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The madness of the bailout in Cyprus

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Re: The madness of the bailout in Cyprus

#121

Post by voxfrege »

JumpCrisscross wrote: post #98

When a sovereign fails, its banks fail, and private sector losses are virtually assured. The question is who bears the burden. Roughly half the deposits in Cypriot banks, with assets five times its GDP, are of Russian, Greek, or British origin [1]. They were attracted by high deposit rates (roughly double EMU average) and a system tolerant of likely tax evaders. >" This whole thing is entirely unfair for the people l…

> Given the political constraints from Deutschland limiting the ability of the European Central Bank to launch into Fed-style monetary base expansion

This is not so. The Bundesbank gets regularly overthrown by the majority in the ECB panel when it comes to decision about this. Respectable Bundes-Bankers have already resigned, because of that.

Thats why the ECB holds billions (i.e. american billions = 1e9) of greek, italian, spain, portugese state debt.

And this despite the fact that the ECB is not allowed to engage in financing states by the treaties. And all this despite the no bailout rule in the treaties. The treaties are not worth more as a piece of used toilet paper, but the politicians cannot understand why the hell people get more and more anti EUR.

Re: The madness of the bailout in Cyprus

#122

Post by siculars »

This is 100% contagion for depositors in all shaky countries. If they can do it in Cyprus they can do it anywhere. I would expect huge inflows into Germany to continue matching outflows from everywhere else in southern Europe. Insanity.

Re: The madness of the bailout in Cyprus

#123

Post by konstruktor »

omgyeah wrote: post #41
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. Th…

As a citizen of a fiscally responsible EU country, reading shit this makes me very angry and eradicates leftover trace amounts of solidarity.

Re: The madness of the bailout in Cyprus

#124

Post by [deleted] »

wintersFright wrote: post #53
ameister14 wrote: post #35

This makes me extremely uncomfortable and I don't understand how anyone could think this was a good idea. We have high unemployment across Europe, Catalunya is attempting to become independent and there is open talk in the press about a military coup if that goes through. Meanwhile, Greece elected a bunch of fascist mps, and now this? Imagine if you woke up tomorrow and 10% of your savings were gone. What would you d…

At the end of the day you have two camps: debtors and savers. You can't force a tractor factory to make a factory once it has closed down ie: you can't force a debtor to pay debt they want to default on. The only way to rebalance the system is to screw the savers. It was always going to happen, the question is whether by stealth via inflation or overtly. It looks like they are taking the overt path. The problem is th…

[deleted]

Re: The madness of the bailout in Cyprus

#125

Post by petercooper »

ryguytilidie wrote: post #95

I don't understand how someone decided the Eurozone was a good idea. It really is probably the biggest economic disaster in modern history.

Though no more a bad idea than the US dollar from the perspective of the federalists who most strongly supported it. The problem is the union is too weak to force it to work in the way it can in the US.

Re: The madness of the bailout in Cyprus

#126

Post by icebraining »

lrei wrote: post #86
icebraining wrote: post #79

Earlier quoted context omitted.

The Cypriot savings didn't lose value, they lost a part. It's not the same thing at all. The proof is that Bitcoin returned to its previous value (and then some) rather quickly, while the savings will never return.

Losing value and losing a part is the same thing. Say you have 100 dollars. And with 100 dollars you can buy 100 beans: * The dollar loses 10% value. Now you can only buy 90 beans. * You lose 10% of your 100 dollars. Now you only have 90 dollars. You can only buy 90 beans. Compare that with: * Cyprus banks go bankrupt, the euro loses 10% value - never mind that people actually lose 100% of their money. * Cyprus savin…

The Euro losing 10% of value in relation to what? USD? Yen?

And even if the dollar loses 10% of the value vs every other currency, it's not true that you can only buy 90 beans, because you're not the only one with dollars: there are farmers who sell in dollars, and buy their stuff in dollars, and so will probably keep their prices.

When everyone you trade with uses the same currency as you, there's no value to be lost or gained relative to them, and since Cyprus trades in Euros, a loss of 10% versus say, the dollar, wouldn't automatically make everything 10% more expensive.

Re: The madness of the bailout in Cyprus

#128

Post by icebraining »

tptacek wrote: post #104
icebraining wrote: post #79

Earlier quoted context omitted.

The Cypriot savings didn't lose value, they lost a part. It's not the same thing at all. The proof is that Bitcoin returned to its previous value (and then some) rather quickly, while the savings will never return.

They seem like exactly the same thing. Maybe the reason they don't seem that way to you is that you've decided a priori that Bitcoin will inevitably regain its 30% in value, while Cypriot assets will never gain 6% of value. That seems a little silly. If you bought gold in 1980, you'd still be waiting, 33 years later, for it to recover its value. Gold, silver, currency, and truncated SHA2 hashes can lose value and nev…

What Cypriot assets? They lost Euros, which happens to be the same currency that their trading partners use, so there's no value to be gained relative to them.

And no, I haven't assumed that Bitcoin will regain in its 30% in value - it already has. But that it can gain (or lose!) so much value relative to the common currency is a big difference, since the common currency can't gain or lose value against itself.

Re: The madness of the bailout in Cyprus

#129

Post by omgyeah »

st0p wrote: post #73
omgyeah wrote: post #62

Earlier quoted context omitted.

OK. I agree with you. And I am paying money to keep your economy afloat. Can you see how stupid this is? Little guys fight each other. And the winner gets eaten by the big guy (= bank).

I can't agree with your last sentence. We've all had the profits of having banks providing liquidity (common, all that Russian money into the Cyprian economy has been great for all of Cyprus). Now that system has failed and the big guys aka the banks are just as clueless as the little guys. Do we need to rethink how our economy works? Yes. Do we need to help Cyprus, Italy, Spain? Yes. Partially because it is in out b…

Nobody blamed you for being consistent, organized, eager to work more and getting rightfully rewarded for it.

This is the way it's supposed to be.

Also the problem is not losing 6.75 of ours savings. For most Greek people it's 0 * 6.75 anyway.

The problem is that I am poor. My country is poor. My country was born poor. My country was funded from the beginning of its existence because of being born poor. My country has always been and will always be poor.

But now somebody decided that we are not poor enough. And there is nothing that we can do about it.

And while at it, that same somebody is trying to make your life less comfortable and blame me for it.

This is a scheme over personal economics. It escalates at country level. Further above what some countries or even coalitions of countries can cope with.

And let's not get started with black market money in Swiss or wherever banks. Everything is plain pretense.

Re: The madness of the bailout in Cyprus

#130

Post by omgyeah »

konstruktor wrote: post #123
omgyeah wrote: post #41

Earlier quoted context omitted.

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. Th…

As a citizen of a fiscally responsible EU country, reading shit this makes me very angry and eradicates leftover trace amounts of solidarity.

As an earthling, reading superficial and insensible comments like this, makes very sad and eradicates my faith in humanity.

Of course, we had it coming.

Let's see your economy strive without the southern suckers.

Oh no, wait.

We have the chinese market now. Screw the southern suckers.

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