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http://www.bbc.co.uk/news/business-21797888
I think this may have implications, not just in Cyprus
People with less than 100,000 euros in Cypriot bank accounts will have to pay a one-time tax of 6.75%, while those with more will have to pay 9.9%. It is expected to raise 5.8bn euros in additional revenue.
On the one hand, it may mean folk thinking of a Med holiday home will avoid Cyprus and Greece like the plague.
On the other hand, it may lead to a bank run (this seizing of bank account monies could happen in any country with a large deficit) as people rush to take out money from their bank accounts. It’s one hell of a precedent, taking 6.75% of your money. I think the word theft is in order here.
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Cyprus has been a centre for money laundering for years. The authorities are implying that due to the unchecked/lax/light regulatory touch. They feel that they have the justification to claw some of it back.
While, Russia may be willing to contribute the other Country that need to do the same is Israel. Innocent saver should not be penalised.
I know many Cypriot’s in London who are decent, honest, hard working people and are contributing to various aspects of UK life. As they are ageing they have sending money to Cypress with a view to buying land/build a house for their retirement.
Of course there will be a flight of capital & Dubai will benefit more than Honk Kong/Singapore.
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So how do you avoid the corrupt system seizing your savings? Buy land or gold? Just wait until the governments realise they can increase land taxes… I think shares in people like Google, Apple (who can avoid taxes by moving operations around the world) may be a solution. Even if, like me, you think the system stinks.
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@DBMarcos99 wrote:
I think the word theft is in order here.
Theft is pretty appropriate. This is just a desperate act of a desperate government, who, faced with stringent requirements of their bailout from the IMF of increasing taxation see raiding bank deposits as an easy option to raise revenue. The suggestion that some of the money they’re taxing may have come from dubious sources is merely a smokescreen to try and add some legitimacy to their actions. They don’t care where it came from, they just care about raising revenue easily.
As I’ve mentioned before on here with regards to corruption, Med countries are just far more obvious and open about what they do, the UK government has been stealing bank depositors money for some time, they just haven’t been as open and obvious about it.
How? Via low interest rates and high inflation. By keeping interest rates flat to the floor and deliberately manipulating the CPI and RPI figures to be no more than just above the best interest rate you’ll get in the bank of between 2-3% they’re misleading you to believe you’re not actually losing any money on your bank deposits when in reality you are because the real underlying rate of inflation is far higher than the manipulated figure of 2-3%.
The real rate of inflation is much higher at somewhere around 6-10%. Energy goes up by 6-10%, rail fares go up by 6-10% etc. because that’s the real rate of inflation. The money you have in the bank is losing 2-3% minus the real rate of inflation of 6-10%, you’re losing money because the purchasing power of that money is going down by that difference year on year. Interestingly the amount you’re losing of 2-3% minus 6-10% isn’t far off what the Cypriot government is taxing those bank accounts under €100k by.
So by keeping interest rates so low and lying about the real rate of inflation the UK government is and continues to steal the money you have in the bank to help them keep down the interest payments on their whopping £700Bn debt and increasing deficit. A debt I might add that many economists are predicting will double within the next five years to £1.4Tn if they carry on as they are currently.
Make no mistake, the UK government won’t think twice about doing what the Cypriot government is doing if they get themselves into the same desperate situation because, sadly, that’s the only way they have of raising revenue – raid peoples bank accounts and tax them.
There’s a very good reason why the physical gold price has shot up – it’s the only way to protect yourself against the falling value and potential taxation of increasingly worthless paper money. This whole sorry mess started by the way when governments came off the gold standard which seemed like a very good and convenient way of printing off and lending as much money and credit as they liked (as well as being able to pay off their own debts) without having to guarantee it by physical gold deposit holdings. Why be constrained by your ability to pay off your debts in physical gold when you can simply print off as much worthless paper money as you liked? Hence the credit boom.
The UK economy is currently being propped by confidence in the markets of them being able to either pay off their debts or simply keep up their debt payments. That confidence took a dent recently by the recent credit rating downgrade, watch the chaos ensue if that confidence falls further.
The whole Eurozone, the UK included is in a very, very bad place and desperate governments make desperate decisions and care little for the people it affects.
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This is absolute madness by the Cypriots and Eurozone Finance Ministers, it’s daylight robbery and a run on the banks there has already started and could spread elsewhere. Today, savers are queuing at Cypriot cash machines, the Co-op Bank there has had to close it’s doors, people cannot make electronic transfers but can withdraw cash (only if the banks have enough).
As mentioned here already, any country including the UK could do this, literally rob people’s accounts to pay off deficits caused by Banks, lack of regulation and Government profligacy.
So much for Cyprus’ low tax incentives which tempted many Brits and others to move there if a lump sum is stolen in one hit.
It will not raise the 6 Billion Euros intended, too much will have been withdrawn. They could match up the account details with their residences and could they/would they then impose a penalty on their properties if they find out residents’ and others’ deposits have been withdrawn?
I would expect gold to rise significantly 🙄
What would the implications be if depositors withdrew their savings yet put it all into the same banks’ safe deposit boxes, could it be touched? 😮
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@angie wrote:
What would the implications be if depositors withdrew their savings yet put it all into the same banks’ safe deposit boxes, could it be touched? 😮
I don’t think putting any kind of asset be it paper money or physical gold deposits into a bank account or safety deposit will be safe if the government in power decides it wants to take some of it.
One of the triggers to the great American depression of the ’30’s was a rush on the banks of people withdrawing money and interestingly they made the carrying of physical gold illegal.
It’s very sad but these kind of things are cyclic, they repeat in cycles and it seems we’re heading back to the days where anyone’s wealth and assets are not safe from governments.
Desperate times mean desperate measures.
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It gets worse, I’ve just read another report saying ‘Cypriot Banks said depositors could access all of their money except the amount set by the levy’ (So it’s already been taken it seems) 😡
It goes on to say ‘The levy takes effect Tuesday following a Public Holiday Monday, yet action has been taken to control electronic money transfers over the week-end’ 😡 So depositors are stuffed which ever way 🙄 It really is robbery!
No warning whatsoever it seems, there would be anarchy in the UK or larger economies 🙄
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I wonder if any executive of any bank in Cyprus has had his/her salary reduced.
OK, I know better. Regardless, I am in AWE of how stupid all parties involved with this mess are.
More austerity! More bailouts of wealthy institutions! More cuts for the poor and middle classes and aid for the wealthy! That will fix everything.
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@GarySFBCN wrote:
That will fix everything.
It’s not meant to fix anything.
It’s meant to protect the wealth of the wealthy and make the ordinary, honest tax paying pleb pay for it who’s only mistake was to believe in the integrity and honesty of politicians and governments.
This is why the wealthy are hanging on to more of their wealth whilst those with very little are paying more.
It’s no different in Cyprus as it is in Spain as it is in the UK the wealthy are protecting themselves for the simple reason that they can.
You can bet your bottom dollar that anyone with any significant wealth in cyprus involved in this decision and/or in government has already discreetly removed all their money before this was implemented. The only people to pay are the one’s who didn’t know it was coming.
This is the way polticians work – they lie, manipulate and con the populations they’re meant to represent and govern all the time.
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I would love to come in on this discussion, but I seem to agree with everything that has been said and I’ve got to use a slightly different tact to move on.
Mediterranean people seem to be slightly more abused by their governments than their northern neighbours, as the Cyprus example shows. But they and the others clustered around the sea respond in a different way too.
Tax evasion is a way of life, black money has been a tradition for centuries and it’s easy to understand why, to sympathise. I’ve had money taken from a Spanish bank account that shouldn’t have been, and it made me furious. So furious that I don’t respect the system at all and if I can claw back money from such a corrupt system, I will.
I keep an absolute minimum in my Spanish accounts, and my main account is safely back in the UK where it will stay. It’s probably not that safe there either, but it feels safer.
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” No warning whatsoever it seems, there would be anarchy in the UK or larger economies “
Don’t kid yourself. It has been done & is being done right now. Most of it is covered by one of the above posting so I don’t feel I should repeat or steal some else’s thunder.
The population of UK are too subservient & ignorant to take such action. They will moan & groan & than go to the Pub.
Can anyone help ? I need to edit one of my earlier posting and cant seem to find the edit button.
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Somebody, it might have been zenkarma, mentioned a comparison to the depression of the thirties, something I’ve always avoided even thinking about because it’s too depressing.
Not that I’m bothered about bankers jumping out of their windows, but the inevitability of war is not a pleasant prospect. I listened to the new defence secretary of the US earlier today, a guy with a funny name, Chuck something, who almost promised to bomb Iran and North Korea.
In the thirties, Chuck’s name was Adolf, and some real nasty shit happened. I know that history repeats itself, but I wish it didn’t.
The only comfort I can take from this thread is that we are all Liberal voters, even Angie, which surprised me.
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@Rocker wrote:
Somebody, it might have been zenkarma, mentioned a comparison to the depression of the thirties, something I’ve always avoided even thinking about because it’s too depressing.
Yes it was me in relation to the USA making the withdrawal and personal possession of physical gold illegal for the simple reason they were too scared of their dwindling gold deposits caused by people withdrawing it from the banks and so much of it having to go overseas due to them importing far more than they were exporting.
