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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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10301 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 03:48:38 PM  
Sounds like an excuse for a struggling business would make.
 
2013-03-29 03:50:13 PM  

nelsonal: 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.


What I took away from this was that the Cypriotic banks had invested heavily in Greek bonds while the yield were high based on them being a risky investment.

If they didn't, then my bad, though then I wonder why they put all their money in Greek bonds if there weren't any yield incentive. Why didn't they spread them out like normal banks do?
 
2013-03-29 03:54:23 PM  
A government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.

You'll swallow everything your betters put in your mouth, eh?
 
2013-03-29 03:56:34 PM  
IRQ12: 
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.


No the government doesn't. And yes, Bitcoin in its nature is immune to government control, and I'm not mistaken.

What could potentially happen is that governments of the world decides to close the internet, uh yeah, that could in theory happen, but it wont of course. If the bitcoin clients can't communicate with each other, then they don't work.

The government could also make it illegal to have a Bitcoin client running, and make it illegal to accept Bitcoins. But that's not control.


Look, why don't you try and read about how the Bitcoin system works, then you could make some informed arguments against it, instead of this nonsense. That is, if you still hate it afterwards.
 
2013-03-29 04:01:28 PM  

snocone: 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.

No, save your feel bad for when that economy no longer feeds, shelters or protects you.


The Cypriot economy will feed, shelter, and protect me (and likely bronyaur1) as much today as it did yesterday or will tomorrow.
 
2013-03-29 04:07:39 PM  

MugzyBrown: government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.


I love how people can become so deranged they seem to believe that The Government is some sort of alien lifeform that came down from the skies one day, as opposed to a bunch of people who doled out services and tax money to the exact same people who are now aghast they may have to pay some of it back.
 
2013-03-29 04:17:05 PM  

MugzyBrown: A government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.

You'll swallow everything your betters put in your mouth, eh?


Except the Cypriot government is matching the money with bank shares.

Better than the banks folding and people losing everything.

I don't think you have much of a grasp on this.
 
2013-03-29 04:19:51 PM  

Surpheon: MugzyBrown: government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.

I love how people can become so deranged they seem to believe that The Government is some sort of alien lifeform that came down from the skies one day, as opposed to a bunch of people who doled out services and tax money to the exact same people who are now aghast they may have to pay some of it back.


That was snarky awesome!
 
2013-03-29 04:35:00 PM  

a_room_with_a_moose: MugzyBrown: A government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.

You'll swallow everything your betters put in your mouth, eh?

Except the Cypriot government is matching the money with bank shares.

Better than the banks folding and people losing everything.

I don't think you have much of a grasp on this.


The bank wouldn't fail if it wasn't allowed to lend out a multiple of its deposits.
 
2013-03-29 04:35:23 PM  
spawn73: ...
Look, why don't you try and read about how the Bitcoin system works, then you could make some informed arguments against it, instead of this nonsense. That is, if you still hate it afterwards.

Ahh...the battle cry of the bitcoin warrior.

I know  exactlyhow it works.  I don't  hate bitcoin I hate the idiots spamming it all over the internet trying to pump up their bubble.

I actually think the concept is great.  The implementation of it in this case is almost like a ponzi scheme.  Do I have a better solution?  No, but I certainly will speak my piece about a bubble where the late comers take on all of the risk.

Just look at the FAQ:

"Early adopters have a large number of bitcoins now because they took a risk and invested resources in an unproven technology. By so doing, they have helped Bitcoin become what it is now and what it will be in the future (hopefully, a ubiquitous decentralized digital currency). It is only fair they will reap the benefits of their successful investment. "

Yes early adopters mined of of their idle CPU and picked the low hanging fruit with almost no effort, of course they should compensated richly!  The late comer who spent 10k on a ASIC farm should get a modest return on his investment, because that's the easy stuff.

I'll put this here just in case you are English as a second language:

con·trol
3.To hold in restraint; check: 
4.To reduce or prevent the spread of:

Let's imagine this purely hypothetical situation in which a government(s) could regulate the the flow of traffic on the internet and the financial institutions where the bitcoins are converted into cash.  That might sound like they are able to control them, wouldn't it?  Naw that's ridiculous, just look how popular online gambling is!
 
2013-03-29 05:02:02 PM  
I don't know if there are very many Russian tax evaders involved.  I'm no fan of the Russkies, but they do have some of the lowest corporate and individual tax rates around, and is a flat tax to boot.  Would hardly be worth to evade taxes.
 
