arose five years ago in the United States, and those investors also lost a high proportion (50%) of their deposits:-

"One relevant lesson might lie not elsewhere in the euro zone but in the carcass of a Los Angeles-based savings and loan institution, IndyMac Bancorp, that failed five years ago and required a bailout. IndyMac was about the size of the Bank of Cyprus, and its depositors ended up taking nearly as big a loss — 50 percent on deposits above the levels insured by the Federal Deposit Insurance Corporation. Rather than causing a panic and a bank run elsewhere, IndyMac’s debacle proved to be a largely contained disaster with little fallout."

http://www.nytimes.com/2013/04/01/bu...k-bailout.html?pagewanted=all&_r=0



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 136, posted (1 year 4 months 3 weeks 8 hours ago) and read 2579 times:

Quoting NAV20 (Reply 135):
I expect that the matter is now classed as a case of twin 'bank failures,' par13del. Banks do occasionally fail, and the depositors can only expect to 'recover' whatever money the banks have left. A very similar situation ('IndyMac') arose five years ago in the United States, and those investors also lost a high proportion (50%) of their deposits:

But here is the issue.

In a normal (bank) business, in case of bankruptcy (or liquidation), The Shareholders get wiped out first, then bondholders, then employees, then trade creditors, and finally, after all other sources of funds are wiped out, can depositors' money be pulled down - IN EQUAL MEASURE.

In other words, if a bank fails and has still has liabilities of $100 million after wiping out everything else, and has deposits of $1 billion, ALL depositors would get a 10% haircut, rich or poor, large or small.

What we are seeing here is not dissimilar to what we saw in General Motors, where bondholders got fleeced while certain politically connected groups who owned stock were protected, even rewarded. This is what happens when governments (aside from normal civil bankruptcy organs) become involved in company affairs - politics come into play, and winners and losers are picked based on political favors and clout.



Veni Vidi Castratavi Illegitimos
User currently offlineMD11Engineer From Germany, joined Oct 2003, 13985 posts, RR: 62
Reply 137, posted (1 year 4 months 3 weeks 5 hours ago) and read 2557 times:

Quoting Dreadnought (Reply 136):
What we are seeing here is not dissimilar to what we saw in General Motors, where bondholders got fleeced while certain politically connected groups who owned stock were protected, even rewarded. This is what happens when governments (aside from normal civil bankruptcy organs) become involved in company affairs - politics come into play, and winners and losers are picked based on political favors and clout.

Actually according to the German Spiegel magazine, originally the Cypriot PM proposed to fleece the smallscale depositors first (which would probably mostly be locals) and to leave the big foreign ones alone (probably so that they would keep thir money in Cyprus). This got shot down in the Cypriot parliament . Note: the proposal came from the Cypriot government themselves, not from Germany.

Jan


User currently offlineDreadnought From United States of America, joined Feb 2008, 8824 posts, RR: 24
Reply 138, posted (1 year 4 months 3 weeks 4 hours ago) and read 2542 times:

Quoting MD11Engineer (Reply 137):
Actually according to the German Spiegel magazine, originally the Cypriot PM proposed to fleece the smallscale depositors first (which would probably mostly be locals) and to leave the big foreign ones alone (probably so that they would keep thir money in Cyprus). This got shot down in the Cypriot parliament . Note: the proposal came from the Cypriot government themselves, not from Germany.

Whether German or Cypriot, it makes no difference. My point is that the normal procedures for a bankruptcy have been hijacked by politicians for their own purposes. They should have stayed out of it.



Veni Vidi Castratavi Illegitimos
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 139, posted (1 year 4 months 2 weeks 5 days 16 hours ago) and read 2452 times:

Quoting Dreadnought (Reply 138):
My point is that the normal procedures for a bankruptcy have been hijacked by politicians for their own purposes. They should have stayed out of it.


I think the basic problem was that Cyprus was only offered a 'partial' bailout, Dreadnought; a mere E10B.. I have no idea why it was so low - vast amounts have previously been dished out in recent years to other failing EU economies. Here are some examples:-

"Here's a look at the rescue programs:

"GREECE - Greece has received two bailout packages from its eurozone partners and the International Monetary Fund. Its problems began in late 2009, when the government admitted that public debt was far higher than official statistics showed. That led it to accept a bailout package of 110-billion euros (worth US$142-billion today) in May 2010. When it became clear that bailout was not enough - because the economy kept weakening - a second bailout was clinched in February 2012 for another 130-billion euros. That included a writedown on the value of Greek government bonds to lighten Athens' debt burden.