It’s interesting you mention Adolf’s rise to power because the economic situation in Weimar Germany at that time is not dissimilar to that currently in the UK although not quite to the same extreme in the sense of rampant inflation – rising inflation and a huge debt % ratio to GDP caused by reparation payments after the first world war. That prompted Hitler’s Nazi Socialist party into power and the rest’s history.
Interesting also that, that debt % ratio to GDP in Germany and that of Argentina prior to the collapse of Argentina’s economy in the 70’s is actually higher in the UK today than it was that prompted those two things to happen. Argentina raided peoples bank accounts as well and refused to allow them to withdraw money in $ and gave them worthless pesos instead.
As I said previously, the only thing keeping the UK economy afloat is market confidence in the governments ability to service its debts.
That’s why interest rates aren’t rising anytime soon and inflation will continue to rise as they fiddle the figures and continue printing off ever larger amounts of paper money via QE causing rising inflation and a fall in the £ on the currency markets.
The only reason the £ isn’t plummeting against the € or the $ is that the people in charge of those currencies are printing off large amounts of paper money via QE themselves!
What a mess.
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@mgspain wrote:
@DBMarcos99 wrote:
Well this is going to knock any recovery in house sales on the head. No-one is going to risk moving large cash sums into bank accounts after this. I’m worried even about my UK account – I’m due a large (for me) amount next month, and I’m already working out how to disperse it, probably into shares.
It’s more important to increase earning potential and savings than to focus on investments. Get yourself down to Silicon Roundabout, find the smartest kid on the block, work for him/her, listen to them, learn from them, do as they do, and you will be OK.
I’ve been down to Old Street a few times and met some of the new web stars (in the Google campus). Quite a few Spanish startups like Brainsins and VideoLean have a base there you know? ( I will only mention those two as they are likely to succeed, don’t want to prejudice others that may not make the grade)
The problem is that some of the web startups are not earning any money, not getting any substantial traffic. They are all hoping that a Biz Angel will step in and invest loadsamoney in their venture. The reason they are based in the Google campus is because they don’t pay commercial rent. I’ve met some very talented folk there, but their talent in IT matters does not always extend to making money. -
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@Ardun wrote:
This is chaos. This is why every man and woman should have guns to keep their leaders in check.
Blimey, keep guns? I have a Danish pal who has an air rifle to shoot rats who raid his palm trees. I had an air rifle as a kid back in the UK, it had a range of about five yards before the pellet fell to the ground.
My pal’s gun is just like an assault rife, not only does it kill the rats, it blows half the tree away. His wife has a gas pistol for muggers, it looks like a Magnum and is just as powerful. I think they’re a bit over-paranoic about their security, they’ve got five dogs and an alarm system as well.
Having written that down, I feel a bit naked. All I’ve got is a base ball bat. And a dummy alarm box.
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@mgspain wrote:
As odd as it may seem, they’re normally left handers.
Us left handers are the lateral thinking creative folk of the world! 😀
Incidentally, there was a fascinating program on the BBC a couple of nights ago on the creative workings of the brain, UK folk should be able to catch it on iplayer if you’re curious about that kind of thing.
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I saw a speech Angela Merkle gave after the EU summit justifying the theft of peoples bank accounts in Cyprus. She said it was equitable and the right thing to do given the circumstances.
So now we all know if it suits the EU and the Germans they can rob anyone’s bank accounts. It’s an outrage and must be illegal when tested in the European courts as it surely will be. Deposit investors have not contributed to the countries bankruptcy but in the eyes of the EU they have and assume their money is unpaid tax. Hence the claw back.
I would imagine beginning next week millions will be withdrawn from bank accounts in the Eurozone. France may well be next and certainly Spanish accounts are vulnerable. The answer is buy gold, equities well spread. Or invest in the buy to let market in UK, it’s doing well because banks are not lending and demand huge deposits from first time buyers.
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I’m quite surprised at the lack of comment in the Sunday papers on this disturbing topic. I had to travel across the Atlantic for the most sensible assessment in the New York Times.
It seems the savers are automatically given bank shares for the money stolen from the accounts, and on the surface it makes the whole debacle slightly less of one. Those bank shares may even increase in value in years to come.
I suppose it’s like going into Mercadona to buy a bottle of whisky and being given a dozen bottles of mineral water instead. The management know what’s best for you, in the long run.
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George Osborne has said this morning that British troops based in Cyprus will be recompensed for this deducted tax.
This is a serious issue which is why we all seem to agree, the implications elsewhere are immense, already there have been mutterings that the focus could then switch to Spain and Italy if this is passed today in Cyprus, Osborne also made mention of this today.
Apparently it happened in the UK I believe in the 30’s, but it was a deduction of 0.6% or less than 1 tenth of the lowest rate of deduction planned for Cypriot deposit holders.
Imagine what those who’ve moved large sums of money to Cyprus for stage payments on properties being built or coming up for completion, many Russians have also bought and moved to Cyprus with sizeable deposits which effectively are already taxed.
Those Politicians in the know will have already avoided this, once again it’s the masses that get stung. Property, Bank Accounts, Motoring are sitting targets for Governments 🙄
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@zenkarma wrote:
@DBMarcos99 wrote:
I think the word theft is in order here.
…
There’s a very good reason why the physical gold price has shot up – it’s the only way to protect yourself against the falling value and potential taxation of increasingly worthless paper money. This whole sorry mess started by the way when governments came off the gold standard which seemed like a very good and convenient way of printing off and lending as much money and credit as they liked (as well as being able to pay off their own debts) without having to guarantee it by physical gold deposit holdings. Why be constrained by your ability to pay off your debts in physical gold when you can simply print off as much worthless paper money as you liked? Hence the credit boom.The UK economy is currently being propped by confidence in the markets of them being able to either pay off their debts or simply keep up their debt payments. That confidence took a dent recently by the recent credit rating downgrade, watch the chaos ensue if that confidence falls further.
The whole Eurozone, the UK included is in a very, very bad place and desperate governments make desperate decisions and care little for the people it affects.
The moral of the story is don’t place all your savings in an asset class the supply of which can be controlled by a group of people whose interests lie outside of maintaining the value of that asset class. That’s how it is with fiat money and, to be fair, nowhere is the BoE contracted to maintain the value of that money (as you say, inflation basket targeting is a smoke screen). Of course there may be times when fiat money might be a worthwhile investment but holders of cash are no more entitled to have the value of their cash propped up by artificial means than say investors in the FTSE 100. Indeed government actions over the past few years imply they are prepared to destroy the value of cash in order to prop up the FTSE 100.
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Cyprus has made the mistake of needing a bail-out in German election year.
Spain is perhaps fortunate in that their banks bailout took place last summer – and remember they repaid 41 billion in January!
There is an alternative route for Cyprus – they could turn down the “bailout” and leave the Euro. Indeed it’s being quoted that the Germans told them “take it or leave it” last week. But then they could see a 50% or 60% cut in the value of their currency. So foreign holders of bank accounts there, may just have escaped a worse fate…unless the Cypriot govt changes tack.
All roads look grim at this point. Thank you Angela. -
@DBMarcos99 wrote:
Cyprus has made the mistake of needing a bail-out in German election year.
Spain is perhaps fortunate in that their banks bailout took place last summer – and remember they repaid 41 billion in January!
There is an alternative route for Cyprus – they could turn down the “bailout” and leave the Euro. Indeed it’s being quoted that the Germans told them “take it or leave it” last week. But then they could see a 50% or 60% cut in the value of their currency. So foreign holders of bank accounts there, may just have escaped a worse fate…unless the Cypriot govt changes tack.
All roads look grim at this point. Thank you Angela.They should leave the euro. The subsequent devaluation may do them good – certainly their tourist industry would get a boost.
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There is no point whatever in owning shares in a bankrupt company such as Cypriot banks. That is to disguise the robbery and make it seem more acceptable. The shares are worthless.
I cannot see this law being passed and if it is the EU courts will overturn it. It’s simply wrong by any modern standard.
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@Chopera wrote:
@DBMarcos99 wrote:
Cyprus has made the mistake of needing a bail-out in German election year.
Spain is perhaps fortunate in that their banks bailout took place last summer – and remember they repaid 41 billion in January!
There is an alternative route for Cyprus – they could turn down the “bailout” and leave the Euro. Indeed it’s being quoted that the Germans told them “take it or leave it” last week. But then they could see a 50% or 60% cut in the value of their currency. So foreign holders of bank accounts there, may just have escaped a worse fate…unless the Cypriot govt changes tack.
All roads look grim at this point. Thank you Angela.They should leave the euro. The subsequent devaluation may do them good – certainly their tourist industry would get a boost.
There’s a strong argument for that. But then the foreign owners of cash in Cypriot bank accounts would have seen the value of their holdings cut by 50 or 60% at a stroke?
Locals wouldn’t escape the loss of cash value totally. I’d imagine a lot of goods are imported – and would be 50% more expensive overnight. But with more tourists coming in, no doubt prices would rise to compensate.. -
Katy has it right – we shouldn’t overreact.
Buying gold has its limitations. Under severe dictatorial rule, it will be confiscated, very difficult to transport and it may be difficult to sell for needed cash. It is also easily stolen. It is a lousy ‘investment’ for most, but it is seen as a good place to park money in times of crisis. There are other options for gold, such as shares in mining companies or ETFs in actual gold holdings.
After reading what others have posted here, I believe the intent was to force Cyprus out of the euro by giving them an impossible choice.
