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(Zero Hedge)   Yesterday: Cyprus problem solved by taking from Russian tax evaders. Today: Cypriot businesses can't make payroll   (zerohedge.com) divider line 154
    More: Asinine, Cypriot, Cyprus, Russians, problem solves, insolvent, current accounts, small businesses  
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10306 clicks; posted to Main » on 29 Mar 2013 at 11:29 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-03-29 12:47:15 PM  
The Law of Unintended Consequences.  Not necessarily unforeseen, certainly not unpredicted.  Just unintended.
 
2013-03-29 12:52:05 PM  

a_room_with_a_moose: Fact is, Cyprus borrowed like a drunken sot. Now they need to pay the tab.


Thats not exactly how I would put it.

"The Cypriot Government was reported requesting a bailout from the European Financial Stability Facility or the European Stability Mechanism on 25 June 2012, citing difficulties in supporting its banking sector from the exposure to the Greek debt."
-http://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_financial_cr isi s

The banking sector in Cyprus (and its liabilities) was far larger than the GDP of Cyprus.

The banks bought risky assets (mostly Greek Bonds) which lead to heavy losses.

The losses were so large that the government of Cyprus could not bail out the banks. (Unlike the U.S. Cyprus could not print/create money to solve this problem.)

The government of Cyprus then sought a load from the EU but it came with conditions.

 
Cyprus didn't "borrow like a drunken sot" but its banks did make poor investments.


//Keep in mind that prior to the financial crisis the EU insisted that Greek bonds were sound.
 
2013-03-29 12:55:04 PM  

Flargan: The government of Cyprus then sought a load from the EU but it came with conditions.


Can't seem to use edit but I meant to say:

The government of Cyprus then sought a loan from the EU but it came with conditions.
 
2013-03-29 12:55:31 PM  

Flargan: a_room_with_a_moose: Fact is, Cyprus borrowed like a drunken sot. Now they need to pay the tab.

Thats not exactly how I would put it.

"The Cypriot Government was reported requesting a bailout from the European Financial Stability Facility or the European Stability Mechanism on 25 June 2012, citing difficulties in supporting its banking sector from the exposure to the Greek debt."
-http://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_financial_cr isi s

The banking sector in Cyprus (and its liabilities) was far larger than the GDP of Cyprus.

The banks bought risky assets (mostly Greek Bonds) which lead to heavy losses.

The losses were so large that the government of Cyprus could not bail out the banks. (Unlike the U.S. Cyprus could not print/create money to solve this problem.)

The government of Cyprus then sought a load from the EU but it came with conditions.

 
Cyprus didn't "borrow like a drunken sot" but its banks did make poor investments.


//Keep in mind that prior to the financial crisis the EU insisted that Greek bonds were sound.


Well, then the banks borrowed like sots and the government let them.

I'm guessing the banks made those investments with their customer's funds.

It amounts to the same thing, in the end.
 
2013-03-29 12:56:26 PM  
Alas, those same individuals are likely to have been least affected, as subsequent discoveries of capital control breaches by the "richest and best connected" reveal, while increasingly it appears that the uninsured depositors on whose back the nation of Cyprus was bailed out are small and medium corporations, who had been parking cash for net working capital purposes with Cyprus' banks, cash which is now gone forever to feed the creeping insolvent Euro-monster, and which can't be used to fund such day to day business activities as payroll, purchases, and business operations.

One.  Sentence.  Article.
 
2013-03-29 12:56:51 PM  

NostroZ: scarmig: Remember, it can't happen here.

Exactly!
Cyprus = Small island country that's used as a tax haven
United States = Large 1/3 of continent country with a world reserve currency & a huge GDP as well as world military.

They cannot/will-not do what Cyprus did, since it would do more harm than good in the long run.
Plus we have the option to print more dollars, Cyprus is at the mercy of the Euro.


Yup.  Anytime, the FED can just append another couple of zeros onto the debt, and we'll all be rich.

Problem solved.
 
2013-03-29 12:58:41 PM  
Coming soon to Canada.
 
2013-03-29 01:03:14 PM  

Gosling: I always secure my savings in places that can vanish if something goes BEEEEEEEeeeeeoooooooop."


Yes you do, for example the mainframe at your bank. The reason you probably don't worry about it is because there are backups that can restore your balance if that ever happens. Bitcoin also has this property. There isn't any central server; your "coins" are stored on your own computer (and as many backup devices as you want) until you send them to someone else.
 
2013-03-29 01:04:39 PM  

ACunningPlan: Accounts up to 100k Euros were insured, but the EU decided to impose a "solidarity tax" on smaller savers.


Not true. That was proposed, everyone said WTF?, was a major policy clusterfark, and the final settlement leaves those under 100k fully intact.
 
2013-03-29 01:05:50 PM  
While the rest of you farkers cry in dispair or blame the democrats, I got off my ass and found a solution.


www.shescribes.com
 
2013-03-29 01:06:00 PM  

scarmig: NostroZ: scarmig: Remember, it can't happen here.

Exactly!
Cyprus = Small island country that's used as a tax haven
United States = Large 1/3 of continent country with a world reserve currency & a huge GDP as well as world military.

They cannot/will-not do what Cyprus did, since it would do more harm than good in the long run.
Plus we have the option to print more dollars, Cyprus is at the mercy of the Euro.

Yup.  Anytime, the FED can just append another couple of zeros onto the debt, and we'll all be rich.

Problem solved.