2013-03-29 05:21:18 PM  
IRQ12: 
Let's imagine this purely hypothetical situation in which a government(s) could regulate the the flow of traffic on the internet and the financial institutions where the bitcoins are converted into cash.  That might sound like they are able to control them, wouldn't it?  Naw that's ridiculous, just look how popular online gambling is!

I read your post, only quoting part of it.

But well, no, those are not mechanisms that could be put in place to control peoples use of Bitcoin.

Hypothetically all governments in the world could regulate the financial institutions as to make converting bitcoins to cash difficult (it would have to be all countries in the world obviously), but that would do nothing to prevent the Bitcoin client and network from functioning as intended.

The thought that the internet could be shut down because of Bitcoin is far fetched, and doesn't matter. A HAM radio client would work just as fine.

That's really the premise, can or can't "the bogeyman" take your Bitcoins. And the answer is no.

I'm a bit surprised that you can come to any other conclusions from reading how it works, despite your eager building of strawmen.
 
2013-03-29 05:22:07 PM  

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


It's not just that it's allowed, it's mandated.  You can't sell them until you pay someone to rate them, and we only allow 3 groups to rate.  It's a government created problem.
 
2013-03-29 05:38:47 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.


You might want to look a little more closely at our banking laws when it comes to regulating bitcoins.  Anyone who performs financial and bank-like transactions can be heavily regulated, and the transactions made via BTC are not immune to tax law either.  The organizations setting themselves up to handle BTC bank transfers are going to find they've become banks, and that means serious people from the government are going to impose serious restrictions.  For one thing, anonymity will end - the source and recipient of every transfer through those quasi-banks will be recorded so the government can find out who was involved in every transfer.  The government can most certainly outlaw the use of BTC for transactions.  They might not be able to prevent two parties from using a non-government backed currency, but they most certainly can tell businesses they are not allowed to accept transactions in BTC.  And yes, the government can seize your bitcoins by making it impossible for you to recover it.  As in you will transfer them to the government address as a literal gun is held to your head.  You then get to sit in a cell for 24 hours as those block chains get replicated.  Done - confiscation has taken place.  xkcd #538 is real.  But you are at least one step ahead of most BTC fanatics - you recognize that it wasn't designed to be a good value storage vehicle.  It was designed as a transaction platform with certain characteristics.  That the supply of BTC behaves like any other commodity is, well, because it is one.
 
2013-03-29 05:51:05 PM  

spawn73: IRQ12: 
Let's imagine this purely hypothetical situation in which a government(s) could regulate the the flow of traffic on the internet and the financial institutions where the bitcoins are converted into cash.  That might sound like they are able to control them, wouldn't it?  Naw that's ridiculous, just look how popular online gambling is!

I read your post, only quoting part of it.

But well, no, those are not mechanisms that could be put in place to control peoples use of Bitcoin.

Hypothetically all governments in the world could regulate the financial institutions as to make converting bitcoins to cash difficult (it would have to be all countries in the world obviously), but that would do nothing to prevent the Bitcoin client and network from functioning as intended.

The thought that the internet could be shut down because of Bitcoin is far fetched, and doesn't matter. A HAM radio client would work just as fine.

That's really the premise, can or can't "the bogeyman" take your Bitcoins. And the answer is no.

I'm a bit surprised that you can come to any other conclusions from reading how it works, despite your eager building of strawmen.


You are the one who doesn't understand how this works.

*Knock, Knock*
You:  Erm yes?
Me:  Hi, I'm from the government.  I'm here confiscate your illegal currency.
You: Go away
Me;  *Takes out weapon - waves hand at squad behind me*  Too bad - you are.
You: Urp!
Me:  *Points gun at your head* Let's sit down at your computer
You: Ok...
Me:  Here's the BTC address you are going to transfer everything to
You:  Right. *You comply - you don't want to be shot resisting arrest right now*
Me: *Phone rings*   Yup, OK.
Me: *Hangs up phone* OK, transaction went through.  Let's turn off your computer and discuss how this couldn't have happened, shall we?
You:  I guess I was wrong...

You should look at xkcd #538 and then realize how little the governments out there are worried about some crypto based currency system.  It doesn't have to play nice.  It will use force.  And it is already starting to happen.  On March 18 BTC currency exchanges were told they will be regulated as MSBs by the US treasury department.  It has begun...
 