The implications for other countries is grim. I think it is past time for people, industry leaders and others to band together and demand accountability from their governments, especially in Spain.
Me? I’m on plan ‘W’ as far as financial strategies for living in Spain. I started with plan ‘A’ and progressed every time there was a change in laws, economies, etc, and none of those plans were created to avoid taxes. It appears that I should have used numbers, because I certainly will run out of letters for my plans.
Finally, the reimbursement of UK military in Cyprus by the government can be seen as a bailout of Cyprus by taxpayers in the UK. There must be some who are concerned about the implications.
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@Chopera wrote:
They should leave the euro.
Lots of countries should be allowed to leave, it’s wrong their economies should suffer due primarily to the strength of the German economy. The single currency has proved to be a disaster, yet the bureaucrats refuse to acknowledge or accept it. They just want power at any cost.
If any country really should leave the Eurozone it’s Germany, they are by far the biggest problem due to the immense strength of their economy. I’d say Germany’s economy was one of the strongest in the world, let alone the Eurozone. They’re laughing their heads off at the stupidity of the Southern EU countries. They sucked all their money in via exports, a lot of it borrowed credit money and then leant it all back to them via the ECB so they could borrow it all again! Only now they’re getting shirty because they’re worried they may never get any of their loaned money back.
Without Germany the Euro can be devalued to where it should be without Germany constantly propping it up to unsustainable levels for most other EU countries. But then Germany wouldn’t be able to boss the Eurozone about which is clearly what it wants to do.
The only real long term sustainable solution to the Eurozone problem is for either the very weak economies to leave it or the very strong one, but the EU politicians and bureaucrats won’t weaken their own power base to solve the problem. Not much different to the way UK politicians behave really, they won’t make and take the right decisions because it weakens their own power.
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@shakeel wrote:
It can be bought on paper.
Then you’ll be subject to market manipulation by traders – which is exactly what they’ve been doing recently.
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‘zenkarma: The market manipulation will be with us as long as we have capitalism. This market can manipulated irrespective if you have the gold on paper or not.
In to today’s Sunday times ( Yes I know it is Murdoch ) I had read that the Cypress banks will issue shares in exchange for the money that is extorted. The question now will it be Bankia II ?
I do not know what burden of debts the Banks are carrying but it will not be on the same scale as the Spanish Banks !
If the Government underwrites the amount over say a six year period than it might soften the blow. However the fact that money has been taken out of the accounts without the consent of the account holder is still an issue for me. This act has damaged Cypriot Banking systemfor decades to come.
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The hidden reason for the move against depositors has a lot to do with the Russians using Cyprus to launder money. They are going to take a very large haircut. The shrewd ones will have seen it coming and removed their money.
In 2012 over €122bn Euros passed through Cyprus banks which originated in Russian and went back there. That’s a larger sum than the GDP of the country. The IMF will have seen that and acted.
That said it’s always the small guy, UK ex-pats for example, who suffer the most for the excess of the powerful.
Incidentally you would have to be brain dead to lose money in gold. OK is not going to make you rich but getting rich is the easy part, staying that way is the hard bit. 🙂
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I’ve always been aware that the UK government, and generally all those who stay behind don’t like the expats who have deserted their own country to live in the sunshine somewhere else in the world.
I listened to William Hague this afternoon when he said that British troops stationed in Cyprus would be compensated for any losses caused by the money grab there. He pointedly stressed that the only people to be helped would be those not there through choice, unlike the 60,000 British expats living there.
I don’t know the figures for expats, people like myself, who have left the UK to live abroad, but it must be a substantial number, a substantial number taking money out of the British economy – they may have earned it, but the fact remains that they’re not spending it in the UK.
As Hague’s angry little face screwed up when he made his point about expats, I could understand his frustration. Not enough to make me go home, though.
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@logan wrote:
The hidden reason for the move against depositors has a lot to do with the Russians using Cyprus to launder money. They are going to take a very large haircut. The shrewd ones will have seen it coming and removed their money.
I read somehwere that a lot of Russian money moved out last week. Wouldn’t surprise me – walls have ears
@logan wrote:
In 2012 over €122bn Euros passed through Cyprus banks which originated in Russian and went back there. That’s a larger sum than the GDP of the country. The IMF will have seen that and acted.
That said it’s always the small guy, UK ex-pats for example, who suffer the most for the excess of the powerful.
Incidentally you would have to be brain dead to lose money in gold. OK is not going to make you rich but getting rich is the easy part, staying that way is the hard bit. 🙂
I think a certain Gordon Brown might argue with that
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@DBMarcos99 wrote:
@Chopera wrote:
@DBMarcos99 wrote:
Cyprus has made the mistake of needing a bail-out in German election year.
Spain is perhaps fortunate in that their banks bailout took place last summer – and remember they repaid 41 billion in January!
There is an alternative route for Cyprus – they could turn down the “bailout” and leave the Euro. Indeed it’s being quoted that the Germans told them “take it or leave it” last week. But then they could see a 50% or 60% cut in the value of their currency. So foreign holders of bank accounts there, may just have escaped a worse fate…unless the Cypriot govt changes tack.
All roads look grim at this point. Thank you Angela.They should leave the euro. The subsequent devaluation may do them good – certainly their tourist industry would get a boost.
There’s a strong argument for that. But then the foreign owners of cash in Cypriot bank accounts would have seen the value of their holdings cut by 50 or 60% at a stroke?
Locals wouldn’t escape the loss of cash value totally. I’d imagine a lot of goods are imported – and would be 50% more expensive overnight. But with more tourists coming in, no doubt prices would rise to compensate..Foreign owners of cash in Cypriot banks should not be the highest priority of the Cypriot governmnent. Indeed the UK has devalued by nearly a third against the euro and most foreigners have seen it as an opportunity to buy up London property.
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I found this interesting, especially number 12.
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Obviously no. 12 looks the best value. May not have all the home comforts though like central heating. Of course it was all put on by a spanish property website
As an investment I would be more interested in the apartment in Sothall at 160,000. Some interesting comments belowWith the trouble in the EU would not buy outside the UK, you could lose your home!!!
Reply .well this one is probably due for demolition to make way for a road. the british were well and truely suckered in on the spanish house lure. shouldda read the small print
Ithink the price is £260 not £160 o i forgot thears no deeds with this house the bulldoser will be hear nex week.
The British have got the spanish market sussed out, they aren’t daft…well most of them 😆 😆 😆
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http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_17/03/2013_488273
Hope they know what they are doing.
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So Cyprus wants to extend it’s Monday Bank Holiday from one day to either two or three days because it’s scared of Capital Flight, as I understand things, Bank Holidays cost countries money so this doesn’t look good either. 🙄
I had a look at those properties and this is my honest opinion:
The Spanish villa visually looks good in the sun with it’s pool etc, and to those who don’t know, maybe the best value, however my knowledge of that type is they are numerous on the Costa Blanca and often on estates.
The Southall apartment would be the best investment, as at the moment we’re looking in the general area now for a relative to rent as an investment for us instead of money in the Bank earning sod all, and surprised at the high prices, but they attract large rentals.
My choice though for looks and value even though I’m not too fond of apartments despite buying two in Spain once, is the Newquay development, might even look into that more. 😉
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I’d like to point out that when Icelandic banks crashed, overseas depositors lost 100%. They eventually were repaid four years later (got about 90% back). The legal precedent was set that the EU accepted that a country could not be forced to pay to repay depositors if it was incapable of doing so.
So if you deposit in a country that cannot honor its deposit guarantee than you are playing with fire. Especially if your reasons are greed (5-11% interest rates in Cyprus) or nefarious (money laundering).
The EU has no responsibility to bail out Cyprus bank accounts. If the Cypriots refuse this deal, expect a 30% haircut and repayment in 4-5 years time.
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I wonder where the Cyprus trouble will end? They’ve now extended the bank holiday by another day – just like that, as Tommy used to say.
I watched a Cypriot housewife interviewed earlier and she normally drew out her weekly money on a Saturday, but the cash points were empty when she tried it yesterday. It’s at this level that you begin to wonder, what’s she going to do in the meantime to feed her children?
I remember some daft panic here in Spain a few years ago and ever since then we keep some spare cash indoors, just in case. And some tins of beans and dog food in the garage.
(And people want to live in Southall?)
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@Rocker wrote:
I wonder where the Cyprus trouble will end? They’ve now extended the bank holiday by another day – just like that, as Tommy used to say.
I watched a Cypriot housewife interviewed earlier and she normally drew out her weekly money on a Saturday, but the cash points were empty when she tried it yesterday. It’s at this level that you begin to wonder, what’s she going to do in the meantime to feed her children?
I remember some daft panic here in Spain a few years ago and ever since then we keep some spare cash indoors, just in case. And some tins of beans and dog food in the garage.
(And people want to live in Southall?)
Keep up Rocker, no one wants to live in Sothall…we are talking buy to lets and increasing prices
The cyprus stuff is getting silly now in the media….they have been quoting a woman taking taxis for two days to find a cash machine with cash. Doesn’t sound sensible does it, the media insults our intelligence.
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@jp1 wrote:
Absolutely brilliant! Funniest thing I’ve seen in ages.
That’s from the film Downfall by the way if any of you wern’t sure where it comes from and it’s the scene where his Generals tell him he’s surrounded and obviously doomed, but I’m sure you all knew that 😉
Great stuff!
