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Shock in Cyprus as savers face bailout levy

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McLovin said:
FFS mate, use some common sense. If it was happening it would be on the front page of every news organisation's website.
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McLovin, I usually like your input so no personnal attack here but two facts:
1) bank are closed and accounts locked at the moment so you will not see a queue is the street, so no photo for the headlines in Cyprus;
2) from what I have read, more than a third of the money there is russian (mafia?) and one of the reason the EU was keen on the "levy" was it was seen as dirty money;
what do you think these russian mafioso or not will do in the next week if they can?
They will move out
this money gone will need to be replaced by either another EU gift or the country system collapses.
What about other investors still in the PIGS? they have to run as fast as possible...but they will not queue at the teller, this is done overnight via bank wire internet.
Only the local small fry will queue but for what if you are italian or spanish, you still need to have an account to pay your rent, etc so do not expect front line until it is far too late

IMHO, the effect is these country will never get a cent from O/S (ie non EU) anymore
and that is the beginning of the end for them and within a few month Euro in the worst case scenario.
 
qldfrog said:
McLovin, I usually like your input so no personnal attack here but two facts:
1) bank are closed and accounts locked at the moment so you will not see a queue is the street, so no photo for the headlines in Cyprus;
2) from what I have read, more than a third of the money there is russian (mafia?) and one of the reason the EU was keen on the "levy" was it was seen as dirty money;
what do you think these russian mafioso or not will do in the next week if they can?
They will move out
this money gone will need to be replaced by either another EU gift or the country system collapses.
What about other investors still in the PIGS? they have to run as fast as possible...but they will not queue at the teller, this is done overnight via bank wire internet.
Only the local small fry will queue but for what if you are italian or spanish, you still need to have an account to pay your rent, etc so do not expect front line until it is far too late

IMHO, the effect is these country will never get a cent from O/S (ie non EU) anymore
and that is the beginning of the end for them and within a few month Euro in the worst case scenario.
Click to expand...

QLD, they froze the assets. They froze everything according to the first proposal. I can't imagine them releasing the funds until they agree on plan B.



CanOz
 
qldfrog said:
McLovin, I usually like your input so no personnal attack here but two facts:
1) bank are closed and accounts locked at the moment so you will not see a queue is the street, so no photo for the headlines in Cyprus;
2) from what I have read, more than a third of the money there is russian (mafia?) and one of the reason the EU was keen on the "levy" was it was seen as dirty money;
what do you think these russian mafioso or not will do in the next week if they can?
They will move out
this money gone will need to be replaced by either another EU gift or the country system collapses.
What about other investors still in the PIGS? they have to run as fast as possible...but they will not queue at the teller, this is done overnight via bank wire internet.
Only the local small fry will queue but for what if you are italian or spanish, you still need to have an account to pay your rent, etc so do not expect front line until it is far too late

IMHO, the effect is these country will never get a cent from O/S (ie non EU) anymore
and that is the beginning of the end for them and within a few month Euro in the worst case scenario.
Click to expand...

Qld

I wasn't actually talking about queues in Cyprus, it was queues in other peripheral countries like Italy/Spain/Greece. :)

Firstly, as I mentioned in a previous post, Cyprus is an outlier and not typical of the other PIIGS banking systems in both its relative size and the composition of the deposit base (700% of GDP and ~50% foreign deposits). Just the amount of Greek bonds the banks had on their balance sheet amounted to 130% of Cyrpus' GDP. That's why its highly unlikely that the EU would need to haircut depositors in other countries, IMO.

Secondly, unless the average Italian/Spaniard/Greek has a foreign bank account (which is likely as an Australian having one), there is nowhere for them to move their money that would prevent it being taxed (if that was to occur) except to withdraw cash. So a bank run would absolutely involve people queuing to withdraw cash, not simply eft.

Re Cyprus' banks. I don't know what will happen, but I wouldn't be surprised if the Russian money stays in Cyprus. It's hard for to go anywhere else, and when you've acquired your cash by less than legal means, 10% isn't such a bad haircut to take.

Anyway, I think it's time for me to bow out of this thread.:)
 
qldfrog said:
2) from what I have read, more than a third of the money there is russian (mafia?) and one of the reason the EU was keen on the "levy" was it was seen as dirty money;
what do you think these russian mafioso or not will do in the next week if they can?
They will move out
this money gone will need to be replaced by either another EU gift or the country system collapses.
Click to expand...

Bank runs are liquidity events but not in itself a solvency event. The Cyprus government has asked for unlimited liquidity to be provided as part of the condition to the bail-in, in anticipation of a bank run.

Tyler Durden said:
You don't know that.
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Absence of proof is proof of absence in this case. Unless there's a media cover up over 200 million people in the PIIGS.
 
