The debacle in Cyprus was inevitable.
I have no sympathy for anyone involved in the losses.
The Cypriot bankers, and the Cypriots themselves must have known. It is a small place.
The majority of money propping up Cyprus in the last three years has been from Russian Mafia, people who trade arms, buy and sell slaves, and money launder.
70% is too little to lose for those bastards.
From the Independent UK.
http://www.independent.co.uk/news/world/europe/moscows-mafia-finds-an-island-in-the-sun-cyprus-is-awash-with-dubious-dollars-from-russia-robert-fisk-reports-from-limassol-on-the-visitors-with-private-jets-bulging-suitcases-and-a-reluctance-to-answer-questions-1381056.html
gg
While I generally agree with your sentiments....not all involved were from the Russian Mafia or Oligarchy. Like the retiree from Oz who was interviewed, many will have the rest of their lives substantially altered due to this. Having said that Caveat Emptor.
Also at the rate the banker are going, they might soon be doing more damage than the warlords and arms dealers:
You too, Happy Easter... Enjoy Easter monday
The EU sabotaged itself by its decision of not following its own rule about the 100k garantee first (the reversal is too late, the damage is done) and it might even take years to unfold but it is the beginning of the end for european finance in my opinion
But one point is quite forgotten in this story.
No one can blame the situation in chyprus on siesta mentality, no tax, people indulging in a RE boom and dust cycle or anything like that, this is not Greece.
The state is so small that the actual economy of the island is peanuts.
So why have they reached that state?
Just because most of their banks financial instruments were linked (culture/language,physical proximity) to greek finance.
They are collateral damages of the "haircut" decisions made a few months ago on greek debts and bonds and even billions of clean or unclean russian money was not able to save them and THAT is the real worry..
They are "fall of the domino number TWO"
So the real question is: what about the other banks in europe? or elsewhere?
How much do they have in greek, spanish, italian bonds or financial tools?
Assets which are worthless but where everyone turns a blind eye.
I do believe it is not anymore a question of "when ths s..hit the fan", I believe we are in already and in a big way.
my usual gloomy view
I do not knowingly own any money in Chyprus..but probably do anyway......
Enjoy Easter monday
And the ever changing news about the so called haircut in Cyprus don’t make it any better, first it was 10% on any amounts/deposits over 100k, then 40% and the latest I heard was up to 60% for customers of the biggest bank and 100% at the second biggest bank.
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.
Customers' deposits at Italian bank Monte dei Paschi fell by "a few billion euros" after a scandal erupted in February over loss-making derivatives trades at the lender, the bank said in a document posted on its web site on Saturday.
All Cypriots knew of the dodgy money coming in to that country, from the baggage handlers unloading cases full of cash, to the taxi drivers driving the Russians to the banks, to the prostitutes servicing them, the villa owners selling or renting and the shops and cafes selling their wares and feeding them.
If you sup with the devil you get indigestion.
Cyprus deserves a very large haircut.
And the EU will be better for it, and so will the Global Financial System
gg
The EU sabotaged itself by its decision of not following its own rule about the 100k garantee first (the reversal is too late, the damage is done) and it might even take years to unfold but it is the beginning of the end for european finance in my opinion
But one point is quite forgotten in this story.
No one can blame the situation in chyprus on siesta mentality, no tax, people indulging in a RE boom and dust cycle or anything like that, this is not Greece.
The state is so small that the actual economy of the island is peanuts.
So why have they reached that state?
Just because most of their banks financial instruments were linked (culture/language,physical proximity) to greek finance.
They are collateral damages of the "haircut" decisions made a few months ago on greek debts and bonds and even billions of clean or unclean russian money was not able to save them and THAT is the real worry..
They are "fall of the domino number TWO"
So the real question is: what about the other banks in europe? or elsewhere?
How much do they have in greek, spanish, italian bonds or financial tools?
Assets which are worthless but where everyone turns a blind eye.
I do believe it is not anymore a question of "when ths s..hit the fan", I believe we are in already and in a big way.
my usual gloomy view
I do not knowingly own any money in Chyprus..but probably do anyway......
Enjoy Easter monday
You too, Happy Easter
In my view, both Cyprus’ and Greece’s economy are peanuts in the EU. From the beginning I couldn’t understand why they didn’t decide a clean solution, either give Greece the money they needed or kick them out. Instead, they delayed the solution for years, attracted the attention of the whole world on a small problem and by that spread a lot of uncertainty if or how long the unified currency can survive. Ridiculous in my opinion, Greece is just not big enough to cause a collapse of the EU.
What worries me more is that by igniting the global uncertainty, they have probably worsened the situation in Italy and Spain. And I don’t think the IMF is big enough to bail out Italy when they default. In other words; more uncertainty. And the ever changing news about the so called haircut in Cyprus don’t make it any better, first it was 10% on any amounts/deposits over 100k, then 40% and the latest I heard was up to 60% for customers of the biggest bank and 100% at the second biggest bank.
