Cyprus, and What it Means for US.

[CrusaderFrank]

Is there any difference between the Mafia and how the IMF handled Cyrus?

 

[PoliticalChic]

Is there any difference between the Mafia and how the IMF handled Cyrus?

Sure....

....the Mafia has a certain subtlety that the Left hasn't mastered.
Perhaps, because they have no need for degree of hecatomb.



" The best comment we’ve read on the collapse in Cyprus is the cartoon in the Interest Rate Observer, issued by James Grant, showing a bank teller looking out from behind her window. “Well, it was your money,” she is saying with a charming smile. “Now we need it.” "
‘Broken Trust of Money’ - The New York Sun

 

[CrusaderFrank]

There are a few things here:

First, the Greek collapse landed on Cyprus and took the banks down with them. The banks are insolvent and the first "Solution" was to have the depositors take a hit, when that was rebuffed, the Troika went bare-knuckled and shut down the second largest bank, now putting large depositors in a situation like the Jon Corzine's customers at MF Global: it will take years before they get 2 cents back on the dollar. These were not loans, these were deposits

Second, the Russian emigres seem to have been targeted by Merkel and the Germans who controlled the terms of the deal. Putin let the banks go down and take depositor money down with it. Pay back? Who knows.

Third, Cyprus gained its independence from the Brits in 1960 only to surrender it to the German bankers in 2013. I hope it was fun while it lasted

 

[Toro]

It was, in the end, a good solution. It was the closest to a free market solution (though hardly one) yet offered by the EU.

Deposits are a liability of the bank. The first €100,000 was protected through deposit insurance. They are now being protected. If you had more, you're at risk. Rather than governments bail out everyone, they're only going to bail out those under the cap. What's wrong with that? Let them fail.

Cyprus is an offshore banking have for Russian oligarchs, tax evaders and money launderers. Why would German taxpayers want to bail them out, given that everyone knew the banks were bust months ago.

 

[CrusaderFrank]

It was, in the end, a good solution. It was the closest to a free market solution (though hardly one) yet offered by the EU.

Deposits are a liability of the bank. The first €100,000 was protected through deposit insurance. They are now being protected. If you had more, you're at risk. Rather than governments bail out everyone, they're only going to bail out those under the cap. What's wrong with that? Let them fail.

Cyprus is an offshore banking have for Russian oligarchs, tax evaders and money launderers. Why would German taxpayers want to bail them out, given that everyone knew the banks were bust months ago.

All true.

Banks typically like doing business with people who maintain deposits far in excess of the insured minimum, so that may change and not for the better for the banks

And if we're letting entities fail, why not let the Sovereigns fail? Let Greece do a real free market workout, no? It reminds me of how Goldman Sachs and Chase got bailed out but Bear Stearns and Lehmann went bust

 

[boedicca]

(ZIRP + Inflation) is to the U.S. what the Deposit Tax is to Cyprus.

Both tax away the value of savings to benefit government and bank looters.

 

[Wiseacre]

It was, in the end, a good solution. It was the closest to a free market solution (though hardly one) yet offered by the EU.

Deposits are a liability of the bank. The first €100,000 was protected through deposit insurance. They are now being protected. If you had more, you're at risk. Rather than governments bail out everyone, they're only going to bail out those under the cap. What's wrong with that? Let them fail.

Cyprus is an offshore banking have for Russian oligarchs, tax evaders and money launderers. Why would German taxpayers want to bail them out, given that everyone knew the banks were bust months ago.

So you think it's okay to arbitrarily confiscate someone's wealth without notice if it exceeds 100,000 euros? Why does it matter whose money it is, or how much they have? What if next time the limit is 50,000 euros, or 20,000, what then?

 

[Toro]

It was, in the end, a good solution. It was the closest to a free market solution (though hardly one) yet offered by the EU.

Deposits are a liability of the bank. The first €100,000 was protected through deposit insurance. They are now being protected. If you had more, you're at risk. Rather than governments bail out everyone, they're only going to bail out those under the cap. What's wrong with that? Let them fail.

Cyprus is an offshore banking have for Russian oligarchs, tax evaders and money launderers. Why would German taxpayers want to bail them out, given that everyone knew the banks were bust months ago.

So you think it's okay to arbitrarily confiscate someone's wealth without notice if it exceeds 100,000 euros? Why does it matter whose money it is, or how much they have? What if next time the limit is 50,000 euros, or 20,000, what then?

Deposit insurance was for up to €100,000.

