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The madness of the bailout in Cyprus

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Re: The madness of the bailout in Cyprus

#41

Post by omgyeah »

st0p wrote: post #29

To quote the article: "This is why The IMF and the ECB has stepped in and bailed out the banks. Rumor has it that without the bailout Cyprus two largest banks would be bankrupt in a matter of days. A situation no economy can survive, especially not one with a disproportionally large banking sector." I don't see the problem to be honest. We (I live in the Netherlands) are paying a lot of money to help them out, which…

I wish you won't ever see the consequence of dire actions against you or your family. You have no idea how it feels like. You have no idea how unfair it is.

In case that you have not realized it, you are not paying any money. You are loaning with loan-shark rates. Have you ever heard of a loan-shark losing money?

Things are much more complicated than black or white.

Greece and Cyprus are not independent countries. Their very existence was built on loan. Loan with a purpose. And this purpose fulfills as we speak.

These countries' sovereignty is more than a joke, more than a century old.

You feel cheated. Greeks (people living in Cyprus are also Greeks) feel cheated. Every single person feels cheated.

Sadly, we live in the dystopian future where international mega-corporations (a.k.a banks) have more power than some countries.

You can however blame the rotten democratic system that we live by. You can blame human kind's greedy nature.

But you can't blame people of being stupid. The society can only be evaluated by the way it treats its weakest members. You can't blame stupid. You must protect them. This is what makes a society virtuous. Protecting its weakest links. Everything else is pure low-level greediness instinct that has driven us from living into caves to the modern world.

If thinking that poor nations had it coming helps you keep your conscious clean, so be it.

But it has always been about survival of the fittest and not survival of everybody and apparently it will keep being this way. Until human kind becomes one. Above races, religions, borders and whatever.

Amen :)

Re: The madness of the bailout in Cyprus

#42

Post by mixmax »

caf wrote: post #38
DannoHung wrote: post #18

Funny that it's targeting only bank accounts and completely ignoring all other liquid assets. By which I mean: Holy shit, if this isn't targeted directly at middle class and lower households and small businesses, I don't know what would be. Also, these guys have all got to be huffing paint if they think a run on the banks won't be a direct result EVEN AFTER THE MONEY IS GONE.

The holders of those bank accounts are the ones deriving the benefit of the bailout. Without the bailout, those banks would go under, and in that situation the depositors would see a lot less than 90%. It's still a silly idea from a practical viewpoint - the article is absolutely right about the loss of confidence - but I don't think it's immoral. The root cause here is that the depositors put their money in a bank w…

There are pan-European laws that if a bank goes under you get the funds up to €100.000 you had in the bank reimbursed by the state.

The reason for this is that is that banks are the financial glue of society, and for better or worse we can't live without them. Bankruns can bankrupt a bank in a day, thus it's incredibly important that people feel secure in knowing that the money they have in the bank is secure no matter what.

This trust has just been put to the test with this incredibly stupid move.

Re: The madness of the bailout in Cyprus

#43

Post by hkmurakami »

hmottestad wrote: post #25
DannoHung wrote: post #18

Funny that it's targeting only bank accounts and completely ignoring all other liquid assets. By which I mean: Holy shit, if this isn't targeted directly at middle class and lower households and small businesses, I don't know what would be. Also, these guys have all got to be huffing paint if they think a run on the banks won't be a direct result EVEN AFTER THE MONEY IS GONE.

We have: - Stocks - Derivatives of stocks - Natural resources (oil/gold) - Derivatives of natural resources - Bonds - State bonds - Real estate - Land (without a building) - Undervalued company that owns all your stuff and you own the company (put that one in there, since it's a usual and practical way of owning real estate and more) No, let me think. Let's just stick with people pensions. So much better.

My understanding is that securities (stocks, bonds, derivatives) are under your name so you maintain ownership of the securities even if the ibank that acted as your broker goes down. (This is why money management companies maintain separate accounts for each of their clients rather than have an aggregate pool)

So the Cypress banks going bankrupt wouldn't have affected these securities. The deposits on the other hand would have potentially lost a huge fraction of their value.

(Though I still don't think this was a wise move...)

edit: I wonder what warranted a downvote in this comment of mine?

Re: The madness of the bailout in Cyprus

#44

Post by rudasn »

omegaworks wrote: post #12
[deleted] wrote: post #6

[deleted]

Actually, what's preventing someone from just putting their savings in bitcoin, waiting on the tax issues to pass, and moving it back?

The news broke out today. All banks are closed on Saturdays except Co-operative Banks. However, even those were essentially closed today as people gathered to minimize their losses (ie, withdraw all their money from the bank).