2013-03-29 05:53:45 PM  
spawn73:
I'm a bit surprised that you can come to any other conclusions from reading how it works, despite your eager building of strawmen.

IRQ12:  The government does not need to seize your bitcoins when they control the infrastructure that makes it possible
spawn73:   Bitcoin in its nature is immune to government control, and I'm not mistaken
IRQ12:  **Pulls out the crayon to help spawn73 understand what the word control means and points out how easy with an example of how easy it is for them to control it by choking the conversion points.
spawn73:  STRAWMAN!

Rinse and repeat for every bitcoin debate ever had on the internet.  UP UP UP!

But go on thinking that the governments will just stand by saying "shucks foiled by bitcoin" should they want to *control* it.  Sure, they will never be able to completely halt its use but that's not really the topic.
 
2013-03-29 05:57:58 PM  

MugzyBrown: a_room_with_a_moose: MugzyBrown: A government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.

You'll swallow everything your betters put in your mouth, eh?

Except the Cypriot government is matching the money with bank shares.

Better than the banks folding and people losing everything.

I don't think you have much of a grasp on this.

The bank wouldn't fail if it wasn't allowed to lend out a multiple of its deposits.


Yeah, because a business borrowing far in excess of its holdings always results in success.
 
2013-03-29 06:03:09 PM  

El Supe: I don't know if there are very many Russian tax evaders involved.  I'm no fan of the Russkies, but they do have some of the lowest corporate and individual tax rates around, and is a flat tax to boot.  Would hardly be worth to evade taxes.


I was under the impression that it wasn't tax evaders but illicit money laundering.
 
2013-03-29 06:08:00 PM  

MugzyBrown: The bank wouldn't fail if it wasn't allowed to lend out a multiple of its deposits.


If they didn't "lend out a multiple of its deposits" we would have a system of full-reserve banking.

I hardly ever read about full-reserve banking outside of the writings of Austrian economists.

It doesn't garner much support since it would make traditional banking (borrow long and lend short) rather difficult.
 
2013-03-29 06:12:43 PM  

spawn73: IRQ12:
Let's imagine this purely hypothetical situation in which a government(s) could regulate the the flow of traffic on the internet and the financial institutions where the bitcoins are converted into cash.  That might sound like they are able to control them, wouldn't it?  Naw that's ridiculous, just look how popular online gambling is!

I read your post, only quoting part of it.

But well, no, those are not mechanisms that could be put in place to control peoples use of Bitcoin.

Hypothetically all governments in the world could regulate the financial institutions as to make converting bitcoins to cash difficult (it would have to be all countries in the world obviously), but that would do nothing to prevent the Bitcoin client and network from functioning as intended.

The thought that the internet could be shut down because of Bitcoin is far fetched, and doesn't matter. A HAM radio client would work just as fine.

That's really the premise, can or can't "the bogeyman" take your Bitcoins. And the answer is no.

I'm a bit surprised that you can come to any other conclusions from reading how it works, despite your eager building of strawmen.


Out of curiosity, how much network connectivity do you need in order to use bitcoins?  If things were to get crazy enough that a Eurozone country decided to shut down the Internet in order to stop the flow of bitcoins,* would two people with bitcoin wallets on their phones still be able to exchange bitcoins, being able to talk to each other (e.g. using NFC) but not to any other device?  Would the anti-counterfeiting measures built into bitcoin stop working if the devices can talk to each other but not to the rest of the network?


* I know it seems crazy, but until about a week ago I thought a Eurozone country taking money from people's savings accounts to pay the country's debts was too crazy to ever happen.
 
2013-03-29 06:12:55 PM  

spawn73: nelsonal: 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.

What I took away from this was that the Cypriotic banks had invested heavily in Greek bonds while the yield were high based on them being a risky investment.

If they didn't, then my bad, though then I wonder why they put all their money in Greek bonds if there weren't any yield incentive. Why didn't they spread them out like normal banks do?


First, greece and greek cyprus have a long history together. Beyond a common language, there was also a big push to reunify with Greece when the British left-

http://www.globalsecurity.org/military/world/war/cyprus2.htm

And the Greeks backed them during the Turkish invasion in 1974.

Also, the banks were to some extent victims of their own success. They were not greedy, loaned cautiosly, and paid good returns. Here is an article with some details-

http://www.reuters.com/article/2013/03/22/us-cyprus-banks-idUSBRE92L 0C Q20130322

The island's 2008 entry to the euro zone was the first in a series of events which have led to a situation in which ATMs in Cyprus may soon run out of cash.

Before joining the euro, the Central Bank of Cyprus only allowed banks to use up to 30 percent of their foreign deposits to support local lending, a measure designed to prevent sizeable deposits from Greeks and Russians fuelling a bubble.

When Cyprus joined the single European currency, Greek and other euro area deposits were reclassified as domestic, leading to billions more local lending, Pambos Papageorgiou, a member of Cyprus's parliament and a former central bank board member said.

Banks' loan books expanded almost 32 percent in 2008 as its newly gained euro zone status made Cyprus a more attractive destination for banking and business generally, but Cypriot banks maintained the unusual position of funding almost all their lending from deposits.
"The banks were considered super conservative," said Alexander Apostolides an economic historian at Cyprus' European University, a private university on the outskirts of Nicosia.

When Lehman Brothers collapsed in the summer of 2008, most of the world's banks suffered in the fallout, but not Cyprus's.
"Everyone here was sitting pretty," said Fiona Mullen, a Nicosia-based economist, reflecting on the fact Cypriot banks did not depend on capital markets for funding and did not invest in complex financial products that felled other institutions.

A source at one of the banks, who asked not to be named, said his institution did not have "serious problems with lending", adding that Cypriot banks typically demanded a down payment of 30 percent for home loans, well above the average in most countries.
The rapid expansion left Cyprus with a banking system eight times the size of its national output, as its accommodative regime of not taxing foreigners' dividends and capital gains lured investors from countries like Russia.

It also offered rates which could not be matched.

A depositor would have earned 31,000 euros on a 100,000 euros deposit held for the last five year in Cyprus, compared to the 15,000 to 18,000 euros the same deposit would have made in Italy and Spain, and the 8,000 interest it would have earned in Germany, according to figures from UniCredit.

Bulging deposit books not only fuelled lending expansion at home, it also drove Cypriot banks overseas. Greece, where many Cypriots claim heritage, was the destination of choice for the island's two biggest lenders, Cyprus Popular Bank -- formerly called Laiki -- and Bank of Cyprus

Simona Mihai, assistant professor at Cyprus European University's banking and finance department, said the banks' exposure stemmed from a desire to help their nearest neighbors, and a belief that Greece could recover.

"People are thinking in hope," she said. "They do not see it from an analytical perspective."


Obviously, in hindsight, this led to overexposure to greek bonds. Which the article also goes into. But personally I don't find it suprising that a bank from a Greek speaking country with historical ties to greece that go back centuries should gravitate into greek investments when hit with large amounts of deposits to invest.
 
2013-03-29 06:16:20 PM  

Flargan: MugzyBrown: The bank wouldn't fail if it wasn't allowed to lend out a multiple of its deposits.

If they didn't "lend out a multiple of its deposits" we would have a system of full-reserve banking.

I hardly ever read about full-reserve banking outside of the writings of Austrian economists.

It doesn't garner much support since it would make traditional banking (borrow long and lend short) rather difficult.


OK. You just got faved. You seem to have a pretty good grasp on economics and I like your explainations.
 
2013-03-29 06:21:15 PM  

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


Who would you have pay the credit rating agencies, the investor?

/not snark
 
2013-03-29 06:32:55 PM  

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

Who would you have pay the credit rating agencies, the investor?

/not snark


Out of curiosity, who pays the rating for personal credit? I know I have a rating though I never paid to have it done.
 
2013-03-29 06:33:24 PM  

a_room_with_a_moose: OK. You just got faved. You seem to have a pretty good grasp on economics and I like your explainations.


Thank you,
 
2013-03-29 06:35:57 PM  

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

Who would you have pay the credit rating agencies, the investor?

/not snark

Out of curiosity, who pays the rating for personal credit? I know I have a rating though I never paid to have it done.


The folks running credit checks typically have a subscription with the credit agencies as I understand it.
 
2013-03-29 06:36:22 PM  

Flargan: a_room_with_a_moose: OK. You just got faved. You seem to have a pretty good grasp on economics and I like your explainations.

Thank you,


Thank you for taking the time to patch up the gaps in my understanding of things.

/it is a never ending task...
 
2013-03-29 06:36:57 PM  

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

Who would you have pay the credit rating agencies, the investor?

/not snark

Out of curiosity, who pays the rating for personal credit? I know I have a rating though I never paid to have it done.

The folks running credit checks typically have a subscription with the credit agencies as I understand it.


Thx
 
2013-03-29 06:48:43 PM  

AdolfClamwacker: Who would you have pay the credit rating agencies, the investor?

/not snark


It is a tough choice.

If the investor pays then it would be similar to paying the cost of home inspection. (Probably not the best analogy but its all I have for the moment) The problem is that paying the cost would be burdensome.

My other option would be creating a government agency to perform the task. I fear such an agency would be staffed by those who want to participate in a revolving door between that agency and the groups that sell the products they rate.

I guess I would have to opt for a government agency.

Like I said, its a tough choice.
 
2013-03-29 07:19:35 PM  
Is the Cypriot banking system run by the same yahoo that ran Hostrail?
 
2013-03-29 07:26:27 PM  
Ok, calling it a 'haircut' is offensive because this is more like a 'scalping'. Losing some hair doesn't hurt you.

That being said, which is more insidious? Taking the money outright in a 'cash grab' like that, or to do what most governments do, inflate the money supply to reduce the country's real debt?

If things get too terrible with China, I imagine the USA will go into hyperinflation in order to rid itself of its debt. The world will tailspin for about 20 years after that. I realy hope it happens after I'm dead of old age.
 
2013-03-29 07:33:10 PM  

MadSkillz: Ok, calling it a 'haircut' is offensive because this is more like a 'scalping'. Losing some hair doesn't hurt you.

That being said, which is more insidious? Taking the money outright in a 'cash grab' like that, or to do what most governments do, inflate the money supply to reduce the country's real debt?

If things get too terrible with China, I imagine the USA will go into hyperinflation in order to rid itself of its debt. The world will tailspin for about 20 years after that. I realy hope it happens after I'm dead of old age.


Well they don't control their own currency so that's not an option. I like the cash grab, except they should have made the lower limit ~1,000,000 or so. Then, offer to take off 100,000 for each banker you help convict for fraud.
 
2013-03-29 08:24:34 PM  

a_room_with_a_moose: MugzyBrown: A government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.

You'll swallow everything your betters put in your mouth, eh?

Except the Cypriot government is matching the money with bank shares.

Better than the banks folding and people losing everything.

I don't think you have much of a grasp on this.


But the shares are pretty much worthless.
Right now people are pulling their money out as fast as they are allowed.
NO ONE IS GOING TO DEPOSIT ANY MORE MONEY
So the banks are going under. It's just a matter of when
 
2013-03-29 11:14:26 PM  

CujoQuarrel: a_room_with_a_moose: MugzyBrown: A government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.

You'll swallow everything your betters put in your mouth, eh?

Except the Cypriot government is matching the money with bank shares.

Better than the banks folding and people losing everything.

I don't think you have much of a grasp on this.

But the shares are pretty much worthless.
Right now people are pulling their money out as fast as they are allowed.
NO ONE IS GOING TO DEPOSIT ANY MORE MONEY
So the banks are going under. It's just a matter of when


Posit: People think a bank might be financially shaky
Consequence: People start pulling their money out
Result: Pretty soon, the bank is financially shaky

On a more macro scale, people pull their money out of all the nation's banks, pretty soon the country itself is financially shaky. Which is happening in Cyprus right now. The rest of the Euro countries have to be looking at this and wondering if they're next. I wouldn't have my money in a bank in the Euro zone, where they have shown they have no reservation about stealing people's savings to cover government deficits. What is happening in Cyprus is theft, pure and simple.
 
2013-03-29 11:37:25 PM  

a_room_with_a_moose: Flargan: MugzyBrown: The bank wouldn't fail if it wasn't allowed to lend out a multiple of its deposits.

If they didn't "lend out a multiple of its deposits" we would have a system of full-reserve banking.

I hardly ever read about full-reserve banking outside of the writings of Austrian economists.

It doesn't garner much support since it would make traditional banking (borrow long and lend short) rather difficult.

OK. You just got faved. You seem to have a pretty good grasp on economics and I like your explainations.


That's not what fractional reserve banking means. Fractional reserve banking means a bank must keep a portion of deposits 'in reserve' in case of a run. For example, if my country requires a reserve of 20%, I may only lend out 80%, and must keep 20% of deposits on hand at all times. This is the bank's 'reserves'.

The bank does NOT get to lend out more than 100% of its deposits. Where would it get this money? And if Full Reserve banking were in effect, if every dollar deposited must physically stay in the vaults, how would a bank make any loans at all? It would make depositors pointless.

This is a common conflation of two completly separate concepts: fractional reserve banking and the different, but related ability called the Federal Reserve's money multplier effect.
 
2013-03-29 11:37:59 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]


upload.wikimedia.org

Then again, you'd need to be drunk to take that deal.
 
2013-03-30 12:30:20 AM  

dustman81: CujoQuarrel: a_room_with_a_moose: MugzyBrown: A government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.

You'll swallow everything your betters put in your mouth, eh?

Except the Cypriot government is matching the money with bank shares.

Better than the banks folding and people losing everything.

I don't think you have much of a grasp on this.

But the shares are pretty much worthless.
Right now people are pulling their money out as fast as they are allowed.
NO ONE IS GOING TO DEPOSIT ANY MORE MONEY
So the banks are going under. It's just a matter of when

Posit: People think a bank might be financially shaky
Consequence: People start pulling their money out
Result: Pretty soon, the bank is financially shaky

On a more macro scale, people pull their money out of all the nation's banks, pretty soon the country itself is financially shaky. Which is happening in Cyprus right now. The rest of the Euro countries have to be looking at this and wondering if they're next. I wouldn't have my money in a bank in the Euro zone, where they have shown they have no reservation about stealing people's savings to cover government deficits. What is happening in Cyprus is theft, pure and simple.


 You know I bet Cyprus would be a great market for home safes. Let's face it , it's safer than putting your money in the bank.

Going to be a lot of cash transactions there from now on.
 
2013-03-30 01:36:59 AM  

dustman81: CujoQuarrel: a_room_with_a_moose: MugzyBrown: A government simply steals the savings of people from their bank accounts to solve a problem they created themselves... and people in here defend it.

You'll swallow everything your betters put in your mouth, eh?

Except the Cypriot government is matching the money with bank shares.

Better than the banks folding and people losing everything.

I don't think you have much of a grasp on this.

But the shares are pretty much worthless.
Right now people are pulling their money out as fast as they are allowed.
NO ONE IS GOING TO DEPOSIT ANY MORE MONEY
So the banks are going under. It's just a matter of when

Posit: People think a bank might be financially shaky
Consequence: People start pulling their money out
Result: Pretty soon, the bank is financially shaky

On a more macro scale, people pull their money out of all the nation's banks, pretty soon the country itself is financially shaky. Which is happening in Cyprus right now. The rest of the Euro countries have to be looking at this and wondering if they're next. I wouldn't have my money in a bank in the Euro zone, where they have shown they have no reservation about stealing people's savings to cover government deficits. What is happening in Cyprus is theft, pure and simple.


It can also happen in the USA and England

a December 2012 joint paper of the FDIC and the Bank of England planning for systemic collapse

http://www.fdic.gov/about/srac/2012/gsifi.pdf

From the paper's conclusions


In both the U.S. and the U.K., legislative reforms already made or planned in response to the financial crisis provide new powers for resolving failed or failing G-SIFIs. The FDIC and the Bank of England have developed resolution strategies that take control of the failed company at the top of the group, impose losses on shareholders and unsecured creditors-not on taxpayers

I've seen the case being made that this strategy of taking deposits has two ulterior motives. The first is to force cash out of the banks and into the economy to try to get an economic recovery, and second, by reducing bank assets through account withdrawals, the government can reduce the size and power of the 'too big to fail' banks and then bring them to heel. If that is the case, its a very risky strategy that could blow up in spectacular fashion.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/3/2 9_ The_Most_Dangerous_%26_Potentially_Fatal_Gamble_In_History.html
 
2013-03-30 02:17:38 AM  

Sim Tree: a_room_with_a_moose: Flargan: MugzyBrown: The bank wouldn't fail if it wasn't allowed to lend out a multiple of its deposits.

If they didn't "lend out a multiple of its deposits" we would have a system of full-reserve banking.

I hardly ever read about full-reserve banking outside of the writings of Austrian economists.

It doesn't garner much support since it would make traditional banking (borrow long and lend short) rather difficult.

OK. You just got faved. You seem to have a pretty good grasp on economics and I like your explainations.

That's not what fractional reserve banking means. Fractional reserve banking means a bank must keep a portion of deposits 'in reserve' in case of a run. For example, if my country requires a reserve of 20%, I may only lend out 80%, and must keep 20% of deposits on hand at all times. This is the bank's 'reserves'.

The bank does NOT get to lend out more than 100% of its deposits. Where would it get this money? And if Full Reserve banking were in effect, if every dollar deposited must physically stay in the vaults, how would a bank make any loans at all? It would make depositors pointless.

This is a common conflation of two completly separate concepts: fractional reserve banking and the different, but related ability called the Federal Reserve's money multplier effect.


Where do they get the money? In the US, certain banks can borrow directly from the federal reserve bank at near 0% rates and use that money to make loans.

Depository borrowings from the fed-

2013-02: 0.465 Billions of Dollars    Hide Last 5 Observations

2013-01:0.5652012-12:0.7952012-11:1.0512012-10:1.466
http://research.stlouisfed.org/fred2/series/BORROW" data-cke-saved-href="http://research.stlouisfed.org/fred2/series/BORR OW">http://research.stlouisfed.org/fred2/series/BORROW


Also, the fed can reduce the amount of reserves required to near zero.

Plus bank assets do not need to be marked to market value, they can be carried at face value. (e.g. that $300k loan on a house that is now worth $150k is still carried at $300k, not the current market value of the house)

As a result, many banks are upside down. If you look at the numbers generated by the FDIC from shut down banks, assets typically come in 25% or more below the value the banks carried them at.

Normally many banks currently open would be closed,  but the FDIC simply doesn't have the resources to do so. They can only go after the very worst. This is one reason there isn't much of a recovery- many banks are barely solvent on paper, and are insolvent if they marked assets to market.

This is also the reason the Fed is buying mortgage securities from the banks and moving it onto its balance sheet. In an effort to keep the government and banking system solvent, the Fed has printed money to buy a trillion dollars in MBS alone from the banks

On December 12, 2012, the Federal OpenMarket

Committee (FOMC) announced that in order to

support a stronger economic recovery and to help

ensure that inflation, over time, is at a rate consistent

with its statutory mandate, the FOMC would

continue purchasing additional agencyMBS at a

pace of $40 billion per month. The FOMC also

announced that it would begin purchasing longerterm

Treasury securities after its program to extend

the average maturity of its holdings of Treasury

securities is completed at the end of 2012, initially

at a pace of $45 billion per month. In addition, the

FOMC decided to maintain its existing policy of

reinvesting principal payments from its holdings of

agency debt and agencyMBS in agencyMBS and,

in January, to resume rolling over maturing Treasury

securities at auction. Taken together, these

actions should maintain downward pressure on

longer-term interest rates, support mortgage markets,

and help to make broader financial conditions
more accommodative

http://www.federalreserve.gov/monetarypolicy/files/quarterly_balance _s heet_developments_report_201303.pdf
 
2013-03-30 02:19:16 AM  

IRQ12: But go on thinking that the governments will just stand by saying "shucks foiled by bitcoin" should they want to *control* it.  Sure, they will never be able to completely halt its use but that's not really the topic.


The issue is not even that there is a government problem with Bitcoins.  The government has an issue with completely anonymous and untracable financial transfer systems.

There is no characteristic of bitcoins that some other form of value transfer does not also share.  Things like the Hawala system, cash, and precious medal based currencies each cover a few of these aspects far better than bitcoins do.  The only advantage bitcoins have right now is obscurity.

Unfortunately the main selling point of bitcoins also makes them very attractive to aspects of humanity that you really do not want to be associated with.  People who buy shockingly illegal things (I am not talking about silk road purchases of pot)

Individuals may not be interested in bitcoins for their less than above board uses, but that does not mean that they will not be associated with people who are interested in them for all the wrong reasons.  Right now it is easier to buy child porn than gas or groceries with bitcoins.  As long as this is true, they will never take off.  The only way to change this is to change the fundemental nature of bitcoins.

TLDR:  Paypal or amazon payments are closer to creating a widely adopted digital value transfer mechanism than the people backing bitcoins, and they have not even tried.
 
2013-03-30 04:36:41 AM  

Nemo's Brother: Only a leftist would not connect point A (stealing money out of the banks) to point B (people/company having no money to make payrool).


"But we have GOOD INTENTIONS! And good intentions do not lead to bad results, only bad intentions do that!"

/it's actually possible, when you can declare that anything you supported yesterday is something you always opposed today with no guilt or shame
//today it's doublespeak, tomorrow it'll be doublethink
 
2013-03-30 05:05:19 AM  

HotIgneous Intruder: 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.

Yeah, that.
The Russian bastards can all fark themselves with a syringe full of krokodil.