When you deposit money in the bank, you are lending money to the bank. If the bank fails, then it liquidates its holdings and pays back as much as it can to those with varying rights in the capital structure. Deposits are insured up to a certain amount so those below the cap are made whole. Amounts above it are not and are subject to the bankruptcy liquidation process like any other enterprise that goes bankrupt.

This is how it's supposed to work. Tea Party people were outraged that banks were bailed out. Well, this is what happens when banks aren't bailed out. Creditors, ie depositors, lose.

 

[Toro]

It was, in the end, a good solution. It was the closest to a free market solution (though hardly one) yet offered by the EU.

Deposits are a liability of the bank. The first €100,000 was protected through deposit insurance. They are now being protected. If you had more, you're at risk. Rather than governments bail out everyone, they're only going to bail out those under the cap. What's wrong with that? Let them fail.

Cyprus is an offshore banking have for Russian oligarchs, tax evaders and money launderers. Why would German taxpayers want to bail them out, given that everyone knew the banks were bust months ago.

All true.

Banks typically like doing business with people who maintain deposits far in excess of the insured minimum, so that may change and not for the better for the banks

And if we're letting entities fail, why not let the Sovereigns fail? Let Greece do a real free market workout, no? It reminds me of how Goldman Sachs and Chase got bailed out but Bear Stearns and Lehmann went bust

Greece has already had a restructuring of its debt.

 

[EdwardBaiamonte]

It was, in the end, a good solution. It was the closest to a free market solution (though hardly one) yet offered by the EU.

Deposits are a liability of the bank. The first €100,000 was protected through deposit insurance. They are now being protected. If you had more, you're at risk. Rather than governments bail out everyone, they're only going to bail out those under the cap. What's wrong with that? Let them fail.

Cyprus is an offshore banking have for Russian oligarchs, tax evaders and money launderers. Why would German taxpayers want to bail them out, given that everyone knew the banks were bust months ago.

So you think it's okay to arbitrarily confiscate someone's wealth without notice if it exceeds 100,000 euros? Why does it matter whose money it is, or how much they have? What if next time the limit is 50,000 euros, or 20,000, what then?

Deposit insurance was for up to €100,000.

When you deposit money in the bank, you are lending money to the bank. If the bank fails, then it liquidates its holdings and pays back as much as it can to those with varying rights in the capital structure. Deposits are insured up to a certain amount so those below the cap are made whole. Amounts above it are not and are subject to the bankruptcy liquidation process like any other enterprise that goes bankrupt.

This is how it's supposed to work. Tea Party people were outraged that banks were bailed out. Well, this is what happens when banks aren't bailed out. Creditors, ie depositors, lose.

when WA MU got resolved the governemnt decided to make all depositors whole regardless of size mostly at the expense of bondholders thus setting a precedent much like the one in the auto industry that says don't worry! And then of course the whole FDIC insurance BS also says don't worry where you throw your money.
And of course with phony accounting rules you could not figure out where your money would be safe if you tried.

Liberal government is a disaster wherever it is!!

 

[william the wie]

I don't believe that the stock market in the 20's was a genuine bubble. You had 2 transformative technologies: electricity and mass production. There might have been some slight froth, but I no longer believe that the 20's stock market was a speculative bubble that HAD to burst. The Federal Reserve strangled the economy nearly to death, that's what brought the market down

I see your point but even the Fed had little to do with radio, movies, home appliances, automobiles and supporting industries hitting the saturation wall in very rapid succession. The Oakies and Arkies had their trucks and cars to take them out to the vineyards of CA before the crash and those were some fairly poor people for that time.

 

[numan]

'
Cyprus Shows Your Savings Will Be Stolen!

Different faces but the same old story is being replayed in a small part of the Euro-zone, Cyprus, and that story is one of the Cypriot banking crime syndicate gambling with depositor funds on the debt markets, this time it's Greek bonds, yes, these master-eds of the universe used depositor funds to pile into soon to go bankrupt Greece because of the high yields they offered so that the bankster's could bank bonuses on the basis of fictitious profits -- as illustrated by the fact that they have dumped an infinite pile of losses (Greek Bond's ) onto Cypriot tax payers, far beyond anything that any other Euro-zone member has had to face to date....

COMMENT
The thieves in Washington don’t have to raid the banks directly as they are doing quite well devaluing our savings and our retirement by rendering our dollar weaker with each passing day.

I and millions of other Americans are witnessing our hard earned retirement dollars disappearing in relation to buying power at the same time the lying government and media keep telling us we have low inflation.