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Worth a read
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Seventeen Eurozone finance ministers locked themselves in a room and decided that every Cypriot depositor – whether super-wealthy or dirt-poor – will, out of the blue, see part of their hard-earned money seized. Remember, Cypriot President Nicos Anastasiades explicitly promised in his election campaign, only a few weeks ago, that depositors were safe. The Cypriot electorate now faces losses on deposits as well as years of austerity (under the bailout loan). What’s worse, deposits under €100,000 are supposed to be protected by EU law, not raided by EU leaders. And Cypriot banks have frozen close to €5.8bn, i.e. imposed capital controls which is meant to be illegal under EU single market rules. This is political dynamite.
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“Unique” Cypriot bailout couldn’t happen in Spain, says government
The painful terms of the Cypriot bailout approved by the European Union on Saturday would never be put in place in Spain because Cyprus is “a unique case,” say Spanish officials, who have also praised the rescue plan for the Mediterranean island.
“It is a good plan because it resolves the problem in Cyprus, but it cannot be applied to another country because we are talking about a unique case,” an Economy Ministry source said on Sunday. Spain’s major opposition party, however, doesn’t agree.
more here: http://elpais.com/elpais/2013/03/17/inenglish/1363547586_114808.html
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The pound Sterling is rocketing, even though the big markets are not even open yet. So this expat in the sun (the rain has stopped and the wind has dropped) is facing a choice this morning.
Do I head for the cash points, or wait for the pound to continue on its skywards journey? I’m going to walk the dog anyway, and I’ve got two cash points to the east of me and another to the west of me. The one to the west has a Spanish cafe that should be opening its doors right now.
The old Spanish boys first through the door are all retired and are sure to be discussing the safety of their savings, or they might be queuing at the cash point.
I’m going to play it by ear, but will take a couple of credit cards just in case. So much excitement on a Monday morning.
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What’s worse, deposits under €100,000 are supposed to be protected by EU law, not raided by EU leaders. And Cypriot banks have frozen close to €5.8bn, i.e. imposed capital controls which is meant to be illegal under EU single market rules. This is political dynamite.
The level of ignorance is astounding. This is very old news.
The precedent was set in 2008; countries only have to protect deposits up to the level of the money stored in the depositor guarantee scheme. This usually covers less than 1% of a country’s bank deposits.
A government is NOT liable and does not have to bail out the protection scheme if it cannot afford it or doesn’t want to.
The EEA/EU court agree with Iceland. Capital controls are also acceptable in exceptional circumstances – 5years now for Iceland and no sign of them being removed.
Furthermore the EU does not protect depositors in individual banks, its astounding that its is and even protecting depositors with more than 100K.
The pound Sterling is rocketing, even though the big markets are not even open yet. So this expat in the sun (the rain has stopped and the wind has dropped) is facing a choice this morning.
Capital flight from small countries is to be expected, good/bad news for the GDP depending on your stance.
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@GarySFBCN wrote:
“Unique” Cypriot bailout couldn’t happen in Spain, says government
It most certainly could happen in Spain. Remember Bankia when the government encouraged small investors to buy shares in the new entity only to announce a few weeks later they had lost most of it.
Spain is likely to require a further bailout soon. Now a precedent has been set by the EU and IMF to raid depositors accounts anything is possible. Personally I’m concerned now about the situation in France and I would not put it past Hollande to do the same if they believe they can get away with it.
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@peterhun wrote:
What’s worse, deposits under €100,000 are supposed to be protected by EU law, not raided by EU leaders. And Cypriot banks have frozen close to €5.8bn, i.e. imposed capital controls which is meant to be illegal under EU single market rules. This is political dynamite.
The level of ignorance is astounding. This is very old news.
The precedent was set in 2008; countries only have to protect deposits up to the level of the money stored in the depositor guarantee scheme. This usually covers less than 1% of a country’s bank deposits.
A government is NOT liable and does not have to bail out the protection scheme if it cannot afford it or doesn’t want to.
The EEA/EU court agree with Iceland. Capital controls are also acceptable in exceptional circumstances – 5years now for Iceland and no sign of them being removed.
Furthermore the EU does not protect depositors in individual banks, its astounding that its is and even protecting depositors with more than 100K.
The pound Sterling is rocketing, even though the big markets are not even open yet. So this expat in the sun (the rain has stopped and the wind has dropped) is facing a choice this morning.
Capital flight from small countries is to be expected, good/bad news for the GDP depending on your stance.
That may be the case but if it is by a case by case basis governments all around europe shouldnt tout this gurantee all the time. I know this is just bullcrap but the normal citizen doesnt. When the shit hits the fan anything is possible that is why no one should trust their rulers. Sadly enough the threat of violence is the only way to keep them in check
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@Ardun wrote:
Spot on.
Not really, and over-reacting just a tad. We’re already hearing that the 6% levy is being negotiated downwards to between 0 and 4% (ok – any amount is bad really) for those with accounts below 100k.
Didn’t Cantona try and organise a bank run last year? If there is any real danger the banks can turn off internet and atm access for a while until it all cools down.
I do expect interest rates to rise after this however – as banks try to attract peoples’ money.
The Cypriot govt could have avoided the necessity of all this by coming to a deal with the Russians over the gas reserves (or using that possibility as a lever against the Germans). I know the Germans can’t be seen to forking out money in an election year, but it has been very clumsy. -
The difference between now, and say the 30s, is that people can survive a lot longer without needing cash. They use cards (and even mobiles). Not saying it’s necessarily a good or bad thing, but people can exist on credit cards for a time.
If you remember last summer we had various internet journalists, “experts” etc., trying to egg on a bank run, particularly with Santander. -
That Forbes article sums the situation up perfectly. Capitalism is about confidence. Confidence if you invest your money it will still be there when you want it. Confidence deposit insurance will actually pay out if the bank goes bust. Confidence in the government to behave in a competent manner.
In the Eurozone today all that necessary confidence Draghi tried to build has walked out the door. These people could not run a second hand car.
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@logan wrote:
@GarySFBCN wrote:
“Unique” Cypriot bailout couldn’t happen in Spain, says government
It most certainly could happen in Spain. Remember Bankia when the government encouraged small investors to buy shares in the new entity only to announce a few weeks later they had lost most of it.
Spain is likely to require a further bailout soon. .Really? In German election year? Remember the banks paid back 40 billion euros in January….
All things are possible, but I can’t see that happening before Angela holds her election. Vamos a ver…. -
Just a few lines from the war correspondent on the frontline in sunny Spain.
I went to three cash points early this morning and there were no queues and no panic. There was no money in the cash points either.
But today is a Valencian holiday and tomorrow is a national holiday. I’m going to try again on Wednesday.
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The issue of whether Spain will soon need a bailout is entire dependent of the countries ability to borrow on the bond markets.
The current 10 year is today up to 5.02% after the Cyprus debacle. Sustained 7% level is considered the tipping point when bailout becomes inevitable. Given the return to risk off after the Cyprus decision, volatility may well continue.Spain has a long way to go before it is out of the woods.
President Putin has now intervened in the Cyprus issue and I believe the back tracking has already begun. Politicians all over the EU are denying the idea was theirs despite Merkle making a speech praising it.
The good thing is there has been a massive international protest against the planned robbery so they will be unlikely to try it again in the near future. I think it is heading for the long grass, probably in time for the Russians to repatriate their dosh.
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70 Billion Euros are deposited in Cypriot Banks, nearly half of that is Russian money, no wonder Putin is involved, the more I think of his involvement the more I think he has money in this tax haven. Poor man he’s so upstanding and whiter than white, I’d hate to think he might lose some of his ill-gotten gains (allegedly) 😉
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“The cyprus stuff is getting silly now in the media….they have been quoting a woman taking taxis for two days to find a cash machine with cash. Doesn’t sound sensible does it, the media insults our intelligence”
Cypress is a small Country & it stands to reason that distances are not large. We dont know where this woman lives, Is she able body, Besides taking taxi in Cypress will be cheaper than public transport in UK.
She may need the money urgently e.g food, medicine and fe;t that going by taxi will give her a head to get from point A to B
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“70 Billion Euros are deposited in Cypriot Banks,”
Thats 70K euro’s for every man woman and child. How much has your familiy got in the bank? 300K? i doubt it.
The EU (and IMF etc) is giving 10K euro to everyone in Cyprus and in return they are expected to pay 5K each to protect their 70K banks saving.
For this 10K gift, the EU is being called thieves, even though there is precisely no obligation to provide it,
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@peterhun wrote:
“70 Billion Euros are deposited in Cypriot Banks,”
Thats 70K euro’s for every man woman and child. How much has your familiy got in the bank? 300K? i doubt it.
The EU (and IMF etc) is giving 10K euro to everyone in Cyprus and in return they are expected to pay 5K each to protect their 70K banks saving.
For this 10K gift, the EU is being called thieves, even though there is precisely no obligation to provide it,
Even if these figures are correct (I don’t know enough details to argue with them) the issue is more to do with the fact that eurozone bank deposits up to €100k are meant to be protected from this kind of thing. And now they are getting round this issue by calling it a “wealth tax” or whatever (even though the poorest depositor will have to pay as well). As I’ve mentioned on another thread – banking is a confidence trick (and ultimately so is money) – if the powers that be destroy that confidence then the consequences can be terrifying. There are ways of doing things – as Zenkarma has mentioned – the UK government is doing the equivalent but in a way that doesn’t cause people to form large queues outside their local bank. Similarly with bonds – default through inflation is acceptable (albeit not without consequences) while direct default is not. Confidence is everything.