"IRELAND - Ireland's banks suffered from their exposure to the U.S. mortgage market meltdown as well as to a collapse in the local housing sector. The government stepped in to guarantee creditors and deposits, but the move cost it dearly. As it rescued its banks, the costs grew and soon the government's borrowing rates on bond markets rose so high it was unable to finance itself independently. It secured a 67.5-billion euro package in November 2010.

"PORTUGAL - After Ireland's rescue, investors turned their eyes to the next weakest country in the currency bloc. Portugal's economy was weak and public finances shaky. The government's borrowing rates in bond markets kept rising on fears it finances would prove unsustainable. By April 2011 talks on a bailout began. In May 2011, the country agreed to a package of 78-billion euros in rescue loans."


More examples here:-

http://business.financialpost.com/20...25/cyprus-bailout-eurozone-rescue/

I suspect that the governments of the more prosperous Eurozone countries (headed by Germany) are finally getting fed up with having to put up with political unpopularity at home by continually dishing out huge sums to the weaker Eurozone economies - money which can never be repaid. I believe Germany has elections coming up - I guess that's probably why the previous gravy train' came to a halt when Cyprus joined the queue?

And there's more trouble ahead:-

"The eurozone unemployment rate has climbed to another record high of 12 per cent, as official figures show more than 19 million people were out of work across the region in February.

"The European Union's statistical agency Eurostat says its the highest number of unemployed workers in the 17-member single currency zone since the euro was launched in 1999.

"The situation is especially grim in Greece and Spain, where more than 26 per cent of their respective workforces are unemployed; and the youth jobless rate in both countries is even worse, sitting at around 60 per cent in Greece and almost 56 per cent in Spain."


http://www.abc.net.au/news/2013-04-0...ment-reaches-all-time-high/4607026

I adhere to my view that the Euro is the problem, not the solution. And that, unless it is phased out, crises of this kind will continue to arise; and yet more (and more frequent) bailouts (mainly paid out by Germany) will be required for the foreseeable future.

[Edited 2013-04-02 21:34:36]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineoffloaded From United Kingdom, joined Apr 2009, 871 posts, RR: 0
Reply 140, posted (1 year 4 months 2 weeks 4 days 5 hours ago) and read 2375 times:

Quoting NAV20 (Reply 139):
I adhere to my view that the Euro is the problem, not the solution.

I would agree with that. Politically inspired bolloxology from day 1.

It is interesting to see trends when clients pay us. Cash has returned in a big way in the last year, which indicates to me a certain level of "under the radar" financial activity, and most recently credit/debit cards from overseas banks. I asked a few why, and the response is always the same: don't trust the banks/state to do a "Cyprus" on them so they're moving money out.



To no one will we sell, or deny, or delay, right or justice - Magna Carta, 1215
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 141, posted (1 year 4 months 2 weeks 2 days 10 hours ago) and read 2319 times:

Quoting offloaded (Reply 140):
I asked a few why, and the response is always the same: don't trust the banks/state to do a "Cyprus" on them so they're moving money out.

Interesting new angle, offloaded, thanks.

Just as a matter of interest, are people all still dealing in Euros? Or are some of them opting to use other currencies, like pounds or US dollars, instead?



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 142, posted (1 year 4 months 2 weeks 2 days 9 hours ago) and read 2317 times:

Quoting offloaded (Reply 140):
Cash has returned in a big way in the last year,

Yep cash is king   I told my Family to get their money out of Greece and the Euro zone when this crisis hit. Now safely and legally in UK banks in pounds. I only keep a small amount in my Irish Euro account also. I just dont trust these banks in the Euro zone anymore.

The cash in hand economy in Ireland and Greece has boomed in the last few years. I personally would find it hard to justify myself as it conflicts with my views but I know friends and neighbours who are working cash in hand. Not because they are greedy but because they find it the only way to keep their heads above water and pay their rents/bills etc...


User currently offlineAesma From France, joined Nov 2009, 6585 posts, RR: 9
Reply 143, posted (1 year 4 months 2 weeks 2 days 6 hours ago) and read 2288 times:

Quoting NAV20 (Reply 139):
I think the basic problem was that Cyprus was only offered a 'partial' bailout, Dreadnought; a mere E10B.. I have no idea why it was so low - vast amounts have previously been dished out in recent years to other failing EU economies.

That's because 10 billions is half the GDP of Cyprus. No single bailout was as big as that relative to the economy, and only Greece got more in the end, in numerous bailouts. Furthermore there was no way to get the people to agree to bailout foreign "investors"/tax dodgers, especially the Russian kind. And I'm talking about both the people of the countries paying for the bailout AND the people of Cyprus who have to pay it back in the end.