I'm certainly for MORE options to solve problems vs. less.
The FED is privately owned and the shareholders of which are major banks and their proprietors.  Therefore, the individuals at the helm also answer to other rich people, as well as their own self interest, and sometimes to the tax-payer.  Yet, I'd argue that in this case, what's good for the goose is good for the gander*.

*Considering the 'goose' is an oversized banking sector headed by the TBTFs and the Fed and the 'gander' is the rest of us not in the sphere of power.
 
2013-03-29 01:11:03 PM  

Surpheon: ACunningPlan: Accounts up to 100k Euros were insured, but the EU decided to impose a "solidarity tax" on smaller savers.

Not true. That was proposed, everyone said WTF?, was a major policy clusterfark, and the final settlement leaves those under 100k fully intact.


That is what I thought. Reuters isn't without its faults as a news source, but I can't believe they would have neglected to mention a "solidarity tax".
 
2013-03-29 01:12:20 PM  

MythDragon: While the rest of you farkers cry in dispair or blame the democrats, I got off my ass and found a solution.


Usury.

Is it wrong that I find that woman smoking hot?
 
2013-03-29 01:20:19 PM  

a_room_with_a_moose: MythDragon: While the rest of you farkers cry in dispair or blame the democrats, I got off my ass and found a solution.

Usury.

Is it wrong that I find that woman smoking hot?


No, that's the whole point of Poke-a-HotAss.

Before they had a slim Indian guy, but went for the "sex sells" theme:
i3.ytimg.com
 
2013-03-29 01:22:45 PM  

NostroZ: a_room_with_a_moose: MythDragon: While the rest of you farkers cry in dispair or blame the democrats, I got off my ass and found a solution.

Usury.

Is it wrong that I find that woman smoking hot?

No, that's the whole point of Poke-a-HotAss.

Before they had a slim Indian guy, but went for the "sex sells" theme:


Poke-a-HotAss.

Oh, my, that amused me.
 
2013-03-29 01:30:55 PM  

anfrind: IRQ12: HAHAHA...yes please secure your funds in bitcoin.

That stupid thing is the 2013 version of the blinking punch the monkey ads.   Here's a fun exercise:  type bitcoin into the little search box on the top right.

I try to maintain a healthy skepticism about bitcoins, but they do offer one significant advantage (from the individual Cypriot's perspective) over the Euro: the government can't go to the bank and seize your bitcoins.

Which is not to say that there aren't better alternatives, but I doubt any of them are as easily accessible to individuals as bitcoin.


It's an awesome idea, the execution is the problem.

Does a government need to seize your bitcoins when they run the infrastructure that makes them a viable form of trade?  That's what's so funny about the bitcoin fanatics, they're all like a bunch of 15 year old boys who think they have figured out all of these "simple" worlds problems....because they don't understand the wider cause and effect of things.
 
2013-03-29 01:31:58 PM  

bronyaur1: Am I supposed to feel bad for an economy that based itself on sheltering and laundering shady money? Don't hold your breath for that.


If the story is accurate, it sounds like the oligarchs that this was supposed to target got their money smuggled out of the country using their vast connections before it could be confiscated, leaving the honest folks to pick up the tab while the criminals who likely had a large hand in creating the problem got to sail off into the sunset on a solid gold yacht filled with hookers and blow. I'm pretty sure that nothing like that has ever happened before. Usually the rich and powerful get screwed while the little guys laugh. There is no way that anyone could have seen this coming.
 
2013-03-29 01:38:43 PM  

mod3072: bronyaur1: Am I supposed to feel bad for an economy that based itself on sheltering and laundering shady money? Don't hold your breath for that.

If the story is accurate, it sounds like the oligarchs that this was supposed to target got their money smuggled out of the country using their vast connections before it could be confiscated, leaving the honest folks to pick up the tab while the criminals who likely had a large hand in creating the problem got to sail off into the sunset on a solid gold yacht filled with hookers and blow. I'm pretty sure that nothing like that has ever happened before. Usually the rich and powerful get screwed while the little guys laugh. There is no way that anyone could have seen this coming.


They didn't get their money "smuggled out." The banks that closed in Cyprus left open their branches on the London exchanges. The Russian mafia simply withdrew its money through London. The Central Bank of Cyprus had no legal authority to close those branches and the bankers decided they liked living above ground, so they gave the Russians their money.
 
2013-03-29 01:39:35 PM  

a_room_with_a_moose: Well, then the banks borrowed like sots and the government let them.

I'm guessing the banks made those investments with their customer's funds.

It amounts to the same thing, in the end.


Kinda, (I apologize in advance if you already knew all this stuff)

 
Banks don't "borrow", they issue loans.

 
They can take your current account (and the accounts of others) and create loans with values much much higher than what they have in liquid assets. (This is more or less what Fractional Reserve Banking is all about) The bank loans are its assets and your account is their liability. This creates an obvious mismatch between liabilities and assets. When the FED or the media speaks of leverage they are talking about the size of this mismatch. And bank leverage had alot to do with what caused the Financial Crisis in the U.S. In fact many of the banks in the U.S. had assets (toxic mortgages) that were so worthless they essentially had nothing of value to balance out their large liabilities. (They basically had a balance sheet of nothing but liabilities)

 
Now normally your current account (any deposit really) is considered the most senior and most secure of all bank liabilities. So during a bankruptcy multiple tears of investors lose their money before your deposit takes a hit. So the real question is what happened to those multiple tears of investors?

 
I am pretty sure that even if the Cyprus banks went into bankruptcy the depositors would lose a great deal. Even with some version of FDIC insurance the losses would be huge. 