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@peterhun wrote:
“70 Billion Euros are deposited in Cypriot Banks,”
Thats 70K euro’s for every man woman and child. How much has your familiy got in the bank? 300K? i doubt it.
The EU (and IMF etc) is giving 10K euro to everyone in Cyprus and in return they are expected to pay 5K each to protect their 70K banks saving.
For this 10K gift, the EU is being called thieves, even though there is precisely no obligation to provide it,
No, the “gift” is to the bankers who were irresponsible with the money. The EU made this decision to once-again give money to thieves. Why aren’t the bondholders being taxed?
Anyway, we are now going to see the messy underside of politics and democracy. Watch the popular vote in every country in Southern Europe go against the wealthy.
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Funny how the Eurozone mess could easily unravel over a minnow like Cyprus. Half of that tiny island, riddled with Russian black money, asked for a bailout from the Northern Europeans and they finally cracked and imposed ridiculous conditions – the money grab.
Of course us expats are incensed, 60,000 of us live in Cyprus, more than five percent of the population – guarded by 3,500 British troops. If Cyprus goes down, the million British expats in Spain could well be packing their bags too.
We’ll all go back to the UK to join Katy and Angie, and by Christ we can then give those pesky Mediterranean people some stick. The cheeky sods with their black money, stopping us from our property speculation in the sun. How dare they?
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Peterhun, I’m afraid I’ve not counted the money in Cypriot banks however my post was extracted from the Cyprus Mail in link below which reckons there’s 70 Billion Euros in their Banks, and nearly half belongs to foreigners of which most belongs to Russians so of course most of the population don’t have 300k in their banks, as for my deposits in the UK well that will remain private 😉
It’s qite likely that Putin has been Putin some of his stash in to the Cypriot tax haven 🙄
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@Rocker wrote:
Funny how the Eurozone mess could easily unravel over a minnow like Cyprus. Half of that tiny island, riddled with Russian black money, asked for a bailout from the Northern Europeans and they finally cracked and imposed ridiculous conditions – the money grab.
Of course us expats are incensed, 60,000 of us live in Cyprus, more than five percent of the population – guarded by 3,500 British troops. If Cyprus goes down, the million British expats in Spain could well be packing their bags too.
We’ll all go back to the UK to join Katy and Angie, and by Christ we can then give those pesky Mediterranean people some stick. The cheeky sods with their black money, stopping us from our property speculation in the sun. How dare they?
Expats are small fry. It’s the fact that anyone with money in a bank account in a country at risk of being bailed out now knows that their money is not safe. They now know that any guarantees given by the ECB are nothing of the sort. Mervyn King once said that starting a bank run is irrational but joining one is entirely rational. Wolfgang Schauble is trying his best to start one.
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The EU has back tracked and said “Not us Gov honest”. They are now blaming the Cypriots who are rushing to cancel the entire plan. However they will still need €10bn and Dragi may well ride to the rescue. It’s one thing to steal their own people’s dosh and a few thousand expats but not the Russians, oh dear me no. 😥
You couldn’t make it up. Banks closed until Thursday to stop them collapsing. Under fractional reserve system they couldn’t pay up anyway, it’s all lent out to someone else. Scrapping the bank deposit insurance overnight. 😯 Who thought that was a good idea? It’s one of corner stones that make capitalism work.
What this debacle has clearly shown is most of the people leading the EU are meat heads without a clue how to run economies.
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“Mr. Sorkin writes: “Cyprus is unique. Besides being tiny, its banking system looks different from those in most other countries. Much of the big money deposited in its banks is from foreign investors, including Russians who have long been suspected of money laundering. Those investors had fair warning that Cypriot banks were troubled.”
As for the bailout’s implications for Europe, there may be an upside. The willingness to impose so-called haircuts on depositors “shows that the European Union is still grappling for ways to reduce the region’s debt levels, a process known as de-leveraging,” DealBook’s Peter Eavis writes. “Some experts think Europe’s economy and employment levels won’t grow in earnest until debt is substantially reduced. As a result, they are, with some reservations, optimistic after the moves taken in Cyprus.”
http://dealbook.nytimes.com/2013/03/19/assessing-the-cyprus-bailout/
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Maybe it would be better to honor the insurance guarantee of accounts up to 100,000 and let the rest evaporate with the fall of the banks. I’m tired of the ‘too big to fail’ mentality that results in taxpayer-funded bailouts with no accountability, no fundamental change and no punishment of those who should have known better and were in positions of responsibility and power.
I now believe that instead of calling this the Cyprus Banking Crisis we should be calling it Pussy Riot’s Revenge.
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I don’t doubt Mr Sorkin is correct and deleveraging is in everyone’s best interests. However not through state theft and trashing confidence in the banking system. It’s indefensible from every sensible view point.
The ECB have the capability of providing Cyprus with the necessary funding by the push of a computer mouse. Germany will not sanction that, they think institutional robbery is a better solution. It matters not if the money taken belongs to Russian Mafia or the Pope it’s still theft and governments cannot ignore laws when it suits. A class action in the European court must be only weeks away.
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It has always been a dilemma for those of us who believe in the principle of the EU, but disagree with some of their decisions. When we do we call them meat heads or something similar and blame them for everything we can think of, especially the nasty Germans.
The dilemma deepens when we think of what we can do about the wrongs. Take them to court, of course, the European courts. But, who runs those courts?
The unelected meat heads, who else.
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It is said that the Russians who have some 20-30 Billion Euros in Cyprus at present will now have to face a bigger haircut of over 12% on their savings and when the Banks open assuming this levy is agreed, start moving their money out of Cyprus. but where to? Will it go into property in prime locations, gold, football clubs( 😆 ), or where? 🙄
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@Rocker wrote:
I
Take them to court, of course, the European courts. But, who runs those courts?
The unelected meat heads, who else.Rocker you need to understand that in modern democracies there is an essential separation between an independent judiciary, jurisprudence and the state. Politicians are well below that in the pecking order.
The rule of law is just that. You cannot democratically govern without it or change it whenever it suits the pressures of the day. It is the individuals defence against tyranny.
That is why this decision is inequitable and wrong. It will not happen because the Cypriot Parliament will never pass the proposal even if it means bankruptcy for the nation. European courts will never sanction state theft no matter how it’s dressed up.
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@Logan. Of course the judiciary should be separate to elected politicians, but if you dig a bit deeper, is isn’t. Parliament appoints the chief law officer, the one holding the post was a good example when Blair took the country to war against Iraq.
Our current Home Secretary, Mrs May, has vowed to change the law so that the UK no longer has to obey the directions of the European Court of Human Rights.
An act of parliament obliges our judges to abide by it, whether they like it or not. Politicians are in charge, they’ve taken over from our dictators and Royalty.
(If Marcos is right and Russia does bail out Cyprus, an EU member, then the EU will have to pass a few more laws and be quick about it. The mind boggles.)
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@Rocker wrote:
(If Marcos is right and Russia does bail out Cyprus, an EU member, then the EU will have to pass a few more laws and be quick about it. The mind boggles.)
Russia should be forced bail out its citizens, there has never been any guarantee over 100K and the majority of those accounts are Russia. Screw ’em.
The EU made a a big mistake calling this a tax. The message was that the Eu was taking money off Cyprus rather than the other way round.
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“Hair cut” planned for New Zealand bank
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You’ve got to feel sorry for the Cypriots, there’s every chance that when their cash points open at the weekend, they’ll be paid out in Roubles.
The UK must have known about all this when they announced their expat pensioners in Cyprus would no longer have their pensions paid on the island. Can you imagine a British pensioner paid in Roubles?
And they say that Spain could be next? The advance guard of Russians is already here, thousands of them.
I wondered what was happening when I saw a house in Russia advertised for sale in the Costa Blanca News this week. I nearly phoned up until I remembered the temperatures there.
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You do wonder what’s been promised, or threatened, behind closed doors.
Cyprus is at the centre of various pressure groups. Even on its own territory it’s split between Greek and Turkish control. It’s in a prime position for military surveillance and intervention in the Middle-East. Anything that goes off on the island is of prime interest to Brits, Americans, Israelis, Arabs and Turks. And there is now believed to be major gas reserves in its waters. No wonder the Russians were keen for a piece of the action.Edit: Just spoke to my Middle-East advisor (the missus). Apparently Turkey has been encouraging migration of its people to the island since the 70s, and it was also a gambling haven (a bit like Gibraltar). So they’ve been long aware of the importance of occupation and feet on the ground there – although the north bit is not involved in this bailout business, and indeed is viewed as Turkish territory.
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@GarySFBCN wrote:
Again: Let the banks fail. Insure all accounts up to 100,000 euro. See what’s left when the dust settles. It really is quite simple.
The Cypriots do not want to do that, Cyprus is a bank. The whole reason the haircut on accounts below 100K was proposed was to protect the offshore, Russian, money.
Cyprus’s entire economy depends on Russian money.
Either Russia bails out its citizens or Cyprus leaves the EZ.
Asking the EU to bail out an offshore banking industry is ridiculous.
Don’t think its simple, however.
