The madness of the bailout in Cyprus • Hacker News Board

Re: The madness of the bailout in Cyprus

#161

Post by jonascopenhagen » Sun, Mar 17, 2013, 1:04 PM UTC

omgyeah wrote: post #133

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".

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

Not AFAIK. Their alternatives were just worse.

Re: The madness of the bailout in Cyprus

#162

Post by mkr-hn » Sun, Mar 17, 2013, 1:18 PM UTC

seanmcdirmid wrote: post #131

wintersFright wrote: post #118

Earlier quoted context omitted.

'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 c…

Gold has some high-end practical use, like electrical connectors and coatings. But that's a recent thing.

Re: The madness of the bailout in Cyprus

#163

Post by tatsuke95 » Sun, Mar 17, 2013, 1:20 PM UTC

omgyeah wrote: post #133

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".

Iceland has 300,000 people and a GDP of $12BB. Their economic "choices" and ensuing trajectory are, for practical purposes, irrelevant.

Re: The madness of the bailout in Cyprus

#164

Post by yannis » Sun, Mar 17, 2013, 1:23 PM UTC

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…

What I would like to see is transparency as how the funds of the bailout would be distributed and how they would be utilized at least for my forced percentage contribution. I am pissed off and at least in my case your assumption that money will not be pulled out of the banks is wrong.

Re: The madness of the bailout in Cyprus

#165

Post by tatsuke95 » Sun, Mar 17, 2013, 1:25 PM UTC

bitcartel wrote: post #85

dougk16 wrote: post #54

Earlier quoted context omitted.

I didn't mean to imply that I would expect to make money from buying gold (if that's what you mean). Even if gold prices were expected to drop, I'd still be interested in buying it as an insurance policy. No matter how severe a crisis, once the dust settles, gold will always be worth something, for reasons I don't understand.

A few things to consider: Central banks are buying gold. http://www.bloomberg.com/news/2013-02-10/putin-turns-black-g... Central banks are repatriating gold reserves held overseas. http://www.forbes.com/sites/afontevecchia/2013/01/16/germany... The LIBOR rigging scandal has turned the spotlight to the gold market, where it has long been claimed that the price of gold has been manipulated. http://www.guardian.co.uk/bu…

Central banks are known buyers at the highs and sellers at the lows. Part of their mandate is "financial stability", and up to and including backstopping out-of-favour assets (like, say, mortgages). I see central banks buying gold as a way to stop a precipitous decline in gold as money rotates sectors.

Then again, this theory happened before this Cyrprus thing, so who knows for sure. Guess we'll see what kind of carnage happens next week.

Re: The madness of the bailout in Cyprus

#166

Post by Shivetya » Sun, Mar 17, 2013, 1:27 PM UTC

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…

Put to test? I would say that it has been totally voided. The people, by the people I mean the little guy, just got rolled.

Considering how well politicians like to play the class warfare card I am surprised even they went for it. Are those in Brussels just tone deaf? I am quite sure no politician here in America would have the guts to pull this, but I do not know how answerable those in Brussels are to the common man.

Re: The madness of the bailout in Cyprus

#167

Post by mjn » Sun, Mar 17, 2013, 1:31 PM UTC

jonascopenhagen wrote: post #161

omgyeah wrote: post #133

Earlier quoted context omitted.

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".

Greece and Cyprus were forced to receive "economic help". Not AFAIK. Their alternatives were just worse.

The people were also consulted to an extent in Greece, though you might say the results were inconclusive. The series of 2012 elections were de-facto a referendum on whether to accept the bailout/austerity or not, since it was the main issue in the campaigns. There were also pro- and anti- parties on both the right and left, allowing people to make that choice independently of their usual political alignment (left voters could choose between PASOK and SYRIZA; right voters could choose between New Democracy and Independent Greeks). If you go by popular vote, the pro-bailout/austerity parties narrowly lost the May election (48-52%) and narrowly won the June election (51-49%).

There's a little bit of subjectivity in assigning those numbers, because a number of pro-bailout/austerity parties were trying as hard as possible to take up tough-sounding, qualified positions, e.g. in the first round Democratic Left was "less" pro- than the others, even though it eventually joined a coalition government that implemented the demanded conditions. So one could argue that Greek sentiment was more anti-bailout/austerity than the results implied, since some people voted for what they thought were moderate anti- parties who turned out to be grudgingly pro- in practice.

Re: The madness of the bailout in Cyprus

#168

Post by tatsuke95 » Sun, Mar 17, 2013, 1:32 PM UTC

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…

>"Back in the day you'd at least get reasonable interest by keeping money in a bank, but nowadays it's really only the convenience of direct deposit and online bill pay that draws me."

Back in what day? You mean, like, 5 years ago? We're still amidst one of the worst recessions ever and rates are at all time lows. No, you don't get riskless real returns right now. But you can also borrow at exceptionally low rates. That will change in the future.

Hording physical gold outside of diversification is a bad idea. You have storage costs, pay a premium over spot when you buy it and eat a spread when you sell it. And, as another commenter said, look at its real returns; not spectacular.

Want to know what was a good buy? The stock market, 4 years ago. When everyone was screaming about the world imploding and it was at irrationally low levels. But that's just the thing: you have to be willing to zig when others are zagging.

Re: The madness of the bailout in Cyprus

#169

Post by gasull » Sun, Mar 17, 2013, 1:35 PM UTC

A1kmm wrote: post #66

jasonlingx wrote: post #27

A good reason to keep your cash in bitcoin ;)

Even if you keep your cash in fiat currency cash (i.e. euro notes) you would be safe from this. Keeping your money in some form of cash (whether bank notes or Bitcoin) generally puts you in a worse position than low risk (i.e. diversified) investing. An investment bank which kept accounts in Bitcoin and paid out in Bitcoin would still be at risk of government seizures (unless they operated illegally and hid their ide…

You don't need a bank for your bitcoins. You can keep them in your laptop or smartphone and the Government wouldn't even know you have it there. And even if they did they cannot force you to decrypt your hard drive.

You can even keep you bitcoins in your brain. No joke. You can just memorize a passphrase that would recreate an encrypted bitcoin wallet:

https://en.bitcoin.it/wiki/Brainwallet

Re: The madness of the bailout in Cyprus

#170

Post by yk » Sun, Mar 17, 2013, 1:36 PM UTC

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…

On German TV someone joked, that Merkel found a way to have tough reforms without hurting voters. So it makes really a lot of sense, it is just not aimed at helping Cyprus.