[Closed] Cypriot bail out

Thm the EU was never a left or right issue as you and binners amply.demonstrate.
I think we shall agree to disagree re whether this is capitalism or not.
Binners no offence but I am not even replying you as I can only be sarcastic to that rant/ polemic.

Oh go on 😉

Even if all the deposit holders are Russian tax dodgers, Cypriot banks (with the backing of their government) were originally more than happy to entice them to deposit their money there. To just shift the goalposts means this is a one-off for Cyprus. Assuming they get a lump sum, they'd better spend it well, because no bugger will trust them ever again.

In terms of the regular Joe in the street, consider this. You have two colleagues on identical salaries. One has denied their family luxuries and saved in order to have peace of mind and a buffer if things go wrong. The other has pissed their money away by going out to eat 2 or 3 times a week and renewing their car every two years (and acted a bit flash as well). Now the government is going to take a big bite out of family A's nest egg whilst family B don't lose anything.

Well done, we're now encouraging a scorched earth approach to family finance.

Might as well take all your money out of the bank and bury it in the garden.

What the hell happened to rationality?

In terms of the regular Joe in the street, consider this. You have two colleagues on identical salaries. One has denied their family luxuries and saved in order to have peace of mind and a buffer if things go wrong. The other has pissed their money away by going out to eat 2 or 3 times a week and renewing their car every two years (and acted a bit flash as well). Now the government is going to take a big bite out of family A's nest egg whilst family B don't lose anything.

Can't add 10% to nothing. Family B never considered HOW they might pay the debt off. That's what turned billions of so-called 'assets' held by banks into liabilities overnight. When it (obviously) turned out that the clue was in the title. Sub-prime. Says it all really.

Neither a lender nor a borrower be.

To just shift the goalposts means this is a one-off for Cyprus

Re your example - how typical do you think that will be? I think we all agree it is a broad brush that harms savers rather than spenders but the saver still has more than the spender just 10% less if they saved over 100k rather than say only having 100 k of 250k if the bank is not bailed out.*

* IME those with 100 k in savings have been very well paid rather than scrimped and saved[ ie they have the broadest shoulders] - even 2 k net saved for each year you work does not get to 100k. I am not sure atypical examples of savers v spender help the discussion tbh and doubt anyone thinks that all savers deserve this equally and that it is not unfair to some.

IME those with 100 k in savings have been very well paid rather than scrimped and saved[ ie they have the broadest shoulders] - even 2 k net saved for each year you work does not get to 100k. I am not sure atypical examples of savers v spender help the discussion tbh and doubt anyone thinks that all savers deserve this equally and that it is not unfair to some.

Well you obviously have pretty limited experience, I know an ex teacher, hardly a highly paid profession especially when he was doing it, he is in his eighties who has liquid savings of £500k. He is tight though.

* IME those with 100 k in savings have been very well paid rather than scrimped and saved[ ie they have the broadest shoulders] - even 2 k net saved for each year you work does not get to 100k

IME other peoples shoulders always look broader. I suppose to say "they" can afford it is fine as long as "they" doesn't become "we" or "me"

* IME those with 100 k in savings have been very well paid rather than scrimped and saved[ ie they have the broadest shoulders] - even 2 k net saved for each year you work does not get to 100k

Quite easy to have achieved with very modest earnings over the last few decades with relatively high inflation, a booming stock market and a booming house market.

Well you obviously have pretty limited experience, I know an ex teacher, hardly a highly paid profession especially when he was doing it, he is in his eighties who has liquid savings of £500k. He is tight though.

IME other peoples shoulders always look broader. I suppose to say "they" can afford it is fine as long as "they" doesn't become "we" or "me"

It is not hard to see why if you have 100k saved you dont want to pay but it is not that easy to argue they are not that well off or that they dont have broad shoulders.

I am not sure it is quite easy tbh [probably not impossible but also no where near typical] and what exactly are you defining as "quite modest" earnings? they bought a second home and invested in the stock exchange with modest earnings. I thought they would have just paid the bills and hoped the car did not break down.

It's more to do with the 'message'.

Don't bother saving. We'll only take it off of you and the crap rate means it's actually shrinking in real terms.

Turns 'better safe than sorry' on it's head at the level of the individual.

Someone else will pick up the tab after all.