Just when you thought it was safe to go back into the market-

ATM Cyprus.JPG

Regarding the one off levy on deposits BELOW 100.000 €: The Euro Commission made it clear in the Eurogroup BEFORE the vote in the Cypriot parliament, that an alternative solution respecting the financing parameters would be acceptable, preferably without a levy on deposits below 100.000 €. The Cypriot authorities did not accept such an alternative scenario.
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skc said:
Absence of proof is proof of absence in this case. Unless there's a media cover up over 200 million people in the PIIGS.
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With respect, I must disagree. Just because something doesn't appear on the news doesn't mean it's not happening.
 
The Cyprus situation will lead to a run on banks in all South European countries.

Even the Poms are advising travellers to Cyprus to watch out for thieves if going to Cyprus and to take cash on holidays.

Cyprus is a kleptocracy, holding money for Russian oligarchs and brigands, with an impoverished population serving at their table.

gg
 
(CY) Cyprus and Troika agree on a 20% levy on deposits above €100K at Bank of Cyprus (largest bank) and 4% levy above €100K at all other banks; Deal still needs to be approved by Cyprus Parliament - financial press - Source TradeTheNews.com
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Just guessing here but would that bank be the one where the bulk of the Russkies funds are?:rolleyes:

CanOz
 
Buckfont said:
More from Jim Sinclair/Eric King blog.

http://kingworldnews.com/kingworldn...Roberts_-_Cyprus_May_Dwarf_2008_Collapse.html
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Thanks for the link, I must say I disagree with this:

“No, I don’t by that definition at all that you are a lender to a bank. In fact, for centuries now, the reason that people have deposited money in a bank, rather than keeping it under the mattress, is you are putting it there for safekeeping. The fact that the bank may then use the money to lend on elsewhere is their business, not yours."
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I always understood that when we put our money into the ban, we are in fact lending it to them.

1. This would explain why the statements are in terms of debit and credit, as it is an account payable for them and account receivable for us.

2. We get paid interest on the money we deposit. If we put $5000 into a safety deposit box, we would not get anything for that.

3. They lend out our money to others. If I put my car at a car park for safe keeping, then they can't touch or use it. But if I park it there and agree to let them hire it out to others, then I am lending them my car.
 
Tyler Durden said:
Thanks for the link, I must say I disagree with this:



I always understood that when we put our money into the ban, we are in fact lending it to them.

1. This would explain why the statements are in terms of debit and credit, as it is an account payable for them and account receivable for us.

2. We get paid interest on the money we deposit. If we put $5000 into a safety deposit box, we would not get anything for that.

3. They lend out our money to others. If I put my car at a car park for safe keeping, then they can't touch or use it. But if I park it there and agree to let them hire it out to others, then I am lending them my car.
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I see your point. Having said that, aren't all deposits made under the assumption that they are risk free (or relatively risk free) and hence are compensated as such? If deposit holders are to take on some of the risks taken on by bankers shouldn't they be compensated accordingly (e.g deposit rate vs dividend)?
 
Cyprus explained...

You have two cows
You loan the Greeks one of them, and the other is 'protected' by the Russian Mafia.
The EU comes looking for the milk.
In 3 days you try stealing 10% of your neighbour's cows, ask the Greeks where the first cow went, and demand the other cow back from the Mafia.
What's left of you is found decorating the walls of your house by an angry mob of locals who came to burn the place down.
The postman delivers two letters.
One is from the EU, a bill for €6 bn to your next of kin.
The other is from Ireland, with instructions on how to milk that horse.
The Greeks come to your funeral and eat all the kebabs.
 
Boggo said:
Cyprus explained...

You have two cows
You loan the Greeks one of them, and the other is 'protected' by the Russian Mafia.
The EU comes looking for the milk.
In 3 days you try stealing 10% of your neighbour's cows, ask the Greeks where the first cow went, and demand the other cow back from the Mafia.
What's left of you is found decorating the walls of your house by an angry mob of locals who came to burn the place down.
The postman delivers two letters.
One is from the EU, a bill for €6 bn to your next of kin.
The other is from Ireland, with instructions on how to milk that horse.
The Greeks come to your funeral and eat all the kebabs.
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Hilarious! Should add that the Greeks milked the cow dry and then proceeded to make kebabs from it.
 
FlyingFox said:
If deposit holders are to take on some of the risks taken on by bankers shouldn't they be compensated accordingly (e.g deposit rate vs dividend)?
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They are. The universal risk free rate is considered to be a long dated treasury bond, not an interest bearing bank account (which have higher returns). Of course one could argue there are risks with treasury bonds also.
 
prawn_86 said:
They are. The universal risk free rate is considered to be a long dated treasury bond, not an interest bearing bank account (which have higher returns). Of course one could argue there are risks with treasury bonds also.
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I do realise that the long dated treasury bond are the basis of pricing all financial instruments. Won't comment on the their actual riskiness, leave that for another thread.

However deposits are seen as risk free or relatively risk free depending on the state of the bank and credit ratings etc. There is even a government guarantee on them. If that changes, there will be a demand for higher compensation as deposit rates are much closer to treasury bond rates (~ 1% >) than say dividend payouts (~ 3-4 % >). Just personal opinion.

BTW what happens to bank shareholders in Cyprus?
 
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