eu helps itself to savers money

[Dryce]

I think that this will be a turning point (for the worse) for our banking system and that history will see this decision as a monumental mistake right alongside the decision to let Lehman Brothers fail.

Bear in mind that the UK has been able to deal with this differently on the surface but the underlying effect may be similar but less obvious.

First off as stated HMG bailed out banks for shares. The liability for this was spread beyond depositors to non-depositors.

Second off our central bank has been indulging in 'quantative easing' which impacts the whole economy to feed the banks (allegedly for our good). They can do this in part because UK is not in the Eurozone.

So we may not be being hit by a stated % of our savings - but the underlying process has the same effect.

However - as you say - the approach in Cyprus will have knock-on. The law of unintended consequences.

 

[WDB124066]

Don't know about gold, but in Italy and France many people have recently installed large safes in their homes for cash removed from banks.

The Cyprus move is a very silly one in my opinion, and I am not saying this based on any moral or ideological reasoning but on a very practical note. It will simply cause people around the EU to stop using banks (there's not much interest to be had these days in saving accounts anyway). Savers will prefer to take their chances with burglars and robbers than with thier own governments.

This will simply drive the economies further into the black, as more people who already have cash will buy and sell in cash thus bypassing all forms of government taxation.

As result EU governments will collect less and less taxes and this will eventually culminate in the inevitable move that developing countries take when loosing control of thier cash - the New Euro note will replace the old Euro and people brining-in old notes to change will have to register and be ready to explain how they came by them...

And then of course everyone will be buying gold and silver and use bartering, signaling the end of civilised economy as we know it.

This has nothing to do with the rights or wrongs of taxation, or any moral or ideological point of view - it is simply NOT the right move in a time when we are so desperately trying to restore people's confidence and trust in financial institutes.

That's exactly what I was trying to say MJ, just not so good with the words as you are...

 

[WDB124066]

BBC News - Cyprus begins controversial oil and gas drilling

Cyprus has oil and gas...who knew
so it's a turf war between the EU and Russia to control the supply? Bankrupt Cyprus and force them into 'administration'?

Russian spy ring paymaster disappears from Cyprus - CSMonitor.com

Was there late last year and there was a lot of talk in and around oil then, off the South Coast.

The Turks in the north have got nine (I think) pipelines bringing gravity feed water from the mountains on the Turkish Mainland to Cyprus, then, get this, on to the Middle East as a Water for Oil exchange program. Parts of it are under construction now....

 

[Palfrem]

Don't know about gold, but in Italy and France many people have recently installed large safes in their homes for cash removed from banks.

Savers will prefer to take their chances with burglars and robbers than with thier own governments.

This will simply drive the economies further into the black, as more people who already have cash will buy and sell in cash thus bypassing all forms of government taxation.


.

That's exactly how Greece was in the 70's to the late 80's. All cash. No proper bills or receipts.

 

[nick mercedes]

Banking stocks nosedive:

Cyprus bailout crisis sends shockwaves through eurozone - live | Business | guardian.co.uk

 

[nick mercedes]

The Cyprus move is a very silly one in my opinion, and I am not saying this based on any moral or ideological reasoning but on a very practical note. It will simply cause people around the EU to stop using banks (there's not much interest to be had these days in saving accounts anyway).

Oddly the banks in Cyprus were offering savers 11% ?

(Calculated Risk)

 

[redbaron]

I am no so sure they will go through with it.... there are already rumours they are reconsidering.

It seems a baffling move by the Cypriot govt. Political suicide.

 

[markjay]

Oddly the banks in Cyprus were offering savers 11% ?

(Calculated Risk)

Interesting read.

'...the island’s second-largest bank, Laiki, was in such bad shape that it no longer qualified for the eurosystem’s emergency liquidity assistance ... The message ... meant that if no deal was reached, Laiki would collapse ... saddling Nicosia with a €30bn bill to reimburse accounts covered by the country’s deposit guarantee scheme. It was money Nicosia did not have. All of the island’s account holders would be wiped out.'

'..if the largest Cyprus banks failed, all depositors would be wiped out (in effect, there really isn't any deposit insurance from Cyprus)...'

'...Cyprus banks have been paying very high interest rates on deposits. I found a 5 year jumbo CD yielding 11% per year.'

 

[Harrythedog]

Reading between the lines it seems the lax banking regulations have attracted a lot of Russian money and this appears to be the main target

 

[WesLangdon]

Robbery - as is all redistribution of wealth via taxation.

or as in the UK turning private debt into a huge public borrowing requirement, RBS, Northern Rock, Lloyds TSB etc

Cyprus is in quite a predicament, I am not sure I would like to tell the Russian mob that I was going to take a share of their ill gotten gains.

 

[Dryce]

or as in the UK turning private debt into a huge public borrowing requirement, RBS, Northern Rock, Lloyds TSB etc

And driving down the value of money and interest rates - so diminishing the value and returns on savings while protecting borrowers to some extent.