//I think I more or less got the above right but I am not the best at describing the inner workings of banking
//Most of what I know is based on the work of others.
 
2013-03-29 01:41:55 PM  

MythDragon: While the rest of you farkers cry in dispair or blame the democrats, I got off my ass and found a solution.


[www.shescribes.com image 425x272]


Wherever you live must really suck.  She trusts me with up to 10,000 dollars where I live.  I didn't know they changed the price based on the area you live...
 
2013-03-29 01:46:13 PM  

Flargan: a_room_with_a_moose: Well, then the banks borrowed like sots and the government let them.

I'm guessing the banks made those investments with their customer's funds.

It amounts to the same thing, in the end.

Kinda, (I apologize in advance if you already knew all this stuff)

 
Banks don't "borrow", they issue loans.

 
They can take your current account (and the accounts of others) and create loans with values much much higher than what they have in liquid assets. (This is more or less what Fractional Reserve Banking is all about) The bank loans are its assets and your account is their liability. This creates an obvious mismatch between liabilities and assets. When the FED or the media speaks of leverage they are talking about the size of this mismatch. And bank leverage had alot to do with what caused the Financial Crisis in the U.S. In fact many of the banks in the U.S. had assets (toxic mortgages) that were so worthless they essentially had nothing of value to balance out their large liabilities. (They basically had a balance sheet of nothing but liabilities)

 
Now normally your current account (any deposit really) is considered the most senior and most secure of all bank liabilities. So during a bankruptcy multiple tears of investors lose their money before your deposit takes a hit. So the real question is what happened to those multiple tears of investors?

 
I am pretty sure that even if the Cyprus banks went into bankruptcy the depositors would lose a great deal. Even with some version of FDIC insurance the losses would be huge. 

//I think I more or less got the above right but I am not the best at describing the inner workings of banking
//Most of what I know is based on the work of others.


Thank you, srsly. That was about what I thought, I just oversimplified it.

I forget most farkers are a little more learned than my good but rather simple neighbors here in southern WV.
 
2013-03-29 01:48:42 PM  

FullMetalPanda: MythDragon: While the rest of you farkers cry in dispair or blame the democrats, I got off my ass and found a solution.


[www.shescribes.com image 425x272]

Wherever you live must really suck.  She trusts me with up to 10,000 dollars where I live.  I didn't know they changed the price based on the area you live...


I think different states have different laws as to amounts and interest.

It is 10 large in WV also.
 
2013-03-29 01:51:11 PM  

Triumph: mod3072: bronyaur1: Am I supposed to feel bad for an economy that based itself on sheltering and laundering shady money? Don't hold your breath for that.

If the story is accurate, it sounds like the oligarchs that this was supposed to target got their money smuggled out of the country using their vast connections before it could be confiscated, leaving the honest folks to pick up the tab while the criminals who likely had a large hand in creating the problem got to sail off into the sunset on a solid gold yacht filled with hookers and blow. I'm pretty sure that nothing like that has ever happened before. Usually the rich and powerful get screwed while the little guys laugh. There is no way that anyone could have seen this coming.

They didn't get their money "smuggled out." The banks that closed in Cyprus left open their branches on the London exchanges. The Russian mafia simply withdrew its money through London. The Central Bank of Cyprus had no legal authority to close those branches and the bankers decided they liked living above ground, so they gave the Russians their money.


That's why I prefaced my statement with "If the story is accurate". The article clearly implies that the wealthy Russians used their influence and connections to get their money out of the country before it could be confiscated. Not that I would be at all surprised if an article on the internet were not 100% completely accurate or a little biased.
 
2013-03-29 01:51:55 PM  
ACunningPlan: 
Accounts up to 100k Euros were insured, but the EU decided to impose a "solidarity tax" on smaller savers.  This isn't about the money though, it's a power grab and the setting of a precedent.  Merkel's up for re-election in September and she wants to be able to tell her voters they're not getting shafted - which they are, quite frankly.  And the EU is busy consolidating its control.

That's not true. The plan Cyprus put forth to the EU was to tax the small savers, then Cyprus voted their own moronic plan down, and thusly had to come up with a new one that could pass (and be accepted by the EU).

It's blatantly false, and sadly widely spread, that it was the EU that imposed it on Cyprus to tax small savers. It fits with the FUD of Euro haters, but it's a lie.
 
2013-03-29 01:52:17 PM  

Erebus1954: It's okay because 100% of people who have accumulated more than 100,000 Euros are criminals and deserved to have their life savings seized.


Yes, fark the one-percenters.  Every last of of 'em.
 
2013-03-29 01:55:13 PM  

Erebus1954: It's okay because 100% of people who have accumulated more than 100,000 Euros are criminals and deserved to have their life savings seized.


I don't really care about money in excess of €100k.  They knew the deposits were only guaranteed to that amount.  Just as we know that here with the FDIC.  The bank failed.  If they had more than that amount, tough shiat.

It's the attempt to grab from people below the insurance threshold that should scare the shiat out of anybody with money in a European bank.  The EU opened Pandora's box with that bullshiat.  I'd be moving my money to Britain or Switzerland ASAP if I were a Spaniard or Irish.
 
2013-03-29 01:55:17 PM  

Surpheon: ACunningPlan: Accounts up to 100k Euros were insured, but the EU decided to impose a "solidarity tax" on smaller savers.

Not true. That was proposed, everyone said WTF?, was a major policy clusterfark, and the final settlement leaves those under 100k fully intact.