It is not a wise assumption to make that this is a one-off. That is the crucial point. The initial proposal goes against the agreed regulation of EU financial services which is what the fuss is all about. Once/if they proceed with the ability to impose a full bail-in for depositors, regulation and insurance has fundamentally changed and the goal posts have been moved. People must understand that and should therefore take responsibility to ensure that they place their deposits in safe banks in safe countries. Otherwise the principle has been established that their deposits may not be as safe as they think. Banks will also have to respond and weaker banks will be forced to pay higher deposit rates to compensate savers for the added risk. Some may argue that this is not a bad thing (and actually what was happening in Cyprus at the aggregate level).

yes that will be very typical of a teacher - they all have 500K saving dont they

I wasn't suggesting it was typical of teachers, I was suggesting that you had limited experience if you thought you could only generate £100 K of savings if you were well paid. There are plenty of frugal people in the world, you just don't seem to have made their acquaintance, and in many ways a levy on bank deposits hits the least financially astute as the well advised will use a broader range of investment vehicles than bank deposits. In my view such people should be protected.

Once/if they proceed with the ability to impose a full bail-in for depositors, regulation and insurance has fundamentally changed and the goal posts have been moved. People must understand that and should therefore take responsibility to ensure that they place their deposits in safe banks in safe countries. Otherwise the principle has been established that their deposits may not be as safe as they think.

Interestingly the UK tax havens only offer 50k [ guernsey, jersey and Isle of Mann] but i suspect nothing much will change there

I was suggesting that you had limited experience if you thought you could only generate £100 K of savings if you were well paid

Having surveyed 2000 people across Britain in August of this year, the Birmingham Midshires Building Society reported that the average person (they mean just adults, though) had £7500 in savings. In September National Savings & Investments (NSI) reported that the average person had £17,300 in all types of savings, including investments, bonds, and other non property-assets. NSI also also reckon that monthly savings are, on average, 6.8% of income or about £88/month.

These figures belie some other facts, though. About 4 million households in the UK (so that's up to 9 million adults, or 18% of the adult population) have barely any cash or analogous assets. They are the "financially excluded". So when you see an estimate of £7500 per adult, that's really less than 0 for about 8 million people, and (on average) £9000 for the rest. Of course, we know some people are stinking rich, so maybe more like just £2000 or so (on average) for an ordinary person assuming they have any savings at all.

compared with £6,074 across the whole of the UK.

I have not met them because there is next to none to meet and basing the discussion on anything other than the average is rather pointless
Yes there will be exmplars and atypical folk - there always are.

Of course it is harsh if you saved but you are not exactly about to starve to death or be in serious finacial hardship afterwards

i think the main issue [ which is wait and see] is what it does to bank assets as folk withdraw money. I suspect it will lead to more problems as THM and Binners note. I am sure it is not worse than what could happen if we just applied the rules and did not bale them out [ certainly is not for the wealthiest who had over 100k in a bank.
Perhaps I should be annoyed, as usual, they have helped the really rich?

So JY - what you seem to be saying is that anyone with any money deserves to have a percentage of it taken off them, as they've probably not earned it by selfless public spirited toil.

It's a quite imaginative basis to run an economy and banking system, I must admit. What could possibly go wrong? Ironically given the russian connections, i think Stalin beat you to the fundamentals of it quite a while back. Once you've taken their money off them should there be 're-education' required so it doesn't happen again? 😆

edit: re-posted below - don't want to get caught in/associated with the crossfire

I though we had agreed to stop sarcasm as it was not always taken as intended- that is twice now, Flounces 😉

what you seem to be saying is that anyone with any money deserves to have a percentage of it taken off them, as they've probably not earned it by selfless public spirited toil.

It's a quite imaginative basis to run an economy and banking system, I must admit. What could possibly go wrong? Ironically given the russian connections, i think Stalin beat you to the fundamentals of it quite a while back. Once you've taken their money off them should there be 're-education' required so it doesn't happen again?

There is no, "no-bail" out option. Cyprus will default without financial assistance. The do-nothing option does not exist as discussed pages earlier. Faced with that stark reality, paying 10% to protect 90% is a no-brainer. Hence my earlier question - what would you do?

But again, this is not the crucial issue that has unsettled everyone. The wider issue is that we have another example of how the EU will unilaterally ride rough-shod over pre-agreed/understood principles. Once this is realised, the world changes forever.

JY- there is nothing "fails to realise" about any of this. Remember, someone (by all account a combination of centre-left Germans, Finns and Cypriot politicians) chose to apply the bail-in to everyone despite the €100k threshold (the murky stuff is to understand each party's motives). The only bit "not to realise" is that when push-comes-to-shove the Euro-elite will and do change the goal posts to suit their immediate needs. The last 24 hours have shown them that this is/was an error - hence the backtracking on all sides.

Arse-biscuits!!!! 🙁

It'll be interesting to see, once this goes through, what happens to the banks of Southern Europe. If trust in the safety of your savings and deposits is completely undermined like this, then it could surely spell the end of the economic system as we know it. I mean... What's the point of using the banking system at all?