As the vermin in office can manipulate the CPI using any products or services which will serve their purpose they have hidden the huge loss in American wealth for the average citizen.

This is a tongue-tip taste of the facts that the Monopoly Media try to hide from people : that the economic and financial crises are very much worse than they appear. The Banksters in Europe are so desperate that they are starting to manipulate the governments they control into directly stealing the saving deposits of their "customers"!! In essence, the banks are stealing the saving deposits of the people who bank with them, and putting the loot into their own vaults!!

What is happening in Cyprus is just a test run -- if they get away with it in Cyprus, expect the banks to try the same tricks in other European countries -- and don't think it couldn't happen in the USA!!

At present, as the commentator writes, the US government can hide the true inflation rate and also manipulate the status of the US dollar as a world reserve currency -- and thus avoid what is happening in Europe. However, when other countries finally refuse to put up with US dollar shenanigans, and the dollar begins to go into free-fall, one can expect the same grand-larceny
bank thefts here in the USA.

As the Chinese commented so many centuries ago :

He who steals a hook is a thief;
He who steals a kingdom is a prince
.

 

[numan]

So you think it's okay to arbitrarily confiscate someone's wealth without notice if it exceeds 100,000 euros? Why does it matter whose money it is, or how much they have? What if next time the limit is 50,000 euros, or 20,000, what then?

Yes, don't forget that a lot of reasonably honest businessmen need to have deposits of more than 100,000 euros in the bank.

Lots of small businesses are going to go bust through no fault of their own.

That should add to the "fun"!! · ·
.

 

[freedombecki]

Welcome to USMB, numan. I guess it's hard for the average person in American to connect with those who live in Cyprus. There have been financial failures all over the world from time to time, but for some reason, all those putting out those video scares against America aren't getting their demands for an American fiscal downfall met.

So I guess, on a wing and a prayer, maybe we'll be okay.

 

[freedombecki]

1. "In the Roaring Twenties, the New York stock market, especially, was a bubble, fed by the fraudulent notion that permanent growth was assured,...As soon as the market turned, it came down hard. Forced sales of the pledged stocks accelerated and broadened the plunge.

a. Eventually, governments inflated the currencies by flooding the private sector with borrowed money.

b. ... increased demand... starts to push prices and wages higher, but in currency of deteriorating value. This practice has stalked and haunted the world ever since.

2. This is essentially the trade-off that our civilization has made: Destitution will be spared all but a few people, but savings, investment, and the quest for security will be an endless treadmill on which he who earns and tries to accumulate wealth is in a constant race with the deterioration in the buying power of the currency in which he measures his wealth.

3. Bubbles occur in almost every area and are corrected eventually. The great housing bubble of 2008 was created in part by the desire of the Clinton administration to promote family home ownership (and befriend the building-trades unions and the residential real-estate developers).

a. ...almost the entire banking sectors of the United States, the United Kingdom, and much of Western Europe and Australia was saved from bankruptcy only by government intervention.

4. The core of the conundrum is that capitalism is the only economic system that works, because it is the only one that is aligned to the almost universal human ambition for more. It is a myth that people really want to share (other than to a limited degree for charitable reasons; among close-knit groups such as families and some associations; or in over-arching emergencies such as serious wars and national disasters).

5. But it is in the nature of capitalism to incite people to foolhardy risks, causing economic calamity with broad collateral damage. And then only government can address the resulting crisis. This is not because governments have any aptitude to do so — in general, politicians and government officials are even less competent than lions of finance and captains of industry. But the government has the power to legislate, enforce laws and control the money supply.

6. The federal government debt of the United States has increased by 70% in four years compared to what it was after the first 232 years of independence up to the installation of the current administration in 2009.

7. [Which brings us to] Cyprus, a haven for financial fugitives and scoundrels, has gone to the front of the line: a collapsed banking system that the government proposed to salvage by taxing bank deposits (an inordinate number of which belong to crooks from other countries). That is the deposits would vanish in taxes rather than to pay for the bank’s bad loans. The people revolted this week, and the government deserted its own measure, making the negative parliamentary vote on it unsuspensefully unanimous.

8. The Cypriot finance ministry adopted Plan B and went to Moscow to offer the banking system and natural resources of Cyprus to Putin’s gangster state...