Taxing the what's left of the core productive part of the economy while failing to cut back the public sector part sufficiently.

Almost 6 years on from autumn 2007 and the run on Northern Rock and subsequent toppling of RBS and LLoyds-HBOS and the core weaknesses in the system are not just remaining - they're actually being sustained and nurtured.

 

[grober]

Reading between the lines it seems the lax banking regulations have attracted a lot of Russian money and this appears to be the main target

Cup of Polonium sorry sorry--- cup of tea President Anastasiades? Thanks don't mind if I do.

BBC News - Cyprus told it can amend bailout, as key vote postponed

 

[nick mercedes]

Cup of Polonium sorry sorry--- cup of tea President Anastasiades? Thanks don't mind if I do.

BBC News - Cyprus told it can amend bailout, as key vote postponed

"“If people believe that $13 billion is the total of this bailout, they are out of their minds. $130 billion is not the true total of even the Russian deposits in Cyprus banks. One important Russian businessman, in his various business enterprises, would have $100 billion on deposit himself. 10% of all deposits in Cypress could be $500 billion or more because Cyprus is the banking entity for Russia, not Switzerland or Grand Cayman."

Lots of cross Russians....

 

[Dryce]

"“If people believe that $13 billion is the total of this bailout, they are out of their minds. $130 billion is not the true total of even the Russian deposits in Cyprus banks. One important Russian businessman, in his various business enterprises, would have $100 billion on deposit himself. 10% of all deposits in Cypress could be $500 billion or more because Cyprus is the banking entity for Russia, not Switzerland or Grand Cayman."

Lots of cross Russians....

I think a reality check is on order on this.

If there was that much *money* deposited in the Cypriot banking system then it wouldn't be in need of a bailout. The EU money would be a drop in the ocean.

The more considered view is that there are 70 billion Euros of deposits, 35 billion are foreign and of those 35 billion about 19 billion Euros are Russian.

There is an incentive in all of this for the Russians to provide some help.

The problem is that the way this has been handled knocks confidence in Cyprus - meaning that any EU or other bailout help will probably get sucked up in a flight of deposits from the banks instead of maintaining stability. Doh!. In fact mega-DOH!

 

[st4]

Avert your eyes guys...


Cars

http://www.mbclub.co.uk/forums/general-discussion/148522-geneva-show-2013-mercedes-cars-only.html

http://www.mbclub.co.uk/forums/general-discussion/148520-geneva-show-2013-part-ii-various.html


Go on, don't be shy

 

[Harrythedog]

Whether or not these proposals take effect you can bet your life on the residents of Cyprus withdrawing all their money out of the banks sooner rather than later to avoid any chance of a repeat so it'll be lumpt mattresses all round me thinks

 

[Stratman]

 

[WDB124066]

Could good old God's Own New Zealand be the first western country to leagalise this in the normal way....??

Kiwis could face Cyprus-style haircut | Stuff.co.nz

This is scary, it needs to be stoped, what other business takes no risk and makes billions a year in profit, answer me that; - seriously.

 

[Dryce]

Could good old God's Own New Zealand be the first western country to leagalise this in the normal way....??

Kiwis could face Cyprus-style haircut | Stuff.co.nz

This is scary, it needs to be stoped, what other business takes no risk and makes billions a year in profit, answer me that; - seriously.

It's worth remembering that UK bank guarantee was only 90% of the guarantee limit of 35K a few years ago. When Northern Rock had queues outside many savers were below the guarantee limit but still very worried about the 10% risk.

As regards making 'profits'. Yes there are big questions to be asked.

One question we should be asking is why with the banks so demonstrably broken are there no major new entrants in the UK banking marketplace to depose those that have failed. After all it's 5 and a half years since the Northern Rock run.

One of the answers to that question is that 100% HMG government guarantee on deposits up to the guarantee limit with the additional confidence by larger depositors that they are also implicitly protected. It makes many depositors complacent. It stops bank runs. It also supports the same people in the same instutions safe from competition.

 

[markjay]

Whether or not these proposals take effect you can bet your life on the residents of Cyprus withdrawing all their money out of the banks sooner rather than later to avoid any chance of a repeat so it'll be lumpt mattresses all round me thinks

So the plan wasn't a complete failure after all.

As others said here, Cyprus was one of the only places in Europe where savers got any Interest, and this apparently attracted a disproportional large amount of money into Cypriote banks, inflating their banking sector.

All this while elsewhere in the EU (and UK) savers saw their savings shrink in teal terms in near-zero-interest bank accounts while inflation is 3-4% a year. Redistribution of wealth that no one can escape (unless you buy gold, of course).

Now in Cyprus not a single branch will escape a massive run on the money when (if?) the banks reopen.

Of course the banks will collapse and shrink back to size, and of course no saver in his right mind will ever keep his/her cash in Cypriote banks again. Instead savers will take their money elsewhere and see their savings erode at 3-4% (5%?) a year like everyone else in the EU.

Job done. Who said the EU ministers are fools?