How many people, especially business owners, are just going to opt to conduct all transactions in cash, and keep it in a safe? With the implications that has for taxable revenue. Not to mention armed robbery (as opposed to the present unarmed type)

But having let the genie out of the bottle it can't be forced back in. The fact that the EU have reached this level of desperation is an indication as to how grave things really are for the entire eurozone despite the "we're over the worst" BS.

I am not sure atypical examples of savers v spender help the discussion tbh

Well, you wouldn't, would you?

I find it strange that you react so badly to jibes about Stalin given your previous espousals on politics!

Anyway, we'll pop the "it'll be different next time, just bail us out this once" record on in a bit. That'll calm things down.

Strangely, that's the same line that the banks trotted out in their moment of trying to blame everyone else.

More often than you think - you find the same arguments of convenience being made by supposed enemies when they've ballsed up and lived beyond their means.

There is no, "no-bail" out option.

Cyprus will default without financial assistance. The do-nothing option does not exist as discussed pages earlier. Faced with that stark reality, paying 10% to protect 90% is a no-brainer. Hence my earlier question - what would you do?

But again, this is not the crucial issue that has unsettled everyone. The wider issue is that we have another example of how the EU will unilaterally ride rough-shod over pre-agreed/understood principles. Once this is realised, the world changes forever.

The only bit "not to realise" is that when push-comes-to-shove the Euro-elite will and do change the goal posts to suit their immediate needs. The last 24 hours have shown them that this is/was an error - hence the backtracking on all sides.

On Saturday, the government, the European Union and International Monetary Fund agreed an outline deal for a levy on bank deposits in return for a bailout worth 10bn euros ($13bn; £8.6bn).

The International Monetary Fund described the country's economic performance before 2008 as a "long period of high growth, low unemployment, and sound public finances".

By 2011, the IMF reported that their assets - which include all the loans they have made - were equivalent to 835% of annual national income, or GDP. A chunk of that is down to foreign-owned banks, but those that are Cypriot had made loans to Greek borrowers worth 160% of Cypriot GDP.

Thanks god we have them to look after the worlds finances eh

Have you heard of taxation?

But I would have thought you were keen on fair taxation, what is fair about taxing deposits in banks whilst leaving all other forms of wealth tax free? It is the little man would saves with the bank, not the hedge fund manager or russian oligarch.

Well, you wouldn't, would you?

I find it strange that you react so badly to jibes about Stalin given your previous espousals on politics!

I'd also be interested to see how many tens of billions of Euros are presently being withdrawn from Spanish, Portuguese, and Italian banks, now they know how the EU will be thinking when their inevitable, rapidly approaching bail-outs are required.

The powers that be in Brussels may have, through this one decision - ill thought through as always - started a whole new self-fulfilling banking crisis! All for the sake of 10% of savings of a country that represents 0.2% of Euro GDP

You really couldn't make it up!

Breaking news: The Cypriot parliament has rejected the EU plan.

Interesting times indeed...

And JY called me Nigel Farage anyway! That's way worse than Stalin or Hitler 😆

I am not at all in favour of the spiv-casino style of banking, but lendees must also shoulder SOME of the blame.

No one has ever been forced to accept a credit card at gunpoint.

what is fair about taxing deposits in banks whilst leaving all other forms of wealth tax free?

Its a broad brush i have never denied it and it is not fair to some [ again not denied]
Personall I would be delighted to tax wealth [ mmm what would Stalin do]but I lack the electoral manadate to be able to enforce it and redistribute wealth fairly.
I dont think the Dule of westminster would like it but we would have some excellent new trails to play on 😉

So what happens now? Cyprus goes Russian? A total meltdown? Or will the EU just wait for the Cypriots to come back begging for mercy?

Think binners is right, Russia will buy it as a med port for their forces

JY - to save boring zokes, myself and others, I am going to refrain from picking up on all the points bar 2 - this in not just about the banks. In this case, as in Iceland and Ireland, the fate of the banks and Cyprus are completely intertwined. The amount of money Cyprus needs to rescue the banks is > than its GDP. This is a true crisis. The second, on the binners and I dont mention other parties, I would merely draw your attention to:

teamhurtmore - Member
Remember, someone ([b]by all account a combination of centre-left Germans, Finns and Cypriot politicians[/b]) chose to apply the bail-in to everyone despite the €100k threshold (the murky stuff is to understand each party's motives).

and the fact that the FT reports that Barosso was prepared to leave the IMF out of the final push. But its obvious that the Cypriots are involved themselves. They need to reverse engineer €5.8bn to get their cash. Do this exclusively from the >€100k camp and their future as an offshore-banking centre comes under threat. That is very clear. Hence the comment about balancing the EU and Russia at the same time!