 I didn't think so: thought they reduced the final settlement, but it does tap accounts under 100K also?
 
2013-03-29 02:01:57 PM  

a_room_with_a_moose: Flargan: a_room_with_a_moose: Fact is, Cyprus borrowed like a drunken sot. Now they need to pay the tab.

Thats not exactly how I would put it.

"The Cypriot Government was reported requesting a bailout from the European Financial Stability Facility or the European Stability Mechanism on 25 June 2012, citing difficulties in supporting its banking sector from the exposure to the Greek debt."
-http://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_financial_cr isi s

The banking sector in Cyprus (and its liabilities) was far larger than the GDP of Cyprus.

The banks bought risky assets (mostly Greek Bonds) which lead to heavy losses.

The losses were so large that the government of Cyprus could not bail out the banks. (Unlike the U.S. Cyprus could not print/create money to solve this problem.)

The government of Cyprus then sought a load from the EU but it came with conditions.


Cyprus didn't "borrow like a drunken sot" but its banks did make poor investments.


//Keep in mind that prior to the financial crisis the EU insisted that Greek bonds were sound.

Well, then the banks borrowed like sots and the government let them.

I'm guessing the banks made those investments with their customer's funds.

It amounts to the same thing, in the end.


The Cypriot banks were not in all that bad shape until the EU forced the greek bond devaluation on them

You can find the details here

http://www.nytimes.com/2013/03/27/world/europe/europeans-planted-see ds -of-crisis-in-cyprus.html?pagewanted=all&_r=0


But the path that led to Cyprus's current crisis - big banks bereft of money, a government in disarray and citizens filled with angry despair - leads back, at least in part, to a fateful decision made 17 months ago by the same guardians of financial discipline that now demand that Cyprus shape up.


That decision, like the onerous bailout package for Cyprus announced early Monday, was sealed in Brussels in secretive emergency sessions in the dead of night in late October 2011. That was when the European Union, then struggling to contain a debt crisis in Greece, effectively planted a time bomb that would blow a big hole in Cyprus's banking system - and set off a chain reaction of unintended and ever escalating ugly consequences.

"It was 3 o'clock in the morning," recalled Kikis Kazamias, Cyprus's finance minister at the time. "I was not happy. Nobody was happy, but what could we do?"

He was in Brussels as European leaders and the International Monetary Fund engineered a 50 percent write-down of Greek government bonds. This meant that those holding the bonds - notably the then-cash-rich banks of the Greek-speaking Republic of Cyprus - would lose at least half the money they thought they had. Eventual losses came close to 75 percent of the bonds' face value.

For Cypriot banks, particularly Laiki Bank, at the center of the current storm, however, these conclusions foretold a disaster: Altogether, they lost more than four billion euros, a huge amount in a country with a gross domestic product of just 18 billion euros. Laiki, also known as Cyprus Popular Bank, alone took a hit of 2.3 billion euros, according to its 2011 annual report.



It's tough to keep your bank solvent under those conditions.

/a box of gold and silver coins is looking better and better
 
2013-03-29 02:04:14 PM  
IRQ12: 


Does a government need to seize your bitcoins when they run the infrastructure that makes them a viable form of trade?  That's what's so funny about the bitcoin fanatics, they're all like a bunch of 15 year old boys who think they have figured out all of these "simple" worlds problems....because they don't understand the wider cause and effect of things.

You're also a fanatic, but you're not funny, just annoying with your ignorance.

Bitcoins in their distributed nature can't be seized, and the government doesn't and can't control the means of which they're traded.

Futhermore, the value of the Bitcoin is irrelevant in so far as it's efficiency of making a purchase. Noone gives a shiat whether it's worth 10 cents or 100 dollars, you just purchase, and transfer, the correct amount of Bitcoins. The problem only arises if you insist on keeping your money in Bitcoins. I think that's a bad idea, and not what the Bitcoin was created for.

By using Bitcoins I can make a purchase to someone across the world, with instant payment, without having to involve banks or credit cards and their associated fees, delays, demands for documentation etc.

Some people do see the Bitcoin as an investment, but it's kinda hard to argue with them if they bought them at 2USD a piece. Let's just hope for them that another crash isn't comming, something that will only affect investors though, as outlined above.
 
2013-03-29 02:06:37 PM  

spawn73: ACunningPlan:
Accounts up to 100k Euros were insured, but the EU decided to impose a "solidarity tax" on smaller savers.  This isn't about the money though, it's a power grab and the setting of a precedent.  Merkel's up for re-election in September and she wants to be able to tell her voters they're not getting shafted - which they are, quite frankly.  And the EU is busy consolidating its control.

That's not true. The plan Cyprus put forth to the EU was to tax the small savers, then Cyprus voted their own moronic plan down, and thusly had to come up with a new one that could pass (and be accepted by the EU).

It's blatantly false, and sadly widely spread, that it was the EU that imposed it on Cyprus to tax small savers. It fits with the FUD of Euro haters, but it's a lie.


That's definitely not true: the original plan voted down was an also EU construct.  Then the Cypriot's went to the Russians, then they went back to the EU and the "hair cut" was imposed..  Only this time, it was smarter because it by-passed the need to have the democratically elected parliament of Cyprus vote on the matter.
 
2013-03-29 02:10:54 PM  

RickyWilliams'sBong: Erebus1954: It's okay because 100% of people who have accumulated more than 100,000 Euros are criminals and deserved to have their life savings seized.

I don't really care about money in excess of €100k.  They knew the deposits were only guaranteed to that amount.  Just as we know that here with the FDIC.  The bank failed.  If they had more than that amount, tough shiat.

