Cyprus levies 10% tax on all bank accounts, Europe panics

[editec]

That cracking sound that you hear coming from Cyprus is still more renting of the international monetary system.

Capitalism as an economic system would work just fine ... if any nation in the world actually practiced it.

But what we have kids, isn't capitalism.

It's monetarism and its a system that is also run by criminals.

I cannot help but note that monetarism is 100 years old this year, in the USA.

It was a nice scam for the BANKSTER masters, but I think their greed and inability to act like good parasites (parasites that do not kill the host) has just about killed the world's economy.

This desperate act by the government of Cyprus is a symptom of just how bad things really are under the surface of the day-to-day economic system that most people live in.

Our leading banks AND our governments have a fatal disease called toxic debt.

 

[Circe]

As for the political unrest, we have done this experiment before. Create enough unemployment and fascist parties in Europe begin to look good. Anyone surprised by this knows no history. Anyone willing to play with this outcome to achieve the kind of objectives the austerity party claims to be working toward is a monumental idiot. Hungary is already a one-party state without any constitutional safeguards, and much of central Europe seems ready to follow.

Sure. There is a reason why European law is so draconian about any fascist symbols, such as that poor guy who gave the fascist salute when he scored a soccer goal. All in the world that symbol is, is the old Roman one, brought up to date in the French Revolution and used constantly then, and then it was leftwing! But it could get a lot of traction soon. It sure did before.

They can't control the incipient fascism in Germany and now in Greece, and don't even talk about anti-semitism and so on in Hungary. With this remarkable idea of confiscating money straight out of people's bank accounts, I begin for the first time to think there could be a serious political situation developing. I KNEW there was a serious financial situation, but things are really getting weird now.

You know what caused the French Revolution? Hunger. Poverty. They had a series of BAD harvests and really awful weather --- hurricane storms, very cold winters -- could not get enough food and soap and many commodities distributed for years, and in addition the king, who was an idiot, had just frankly collapsed the economy with a series of wars and useless expenditures. Both the king and the revolutionary government tried to put out paper money to recover the economy, but the paper money lost most of its value very quickly.

I'm studying the French Revolution and watching Egypt go the same way into revolution, and I'm looking very nervously at Greek riots and antics like this theft of bank accounts in Cyprus.

 

[Circe]

This is a very bad idea.

Which will be coming to America eventually. You can't keep spending at the rate we are without having to pay the bill someday. Contrary to popular opinion, the wealthy don't have enough money to pay it. It will eventually be everyone's "responsibility" to bail the government out.......even the 47% who pay no income tax.

No it won't.

Man you guys are paranoid.

It may be the 47%'s responsibility to pay for the government as much as yours and mine, but guess what? They'll take the money away electronically from people who HAVE bank accounts, and that would be you and me. They won't take anything from people without bank accounts, people who don't pay taxes to start with.

Those are the people who GET the taxes, not the people who pay the taxes.

 

[Underhill]

Which will be coming to America eventually. You can't keep spending at the rate we are without having to pay the bill someday. Contrary to popular opinion, the wealthy don't have enough money to pay it. It will eventually be everyone's "responsibility" to bail the government out.......even the 47% who pay no income tax.

Right, except the 47% who pay no taxes have nothing to take. This is what happens when the middle class is destroyed.

This is also why the top 1% are worth roughly the same as 95% of the country... Think about that. That means 3 million people are worth more than 300,000,000.

Some will say this has always been the way. But they would be wrong. There have always been rich people, and should be. But no where near this level of disparity. It isn't healthy and it isn't sustainable.

The middle class in not destroyed. It's on it's heels, but some pretty minor adjustments would rectify the situation.

Perhaps, but I think minor is a bit of a stretch. It would take a major policy shift among both democrats and republicans.

 

[Underhill]

Right, except the 47% who pay no taxes have nothing to take. This is what happens when the middle class is destroyed.

This is also why the top 1% are worth roughly the same as 95% of the country... Think about that. That means 3 million people are worth more than 300,000,000.

Some will say this has always been the way. But they would be wrong. There have always been rich people, and should be. But no where near this level of disparity. It isn't healthy and it isn't sustainable.

The middle class in not destroyed. It's on it's heels, but some pretty minor adjustments would rectify the situation.

Which won't happen for the next 4 years while the clueless in chief is at the helm.

Considering the changes that led to this point started under Reagan, and have been continued by every president since, the problem is a bit bigger than this president.

 

[Underhill]

Which will be coming to America eventually. You can't keep spending at the rate we are without having to pay the bill someday. Contrary to popular opinion, the wealthy don't have enough money to pay it. It will eventually be everyone's "responsibility" to bail the government out.......even the 47% who pay no income tax.

Right, except the 47% who pay no taxes have nothing to take. This is what happens when the middle class is destroyed.

This is also why the top 1% are worth roughly the same as 95% of the country... Think about that. That means 3 million people are worth more than 300,000,000.

Some will say this has always been the way. But they would be wrong. There have always been rich people, and should be. But no where near this level of disparity. It isn't healthy and it isn't sustainable.

