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The madness of the bailout in Cyprus

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Re: The madness of the bailout in Cyprus

#81

Post by Evbn »

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.

Eventually the small guys get so desperate and bored that the only way to pass the time is to violently attach the big guys.

Re: The madness of the bailout in Cyprus

#82

Post by moe »

[deleted] wrote: post #61
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.

[deleted]

So, what do you propose he should do with his money?

I have a hunch your little smarty-pants speech didn't help him one bit.

Re: The madness of the bailout in Cyprus

#83

Post by caf »

mixmax wrote: post #55
caf wrote: post #49

Earlier quoted context omitted.

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.

It's a good point, so I did a quick google search and it appears that in most countries the insurance is paid out by a seperate insurance fund that all banks pay in to over time. Presumably the fund is reinsured with lloyds, Berkshire Hathaway or something similar. So it's independent of the banks and the state. I couldn't find anything specifically for Cyprus, so I'm not sure what the situation is there, but it's pr…

There's no reinsurance, and the rules only ensure that there will be enough funding to cope with a single "medium-sized bank failure" ... by 2020.

Re: The madness of the bailout in Cyprus

#84

Post by papercruncher »

camperman wrote: post #20
papercruncher wrote: post #11

I was born and raised in Cyprus and my entire family still lives there. I spoke to a few of them this morning and whether the measures pass or not (parliament still needs to approve) they all plan on making a run to the bank asap.

Money's already been taken out of the 9,9% accounts dude. And electronic transfers are frozen.

Yes, but as the article pointed out, trust is broken and everyone thinks this will happen again

Re: The madness of the bailout in Cyprus

#85

Post by bitcartel »

dougk16 wrote: post #54
khuey wrote: post #47

Earlier quoted context omitted.

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.

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/business/2013/mar/13/london-financ...

It has also been claimed there is a ponzi scheme in paper gold, i.e. instruments may not actually be physically backed, so when things go pear-shaped and you ask for physical delivery, you will have to fight other investors over legal ownership. http://www.businessweek.com/news/2011-12-12/hsbc-sues-mf-glo...

Given recent banking scandals, anything is possible. Caveat emptor!

Re: The madness of the bailout in Cyprus

#86

Post by lrei »

icebraining wrote: post #79
lrei wrote: post #30

Earlier quoted context omitted.

sure because bitcoin value never went down overnight. Not even 10% like the cypriot savings. Oh wait, never mind. It went down 30% in a single day: http://www.dailytech.com/Digital+Black+Friday+First+Bitcoin+...

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 savings take a 10% cut, Euro keeps 100% of its value.

Sure it's a simplification but I think it's a valid point.

Re: The madness of the bailout in Cyprus

#87

Post by tatsuke95 »

wintersFright wrote: post #57
tatsuke95 wrote: post #8

Earlier quoted context omitted.

Like 90% of the past 5 years, this isn't a banking problem, it's a government problem. The IMF can suggest ways to fund a bail out, but the government has to accept it. Confiscating your citizens money is a horrible precedent.

Goverments steal purchasing power already via targeted 2% inflation. There is a precedent already - this is just a different way to skin the cat (or more to shear the sheep!)

Not really. Unexpected inflation hurts. Central banks don't hide the fact that they target positive inflation figures. If you stuff your money in a mattress, you will lose PP. Not if you put it in practically ANY investment vehicle, throughout history. Though, I get your point.

Nobody guarantees the value of your dollar earned over any period of time, nor that it won't diminish in value with the production of more dollars.

Re: The madness of the bailout in Cyprus

#88

Post by viraptor »

jasonlingx wrote: post #27

A good reason to keep your cash in bitcoin ;)

At this point, probably... But on Tuesday it may change. It may be the usual cycle of: some event brings new bitcoin buyers; BTC goes up; media and people who want to ride the wave join in; if it happens too fast people will get nervous, sell at current high and cause another dip. Not sure how many people in Cyprus are interested in bitcoin, but after their transfers are possible again, I wouldn't touch BTC for a couple of days just in case.

Re: The madness of the bailout in Cyprus

#89

Post by mcartyem »

jonascopenhagen wrote: post #22
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.

Actually the Russian mafia supposedly has a lot of money in the tax haven that is Cyprus. (Source (in Danish): http://www.dr.dk/Nyheder/Udland/2013/03/16/100422.htm )

10% of the $34.6 billions Russians have parked in Cyprus is a lot of money.

http://www.businessinsider.com/cyprus-bailout-russian-angle-... http://www.bloomberg.com/news/2013-01-21/russia-cyprus-money...

Re: The madness of the bailout in Cyprus

#90

Post by bitcartel »

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…

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!

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