9. This charade has gone on so long, and with such affected solemnity, that few seem to realize what volcano most countries are sitting on. Even relatively strong countries such as Germany have reached for the nearer cookie jars, like securitizing debt with pensions. Arizona has sold its state capitol, and is a tenant there. As a distinguished and witty economist (Herbert Stein) famously said, “If something can’t go on, it won’t.”
From the National Post
Under the Volcano: How the Charade of Cyprus Obscures Bigger Danger to Economy - The New York Sun

Debt and deficit meaningless?
Austerity a terrible idea?
Re-electing a failed administration?
Your savings and IRA are safe?
The Constitution will protect you?

In very, very short:
Just what do you think is going to happen here?

<gulp> I hate to be the devil's advocate, PoliticalChic, but in a word, "nothing."

Our forbears went through ups and downs from early on. Somehow, through all the hassles, shortages, scrimping, and saving, we made it through a dozen hard times in the nineteenth century, the 30s and the Jimmy Carter years in the twentieth century, and through Obamanomics in which the spending frenzy for the first two years was met with an election that favored conservatives in 2010 and mixed results in 2012. People will not be elated to find their earnings are seriously taxed by Obamacare as income whittles down, and people are going to have to cut short vacations with a gasoline market that is unpredictable. Even so, somehow, I think we'll muddle through whatever comes, and that's why I say, probably, "nothing."

 

[iamwhatiseem]

Wake up people.
What they tried to do in Cyprus has been happening in the U.S. for quite some time, only on a much larger scale.
Cyprus's mistake is they tried to take money from the citizenry through the banks.
The U.S. is far smarter to do it using our taxation system.
Every month the FED gives the central banks and global finance companies $85,000,000,000...every month. That money comes directly from your taxes and flat out printing money out of thin air which has dramatically devalued our currency. Which is why gas prices are what they are.
Yay the stock market is at an all time high...yay.

 

[boedicca]

I doubt we will see direct seizures of deposits in the U.S.

The Federal government doesn't need to to this. With QE^Infinity and ZIRP, the value of savings is being destroyed in order to subsidize deficit spending and debt for the benefit of Big Government and its cronies.

 

[numan]

Welcome to USMB, numan.
So I guess, on a wing and a prayer, maybe we'll be okay.

Thank you, Becki.

This is going to be a very rough century, but I hope you are right...

...though I can't help remembering that "hope" was one of the plagues contained in Pandora's Box -- and the ancient Greeks were pretty realistic. · ·

.

 

[iamwhatiseem]

I doubt we will see direct seizures of deposits in the U.S.

The Federal government doesn't need to to this. With QE^Infinity and ZIRP, the value of savings is being destroyed in order to subsidize deficit spending and debt for the benefit of Big Government and its cronies.

Yes. Which is why I am saying the US Gov't is doing the same thing as Cyprus, only difference is they are doing it deceptively and quite easily because the public is so clueless.
Go ahead and try to find a liberal poster who will even talk about the $85Bn a month the Fed gives to the central banks and finance industry. Go ahead and watch liberal news 24 hours a day and I bet my house you will never hear anything about currency devaluation and the resulting gas prices.

 

[Sallow]

So you think it's okay to arbitrarily confiscate someone's wealth without notice if it exceeds 100,000 euros? Why does it matter whose money it is, or how much they have? What if next time the limit is 50,000 euros, or 20,000, what then?

Deposit insurance was for up to €100,000.

When you deposit money in the bank, you are lending money to the bank. If the bank fails, then it liquidates its holdings and pays back as much as it can to those with varying rights in the capital structure. Deposits are insured up to a certain amount so those below the cap are made whole. Amounts above it are not and are subject to the bankruptcy liquidation process like any other enterprise that goes bankrupt.

This is how it's supposed to work. Tea Party people were outraged that banks were bailed out. Well, this is what happens when banks aren't bailed out. Creditors, ie depositors, lose.

when WA MU got resolved the governemnt decided to make all depositors whole regardless of size mostly at the expense of bondholders thus setting a precedent much like the one in the auto industry that says don't worry! And then of course the whole FDIC insurance BS also says don't worry where you throw your money.
And of course with phony accounting rules you could not figure out where your money would be safe if you tried.

Liberal government is a disaster wherever it is!!

What the heck are you talking about?

Since Ronald Reagan, Conservatives have been demolishing regulations put into place to keep this sort of stuff from happening. And WHILE he was doing it, it was happening. That should have been a stark reminder that if you put your hand in fire..you will be burned.

But these folks didn't care. Reagan's administration was lousy with bank bailouts and saving financials. The coup de grace came with the repeal of Glass Steagall, and that set the stage for the financial collapse that occurred at the end of the Bush administration.

A well regulated financial industry, like the one that Canada has, doesn't see these wild swings.