That is incorrect. Those 47% are not taking home $0.00 per year with their sole survival dependent on the government. They have income, politicians have just deemed a certain income amount where people below that do not have to pay. That can change with the flick of a pen. If you'll recall, the liberal argument is that hose people DO pay taxes because they have the payroll taxes taken out of their pay. So they do have income......and it can be taxed more if the government decides they need it to get out of the hole they've dug. They will go after the rich first and when that runs out, all of those who have been enjoying the entitlements paid at the expense of the rich will find their chickens come home to roost. They will have to put some skin in the game. Ask the people of Cyprus.

Yes, they have money. A pathetic income that leaves them damn close to, or below, the poverty level. So yes, theoretically they could pay more. But at their income levels it will have zero impact on the debt, and a much more damaging impact on the lower classes.

 

[Circe]

Yes, they have money. A pathetic income that leaves them damn close to, or below, the poverty level. So yes, theoretically they could pay more. But at their income levels it will have zero impact on the debt, and a much more damaging impact on the lower classes.

There is no reason the rest of us should pay for their government.

The poor get most of the advantage, such as it is, from government. Let them pay for it.

 

[editec]

Yes, they have money. A pathetic income that leaves them damn close to, or below, the poverty level. So yes, theoretically they could pay more. But at their income levels it will have zero impact on the debt, and a much more damaging impact on the lower classes.

There is no reason the rest of us should pay for their government.

The poor get most of the advantage, such as it is, from government. Let them pay for it.

With what?

The 3% of the nations wealth they control?

 

[ScienceRocks]

Does Obama want to do something like this?

 

[ScienceRocks]

This is a very bad idea.

Which will be coming to America eventually. You can't keep spending at the rate we are without having to pay the bill someday. Contrary to popular opinion, the wealthy don't have enough money to pay it. It will eventually be everyone's "responsibility" to bail the government out.......even the 47% who pay no income tax.

No it won't.

Man you guys are paranoid.

Why do you trust the government? History should tell you not too.

 

[kwc57]

Right, except the 47% who pay no taxes have nothing to take. This is what happens when the middle class is destroyed.

This is also why the top 1% are worth roughly the same as 95% of the country... Think about that. That means 3 million people are worth more than 300,000,000.

Some will say this has always been the way. But they would be wrong. There have always been rich people, and should be. But no where near this level of disparity. It isn't healthy and it isn't sustainable.

That is incorrect. Those 47% are not taking home $0.00 per year with their sole survival dependent on the government. They have income, politicians have just deemed a certain income amount where people below that do not have to pay. That can change with the flick of a pen. If you'll recall, the liberal argument is that hose people DO pay taxes because they have the payroll taxes taken out of their pay. So they do have income......and it can be taxed more if the government decides they need it to get out of the hole they've dug. They will go after the rich first and when that runs out, all of those who have been enjoying the entitlements paid at the expense of the rich will find their chickens come home to roost. They will have to put some skin in the game. Ask the people of Cyprus.

Yes, they have money. A pathetic income that leaves them damn close to, or below, the poverty level. So yes, theoretically they could pay more. But at their income levels it will have zero impact on the debt, and a much more damaging impact on the lower classes.

Something from 100% of the population is considerably more than something from 1% or 53% of the population. You do the math.

 

[kwc57]

Which will be coming to America eventually. You can't keep spending at the rate we are without having to pay the bill someday. Contrary to popular opinion, the wealthy don't have enough money to pay it. It will eventually be everyone's "responsibility" to bail the government out.......even the 47% who pay no income tax.

No it won't.

Man you guys are paranoid.

Why do you trust the government? History should tell you not too.

Sallow has always been good at "helping" others at somebody else's expense. He trusts the gubmint to know what is best for everyone.

 

[Underhill]

That is incorrect. Those 47% are not taking home $0.00 per year with their sole survival dependent on the government. They have income, politicians have just deemed a certain income amount where people below that do not have to pay. That can change with the flick of a pen. If you'll recall, the liberal argument is that hose people DO pay taxes because they have the payroll taxes taken out of their pay. So they do have income......and it can be taxed more if the government decides they need it to get out of the hole they've dug. They will go after the rich first and when that runs out, all of those who have been enjoying the entitlements paid at the expense of the rich will find their chickens come home to roost. They will have to put some skin in the game. Ask the people of Cyprus.

Yes, they have money. A pathetic income that leaves them damn close to, or below, the poverty level. So yes, theoretically they could pay more. But at their income levels it will have zero impact on the debt, and a much more damaging impact on the lower classes.

Something from 100% of the population is considerably more than something from 1% or 53% of the population. You do the math.

Ok let's do that. 50% of the population make less than 69k a year per household. The average is less than half that. So let's say you raise taxes on them to 5%. Never going to happen, but for the sake of argument... That totals 45 Billion. And you are basically making the needy that much more needy. How much sense does it make to take money from people who are receiving assistance because they cannot pay their bills?

Alternatively lets take the top 5%. The bottom of the range is around 160k in income. The top, well the top is in the hundreds of millions. They currently pay (affective rate) 20.7%. Raise that by 5% and the net gains are 151 Billion dollars from people who average 400,000 in income. So you raise more than 3 times as much money from people who will hardly miss it.