New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently offlinePanHAM From Germany, joined May 2005, 9269 posts, RR: 29
Reply 144, posted (1 year 4 months 2 weeks 1 day 12 hours ago) and read 2255 times:

Quoting NAV20 (Reply 141):
Just as a matter of interest, are people all still dealing in Euros? Or are some of them opting to use other currencies, like pounds or US dollars, instead?

The € is the legal tender n the Euro zone. Payments in other currencies would always be based on the € price converted into Dollars or Pounds or whatever else at a rate which always will be more favorable to the shop owner.

Now, OK, I will not read all the 100 somehting posts.

The headline is wring, It is not a government money grab, it is Banks going bankrupt and instead of being bailed out with public money, the depositors are taken into responsibility to pay for the high interest rates they received in the past.

The cypriotic banks have been heavily exposed to the Greek collapse and every overseas depositor who know a little about business should have withdrawn his money a year ago latest. But that's the trouble with bllack money for which taxes have not been paid, where to go?

Even the small depositors, which are untouched now, should conisder that regular interest rates in the EU are around 2% p.a. while thy got 4,5 or more percent. If they had been talken into liability for their deposits,m they would still be better off than the German savings and loan cstomer who got less interest for their deposits over the years.

Why should we (in Germany and other nothern European counries) pay twice and take liability for high intrest rates which we do not get? Why should we pay for Russian black money? Oh, we still do, part of the deal (bail out) is that the EU injevcts a couple of billions into the system.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 145, posted (1 year 4 months 2 weeks 1 day 10 hours ago) and read 2236 times:

Quoting PanHAM (Reply 144):
Why should we pay for Russian black money?

Dont forget Germany has hosted EUR140 billion in Russian ''black'' money also .  


User currently offlinePanHAM From Germany, joined May 2005, 9269 posts, RR: 29
Reply 146, posted (1 year 4 months 2 weeks 1 day 9 hours ago) and read 2228 times:

Germany definately not, may be German Banks have illegally earned money in foreign accounts. However, since each and every deposit made in a German bank is screened and the owner has to prove where the money comes from, your allegiation is unfunded.

Anyhow, whjat difference would it make? Most of the monies which are frozen now have never been taxed, earned far nore interest than they could have earned in other financial markets and many of the owneers sitting now in hotels in Cyprus don't even speak English and may have missed the bus taking their money out. Lack of education, tough luck.

With the developments in greece and the exposure of Cypriotic banks it was a no brainer that this will happen sooner or later. With some of the assets converted into bank shares they may even come out ahead in a couple of years. Like many of the Lehman creditors.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlinepar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 147, posted (1 year 4 months 2 weeks 1 day 8 hours ago) and read 2223 times:

Quoting PanHAM (Reply 144):
Why should we (in Germany and other nothern European counries) pay twice and take liability for high intrest rates which we do not get? Why should we pay for Russian black money? Oh, we still do, part of the deal (bail out) is that the EU injevcts a couple of billions into the system.

Based on some quarters, it is being done to preserve the Euro and not have one nation leave which may have a domino effect on the others.
Cyprus did what it could in the global ecnomy to provide a better life for it citizens based on the resources of the nation, finance is really cheap to establish, as in all things they made excess's and now there is a price to pay, they will be a major debtor nation for the forceable future and the day of being independent and in control of their future may be lost for a long long time.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 148, posted (1 year 4 months 2 weeks 1 day 8 hours ago) and read 2217 times:

Quoting PanHAM (Reply 144):
Why should we (in Germany and other nothern European counries) pay twice and take liability for high intrest rates which we do not get?

Basically, PanHAM, because of a 'design flaw' in the whole concept of the Euro. The Euro was accepted as the single currency of all the Eurozone countries (I think 17 of them?) but the Eurozone neglected to set up a genuine 'central bank' to 'manage' the value of the currency. So, on the principle of 'the higher the fewer,' the Euro has been holding a high value relative to other world currencies because of the relative economic success of the stronger Eurozone countries (especially Germany).

Trouble is, that leaves the weaker Eurozone countries stuck with a high-value 'hard currency.' That inevitably leads to balance of payments problems - they're importing more goods than they export. If they were independent countries with their own currencies they could largely correct that problem by devalueing - reducing the value of their currencies, which would automatically make exports cheaper and imported goods more expensive. By the same token, the currencies of successful exporting countries would tend relatively to rise in value, reducing the level of their exports.

Those basic economic principles were well spelled out by John Maynard Keynes the best part of fifty years ago; and they STILL work, for the most part - everywhere but in the Eurozone.

So, seems to me, there are only two possible solutions to the current Eurozone problems:-

Either.......