It's the attempt to grab from people below the insurance threshold that should scare the shiat out of anybody with money in a European bank.  The EU opened Pandora's box with that bullshiat.  I'd be moving my money to Britain or Switzerland ASAP if I were a Spaniard or Irish.


Yeah fark Cyprus tbh.

But anyway, what I'd do at least, if I had more money than 100k Euro (I wish), was to look into the solvency of my bank. Fortunatly I live in a country where the government checks the banks constantly for solvency, but I guess they didn't in Cyprus since this apparently came as a surprise for them, in that they didn't act before it was too late.

(you do realise that Great Britain and Switzerland are also in Europe? Your comments are a bit strange (GB is in the EU as well) I'd certainly trust GB or Swizz banks more than Irish for sure though.).
 
2013-03-29 02:17:20 PM  
realityVSperception:
He was in Brussels as European leaders and the International Monetary Fund engineered a 50 percent write-down of Greek government bonds. This meant that those holding the bonds - notably the then-cash-rich banks of the Greek-speaking Republic of Cyprus - would lose at least half the money they thought they had. Eventual losses came close to 75 percent of the bonds' face value.
For Cypriot banks, particularly Laiki Bank, at the center of the current storm, however, these conclusions foretold a disaster: Altogether, they lost more than four billion euros, a huge amount in a country with a gross domestic product of just 18 billion euros. Laiki, also known as Cyprus Popular Bank, alone took a hit of 2.3 billion euros, according to its 2011 annual report.

It's tough to keep your bank solvent under those conditions.
/a box of gold and silver coins is looking better and better


It's hardly the EUs fault that the Cypriotic banks invested in bonds with junk status.

They invested in them because they were greedy, ie. they probably paid up to 20%.

Of course the EU, and Greece, would say to anyone who cares to listen that Greek was safe, and their bonds were safe. That's their farking job to say, they're not going to go out there and talk the Greek economy even further into the shiatter.

Perhaps Cyprus is just to small to be able to run a banking system themselves if it came as a surprise to them that Greek bonds was a risky investment that you´d be a complete moron, or a Cypriotic, to bet your house on. Because that's what they did, and it's noones fault but their own.
 
2013-03-29 02:17:41 PM  

a_room_with_a_moose: Thank you, srsly. That was about what I thought, I just oversimplified it.

I forget most farkers are a little more learned than my good but rather simple neighbors here in southern WV.


Glad to help,

 
I should mention that there isn't much of a consensus as to whether or not banks are reserve constrained (i.e. Do they need more money to lend or does lending come first regardless?) and most of the public believes that we operate under a full reserve system (every loan is backed by a deposit).

 
Also, most economists downplay the economic impact of the loans a bank creates.

But those loans are really a form of money called endogenous money and have the same economic impact as real money. In fact most of the money creation in the U.S. occurs in the banks.

 
"Changes in the quantity of money may originate with actions of the Federal Reserve System (the central bank), depository institutions (principally commercial banks), or the public. The major control, however, rests with the central bank. The actual process of money creation takes place primarily in banks."

 -the Chicago Fed
 
2013-03-29 02:22:02 PM  

ACunningPlan: spawn73: ACunningPlan:
Accounts up to 100k Euros were insured, but the EU decided to impose a "solidarity tax" on smaller savers.  This isn't about the money though, it's a power grab and the setting of a precedent.  Merkel's up for re-election in September and she wants to be able to tell her voters they're not getting shafted - which they are, quite frankly.  And the EU is busy consolidating its control.

That's not true. The plan Cyprus put forth to the EU was to tax the small savers, then Cyprus voted their own moronic plan down, and thusly had to come up with a new one that could pass (and be accepted by the EU).

It's blatantly false, and sadly widely spread, that it was the EU that imposed it on Cyprus to tax small savers. It fits with the FUD of Euro haters, but it's a lie.

That's definitely not true: the original plan voted down was an also EU construct.  Then the Cypriot's went to the Russians, then they went back to the EU and the "hair cut" was imposed..  Only this time, it was smarter because it by-passed the need to have the democratically elected parliament of Cyprus vote on the matter.


No it wasn't, that was the plan that Cyprus proposed to the EU, which the EU deemed acceptable.

Cyprus proposed it, the EU is just demanding to see the money. What Cyprus proposed satisfied that part of it, so the EU and Cyprus presented that as the plan.

That's how it works. The EU doesn't outline in details how, in this case, Cyprus has to come up with the money, only deems whether or not it is satisfactory. I hope the EU had told Cyprus that their plan was stupid, but who knows. I gather they did, but Cyprus insisted on it because they wanted to protect their status as international banking heaven (something they can kiss goodbye now obviously).
 
2013-03-29 02:29:34 PM  

Triumph: They didn't get their money "smuggled out." The banks that closed in Cyprus left open their branches on the London exchanges. The Russian mafia simply withdrew its money through London. The Central Bank of Cyprus had no legal authority to close those branches and the bankers decided they liked living above ground, so they gave the Russians their money.


You managed the perfect combination of information, wit, and snark
 
2013-03-29 02:41:34 PM  

spawn73: It's hardly the EUs fault that the Cypriotic banks invested in bonds with junk status.


AAA is junk status now? Ok.
 
2013-03-29 02:42:40 PM  
Whatever.  This, like all other problems, can be solved by making the rich pay more taxes.
 
2013-03-29 02:45:25 PM  

spawn73: Yeah fark Cyprus tbh.

