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The madness of the bailout in Cyprus

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Re: The madness of the bailout in Cyprus

#131

Post by seanmcdirmid »

wintersFright wrote: post #118
seanmcdirmid wrote: post #111

Earlier quoted context omitted.

Exactly, swapping a fiat paper currency for fiat metal is not useful. If you are a pessimist, buy guns, bullets and non perishable food, or invest in a secret mountain farm/retreat. Or you could just work within the system and try to help keep it from failing by running on the bank.

'fiat' metal = metal by government decree?? fiat currency is intrinsically overvalued as it is valued by decree - by the threat of legal violence if you don't use it. There are no fiat metals. Your pessimist view is at the extreme end of the spectrum. Individual fiat currencies have eventually failed ever since they were invented. Each time a currency dies there are winners and there are losers, but it doesn't go all…

Gold has little intrinsic value (well, you can make pretty things with it), its value is what people assign to it for the purposes of trade. So it most definitely is a fiat metal. If it was something like copper, there would be some intrinsic worth, but it isn't convenient to carry around while there is only so much intrinsic demand for copper!

Gold has failed just as often as fiat currencies have. When the Spanish conquered the Americas, the natives were amused that the invaders saw value in such a useless metal, but the amount of new gold that was discovered caused significant inflation back in the old world because Spain was just sitting back, buying everything it needed with its gold, and producing little of value.

Similar things happened when Africa came online as a significant source of gold, it got to the point that gold was no longer a stable representative of value, because anybody could just mine more! So you see lots of movement away from gold throughout the 20th century to something...more stable...fiat currency believe it or not. Countries now have control over their monetary policies, for better or worse, and are not beholden to some arbitrary metal.

Ok, so its more complicated than that, but reading http://en.wikipedia.org/wiki/Gold_standard is quite an experience if you are a goldy.

Re: The madness of the bailout in Cyprus

#132

Post by omgyeah »

st0p wrote: post #71
omgyeah wrote: post #69

Earlier quoted context omitted.

Please, you are not helping anybody. Nobody has ever paid back a loan with a bigger loan. It's just an excuse to take your money too and blame someone else for doing so.

So what do you propose? We sit back and do nothing?

I don't think that an actual once-and-for-all solution does exist.

People much greater than my humble me couldn't provide a non-temporary solution.

And I must admit that I don't carry the most temperate mind around.

At theoretical level, the only solution that is intriguing me for many years now is a society's hard reset via global bank run.

Rebuild everything from the ashes and maybe learn from the past mistakes this time.

Replace money with something else. Maybe something of non-long-term-accumulative nature.

But also, on the same time, find a fair way to compensate for the fruits of one's excessive labor.

Not the smoothest thing to do.

The inconvenience of millions will be the salvation of billions. Fair or not?

The real problem is that human's greed-driven ingenuity will abuse, overcome and nullify every kind of systemic fairness.

We live in an infinite loop of imbalance.

Unless the next asteroid is big enough and hits the target before we set our GPS navigators to the deep space :)

Re: The madness of the bailout in Cyprus

#133

Post by omgyeah »

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…

If you think that Greece and Cyprus are sovereigns, think again.

And Iceland chose not to receive "economic help".

Greece and Cyprus were forced to receive "economic help".

Re: The madness of the bailout in Cyprus

#135

Post by kansface »

khuey wrote: post #91
krcz wrote: post #67

Earlier quoted context omitted.

What do you mean? Won't things described here: http://www.centralbank.gov.cy/nqcontent.cfm?a_id=8158&la... work in case of bankruptcies of these two banks?

But the banks aren't going bankrupt. If you have 100k EUR in a bank account in Cyprus today, you're going to get 93.250k EUR on Tuesday. If instead the bank went bankrupt you'd have 100k EUR in your bank account on Tuesday too thanks to the deposit insurance. You'd be better off if the bank actually went bankrupt! The typical pro-bailout argument at this point is that if Cyprus lets the banks go bankrupt the deposit…

Not really if you consider that no one can or would pay in the case of bankruptcy.

Re: The madness of the bailout in Cyprus

#136

Post by kzrdude »

danenania wrote: post #93
Tuna-Fish wrote: post #77

Earlier quoted context omitted.

The traditional answer in this situation would have been to devalue the currency. Cyprus is not capable of doing this because they do not control the Euro. It's important to note that 10% haircut is much, much less than what would have happened if Cyprus was not under the Euro and had devalued. Just a few years ago, everyone in Iceland lost more than 50%.

Iceland lost 50%, but they put their corrupt bankers and government ministers on trial. Cyprus lost 10% and they still have the exact same cancer.

Some of them. Don't think that Iceland's problems are all resolved. It's still unsure if the new constitution will pass, lots of people in power do not want change.

Re: The madness of the bailout in Cyprus

#137

Post by omgyeah »

st0p wrote: post #97
bitcartel wrote: post #90

Earlier quoted context omitted.

It's theft, plain and simple. The Cypriot people are not being asked if they want to sacrifice their savings - it is being taken from them by force!

They don't have anything to be asked, since they're bankrupt.

The local governments and the local banks are bankrupt.

The local people are not bankrupt.

But they are soon-to-be.

Re: The madness of the bailout in Cyprus

#138

Post by omgyeah »

seanmcdirmid wrote: post #113
bitcartel wrote: post #90

Earlier quoted context omitted.

It's theft, plain and simple. The Cypriot people are not being asked if they want to sacrifice their savings - it is being taken from them by force!

Well, the euro zone doesn't have to help Cyprus put and just let them collapse. Maybe Greece could sell the other half of Cyprus to turkey to get some extra needed cash...what is a better option?

Maybe you could sell some of your parents organs and buy a new car?

What is a better option? Maybe don't buy a new car?

Let them rot. They're too far away. I can't smell the foul scent. I don't care.

Re: The madness of the bailout in Cyprus

#139

Post by tomjen3 »

znowi wrote: post #31

I say let them default. Can't manage your assets - go out of business. Employ shady schemes - go to jail. Now this would be fair.

We should have let them default when the crisis started, but no because our government are traitors to the people whom they have to protect.

Re: The madness of the bailout in Cyprus

#140

Post by omgyeah »

vacri wrote: post #114
bitcartel wrote: post #90

Earlier quoted context omitted.

It's theft, plain and simple. The Cypriot people are not being asked if they want to sacrifice their savings - it is being taken from them by force!

Good old libertarians - everything is about money and force. The money isn't being taken by force. Money is a social construct, and the people in charge of taking care of that social construct are fiddling with the numbers. There are no jackbooted thugs going into people's homes and relieving them of physical property, which is what you're alluding to. Whethere it's morally right or not (or somewhere in-between) is a…

Well... There are 5,000-euros suited thugs sitting in their offices relieving people of fiscal property.

Which is exactly the same as jackbooted thugs going into people's homes and relieving them of physical property.

And it's morally wrong. Like putting tags on people to make fun of them.

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