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Shock in Cyprus as savers face bailout levy

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If you asked 100 random people on the street what the lowest risk investment is, I'd expect that at least 90% of them would say "put the money in the bank".

Treasury bonds aren't something that your average small investor puts money into. Indeed a lot would have no idea that such things exist in the first place, and even fewer would know how to invest money in that way.

Ordinary non-expert people who deposit cash into banks do so on the assumption that this is the "safest" place to keep their money as well as being a reasonably convenient one. :2twocents
 
Smurf1976 said:
If you asked 100 random people on the street what the lowest risk investment is, I'd expect that at least 90% of them would say "put the money in the bank".

Treasury bonds aren't something that your average small investor puts money into. Indeed a lot would have no idea that such things exist in the first place, and even fewer would know how to invest money in that way.

Ordinary non-expert people who deposit cash into banks do so on the assumption that this is the "safest" place to keep their money as well as being a reasonably convenient one. :2twocents
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Agree. And I'd even be willing to raise that to 95%.
 
FlyingFox said:
BTW what happens to bank shareholders in Cyprus?
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Yes curious about this as well. If they are insolvent then presumably the stock is worthless. The CEO and senior management should be out of work and unemployable in banking etc. Or is this a too big to fail thing? The shareholders in a dud business get bailed out by taxpayers again. Shame I can't get all my equities tax payer underwritten. I wonder if Nathan Tinkler is too big to fail?

And thanks for the cow analogy.
 
Aussiejeff said:
Yep.

Banksters smile, markets soar, problems fixed.

Yep.

:rolleyes:
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I thought I was well prepared for the approaching armaggeddon but what we are witnessing is unbelievable.

And lets see how the markets look in a week or so when it becomes believable.
 
I'm trying to work out what this means,

The Bank of Cyprus, the island's No.1 lender, survives: but it will have to endure a major “haircut” - a forced wipeout of investment value, on all deposits of more than 100,000 euros ($A125,000).
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Put simplistically, does a depositor with over 100,000 lose the lot or just that part over 100,000 ?

In relative terms, the latter would make more sense than the former.

http://www.news.com.au/breaking-new...ch-bailout-talks/story-e6frfkui-1226605081089
 
drsmith said:
I'm trying to work out what this means,



Put simplistically, does a depositor with over 100,000 lose the lot or just that part over 100,000 ?

In relative terms, the latter would make more sense than the former.

http://www.news.com.au/breaking-new...ch-bailout-talks/story-e6frfkui-1226605081089
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The latest interpretation of latest statements is that over $100,000 will lose 40%

But then again the Us$ has gone from $1.30 on the index to .80 in just a few years so if one thinks about it, what is the difference in the long term. Take it today or dilute it gradually.
 
explod said:
The latest interpretation of latest statements is that over $100,000 will lose 40%

But then again the Us$ has gone from $1.30 on the index to .80 in just a few years so if one thinks about it, what is the difference in the long term. Take it today or dilute it gradually.
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Can you provide a link for the 40% value?
 
16:41 (CY) Chair of Cyprus Finance Committee member Spox: Believes big depositors in Bank of Cyprus to lose 30%; levy to be determined on Tuesday, Mar 26th - Source TradeTheNews.com
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Down to 30%?

CanOz
 
explod said:
The latest interpretation of latest statements is that over $100,000 will lose 40%

But then again the Us$ has gone from $1.30 on the index to .80 in just a few years so if one thinks about it, what is the difference in the long term. Take it today or dilute it gradually.
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The difference is that they are taking people's savings instead of allowing a floating currency to do it's job. The lesson here is that a single currency is not appropriate for the range of economies in the EU.

That tough still leaves an interesting question.

If the loss is xx% for deposits over $100,000 euro, does a depositor with $100,001 euro end up with $100,001/(1 - xx%), or say $70,000.70 euro for 30% ?
 
The bank is broke. They should just wind it up and pay what's left to the depositors.

Instead they are looking after the small guy which has to be a first in this crisis. It is only occurring because of the power of voting.
 
What will also be interesting is when the banks re-open: will people who are unaffected by the proposed terms leave their money in the bank, or has all trust been eroded and everyone will just withdraw their money?
 
drsmith said:
...That tough still leaves an interesting question.

If the loss is xx% for deposits over $100,000 euro, does a depositor with $100,001 euro end up with $100,001/(1 - xx%), or say $70,000.70 euro for 30% ?
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I think it’s safe to assume the first. If they say deposits up to 100k are safe then it doesn’t make sense to deduct any amount from that. On the other hand, some of their decisions do actually make no sense to me but perhaps it’s just because I can’t see the bigger picture.
 
YMI said:
I think it’s safe to assume the first. If they say deposits up to 100k are safe then it doesn’t make sense to deduct any amount from that. On the other hand, some of their decisions do actually make no sense to me but perhaps it’s just because I can’t see the bigger picture.
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Putting the right or wrong of this aside for a moment, I would have thought not touching the first $100,000 euro of any deposit and only clipping the portion over $100,000 euro by xx% would be the most logical approach.
 
drsmith said:
I would have thought not touching the first $100,000 euro of any deposit and only clipping the portion over $100,000 euro by xx% would be the most logical approach.
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Naa first offer was never going to work.
They just did that to get people thinking of the possibilities.
Less votes lost by taking the smaller no of people’s money especially the Richer ones and taking the Russian deposits in probably the most corrupt and Russian capitalized bank.

Now I know why Germany has recalled it's gold from the US.
It's going to melt it down and open up gold ATMs all over the Europe peripheries.
 
notting said:
Now I know why Germany has recalled it's gold from the US.
It's going to melt it down and open up gold ATMs all over the Europe peripheries.
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LOL. Or a gold backed Deutsche Mark if/when the Euro fails.....assuming they didn't get tungsten bars :p
 
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