That is a completely different question and not the point I was making.
Essentially savers are being punished for the mistakes of governments, banks and bankers.
That is a completely different question and not the point I was making.
It is the question that reality is presenting them.
Really?
I suppose that could be true if those savers paid their taxes and voted with the benefit of the country as a whole rather than what might fatten their wallets regardless of what it would do to the country.
Other wise they are just getting what they had coming to them.
It's the only relevant question. The banking system in Cyprus is broke and the Cypriot government doesn't have anywhere near enough money to rescue it. So the golden rule applies.
Why should taxpayers from Northern Europe be expected to foot bill? If they don't, of course, then the Cypriot depositors will have accounts worth substantially less than x-10%.
I absolutely understand why the Germans et al aren't interested in bailing out a banking system that operated largely as a Russian laundromat.
All unscrupulous behaviour aside, do you think the savers of the country are to be blamed for the present predicament?
The more important question is what sort of precedent does this set. I am sure there will be more banks and governments that will go down this road.
The more important question is what sort of precedent does this set. I am sure there will be more banks and governments that will go down this road.
A policy of raiding citizens bank accounts will undermine every countries financial system and central bank and it sets a dangerous precedent. How will Spanish savers greet negotiations with the IMF and how will they begin to withdraw their savings from the already fragile Spanish banking system.
Once again the ECB, the IMF and the EU elites have looked after the interests of banks and institutions over those of the ordinary people. Corporatism is alive and well and it threatens our banking systems and capitalism itself which cannot function without a healthy banking system.
It's the only relevant question. The banking system in Cyprus is broke and the Cypriot government doesn't have anywhere near enough money to rescue it. So the golden rule applies.
Why should taxpayers from Northern Europe be expected to foot bill? If they don't, of course, then the Cypriot depositors will have accounts worth substantially less than x-10%.
I absolutely understand why the Germans et al aren't interested in bailing out a banking system that operated largely as a Russian laundromat.
No. But I think who's to blame is entirely irrelvant at this point. Cyprus is where it is and no amount of blame or punishment will reverse previous mistakes or malfeasance.
I highly doubt it.
It maybe irrelevant at this point in time and possibly to Cyprus but it is the most relevant question going forward. This is advocating that no matter what governments do or how banks screw up , they will be propped up. Not only that but if you have savings, you will be the first one targeted.
Deposit holders aren't some sacred cow that needs to be protected no matter the cost borne by the rest of society.
I disagree. It is less about reversing previous mistakes and more about setting a precedent for the future.No. But I think who's to blame is entirely irrelvant at this point.
Exactly.It maybe irrelevant at this point in time and possibly to Cyprus but it is the most relevant question going forward. This is advocating that no matter what governments do or how banks screw up , they will be propped up. Not only that but if you have savings, you will be the first one targeted.
Regardless of whether it happens or not, people have/will loose trust in the system. And like you said, the current situation can't be reversed. What is the same happens in Italy and Spain?
More from the RBA speech this morning. Dr Philip Lowe said he had been very surprised by plans to tax depositors in Cyprus as part of a bailout package and saw it as a step back for the region.
Answering questions after a speech, Reserve Bank of Australia (RBA) Deputy Governor Philip Lowe said the plans for a tax threatened integrity of deposits generally and could lead to runs on banks in other euro zone countries where bailouts might be needed.
You seem to be dismissing the collective psychological impact of the message now that money in the bank is no longer safe. The potential ramifications of such a loss of trust could be considerable imo.Deposit holders aren't some sacred cow that needs to be protected no matter the cost borne by the rest of society.
Thank you: that link worked. From Mr Koukoulas's article:Try this link again if you are interested.
http://www.businessspectator.com.au...two-options-misery-or-suffering#ixzz2NrxmDwpS
The decision to tax savings has lead to a range of criticisms, particularly as savings are the antithesis of the whole problem and sovereign debt holders have not had to endure a similar hair cut. This is the main problem with the deposit levy as those active players in the whole crisis such as the hedge funds, banks and other bond holders are getting away scot-free it seems.
No. The consequence is that the purchasing power of savers, specifically, is reduced, that they are to be punished for their caution and diligence.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.
It hardly compares!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.
Strewth, would you care to read back what you just said,
or perhaps can you elaborate on that ?
You seem to be dismissing the collective psychological impact of the message now that money in the bank is no longer safe. The potential ramifications of such a loss of trust could be considerable imo.
It hardly compares!
Someone earning over $100K was levied a one off mere 1% just on those earnings. That's a completely different principle from a tax on savings.
(CY) Cyprus govt spokesperson Stylianides: Cyprus parliament will not approve bank deposit levy, trying to find ways to mitigate burden on depositors - Source TradeTheNews.com
Bank is propped up by taxpayers or deposit holders lose everything
Bank is propped up by taxpayers and deposit holders lose a small amount of their funds on deposit or they lose everything.
See the quandry? Either way taxpayers pay. Shouldn't the people most directly affected bear a higher proportion of the cost? Deposit holders aren't some sacred cow that needs to be protected no matter the cost borne by the rest of society.
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.
Let me ask you this. Why is the banking sector in trouble in the first place?
Neither are investment bankers ... but they seem to get away with it...
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