But anyway, what I'd do at least, if I had more money than 100k Euro (I wish), was to look into the solvency of my bank. Fortunatly I live in a country where the government checks the banks constantly for solvency, but I guess they didn't in Cyprus since this apparently came as a surprise for them, in that they didn't act before it was too late.

(you do realise that Great Britain and Switzerland are also in Europe? Your comments are a bit strange (GB is in the EU as well) I'd certainly trust GB or Swizz banks more than Irish for sure though.).


Yes, having lived in Britain, I'm well-aware of the fact that they're in the EU.  They have their own currency, as does Switzerland, so they're not beholden to the wishes of scumbags like Schauble and Asmussen.

People keep thinking this is a debt crisis.  It's not.  It's a currency crisis.  As long as these idiots hold on to that moronic currency, their people are screwed.
 
2013-03-29 02:46:55 PM  

spawn73: IRQ12:


Does a government need to seize your bitcoins when they run the infrastructure that makes them a viable form of trade?  That's what's so funny about the bitcoin fanatics, they're all like a bunch of 15 year old boys who think they have figured out all of these "simple" worlds problems....because they don't understand the wider cause and effect of things.

You're also a fanatic, but you're not funny, just annoying with your ignorance.

Bitcoins in their distributed nature can't be seized, and the government doesn't and can't control the means of which they're traded.

Futhermore, the value of the Bitcoin is irrelevant in so far as it's efficiency of making a purchase. Noone gives a shiat whether it's worth 10 cents or 100 dollars, you just purchase, and transfer, the correct amount of Bitcoins. The problem only arises if you insist on keeping your money in Bitcoins. I think that's a bad idea, and not what the Bitcoin was created for.

By using Bitcoins I can make a purchase to someone across the world, with instant payment, without having to involve banks or credit cards and their associated fees, delays, demands for documentation etc.

Some people do see the Bitcoin as an investment, but it's kinda hard to argue with them if they bought them at 2USD a piece. Let's just hope for them that another crash isn't comming, something that will only affect investors though, as outlined above.


Considering how idiotic the idea of seizing cash from everyone's savings was, I wouldn't put it past them to try to stop money from flowing out of the country by similarly idiotic measures, such as shutting down or severely restricting Internet access.  I know that there are smartphone apps to maintain bitcoin wallets and even transfer bitcoins from one phone to another, but would that still work without access to the bitcoin network?

At this point, if I had to move from the U.S. to a Eurozone country, I'd be highly motivated to keep my existing credit union accounts if at all possible.

spawn73: (you do realise that Great Britain and Switzerland are also in Europe? Your comments are a bit strange (GB is in the EU as well) I'd certainly trust GB or Swizz banks more than Irish for sure though.).


The United Kingdom and Switzerland are part of the European Union, but are not part of the Eurozone.  As such, they still have their own national currencies.
 
2013-03-29 02:47:20 PM  

spawn73: RickyWilliams'sBong: Erebus1954: It's okay because 100% of people who have accumulated more than 100,000 Euros are criminals and deserved to have their life savings seized.

I don't really care about money in excess of €100k.  They knew the deposits were only guaranteed to that amount.  Just as we know that here with the FDIC.  The bank failed.  If they had more than that amount, tough shiat.

It's the attempt to grab from people below the insurance threshold that should scare the shiat out of anybody with money in a European bank.  The EU opened Pandora's box with that bullshiat.  I'd be moving my money to Britain or Switzerland ASAP if I were a Spaniard or Irish.

Yeah fark Cyprus tbh.

But anyway, what I'd do at least, if I had more money than 100k Euro (I wish), was to look into the solvency of my bank. Fortunatly I live in a country where the government checks the banks constantly for solvency, but I guess they didn't in Cyprus since this apparently came as a surprise for them, in that they didn't act before it was too late.

(you do realise that Great Britain and Switzerland are also in Europe? Your comments are a bit strange (GB is in the EU as well) I'd certainly trust GB or Swizz banks more than Irish for sure though.).


Yah. The Irish would just drink your money up.

/Irish-American
//self-loathing?
 
2013-03-29 02:47:57 PM  

Evil High Priest: AAA is junk status now? Ok.


Well... we did have alot of CDOs (bundles of bad mortgages) that were marked AAA despite the fact that they had little to no value. But most investors (savvy or not) took the AAA at face value and never asked any questions. 2008 wasn't that long ago and everyone was making the same poor choices whether it was a Greek bond or a U.S. CDO.

 
//I still wonder why its ok for the credit rating agencies to get paid by the companies they rate products for.

//"This thing is awful but if we don't mark it AAA someone else will."
 
2013-03-29 02:50:58 PM  

realityVSperception: a_room_with_a_moose: Flargan: a_room_with_a_moose: Fact is, Cyprus borrowed like a drunken sot. Now they need to pay the tab.

Thats not exactly how I would put it.

"The Cypriot Government was reported requesting a bailout from the European Financial Stability Facility or the European Stability Mechanism on 25 June 2012, citing difficulties in supporting its banking sector from the exposure to the Greek debt."
-http://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_financial_cr isi s

The banking sector in Cyprus (and its liabilities) was far larger than the GDP of Cyprus.

The banks bought risky assets (mostly Greek Bonds) which lead to heavy losses.

The losses were so large that the government of Cyprus could not bail out the banks. (Unlike the U.S. Cyprus could not print/create money to solve this problem.)

The government of Cyprus then sought a load from the EU but it came with conditions.


Cyprus didn't "borrow like a drunken sot" but its banks did make poor investments.