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Cyprus always was a basket case economically. A backward island scrapping with it’s ethnic neighbours and the British. A relative of mine was shot by Makarios’s terrorists whilst serving in the British Army and only just survived. They had dustbin lids for protection, I kid you not. 🙁
Then the island entered the EU and Euro and everything changed. Cash flooded in not just from Russia. They lived above their real means on someone else’s cash. It’s the story of the Euro all across the Mediterrean.
Now the chickens have come home to roost and the island has a choice to either sell themselves to Russia or face harsh austerity from the EU. Rock and a hard place comes to mind.
The message for all expats living anywhere in the Eurozone is clear. Keep your money and income in the UK even if Sterling is low in value.
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Back of envelope calculations
EU pay 10billion, Cyprus 5.8bn
100K (offshore) depositors pay 9.9%EU pay 10billion, Cyprus 5.8bn
100K depositors pay 25-30%EU pay 0billion, Cyprus 15.8bn
100K depositors pay 75%EU pay 0billion, Cyprus 15.8bn
100K depositors pay 30%Note. Iceland made all offshore depositors pay 100%, onshore depositors kept around 100%. This complied with EU law and was almost universally praised as a good thing.
Guarantee, BTW, only applied up to the ability of the Guarantor to pay; according to the Icelandic precedent.
Nobody under 100K has an absolute right to their money if the ‘Guarantor’ cannot or does not want to pay, under EEA/EU law.Cyprus always was a basket case economically.
Similar to Iceland. they realized immediately their off-shore banking future was finished. Cyprus should do the same and wipe out any non Cypriot residents accounts and only protect their residents. Rip off the foreigners.
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Many moons ago, many prosperous and semi-prosperous people in the prosperous UK realised that they were suddenly free to live and work in other EU countries under the new EU laws. Many of them did just that.
They went to places where they had had holidays in the sun – Spain, Portugal, France and Cyprus. They bought houses and businesses and lived like Lords with an exchange rate that allowed them to, new colonials in all but name.
They bought cow sheds on rural land and turned them into mansions, concreted over hundreds of miles of coastal land for British housing, and learned to order beer and coffee in the local language. The natives clapped and cheered and prospered.
The Euro came along and didn’t make much difference, it made it easier to calculate their wealth. Then the mighty US banks parcelled up new financial instruments based on sub-prime mortgages and sold them to every gullible banker in the rest of the world. It all ended in tears in 2008.
The tears are still flowing, especially in Cyprus. There can’t be a single expat left who isn’t sitting down with a calculator and looking up UK property websites.
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So Cyprus has a Monday deadline from the ECB to find €5.8bn otherwise funding will stop. Thanks a lot Europe. 👿 Banks not to open Tuesday with a queue of angry Russians stretching all the way back to Nicosia airport waiting to get their ill-gotten dosh back. Sergei looks menacing and I would not like to be the Cypriot bank clerk who says he can’t have it.
Meanwhile Moscow has declined to give Cyprus anymore loans so Cyprus is likely to purloin 40% of Russians money on deposit by liquidating their banks, raid their pension funds and anything else they can get their hands on. They are calling it restructuring. 😕
Parliament will vote today on this plan B or is it plan F? Whatever happens I doubt after this in the future any investors be they Russians or Chinese will ever again touch Cyprus with a long pole. After all they thought the ECB and EU would guarantee any investment they made in the Eurozone. Well now we know folks.
Even I hear the expats are now leaving, believing Cyprus is about to exit the Euro.
They can all be cheered up by the benefit this debacle has all brought to Sterling. Ill wind and all that……. 🙂
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Cyprus has shown the deposit guarantee system and the belief Eurozone banks are underpinned by the EU financial system is bunk.
Spain received €40bn to prop up their banks. Cyprus could be forgiven if they believe they are being victimised by the EU just because they attracted Russian black money. It’s that fact which lies at the heart of this crisis. It’s punishment ECB style. -
The human factor seems to be lost in any discussion on Cyprus, a million Cypriots and 60,000 British expats, a lot of ordinary people facing an uncertain future.
It’s easy to understand the ECB not wanting to bail out Cypriot banks stuffed full of Russian black money, dirty money; but come Monday they surely can’t let the ordinary people down?
I fear they might, the people of Berlin, Paris and London, yes, London too, won’t care about a tiny island in the far Med.
I worry about the possible reintroduction of the old Cypriot currency, it’s called the Pound. The pound Sterling already has a bad name on the markets, I read the other day that it’s considered a toxic currency.
My money’s not toxic, I worked hard for it.
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@Rocker wrote:
The human factor seems to be lost in any discussion on Cyprus, a million Cypriots and 60,000 British expats, a lot of ordinary people facing an uncertain future.
It’s easy to understand the ECB not wanting to bail out Cypriot banks stuffed full of Russian black money, dirty money; but come Monday they surely can’t let the ordinary people down?
I fear they might, the people of Berlin, Paris and London, yes, London too, won’t care about a tiny island in the far Med.
I worry about the possible reintroduction of the old Cypriot currency, it’s called the Pound. The pound Sterling already has a bad name on the markets, I read the other day that it’s considered a toxic currency.
My money’s not toxic, I worked hard for it.
The crisis is very much about the human factor – we now have a situation where the Cypriots are screwed either way: either their banks open and there is the mother of all bank runs or their banks remain closed and the riots start. Cyprus needs to start printing its own currency now.
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TheLocal is claiming that the Cyprus crisis will persuade more Russians to come to Spain instead. I’m not so sure about that – it may put them off buying property in the EU altogether.
http://www.thelocal.es/page/view/rich-russians-set-sights-on-spanish-coast#.UUxP_VeK3xc
Russians bought 2,399 homes in Spain in 2012, mainly on the Mediterranean coast, 50 percent more than in the previous year and eight times the amount purchased in 2006, according to figures from the country’s property registrars association.
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@Chopera. The only meaningful riots I can remember, meaningful in the sense that they got the government to change its policy, were the poll tax riots in the UK. Ordinary people rioted over a ridiculous law which was going to cost poor people money while making the rich richer.
In a way, it’s similar to the situation in Cyprus, a situation which will become unsustainable if the banks open briefly and quickly run out of money.
Doesn’t the UK have some responsibility for Cyprus for historical reasons? The few billion needed by Cyprus will hardly be felt by the UK, already in debt to the tune of a trillion – it’s a drop in the ocean.
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@Rocker wrote:
@Chopera. The only meaningful riots I can remember, meaningful in the sense that they got the government to change its policy, were the poll tax riots in the UK. Ordinary people rioted over a ridiculous law which was going to cost poor people money while making the rich richer.
In a way, it’s similar to the situation in Cyprus, a situation which will become unsustainable if the banks open briefly and quickly run out of money.
Doesn’t the UK have some responsibility for Cyprus for historical reasons? The few billion needed by Cyprus will hardly be felt by the UK, already in debt to the tune of a trillion – it’s a drop in the ocean.
I’m not talking about riots for political change I’m talking about riots because people can’t access their bank accounts and are running out of food for themselves and their families.
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I reckon they will have to find some sort of plan, even short term sticking plaster and kick the can down the road further other wise it could cause spillover panic. I doubt the UK will save Cyprus although you never know for sure, imagine what the British public’s reaction would be to that whilst they are under the cosh them themselves 🙄
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………..and Slovenia may be next. Their banking system is in the same trouble.
I have no doubt some compromise solution will be cobbled together for Cyprus but the fundamentals will still apply. That is the Eurozone in it’s current form is a flawed structure and cannot survive without major changes.
Are the present set of EU leaders competent to bring in that much needed change? By any experience so far the answer must be no.
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@logan wrote:
………..and Slovenia may be next. Their banking system is in the same trouble.
I have no doubt some compromise solution will be cobbled together for Cyprus but the fundamentals will still apply. That is the Eurozone in it’s current form is a flawed structure and cannot survive without major changes.
Are the present set of EU leaders competent to bring in that much needed change? By any experience so far the answer must be no.
Even if they were competent, the problem remains that the people making the decisions on Cyprus’ future are accountable to an electorate in a different country that’s over a thousand miles away.
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Talking about remote government, we don’t have to quote the distance from Brussels to Cyprus, we have a nearer example on our doorstep. In September, 2014 the people of Scotland will vote on whether they want to continue to be governed from London, also a long way away.
I daresay the outcome will be close, the Scottish people will be frightened by some of their extreme lunatics who may force them all to wear kilts. Cypriot people will have similar fears, it’s all very well dreaming of singing patriotic songs but the last time they did it Turkish paratroopers fell out of the sky and stole half their land.
National pride does not pay the rent.
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This may seem bizarre, but I’m considering opening a bank account in Cyprus for some of my savings (once the arrangements are agreed upon).
Obviously I won’t put over 100k there. But if the ECB does guarantee the deposits (with haircuts for the larger amounts), and Cyprus banks offer large interest rates to attract investors, say 9 or 10%, then it may be worth putting a wad there.
Of course the accounts are demominated in Euros, so if you think the pound will rise further against the euro, beware! On the other hand, if the euro regains strength you could make even more money.Just a thought – and I’d be grateful for others’ opinion on this.
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I last went to Cyprus for a holiday some years ago and didn’t see any Russians there, nor many resident Brits. I was amazed to read earlier, it was in the Guardian so it must be true, that 50,000 Russians actually live on the island. Alongside 60,000 Brits. On such a tiny island.
