The madness of the bailout in Cyprus

Post by [deleted] » Sun, Mar 17, 2013, 4:36 AM UTC

hkmurakami wrote: post #43

hmottestad wrote: post #25

Earlier quoted context omitted.

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…

Post by wintersFright » Sun, Mar 17, 2013, 5:40 AM UTC

srid68 wrote: post #102

st0p wrote: post #71

Earlier quoted context omitted.

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

They could have made the bank bond holders (rich foreign banks) take losses without affecting the normal depositors. How can you think getting a bigger loan to pay current loan is a good strategy. It will work only if the economy improves. If the economy tanks, it is not going to work. It is only going to increase the losses for the lenders ultimately.

Post by wintersFright » Sun, Mar 17, 2013, 5:42 AM UTC

srid68 wrote: post #102

st0p wrote: post #71

Earlier quoted context omitted.

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

They could have made the bank bond holders (rich foreign banks) take losses without affecting the normal depositors. How can you think getting a bigger loan to pay current loan is a good strategy. It will work only if the economy improves. If the economy tanks, it is not going to work. It is only going to increase the losses for the lenders ultimately.

Post by DJN » Sun, Mar 17, 2013, 7:37 AM UTC

caf wrote: post #51

dougk16 wrote: post #40

Earlier quoted context omitted.

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…

This does depend on where you live. In some places, mortgages are offered with "offset accounts", where your positive balance in the account offsets your outstanding debt on the mortgage, and in doing so reduces the interest accruing on the loan. This means that your excess funds effectively earn the mortgage rate of interest (and since interest avoided isn't "income", this isn't taxed as deposit interest would be ei…

Post by pinaceae » Sun, Mar 17, 2013, 7:53 AM UTC

omgyeah wrote: post #70

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.

But if everybody keeps thinking like that, in a few years time in the place of "Greece, Italy, Spain, or Ireland" you will read "Germany, France and UK". It's just a worldwide poker game, the banks are winning and the small guys are being forced out of the table.