//Keep in mind that prior to the financial crisis the EU insisted that Greek bonds were sound.

Well, then the banks borrowed like sots and the government let them.

I'm guessing the banks made those investments with their customer's funds.

It amounts to the same thing, in the end.

The Cypriot banks were not in all that bad shape until the EU forced the greek bond devaluation on them

You can find the details here

http://www.nytimes.com/2013/03/27/world/europe/europeans-planted-see ds -of-crisis-in-cyprus.html?pagewanted=all&_r=0


But the path that led to Cyprus's current crisis - big banks bereft of money, a government in disarray and citizens filled with angry despair - leads back, at least in part, to a fateful decision made 17 months ago by the same guardians of financial discipline that now demand that Cyprus shape up.


That decision, like the onerous bailout package for Cyprus announced early Monday, was sealed in Brussels in secretive emergency sessions in the dead of night in late October 2011. That was when the European Union, then struggling to contain a debt crisis in Greece, effectively planted a time bomb that would blow a big hole in Cyprus's banking system - and set off a chain reaction of unintended and ever escalating ugly consequences.

"It was 3 o'clock in the morning," recalled Kikis Kazamias, Cyprus's finance minister at the time. "I was not happy. Nobody was happy, but what could we do?"

He was in Brussels as European leaders and the International Monetary Fund engineered a 50 percent write-down of Greek government bonds. This meant that those holding the bonds - notably the then-cash-rich banks of the Greek-speaking Republic of Cyprus - would lose at least half the money they thought they had. Eventual losses came close to 75 percent of the bonds' face value.

For Cypriot banks, particularly Laiki Bank, at the center of the current storm, however, these conclusions foretold a disaster: Altogether, they lost more than four billion euros, a huge amount in a country with a gross domestic product of just 18 billion euros. Laiki, also known as Cyprus Popular Bank, alone took a hit of 2.3 billion euros, according to its 2011 annual report.


It's tough to keep your bank solvent under those conditions.

/a box of gold and silver coins is looking better and better


Can't disagree with the gold and silver thing for saving.

If there was no faith that the Greek government would be able to redeem the bonds, why shouldn't they have been devalued? Not being critical, just curious.
 
2013-03-29 02:53:18 PM  

spawn73: ACunningPlan: spawn73: ACunningPlan:
Accounts up to 100k Euros were insured, but the EU decided to impose a "solidarity tax" on smaller savers.  This isn't about the money though, it's a power grab and the setting of a precedent.  Merkel's up for re-election in September and she wants to be able to tell her voters they're not getting shafted - which they are, quite frankly.  And the EU is busy consolidating its control.

That's not true. The plan Cyprus put forth to the EU was to tax the small savers, then Cyprus voted their own moronic plan down, and thusly had to come up with a new one that could pass (and be accepted by the EU).

It's blatantly false, and sadly widely spread, that it was the EU that imposed it on Cyprus to tax small savers. It fits with the FUD of Euro haters, but it's a lie.

That's definitely not true: the original plan voted down was an also EU construct.  Then the Cypriot's went to the Russians, then they went back to the EU and the "hair cut" was imposed..  Only this time, it was smarter because it by-passed the need to have the democratically elected parliament of Cyprus vote on the matter.

No it wasn't, that was the plan that Cyprus proposed to the EU, which the EU deemed acceptable.

Cyprus proposed it, the EU is just demanding to see the money. What Cyprus proposed satisfied that part of it, so the EU and Cyprus presented that as the plan.

That's how it works. The EU doesn't outline in details how, in this case, Cyprus has to come up with the money, only deems whether or not it is satisfactory. I hope the EU had told Cyprus that their plan was stupid, but who knows. I gather they did, but Cyprus insisted on it because they wanted to protect their status as international banking heaven (something they can kiss goodbye now obviously).


That's not my understanding of how events unfolded.  But we're not going to reach consensus on this subject - you're in favor & I'm against - so can we amicably agree to disagree:)
 
2013-03-29 02:55:02 PM  

Evil High Priest: spawn73: It's hardly the EUs fault that the Cypriotic banks invested in bonds with junk status.

AAA is junk status now? Ok.


This is why Europe is royally farked.  Zee Germans make up the story as they go along and know nothing about economics.

Germany: "You have to agree to this haircut on Greek debt, Cyrprus, in the interest of EU solidarity and stability.  We'll back you up if you run into problems."

Cyprus: "Okay, we did that, and now our banks are insolvent.  Help please?"

Germany: "Pfffffft.  biatch, please.  Give us your deposits.  And cripple yourselves with budget cuts and deflation while you're at it."
 
2013-03-29 03:08:14 PM  

RickyWilliams'sBong: Evil High Priest: spawn73: It's hardly the EUs fault that the Cypriotic banks invested in bonds with junk status.

AAA is junk status now? Ok.

This is why Europe is royally farked.  Zee Germans make up the story as they go along and know nothing about economics.

Germany: "You have to agree to this haircut on Greek debt, Cyrprus, in the interest of EU solidarity and stability.  We'll back you up if you run into problems."

Cyprus: "Okay, we did that, and now our banks are insolvent.  Help please?"

Germany: "Pfffffft.  biatch, please.  Give us your deposits.  And cripple yourselves with budget cuts and deflation while you're at it."


Well, if there is anything to take away from this, it is that Germans are just plain evil.

I'm sure the other strong Eurozone states like France had nothing to do with this crisis.
 