Four pages with the names of some 132 companies and individuals who withdrew the bulk of their deposits in euros, dollars and rubles kept in local banks reveals protothema.gr.
Transfers of money totaling causes vertigo made within 15 days, namely the period from 1st until March 15, 2013. On Friday, March 15 at the Eurogroup meeting which decided formally levy, as has been called the "haircut", on deposits of companies and individuals in all banks in Cyprus. These 132 companies and individuals seem to have "inside" information about impending single taxation of deposits in Cypriot banks so it proved as the elements contained in lists, in most cases, they withdrew all their deposits in Euro, dollars and rubles, which moved to other banks outside Cyprus, which apparently considered a "safe harbor."
The disclosure of the list, which shows that the outflow of deposits from local banks other financial institutions outside Cyprus became massively creates reasonable suspicion that some had inside information about the decisions taken by the other 16 eurozone countries in exchange for funding deficits of the economy.
Apart from the huge moral issue raised, the government of Nikos Anastasiadis is heavily exposed, since in some cases, those who took huge funds from abroad are relatives of the President of the Republic, as the company Loutsios & Sons ltd owned by father of groom Nikos Anastasiadis, who three days before the decision to "haircut" deposits transferred to a British bank 21 million euros!
Read the lists with the names of all companies and individuals who withdrew their deposits from Cyprus during the period from 1st until March 15.
Now this seems to be the latest:
http://www.reuters.com/article/2013/03/29/us-cyprus-parliament-idUSBRE92G03I20130329
Also, seems like the wave has reached Italy:
Customers' deposits at Italian bank Monte dei Paschi fell by "a few billion euros" after a scandal erupted in February over loss-making derivatives trades at the lender, the bank said in a document posted on its web site on Saturday.
http://www.reuters.com/article/2013/03/30/us-monte-dei-paschi-deposits-idUSBRE92T08520130330
The way I see it is that the situation sounds bad initially but ultimately it is the same as other forms of tax increase, austerity or even inflation. The consequence is that the private citizens' purchasing power is reduced.
The Australian government had a one-time QLD flood levy in 2011. I paid my share but I was not offered any choice or consulted in the process. The economic impact to me would be the same had they simply take the same amount from my bank account. But they called it a tax/levy and took it out of people's pay instead. The situation and cause are slightly different, but the economic consequences are similar. Yet somehow a flood levy doesn't sound nearly as dramatic as a disposit levy.
Government has the power to take money from the public... either through taxes, reduced welfare, deliberate inflation or "direct debit" of bank accounts. The economic consequence is the same, and each of these methods will hurt some subset of the public.
Cast aside the notion that savers are for some reason more sacred than tax payers or welfare recipients, and ignore the quantum of the two levies (as they are trying to address problems of different magnitude) you will find there are more similarities than differences. They are both one-off levies, they are both imposed on the public (a different subset of the public), and they are both done as extraordinary measures to address issues elsewhere in the system.
Whilst it's true that the government has the power to take money from us (or do anything, really), what makes this Cyprus situation so hard to swallow is it's a retrospective tax. I think people are accustomed to 'future' taxes, at least people have the opportunity to prepare/plan for it. But to retrospectively take your money away is very much akin to stealing.
Whilst it's true that the government has the power to take money from us (or do anything, really), what makes this Cyprus situation so hard to swallow is it's a retrospective tax. I think people are accustomed to 'future' taxes, at least people have the opportunity to prepare/plan for it. But to retrospectively take your money away is very much akin to stealing.
So a company is insolvent, the government guarantees that savers with EUR100k or less will be reimbursed first. That leaves everyone else as creditors of a failed company. As it is they are able to keep 40% of their money by being bailed out with public funds.
How exactly is this a tax, retrospective or other? I imagine without government intervention they would have faired much more poorly.
The Government is also responsible for implementing capital adequacy requirements(in Aus, not sure about Cyprus) and ensuring these are met.
Therefore a degree of resonsibility falls at the feet of the Government, to ensure the banks are being diligent in their operation and to check the assetts supporting that capital adequacy ratio.
In any event, the haircut is not a tax.
Sure, but the government is responsible for setting lots of regulations in lots of industries, that doesn't automatically make them responsible for the investment decisions that result from those regulations.
I agree it is not a tax, it is just pure theft.
Tyler Durden said:I use the word 'tax' loosely - whenever the government takes money away from you, they disguise it by calling it a tax.
sptrawler said:Well in Australia, where the government basically forces you to have your wage paid directly into a bank account, there is a certain amount of responsibility and accountability attached.
Well I've only worked for large companies, but there was never an option to take your pay as cash.
I assumed it was legislated that wages had to be deposited into a bank, it would make sense for the tax department. I will stand corrected, as I said it was an assumption.
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