I occasionally visit a Russian restaurant here in Spain, not that I think much of their food, everything tastes of boiled cabbage, but I’m curious about other people and how they live. They don’t seem to be all that different to the rest of us, even after eating all that boiled cabbage.
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@DBMarcos99 wrote:
This may seem bizarre, but I’m considering opening a bank account in Cyprus for some of my savings (once the arrangements are agreed upon).
Obviously I won’t put over 100k there. But if the ECB does guarantee the deposits (with haircuts for the larger amounts), and Cyprus banks offer large interest rates to attract investors, say 9 or 10%, then it may be worth putting a wad there.
Of course the accounts are demominated in Euros, so if you think the pound will rise further against the euro, beware! On the other hand, if the euro regains strength you could make even more money.Just a thought – and I’d be grateful for others’ opinion on this.
All things being equal (which of course they aren’t) the interest is simply a reflection of the risk. If people thought the €100k guarantee was cast iron then they wouldn’t demand higher interest – and if the banks do have to pay a premium above base rate to attract customers, where will the money come from? Sounds a bit Ponzi-ish. Give it a try if you like, but wait to see what capital controls are in place, and don’t bet your life savings.
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Crunch talks with the EU this weekend are likely to agree a tax of 25% of all private accounts with more than €100k. The EU seems determined to confiscate as much Russian black money they can get away with and to stop the money laundering that’s been going on in Cyprus.
One thing is certain when the banks do finally open without any emergency controls a bank run is almost certain. These controls are unlikely to last long and that means most Russian money left in accounts will eventually leave the island. That will leave the country bereft and in need of further financial help.
In my view the EU has behaved disgracefully towards Cyprus. Bully boy tactics towards a small nation trying to make it’s way in the world as best it could. Shame on Germany, shame on the Troika, shame on the entire EU. Cyprus should pull out of Europe and stick two fingers at them. 👿
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@logan wrote:
Cyprus has shown the deposit guarantee system and the belief Eurozone banks are underpinned by the EU financial system is bunk.
Dopsitors are guaranteed up to 100K, you must know this so why are you faking shock and outrage?
@logan wrote:
It’s punishment ECB style.
Yes and its good.
These controls are unlikely to last long
5 years and counting in Iceland.
In my view the EU has behaved disgracefully towards Cyprus. Bully boy tactics towards a small nation trying to make it’s way in the world as best it could.
Cry me a river. Cyprus is an mess entirely of it own making and has leeched off EU membership for money laundering purposes. You’d feel pity for a thief who gets caught because he was ‘trying to make his own’ way?
They are perfectly entitle to refuse the EU’s money and become fully independent with their own currency. EU have told them to their face, go ahead and do it.
Guess what, that won’t happen
Very unlikely,
Almost certain and 25% seems at the bottom end. Argentina was around 50%, although the Peso (which were give instead of dollars) is now about 12% of its value. Iceland was 100% (but 95% was recovered after a few years).
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@peterhun wrote:
@logan wrote:
Cyprus has shown the deposit guarantee system and the belief Eurozone banks are underpinned by the EU financial system is bunk.
Dopsitors are guaranteed up to 100K, you must know this so why are you faking shock and outrage?
Because they originally suggested all depositors be penalised. Remember 6.7% for small investors
These controls are unlikely to last long
5 years and counting in Iceland.Iceland is not in the Eurozone and subject to treaties providing free movement of capital. You cannot just rip up treaties when is suits.
In my view the EU has behaved disgracefully towards Cyprus. Bully boy tactics towards a small nation trying to make it’s way in the world as best it could.
Cry me a river. Cyprus is an mess entirely of it own making and has leeched off EU membership for money laundering purposes. You’d feel pity for a thief who gets caught because he was ‘trying to make his own’ way?
Cyprus provided a legal high interest investment facility. All institutions do the same. The origins of money are a matter for the investor.
They are perfectly entitle to refuse the EU’s money and become fully independent with their own currency. EU have told them to their face, go ahead and do it.
Guess what, that won’t happen
Perhaps not. However I will agree Cyprus was poorly governed in recent years, along with Spain, Italy, Greece and just about everywhere else. So why penalise Cyprus and not Spain?
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Interesting piece on the advantages of living in Cyprus and the current difficulties for expats..
http://www.guardian.co.uk/commentisfree/2013/mar/22/cyprus-banking-crisis-british-expats
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Eurozone leaders, led by Germany, have offered Cyprus €10 billion, but only on condition it raises €5.8 billion of its own.
They say the only way to find that cash is from depositors who have €68 billion in Cypriot banks, including €38 billion in accounts of more than €100,000 – enormous sums for an island of 1.1 million people which could never sustain such a big financial system on its own.
http://www.cyprus-mail.com/bailout/disy-apologises-cyprus-says-we-all-share-blame/20130323
5.8/38= 15%
Not so bad.
5 years and counting in Iceland.Iceland is not in the Eurozone and subject to treaties providing free movement of capital.
Iceland is in the EEA, which makes it fully subject to all EU financial laws (only agriculture and fishing are excluded). Free movement of capital is one of the pillars of the EU and by extension the EEA
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They are perfectly entitle to refuse the EU’s money and become fully independent with their own currency. EU have told them to their face, go ahead and do it.
Well, Cyprus could still choose to leave the Euro, so let’s see…
But, despite all the problems in the Eurozone there doesn’t seem to be any substantial movement towards leaving the Euro. Surprised me a bit, but I suppose that at least people know that the Euro has value. If a country leaves the Euro, straight away their savings, earnings and buying power will be devalued, by potentially a lot more than 15%.
There is also the viewpoint in Spain, that they don’t want the likes of Rato, Zapo and Barcenas ever having control of the national currency. -
@DBMarcos99 wrote:
25% on accounts over 100k? Ouch!
Very unlikely, but just shows you should never keep amounts of money that large sitting in a bank account.
Some of it could be committed money hanging around in an account for a few days and it just happened to be there when the shut down began. Businesses can have a million in and be overdrawn 3 days later. A private individual could have sold a house for a few hundred thousand but intending to complete on another in 2 weeks time or just cashed in a pension. Not everyone affected will have just had the money saved for a rainy day.
The troika haven’t done Cyprus any favours and they haven’t done the rest of the Eurozone any either!
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@peterhun wrote:
Free movement of capital is one of the pillars of the EU and by extension the EEA
Quite so. Why then is Cyprus being punished for allowing Russian cash to enter the country on deposit? Would Spain be punished in the same way?
The reason Cyprus is being punished is because they offered better rates than any other EZ country. They competed in a supposedly free market. They were successful in attracting investment because of it.
The EU dislikes their member states competing against each other in a capitalist market. They want a level playing field. This bullying is a way of forcing them into line.
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@logan wrote:
@peterhun wrote:
Free movement of capital is one of the pillars of the EU and by extension the EEA
Quite so. Why then is Cyprus being punished for allowing Russian cash to enter the country on deposit? Would Spain be punished in the same way?
The reason Cyprus is being punished is because they offered better rates than any other EZ country. They competed in a supposedly free market. They were successful in attracting investment because of it.
The EU dislikes their member states competing against each other in a capitalist market. They want a level playing field. This bullying is a way of forcing them into line.
Spot on.
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@peterhun wrote:
Eurozone leaders, led by Germany, have offered Cyprus €10 billion, but only on condition it raises €5.8 billion of its own.
They say the only way to find that cash is from depositors who have €68 billion in Cypriot banks, including €38 billion in accounts of more than €100,000 – enormous sums for an island of 1.1 million people which could never sustain such a big financial system on its own.
http://www.cyprus-mail.com/bailout/disy-apologises-cyprus-says-we-all-share-blame/20130323
5.8/38= 15%
Not so bad.
5 years and counting in Iceland.Iceland is not in the Eurozone and subject to treaties providing free movement of capital.
Iceland is in the EEA, which makes it fully subject to all EU financial laws (only agriculture and fishing are excluded). Free movement of capital is one of the pillars of the EU and by extension the EEA
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Because they originally suggested all depositors be penalised. Remember 6.7% for small investors
That was a Cypriot plan to protect depositors over 100k and save their off shore banking industry (by keeping the cut to less than 10%
The reason Cyprus is being punished is because they offered better rates than any other EZ country
The limit on the money is determined by Cyprus’s debt to GDP ratio, giving too much will cripple the economy.
And you damn well know banks often take money off large depositors when they fail.So its not ‘punishment’.
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@peterhun wrote:
So its not ‘punishment’.
If it is not punishment, why then the Monday deadline and the short fall on the bailout of €5.8bn?
Spain, Portugal, Ireland and Greece were given no such deadline. No such shortfall. Germany and France had too much to lose if these countries failed and fell out of the EZ.
The EU have treated Cyprus as an exception because of the Russian cash, because they went their own way and the fact that it foes not matter much to them if they leave the Eurozone.
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@logan wrote:
@peterhun wrote:
So its not ‘punishment’.
If it is not punishment, why then the Monday deadline and the short fall on the bailout of €5.8bn?
I already said, giving them all the money will overload Cyprus debt to gdp ration and nobody wants to lend them any more when it will simply have to be written off in the next bailout (see Greece). Why should big depositors take a cut – its the norm and Cyprus has a very large number of them.