P.S. I extended M Lagardere the courtesy of including her in the euro-elite. It would be a disservice not to.

That should be good - we'll have British Sovereign base area's on one side of the Island, Russian naval port on the other, Turkey retaining the Northern half of the island, and Syria has just gone Chemical

What could possibly go wrong ? 😯

Buy it? Given Putins way of doing business, I'd be amazed if he doesn't technically own it already!!!!

it is probably just one of his "friends" who own it - lets hope they dont cross him and end up in court

I'd imagine its easier to bump someone off in Cyprus than Chelsea

Oh.... Erm.... Actually.....

Re Hitler and Stalin (admittedly now well off-topic).

I think most modern-day spin doctors would have them both portrayed as plucky provincials who fought inherent prejudice and snobbery to rise to the top. A real wholesome tale of the triumph of an everyman over the elite.

Cynicism really knows no bounds!

As for the Greek half of Cyprus, I seem to recall that the Turks were quite keen on it. Maybe they should put in a bid?

All in jest of course.

Back on topic. Attracting investment (whether speculative or just for security) is a matter of trust. Any country that does this is going to a one-off well, and their credibility and future prospects would be bleak even after the one-off windfall.

A useful site and source of knowledge. (and you thought I was a doomster...)

http://www.zerohedge.com

It is the little man would saves with the bank, not the hedge fund manager or russian oligarch.

Well, Newsnight was sobering on all of this.... 🙁

I think i'm going to move my savings out of the EU area and just keep my current account open, i'll move over whats left each month to wharever i choose to open a new savings account (Channel Islands, Swiss etc etc)....the duplicitous politicians in the EU are out of control.
At which point did the general population become serfs for politicians?....these idiots need to be reminded that they are public servants and can be voted out as easily as they were voted in.

A wise American political commentator once said that it doesnt matter who is in government, just vote them out the next time round....thus ensuring they never get too comfortable and giving them a stark reminder every 4-5 years that they are there to do our bidding and not vice versa.

It would (almost) be worth the catastrophic consequences of seeing most people withdraw their funds from EU banks and either keep cash at home or invest outside the EU....bring the whole crappy system down, force the toxic banks to fail and leave the corrupt EU with no banks to borrow from....a massive wiping clean of a very dirty and stinky slate.

Sadly though most people are too stupid to take any kind of action, the common or garden Brit is more interested in when the next series of X-Factor starts than making sure their financial future is safe.

hey are there to do our bidding

Lol.. they aren't, really. Can you imagine what would happen if you let the average idiot in the street actually run the country? Good one 🙂

bring the whole crappy system down

Please don't - I rather like having a job.

these idiots need to be reminded that they are public servants and can be voted out as easily as they were voted in.

They can't though. That's the whole point. And the fundamental problem of the Eurozone. All decisions are taken by the European [i]Commission[/i]. They aren't elected. They are appointed. By themselves. You've as much chance of voting [i]them[/i] out as you have Kim Jong Un. Also note the revolving door policy between the European Commission, ECB and the IMF, to see where their true interests lie, and who's interests they [i]actually[/i] represent.

Hence their supremely arrogant behavior. The MEP's are just there to basically rubber stamp the Commission's dictats, and pick up there enormous salaries and bulging tax-free expenses claims in return.

Ultimately the Parliament* is there purely as a fig-leaf for one of the most undemocratic, corrupt and self-serving systems of government on the planet. Which goes a long way to explaining the mess the Eurozone is in. Zero accountability at the top, as they answer to no electorate.

* The word is used figuratively in this instance and does not imply any actual democratic accountability, as that term would be commonly recognised by anyone living in an [i]actual[/i] democracy

We live in a totalitarian European union and have done for some time. Of course if anyone stands up in this country to point that out they are compared to some sort of racist xenophobe. People take the piss out Farage and UKIP (he and some of them are nutters) but there is truth in most of the objections raised about the way the EU goes about governing us. If you have ever been involved in the law making that covers the Eurozone you'd know what I mean, they never get it wrong so never need to change anything at all. Even if what the force on us is unsafe, my experience has so appalled in the last few year I'm almost tempted to vote Farage as it seems to be the only way to register an anger at the EU itself (I'm resisting hard).

This discussion has been very interesting so far especially the informative posts from teamhurtmore. It is also good to be reminded by some that a socialists wants to use our money and not theirs.

It's time take my cash and buy a forest.

It looks as if the Cypriots are trying to get the Russians to bail them out, with the ongoing political influence that is implied. So in addition to permanently undermining confidence in the eurozone banking system the eurocrats' incompetence may also give russia a geo-strategic influence on eurpoe's south-eastern corner.

Well effing done!