2013-03-29 03:09:02 PM  

bronyaur1: Am I supposed to feel bad for an economy that based itself on sheltering and laundering shady money? Don't hold your breath for that.


And never mind that the collapse is because they were chasing yield and bought a ton of Greek debt.
 
2013-03-29 03:14:54 PM  

Evil High Priest: spawn73: It's hardly the EUs fault that the Cypriotic banks invested in bonds with junk status.

AAA is junk status now? Ok.


I'd love to live in your world, it sounds nice. Do you have unicorns as well?

http://en.wikipedia.org/wiki/List_of_countries_by_credit_rating

Sadly in reality Greece is still close to junk, and they're doing good now relative to when the banks in Cyprus made the decision to invest the Russians mafias money in them.
 
2013-03-29 03:18:33 PM  

spawn73: realityVSperception:
He was in Brussels as European leaders and the International Monetary Fund engineered a 50 percent write-down of Greek government bonds. This meant that those holding the bonds - notably the then-cash-rich banks of the Greek-speaking Republic of Cyprus - would lose at least half the money they thought they had. Eventual losses came close to 75 percent of the bonds' face value.
For Cypriot banks, particularly Laiki Bank, at the center of the current storm, however, these conclusions foretold a disaster: Altogether, they lost more than four billion euros, a huge amount in a country with a gross domestic product of just 18 billion euros. Laiki, also known as Cyprus Popular Bank, alone took a hit of 2.3 billion euros, according to its 2011 annual report.

It's tough to keep your bank solvent under those conditions.
/a box of gold and silver coins is looking better and better

It's hardly the EUs fault that the Cypriotic banks invested in bonds with junk status.

They invested in them because they were greedy, ie. they probably paid up to 20%.

Of course the EU, and Greece, would say to anyone who cares to listen that Greek was safe, and their bonds were safe. That's their farking job to say, they're not going to go out there and talk the Greek economy even further into the shiatter.

Perhaps Cyprus is just to small to be able to run a banking system themselves if it came as a surprise to them that Greek bonds was a risky investment that you´d be a complete moron, or a Cypriotic, to bet your house on. Because that's what they did, and it's noones fault but their own.


The EU is the one who failed to due diligence when they allowed Greece to join the euro in the 1st place.
Greece actively hid its debt levels with help from Goldman Sachs.

http://www.dailymail.co.uk/news/article-1251280/Goldman-Sachs-new-st or m-secret-deal-mask-Greek-debts.html

How was a Cyprus bank suppose to detect the fraud when even the EU ministers in Brussels were fooled?

Actually Greek bonds were not rated as junk, and paid typical rates around 5% leading up to the crisis.
http://www.tradingeconomics.com/greece/government-bond-yield

The whole point of the EU is to allow small countries to participate in and have the benefits of a continental size economy. It shouldn't matter how small the individual country is, otherwise, why bother having the EU in the first place?

So even though Greece actively committed fraud, and the EU forced the losses on the Cyprus banks, you think the Cyprus banks are entirely at fault for creating a financial industry and buying investment rated government debt backed by the EU?
 
2013-03-29 03:27:24 PM  

spawn73: Evil High Priest: spawn73: It's hardly the EUs fault that the Cypriotic banks invested in bonds with junk status.

AAA is junk status now? Ok.

I'd love to live in your world, it sounds nice. Do you have unicorns as well?

http://en.wikipedia.org/wiki/List_of_countries_by_credit_rating

Sadly in reality Greece is still close to junk, and they're doing good now relative to when the banks in Cyprus made the decision to invest the Russians mafias money in them.


Everyone knows the Greek banks are junk now, the issue is when they bought the bonds back in 2008, when they were A1 rated (more importantly they were considered by EU bank regulators to be in the safest class of assets banks could hold).  Bonds once you hit the level of buying billions at a time are quite illiquid so by the time a credit downgrade occurs owners are already farked.  In addition to the Greek Sovereign haircut/default, an awful lot of Cypriot bank loans were to Greek business that slowed in the austerity plans that followed.
 
2013-03-29 03:32:10 PM  

spawn73: IRQ12: 


Does a government need to seize your bitcoins when they run the infrastructure that makes them a viable form of trade?  That's what's so funny about the bitcoin fanatics, they're all like a bunch of 15 year old boys who think they have figured out all of these "simple" worlds problems....because they don't understand the wider cause and effect of things.

You're also a fanatic, but you're not funny, just annoying with your ignorance.

Bitcoins in their distributed nature can't be seized, and the government doesn't and can't control the means of which they're traded.

Futhermore, the value of the Bitcoin is irrelevant in so far as it's efficiency of making a purchase. Noone gives a shiat whether it's worth 10 cents or 100 dollars, you just purchase, and transfer, the correct amount of Bitcoins. The problem only arises if you insist on keeping your money in Bitcoins. I think that's a bad idea, and not what the Bitcoin was created for.

By using Bitcoins I can make a purchase to someone across the world, with instant payment, without having to involve banks or credit cards and their associated fees, delays, demands for documentation etc.

Some people do see the Bitcoin as an investment, but it's kinda hard to argue with them if they bought them at 2USD a piece. Let's just hope for them that another crash isn't comming, something that will only affect investors though, as outlined above.


Furthermore, another person who completely misses the point that the governments control the infrastructure that makes the whole thing possible.

Trust me, with all of the scammers, pumpers, fools, etc out littering the internet with their get rich quick scheme they have also made it much more visible.  If you think bitcoin is immune to government control you are very mistaken.  There's a reason money laundering is one of the top federal crimes in this country.  The government wants their cut.
 
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