1. Set up a genuine Eurozone banking union with the economically-stronger countries (mainly Germany) systematically (and permanently) supporting the weaker ones with financial subsidies; OR

2. Phase out the Euro and have all countries (starting with the poorer ones) revert to their own currencies, which they can devalue or revalue as necessary to bring imports and exports into a better and more sustainable balance.

The only other 'available' solution is a complete and irreversible political and economic union - a 'United States of Europe.' I expect that we can both agree that that just isn't going to happen?



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlinePanHAM From Germany, joined May 2005, 9269 posts, RR: 29
Reply 149, posted (1 year 4 months 2 weeks 1 day 5 hours ago) and read 2195 times:

Quoting NAV20 (Reply 148):
Basically, PanHAM, because of a 'design flaw' in the whole concept of the Euro. The Euro was accepted as the single currency of all the Eurozone countries (I think 17 of them?) but the Eurozone neglected to set up a genuine 'central bank' to 'manage' the value of the currency.

You come close but not near.

The EU has 27 nations, 17 have elected to join the € so far.

There is a European Central bank, right here in Frankfurt. The EU has set up a rescue system already and the ECB is the body to execute those plans..

Cyprus, with a GNP of 18 billion e is not really bringing the € down,

Thze design flaw as you called it is, that the weak countries do not have any means to de-valuate their currency now, since the yjoined the €. That is because the € was a political invention set up by politicians who have no clue on business.

Our former finance minister Hans Eichel, in the Schroeder government, inisted that his poltical buddies in Greece, could join the € . he knew that they falsified all documents, all balance sheets, still mr., Eichel draws a pension of more than € 11 K per month.

The EU is a united Europe of nations, may be in 50 years or so it will become a Unitd States of Europe, but that may have to wait until Mexico becomes the 51st state.

The interims solution will be that Germany, along with Austria, Finland Luxemburg and Holland may create a "North Euro". Sweden and denmark, eventually Poland and Estonia might join the strong part. May be even the UK

The other countries, including France and Italy can either get their old currencies back which the y can devaluate if necessary or create a "South €"

However, nothing will happen until the German elections in September.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineOA260 From Ireland, joined Nov 2006, 26900 posts, RR: 58
Reply 150, posted (1 year 4 months 2 weeks 1 day 5 hours ago) and read 2189 times:

Quoting PanHAM (Reply 146):
Germany definately not, may be German Banks have illegally earned money in foreign accounts. However, since each and every deposit made in a German bank is screened and the owner has to prove where the money comes from, your allegiation is unfunded.

Really I would read your newspapers and media over the next few weeks my friend.   Some very interesting revelations await about money laundering and tax evasion and also major German banks assisting your fellow citizens to avoid tax in off shore accounts and Russian laundered money. It very well make the Cypriots look like amateurs !

There is a very good saying ''Those in glass houses shouldn't throw stones'' .


User currently offlinePanHAM From Germany, joined May 2005, 9269 posts, RR: 29
Reply 151, posted (1 year 4 months 2 weeks 1 day 4 hours ago) and read 2181 times:

FAZ and WELT on a daily basis. but the other poster said that "Germany has hosted 140 bn" .

Now. German banks are not Germany and the country, the Bundesbank or the finance ministry has not hosted such money.

What German banks have done is another story but i would take these allegations you are referring to with more than a grain of salt. And it has nothing to do with gölass houses. German banks are not over exposed, nowhere near to what Greek banks were or Cypriotic.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineBMI727 From United States of America, joined Feb 2009, 15727 posts, RR: 26
Reply 152, posted (1 year 4 months 2 weeks 1 day 3 hours ago) and read 2185 times:

Quoting PanHAM (Reply 144):
But that's the trouble with bllack money for which taxes have not been paid, where to go?

You can bet they'll find somewhere now. And never underestimate the power of ill gotten gains to stimulate an economy.

Quoting PanHAM (Reply 144):
Why should we (in Germany and other nothern European counries) pay twice and take liability for high intrest rates which we do not get?

You should have considered that before you got all mixed up in this Euro business.

But, the answer to your question is that you've kneecapped the European banking system. It cannot be trusted, and at the end of the day, that's what banks live and die with. The word is out: money in European banks is not safe. There is no way around that, the precedent has been set. Even Paul Krugman gets that, which should shed some light on how obvious a conclusion that is.

Quoting PanHAM (Reply 146):
Most of the monies which are frozen now have never been taxed,

In no way does that make it okay.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineAesma From France, joined Nov 2009, 6585 posts, RR: 9
Reply 153, posted (1 year 4 months 2 weeks 1 day 2 hours ago) and read 2175 times: