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Cyprus levy --- merged threads


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No. People's "bank credit" is the money they have worked and saved for.

If the government now propose to simply help themselves, well if it was me, I'd withdraw the lot on monday.

I think it may become worse than simply withdrawing money, if I was counter staff in Cyprus I would be having a sickie for the whole of next week. Looks like the cracks are really opening up now in the eurozone?

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Inflation and QE may well be a subtle enough form of theft that the average person doesn't perceive it to be so but this is forcing people to open their wallets and physically hand over the cash - it's madness.

How bad could the alternative options have been that they decided on this one?

This will reverberate around Europe because it is so easily understood and to the layman, grossly unfair.

The EU have played a blinder here.

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As you can imagine Denninger and the Market Ticker Forum have gone mental at the news

http://market-ticker.org/akcs-www?post=218812&page=1

Great quote from ZH as well

As of this morning Europe has finally grasped that there is a 6.75% to 9.9% premium to holding physical cash in your mattress rather than having it stored with your local friendly insolvent bank

http://www.zerohedge.com/news/2013-03-16/europe-does-it-again-cyprus-depositor-haircut-bailout-turns-saver-panic-bank-runs-br

Come Monday the Bank of Sealy and Slumberland is set to soar

Edited by stormymonday_2011
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Inflation and QE may well be a subtle enough form of theft that the average person doesn't perceive it to be so but this is forcing people to open their wallets and physically hand over the cash - it's madness.

How bad could the alternative options have been that they decided on this one?

This will reverberate around Europe because it is so easily understood and to the layman, grossly unfair.

The EU have played a blinder here.

these same people are ALSO subject to the inflation and austeritysoon to be added to their deficit.

Not instead of.

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Another good reason for people to hold things other than paper money.

Or even to take on debt and buy assets with it .. That way your're hedged against outright theft of this sort as well as theft by inflation which is how our government is dumping the debts of the banks onto the people.

When will the general population catch onto the fact that after years of privatisation of the profits, the losses are being socialised on a massive scale? Despite this rather clumsy and obvious example, I'm not sure our base of booze-soaked, horsemeat-munching, football-obsessed, celebrity-worshipping, reality-tv-addicted moron public will ever take any action. Screw them and take action to protect yourself.

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I first understood this to be 6.75% tax on interest paid on deposits. In fact it's a tax on the capital. Is this legal? Would you put up with it?

Hehe. That's a big double-take.

[Hang on - that works as a pun: the depositors are being taxed twice (unless they're from Russia - always a shock when you receive your first tax bill).]

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Guest unfunded_liability

Or even to take on debt and buy assets with it .. That way your're hedged against outright theft of this sort as well as theft by inflation which is how our government is dumping the debts of the banks onto the people.

When will the general population catch onto the fact that after years of privatisation of the profits, the losses are being socialised on a massive scale? Despite this rather clumsy and obvious example, I'm not sure our base of booze-soaked, horsemeat-munching, football-obsessed, celebrity-worshipping, reality-tv-addicted moron public will ever take any action. Screw them and take action to protect yourself.

Yes, no debtors prisons yet... :unsure:

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OK, here's a good article on it - sourced from Naked Capitalism:

Bailout fatigue is the driving force behind the Cyprus bank deposit bail-in. The logic here is the same logic that was at work in the confiscation of subordinated debt holders’ money in the Dutch bank SNS Reaal’s bankruptcy. The principle is that the direct lenders of banks will now become the main parties to lose money in any future EU bailout deal. Significantly, sovereign balance sheets will not take a hit unless nationalized banks’ direct lenders do first. No loans and no guarantees will flow before appropriate haircuts are given to the direct bank lenders. And we can see now that this includes depositors. This approach was first adopted as principle during the Spanish crisis last year. European policy makers see bail-ins as critical in breaking the sovereign-bank nexus which has been so destructive during the European crisis.

http://www.creditwritedowns.com/2013/03/the-cyprus-bank-deposit-bail-in.html

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Checkout some of the whinging ex-pats

http://www.bbc.co.uk...europe-21812436

They are sucking money out of the UK and turned their back on us and now expect David Cameron to get involved because

the Cypriots have screwed them!

Many of the ex-pats will have just shipped housing "equity" over there, slightly different to wages from decades of digging ditches or whatever? I am glad it has finally started, maybe some sheeple will now wake from their slumber?

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Call me mad but just been to the bank and taken out 4 x £300 from 4 current accounts. We will take some more out tomorrow.

Even if the UK is able to print as much paper as they like if any kind of bank run happens in Europe on Monday morning we could see a knock on effect which, worst case, close the banking system down for a few days while they work out what to do.

When a stampede happens, it's always wise to be at the front.

DONT PANIC DONT PANIC DONT PANIC...FEC THAT...PANIC FIRST!!!!!

Edited by TheCountOfNowhere
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I think the Brit angle should not be overlooked. I think this is just as much about getting at us as it is the Russkis. Der Spiegel:

Indeed.

EU turns up the heat on Dim Dave. They're forcing his hand. Where was he in this bailin agreement? Nowhere.

Is he going to come out fighting for Brit expats or leave them hanging. My guess would be he'll stick two fingers up to them.

Merkel's pretending to want to keep Britain onside whilst acting to force us out. Dave being Dim will play into her game plan.

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OK, here's a good article on it - sourced from Naked Capitalism:

Bailout fatigue is the driving force behind the Cyprus bank deposit bail-in. The logic here is the same logic that was at work in the confiscation of subordinated debt holders’ money in the Dutch bank SNS Reaal’s bankruptcy. The principle is that the direct lenders of banks will now become the main parties to lose money in any future EU bailout deal. Significantly, sovereign balance sheets will not take a hit unless nationalized banks’ direct lenders do first. No loans and no guarantees will flow before appropriate haircuts are given to the direct bank lenders. And we can see now that this includes depositors. This approach was first adopted as principle during the Spanish crisis last year. European policy makers see bail-ins as critical in breaking the sovereign-bank nexus which has been so destructive during the European crisis.

http://www.creditwritedowns.com/2013/03/the-cyprus-bank-deposit-bail-in.html

Very interesting article.

It contains a link to this take on todays events which examines previous attempts to apply bank deposit levies

http://www.edmundconway.com/2013/03/the-tragedy-of-cyprus/

The omens for this succeeding in its declared aims are not good

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I know this is on another thread but thought this deserved a thread of its own as I frankly cannot believe it & sets a very scary precedence, how can that even be legal?

http://www.bbc.co.uk/news/business-21797888

membrane

Yes - this is a watershed moment and we will see how the market react on Monday.

However, something interesting here:

Here are the outlines of the financial package:

- Nicosia will impose a 9.9 per cent one-off levy on deposits above €100,000 in Cypriot banks and a tax of 6.75 percent on smaller deposits from March 19. The levy will generate €5.8 billion.

Depositors will be compensated by equity in the banks.

There will also be a tax on interest that the deposits generate.

- Cyprus has agreed to increase its nominal corporate tax rate by 2.5 percentage points to 12.5 per cent, which could bring in up to €200 million a year.

- The International Monetary Fund is expected to contribute to the rescue package, but the amount is still to be determined.

- Russia will likely help finance the programme by extending a 2.5 billion euro loan already made to Cyprus by five years to 2021 and reducing the interest rate, which is now at 4.5 per cent.

- Cyprus may be required to privatise the Cypriot telecoms company, the electricity company and the ports authority.

- Cyprus will have to downsize its banking sector, reducing it to the EU average by 2018. The size of the banking sector in Cyprus is more than eight times the size of the economy, compared to around 3.5 times in the EU.

Further, I would expect all Cyprus important people (including people related to the Commi government) would already have had their deposit moved to somewhere safe). It would only be the little people who will get hit.

Edited by easy2012
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Very interesting article.

It contains a link to this take on todays events which examines previous attempts to apply bank deposit levies

http://www.edmundcon...gedy-of-cyprus/

The omens for this succeeding in its declared aims are not good

From that link: "Greek depositors get an exception"! I suppopse Cyprus was a major destination for the money that fled Greece.

I'm not clear on the regime the EU has for bondholders. Need to dig a bit more.

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Say this comment over on the'pin:

LeDroit ‏@LeDroit1

If you still have any money in a Spanish bank on Wednesday you may need to see your doctor about an emergency IQ test.

#Cyprus

I would be inclined to amend it to:

LeDroit ‏@LeDroit1

If you still have any money in a Eurozone bank on Wednesday you may need to see your doctor about an emergency IQ test.

#Cyprus

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Say this comment over on the'pin:

LeDroit ‏@LeDroit1

If you still have any money in a Spanish bank on Wednesday you may need to see your doctor about an emergency IQ test.

#Cyprus

I would be inclined to amend it to:

LeDroit ‏@LeDroit1

If you still have any money in a Eurozone bank on Wednesday you may need to see your doctor about an emergency IQ test.

#Cyprus

If that was a real possibility, why would the PTB do something like this? Are currency controls going to be in place at the start of the week?

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[/b]

If that was a real possibility, why would the PTB do something like this? Are currency controls going to be in place at the start of the week?

It looks as though the IMF is moving towards accepting Capital Controls in some circumstances if you believe this Credit Writedown article

http://www.creditwritedowns.com/2012/12/the-imf-now-supports-capital-controls.html

They might restrict hot money flows such as the Russian money reputed to be laundered via Cyprus However, they would make a nonsense of the Eurozone if they were used to stop depositors shifting money between member countries. Essentially you would then have all the disadvantages of a shared currency but none of the advantages. I think the decision made in Cyprus today will end up chasing all deposits into the banks of the core Eurozone countries such as Germany.

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It's being touted as a 'one-time' tax. Really. This is a bad precedent for an EU country. It could easily become a two-time and more tax if a country is bust. Monday morning's market reaction could be interesting, which is why I suppose it was decided on a Friday to give TPTB time to spin it, or at least put some controls in place.

Now that is worrying as nothing is ever a 1 time tax.

This could be the start of a bank run of epic proportions. The Greeks / Spanish etc... must now be looking at moving savings our of their national banks.

And what happens to the debtors?

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