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Revelation
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Government Money Grab In Cyprus

Wed Mar 20, 2013 1:03 pm

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'?
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Dreadnought
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 3:03 pm

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.
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Quokkas
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 3:52 pm

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.  
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Arrow
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 4:19 pm

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.
 
Kiwirob
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 4:20 pm

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.
 
Quokkas
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 4:42 pm

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.
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MD11Engineer
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 4:43 pm

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
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moo
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 4:49 pm

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!
 
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par13del
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 4:55 pm

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.
 
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moo
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 5:06 pm

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.
 
Quokkas
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 5:12 pm

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?
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moo
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 5:15 pm

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.
 
Arrow
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 5:24 pm

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.
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MD11Engineer
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 5:24 pm

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
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Quokkas
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 5:33 pm

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]
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Dreadnought
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 8:13 pm

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.
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Quokkas
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 8:59 pm

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?
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lewis
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 9:00 pm

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.
 
flyingturtle
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 9:27 pm

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
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MD11Engineer
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 9:33 pm

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
Je Suis Charlie et je suis Ahmet aussi
 
lewis
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 9:48 pm

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]
 
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OA260
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RE: Government Money Grab In Cyprus

Wed Mar 20, 2013 9:48 pm

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.
 
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Aesma
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RE: Government Money Grab In Cyprus

Thu Mar 21, 2013 12:28 am

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.
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RE: Government Money Grab In Cyprus

Thu Mar 21, 2013 1:42 am

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.
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RE: Government Money Grab In Cyprus

Thu Mar 21, 2013 2:26 am

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.
 
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RE: Government Money Grab In Cyprus

Thu Mar 21, 2013 3:01 am

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]
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RE: Government Money Grab In Cyprus

Thu Mar 21, 2013 3:03 am

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.

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RE: Government Money Grab In Cyprus

Thu Mar 21, 2013 1:05 pm

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?
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RE: Government Money Grab In Cyprus

Thu Mar 21, 2013 5:16 pm

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.
 
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RE: Government Money Grab In Cyprus

Fri Mar 22, 2013 2:54 am

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?
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RE: Government Money Grab In Cyprus

Fri Mar 22, 2013 12:58 pm

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.
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RE: Government Money Grab In Cyprus

Fri Mar 22, 2013 3:57 pm

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
 
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RE: Government Money Grab In Cyprus

Sat Mar 23, 2013 9:58 pm

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.
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 12:23 am

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.

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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 1:04 am

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'?
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 1:35 am

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.

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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 1:59 am

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.
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 2:26 am

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.

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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 3:20 am

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.
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 3:35 am

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.
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 3:42 am

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.
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 4:49 am

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...
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OA260
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 11:07 am

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?
 
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par13del
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 12:15 pm

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.
 
NAV20
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 12:59 pm

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]
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par13del
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 1:14 pm

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.
 
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 1:16 pm

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
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NAV20
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 1:19 pm

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
 
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par13del
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 1:50 pm

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.
 
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RE: Government Money Grab In Cyprus

Sun Mar 24, 2013 3:06 pm

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.
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