Both alternatives are obviously not the complete answer. If it were up to me, I would raise the top rate by something like 5%. The rate on the middle 50% by 2-3% and cut spending by around 5% over the next 10 years starting with the military but everything should be on the table.

But the chances of any of this happening is about zero. More likely they will just put off any changes until things are even more dire. Until we have yet another looming crisis.

 

[Circe]

Both alternatives are obviously not the complete answer. If it were up to me, I would raise the top rate by something like 5%. The rate on the middle 50% by 2-3% and cut spending by around 5% over the next 10 years starting with the military but everything should be on the table.

But the chances of any of this happening is about zero. More likely they will just put off any changes until things are even more dire. Until we have yet another looming crisis.

What they've decided to do in Cyprus is much more efficient. They go to where everyone has their bank accounts -- the people who do have bank accounts, not everyone -- and suck out a percentage from all the accounts overnight. Then they use that to bail out the banks, which have been mismanaged all along.

 

[Underhill]

Both alternatives are obviously not the complete answer. If it were up to me, I would raise the top rate by something like 5%. The rate on the middle 50% by 2-3% and cut spending by around 5% over the next 10 years starting with the military but everything should be on the table.

But the chances of any of this happening is about zero. More likely they will just put off any changes until things are even more dire. Until we have yet another looming crisis.

What they've decided to do in Cyprus is much more efficient. They go to where everyone has their bank accounts -- the people who do have bank accounts, not everyone -- and suck out a percentage from all the accounts overnight. Then they use that to bail out the banks, which have been mismanaged all along.

Mismanaged by whom?

It isn't actually the banks themselves, but the countries tax policies, which the residents knew about, took advantage of, and which people from other countries have used and taken advantage of.

So while I think it's a bad idea in general, I do not have a lot of sympathy for those getting hit by the change.

The banks are not completely innocent, but they aren't solely to blame either.

This is the result of poor fiscal policy. I don't know that it is the best way for the EU to go about it. But I can understand the reasoning. People who take advantage of these low tax rates that have left Cypress near bankruptcy should bare the burden. New taxes only harm those currently making money in the system and would simply force companies or individuals to find another haven.... and they would end up paying little if anything towards the current problems.

 

[Circe]

Mismanaged by whom?

It isn't actually the banks themselves, but the countries tax policies, which the residents knew about, took advantage of, and which people from other countries have used and taken advantage of.

I'm being unfair to Cyprus, it seems. I was just reading in The Guardian that Cyprus was doing great when it joined in 2008 (abysmal timing, everyone agrees, now). The government ran a surplus AND the banks ran a surplus, depositor-heavy.

Then Greece happened................

The banks in Cyprus had HEAVILY invested in Greek government bonds, and this was probably not entirely optional, as half of Cyprus is a Greek colony. Both major banks lost billions, plural. That "haircut" all bondholders had to "voluntarily" take. Now they are destitute and either they get "recapitalization" (that is, someone gives them lots of money) or they go bankrupt and then there is no financial system and then Cyprus leaves the Euro. And the EU collapses.

So I would say this is NOT the fault of Cyprus! But it's still not reasonable that the people with bank accounts just get money sucked out. Darn, makes me nervous and considering making a run to the bank just thinking about it.

 

[Katzndogz]

The big beneficiary is going to be Russia. Goldman Sachs and Credit Suisse have already moved accounts to the Bank of Moscow. The wealth of Europe and the US will flow into Russia and China.

 

[Circe]

Here's another issue:

Deposit insurance.

The EU insures all deposits up to $100,000 Euros per account, like we do.

So if a bank goes belly up, the idea is, like here in 1932, the depositors don't lose everything. If a bank defaults and ....sort of disappears a whole lot of money they won't/can't pay back to depositors, the insurance covers that, too.

Well, isn't that what's going on here? If they suck out 10% of someone's bank account, shouldn't the EU deposit insurance pay for that?

If not.....that's making people in Spain and France and so on start thinking about that issue, because the insurance is supposed to pay for defaults, that's basically what it's for. And this would certainly be a partial default.

Whatever banks CALL it, and they never call it default: they call it tax, stabilization charge, loan, etc., ---- it's a default.

If their depositors insurance doesn't cover the bank sucking out money from their accounts, it won't cover ANYthing and there is no functional depositors' insurance. I'm reading articles all over the Web as people start to realize this and ask what about the depositors' insurance.

 

[Katzndogz]

Insurance won't cover valid taxing authority.

 

[anotherlife]

This is VERY interesting.

Maybe we can put Cyprus's bank run / nationaization into context.

First, it was the world's leading banks, namely the top 6 US banks that took over nations' governments.

Now they demand that all outsiders close shop.

They instructed the US government to beligerently close down Switzerland's Wegelin bank "in a court of law", earlier. Now the national banking sector of Cyprus is next. Then there will be the other next.

This is not new though, a few decades ago, the IMF/Worldbank forced Brazil to do the same. Plus a whole lot of other national banks in the 20th century too.

Now it should come clear. The idea of a national identity is simply a financial market differentiation trick.