I think you two got caught up in the excuse rather than the real crime here.  The banks literally used the mechanism of government to prop up that very same corrupt financial system...you know...the one HSBC is a part of that was laundering money from various south/central american drug cartels.  Yeah those guys.  Oh noes russian tax evaders!  Clearly that means you have to nuke the savings of EVERYONE (just to be sure of course).

when in doubt nuke it from orbit.  This was a pure wealth grab...and its not even a tax...they call it a haircut...except the people who used poor judgement and made poor business decisions were not the depositors...not even the kleptocrats of Russian/other origin were necessarily responsible for the banks being unable to manage risk and return.  This is also a phenomenon of fractional reserve banking where they don't multiply their reserves by an y reasonable multiplier...but many times beyond what would be considered reasonable exposure.

The rabbit hole goes down deep in this case and in this case the money went from the depositors in to the account of the bank itself.  This was theft plain and simple.  There is no reasonable reaction to this kind of action by a government and the banks.  You either lay down and take it...or hang em high so they don't ever try this shiat again.  *currently watching em lay down and take it*
 
2013-03-30 08:54:40 AM  
He's businessman, but didn't do the research in possibly ways of getting his money out? My business currently has around £10K in an account, and trust me, if you told me I would lose 80% of it, I'd be spending at least a day on the phone to people I know trying to find a legal way to avoid it, probably resulting in me hiring a lawyer in London to walk into the branch, withdraw the money and stuff it in a mattress somewhere.
 
2013-03-30 10:55:08 AM  
Even in 2008, it would take a off the derp end lefty to have faith in Greek bonds. Why would you ever trust a Mediterranean people in any matter of business? They lie and cheat more than the Chinese government.
 
2013-03-30 11:14:04 AM  
The WindowLicker: Right now it is easier to buy child porn than gas or groceries with bitcoins.  As long as this is true, they will never take off.  The only way to change this is to change the fundemental nature of bitcoins.

I'm not sure the barrier is that high for buying and selling legitimate goods.  I checked the Google Play store yesterday, and found a bitcoin wallet app that claims to be able to both store bitcoins and transfer them to another phone using nothing but QR codes (i.e. all your phone would need to send and receive bitcoins is a camera).  It also supports NFC, although only newer Android phones have that capability.

I haven't actually tried it, but if it works as easily as the developers say it does, it wouldn't be that hard for a vendor at e.g. a farmer's market to use their phone to accept bitcoin payments.  Of course, it may not be worth the effort if there aren't enough shoppers who would want to pay for goods using bitcoins, and few shoppers are going to want to set up bitcoin wallets if no vendors accept them, thus a chicken-and-egg problem.

As for iPhone, it looks like there are apps available on the iTunes store, but only for certain online bitcoin wallet services like Coinbase.  There doesn't appear to be a way to actually store the wallet on an iPhone.
 
2013-03-30 06:10:37 PM  

IlGreven: 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.

Of course.  Because the system is corrupt, let's take everything from the legit businesses.


According to some reports coming out, it's only the legit folk who got stung. The tax-dodging oligarchs got early word and moved their dough before all this went down.

If Cyprus having a banking sector multiple times the size of its GDP is an indication that its dealing in shady money, then the same must be true of the UK, France, and a number of other Western nations. So get ready, your money is next to be taken, you scumbag criminals.
 
2013-03-31 12:40:17 AM  
Why are we giving any kind of sh*t about the Cypriot economy?

Just a reason to be bearish? No one cares. Move on with your life.
 
2013-03-31 04:39:43 AM  

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.


THIS.

Now can the rest of the tax domiciles go the way of Cyprus?  Perhaps it would make clear that that tax evasion has visible, detrimental, and destructive consequences - for both ends of the equation, not just the taxing side.
 
2013-03-31 06:54:50 AM  

NewportBarGuy: Why are we giving any kind of sh*t about the Cypriot economy?


We dont, but I care about what kind of actions that EU takes to maintain the value of the Euro.  The actions they take when dealing with smaller and weaker economies can indicate how they will manage the eurozone as a whole.  I do care about what happens with the eurozone.
 
2013-03-31 06:55:43 AM  

Slaves2Darkness: a_room_with_a_moose: 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.

Seized implies the money was taken and nothing given in return.

Yesterday Reuters reported that all money taken is being matched by bank (stock) shares.

Granted, the shares my not account for much at the moment, but seized us not the word you are looking for.


ih1.redbubble.net
Catch-22
 
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