Nobody could withdraw or transfer any money today to any account, period. No matter how much money you had.

A friend of mine, a banker, said that (he hopes that) these news are just a fear mongering attempt and that it will never pass through the parliament (scheduled for an emergency meeting on Sunday).

What I'm saying is that in theory there is nothing preventing you from "just putting their savings in bitcoin" but in practice, when you don't have cash and all your money is just numbers in a bank screen, you don't really have any savings.

The fact that the state can at any time take any percentage of your money is theft, plain and simple. It's not about being politically right or left, it's just theft and unlawful and absolutely unconstitutional. I really don't know how something like this can pass through the parliament but, at the same, I have zero trust on our politicians to act like rational human beings.

Personally, I wouldn't mind paying high taxes if I saw a real social, public, shared benefit for doing so. But paying high taxes, getting lower wages, and being ripped off so easily and without consent or even a warning is just too much.

More and more educated and skilled Cypriots are not even considering of going back to Cyprus, if they are abroad, and those who are in Cyprus are eager to figure out a way to escape.

In addition to this recent economic crisis, there's also a ton of political bullshit, fighting, and wars since the early 1900's and even before that. Unfortunately Cypriots, although a strong and proud people, were never able to grow a pair, agree on something, and fight for it.

Re: The madness of the bailout in Cyprus

#45

Post by caf »

kubindurion wrote: post #36

This is THEFT. I leave my country if that happens to me. (I am from Poland, EU)

What about if the alternative is no bailout, the bank goes under, and you get almost nothing back at all?

Like it or not, when you deposit 100 euros in a bank, you don't have 100 euros anymore - you instead now have an unsecured bank debt with a face value of 100 euros.

Re: The madness of the bailout in Cyprus

#46

Post by ameister14 »

st0p wrote: post #29

To quote the article: "This is why The IMF and the ECB has stepped in and bailed out the banks. Rumor has it that without the bailout Cyprus two largest banks would be bankrupt in a matter of days. A situation no economy can survive, especially not one with a disproportionally large banking sector." I don't see the problem to be honest. We (I live in the Netherlands) are paying a lot of money to help them out, which…

The thing is, your country signed an agreement to help them if they need it. You don't get to punish them for the fact that you are upset to have to meet your obligations.

Re: The madness of the bailout in Cyprus

#47

Post by khuey »

dougk16 wrote: post #40
chailatte wrote: post #2

If I were in Greece, Italy, Spain, or Ireland, I think I would pull out all my bank deposits but the bare minimum cash needed to cover obligations.

I've been thinking about this lately, and, at the risk of sounding like a doomsday kook, this seems to make sense to me (perhaps in a milder sense) no matter where one lives. My plan is, if I ever get over $X in my account, where X is some reasonable buffer to pay bills, etc., that I'll just buy gold with the overage[1]. Back in the day you'd at least get reasonable interest by keeping money in a bank, but nowadays i…

If you think gold is a predictable and low-volatility store of value you really should look at inflation adjusted gold prices from 1980-2000.

Re: The madness of the bailout in Cyprus

#49

Post by caf »

mixmax wrote: post #42
caf wrote: post #38

Earlier quoted context omitted.

The holders of those bank accounts are the ones deriving the benefit of the bailout. Without the bailout, those banks would go under, and in that situation the depositors would see a lot less than 90%. It's still a silly idea from a practical viewpoint - the article is absolutely right about the loss of confidence - but I don't think it's immoral. The root cause here is that the depositors put their money in a bank w…

There are pan-European laws that if a bank goes under you get the funds up to €100.000 you had in the bank reimbursed by the state. The reason for this is that is that banks are the financial glue of society, and for better or worse we can't live without them. Bankruns can bankrupt a bank in a day, thus it's incredibly important that people feel secure in knowing that the money they have in the bank is secure no matt…

That guarantee is clearly a dead letter in the case of Cyprus anyway, because there's no way that their government can make good on that promise in the face of multiple large bank collapses.

I already said that I agree it was a bad move due to the effect on confidence.

Re: The madness of the bailout in Cyprus

#50

Post by samstave »

TillE wrote: post #4

It's absolutely insane. I can't understand how they think this will cause anything other than a catastrophic bank run on Tuesday. At least they get to skim off a percentage before the banks collapse, I guess? Someone's benefiting, somehow.

They knew it would cause this Tuesday which is why it is done now so that the peasants have to wait several days to be able to do anything. In the mean time the elite have days and resources to do what they need to do.

These are acts of war on citizens by corporations and should be treated as such.

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