Why should the EU bail out depositors who chased high interest rates and ignored the 100k limit on protection?
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I’m not an expert on Eurozone laws, but I don’t think you can just leave the zone if you feel like it, nor can you be thrown out. They forgot to include an exit clause when drawing up the legislation.
I suspect they may use Cyprus as a test case, the country is tiny with only 0.2% of EZ GDP. The latest news refers to a possible bank levy of 25% on deposits over 100K.
The first victim has just shot himself, Boris Bereszovky had most of his money in Cyprus and reached for his gun when told that he would lose a quarter of it.
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@peterhun wrote:
Someone pointed out that capital controls are effectively leaving the Euro as the currency can only be used internally.
I’d say it’s half way to leaving the euro – they’re still not printing their own currency so they’re in a kind of limbo
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@Rocker wrote:
I’m not an expert on Eurozone laws, but I don’t think you can just leave the zone if you feel like it, nor can you be thrown out. They forgot to include an exit clause when drawing up the legislation.
I suspect they may use Cyprus as a test case, the country is tiny with only 0.2% of EZ GDP. The latest news refers to a possible bank levy of 25% on deposits over 100K.
The first victim has just shot himself, Boris Bereszovky had most of his money in Cyprus and reached for his gun when told that he would lose a quarter of it.
Any sovereign country can leave the euro simply by changing the official currency of tender to something else. That’s not against the rules. There is a technicality about what happens to their bonds – I suspect they can redenominate them into another currency as that’s what happened when the euro was formed. The problem is that if heavily indebted nations leave the euro the new currency will devalue and anyone holding bonds (or indeed any savings and investments) in that country loses money. German banks are exposed to Spain and Italy so they try to keep them in the euro while making sure they are sufficiently screwed to keep the euro nice and low to help German exports. German banks are not exposed to Cyprus so Germany is quite prepared to pillage the country if it stays in the eurozone because it doesn’t care if it leaves.
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@peterhun wrote:
Because they originally suggested all depositors be penalised. Remember 6.7% for small investors
That was a Cypriot plan to protect depositors over 100k and save their off shore banking industry (by keeping the cut to less than 10%
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I think Logan was referring to the initial “taxes” that the Eurogroup tried to apply to every saver. OK they changed it to punish only those with over €100k savings later on, but the fact is they were initially going to circumvent the €100k protection scheme and punish everybody. They did not care whether it was some Cypriots life savings or some Russian oligarch – they went after everyone and only backtracked when the wider implications became clear.
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I know it’s the Daily Mail, but it’s still the biggest selling British newspaper. Expats love it. And this is bound to make them think:
It’s actually quite comforting that our government will look after us if the wheel comes off.
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@Chopera wrote:
I think Logan was referring to the initial “taxes” that the Eurogroup tried to apply to every saver. OK they changed it to punish only those with over €100k savings later on, but the fact is they were initially going to circumvent the €100k protection scheme and punish everybody. They did not care whether it was some Cypriots life savings or some Russian oligarch – they went after everyone and only backtracked when the wider implications became clear.
Only the Cypriots can apply the ‘tax’, why did they even agree to such a plan unless it met their objectives of protecting the foreign depositors. The EU could not give two hoots about large depositors so why the 9.9% cut, if it wasn’t for the benefit of Cyprus and the Russians? 9.9% was below 10% to make the pain acceptable, smaller depositors were used to bail out the bigger depositors – that is nothing to do with the bailout demands its a Cypriot plan.
“Punish”? the Cypriots lost their customers money, EU is refunding it, who is punishing who?
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I know I cannot sway your views on this Peter but really you seem to have a blind spot.
It was the Euro group along with the Cyprus finance minister which initially agreed the 6.7% ‘tax’ on small depositors and 10% on deposits over €100k.
The European Union are supposed to have in place by treaty a guarantee for all bank deposits under €100k. In this case they simply tore that up and had it not been for the sense of the Cypriot Parliament voting against these ‘taxes’ the Troika would have gone along with it quite happily.
What that does in principle is send a message to everyone who has deposit investments within the Eurozone that they no longer have such a guarantee. If it suits the EU your money is not safe. I know they will say this was a one off and that it will not happen elsewhere. Believe that if you will, but personally I would not trust them with my grandmothers cat.
Investment returns in the Eurozone mainstream countries currently pay little more than 3%. There is no risk premium offered so why on earth would international investors any longer put their money in the Eurozone?
Now it looks like a 25% ‘tax’ on deposits in the Bank of Cyprus over €100k and 4% on other banks. It’s not yet clear if this will raise the €5.8bn the EU demand but make no mistake this is an institutional cash grap the EU would have never tried in any other member state.
Chopera is quite right, it’s the self interest of Germany and France that is driving this crushing of Cyprus. The country will now be in hock to the EU instead of Russia which I believe is actually the EU’s hidden agenda.
Cyprus has massive untapped gas reserves and Russia was interested in exploiting them. Putin has missed an opportunity. He could have bailed the country out making them dependent on them. Instead it will cost their oligarchs and mafiosi some of their money. What’s left will leave Cyprus pretty soon leaving the banks high and dry.
This entire business is a total dogs breakfast.
Here is the next installment. – http://www.guardian.co.uk/world/2013/mar/23/cyprus-bailout-kremlin-reprisal-bank-levy
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Everybody is pointing the finger of blame, but the only beneficiaries of cutting below 100K would be the Russians and Cypriot banking system. I don’t believe its an EU instruction and it can’t be applied anyway – only the Cypriots can make a law to do it. The Cypriots have passed a bill cutting less than 1% of below 100k deposit, there is NO reason for them to do that, except to protect the Russians.
The EU’s hidden agenda is probably to kick Cyprus out of the EZ. And why not? It not too big to fail. I’m sure they would have kicked out the PIIGS is they could afford to.
The European Union are supposed to have in place by treaty a guarantee for all bank deposits under €100k.
They do, but as I’ve pointed out, if a country crashes it does not have to fund the bailout, Icelandic precedent. Notice there no complaints about the legality of not giving a guarantee; they KNOW there is no guarantee.
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So with the news that Bank of Cyprus deposits over 100k will have a levy of 20%, and other Cypriot bank deposits of over 100k will ‘only’ be levied 4% on first impression seemed a bit strange, but then they must know that the Bank of Cyprus large deposits is where the Russian illegal money is 🙄
Too bad if you’re a Brit or other nationality who have just paid your stage payment monies into the Bank of Cyprus ready for completion on a property soon. Supposing it’s 300k paid in for this purpose, will only be worth 240k and quite likely unable to complete with legal implications too 🙄
So if all these Brits are airlifted home presumably the State will grab their properties or debt collectors follow them to the UK of which they are quite aggressive in Cyprus from experience of someone we know 😯
Just to add more confusion, Cyprus Mail says Russians are unlikely to be hit the hardest as only 5% of deposits in Bank of Cyprus are in fact Russian 🙄 😯
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@peterhun wrote:
Everybody is pointing the finger of blame, but the only beneficiaries of cutting below 100K would be the Russians and Cypriot banking system.
I don’t understand your reasoning there.I don’t believe its an EU instruction and it can’t be applied anyway – only the Cypriots can make a law to do it.
Yes but they are caught over a barrel if they want the €10bn from the Euro group they have to comply or go bankrupt. It’s this coercion I am against. What has happened to EU solidarity?The Cypriots have passed a bill cutting less than 1% of below 100k deposit, there is NO reason for them to do that, except to protect the Russians.
I’m not sure how that protects the Russians and in any case I thought smaller deposit haircuts were thrown out by the parliament. The Russians still stand to lose 20% in the Bank of Cyprus. If the Cypriots think Putin will just stand around and do nothing in retaliation they are dreaming. -
Whatever happens tomorrow or during the next few weeks and months, if I was an expat living in Cyprus I would be planning to move elsewhere, probably back to the UK.
Those of us living in Spain have to be affected by what happens elsewhere in the Eurozone, whether we like it or not, we live in it.
I don’t think there’s any need to panic, just yet, but I feel safer with my money in a UK bank and other considerations.
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We only ever kept a float in Spanish banks even before the crisis. See that Farage has been warning ex-pats in Spain to get their out of the country.
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Absolutely Rocker and Farage is right. I have done much the same last year when the crisis hit it’s peak. I have no confidence whatever in the Euro or the EU. They have shown their political and economic incompetence yet again over this Cyprus debacle. It’s a disaster in the present form and requires radical change with a full banking and fiscal union.
Whether you live in Spain, Greece, France or any other country except perhaps Germany, who are not immune if you are a UK expat keep all your money in UK and a current account off shore since some banks will not allow a current account with a foreign address. A minimal local account where you live just to pay bills to feed as and when it’s needed.
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One thing’s for certain, just like Cyprus, people living in other Eurozone countries will not get an advance warning if those countries decide to impose a Bank levy, by the time anyone knows it will have been announced, it may never happen but who knows for sure? 🙄
Keep day to day money only in Eurozone accounts 😉
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@peterhun wrote:
@Chopera wrote:
I think Logan was referring to the initial “taxes” that the Eurogroup tried to apply to every saver. OK they changed it to punish only those with over €100k savings later on, but the fact is they were initially going to circumvent the €100k protection scheme and punish everybody. They did not care whether it was some Cypriots life savings or some Russian oligarch – they went after everyone and only backtracked when the wider implications became clear.
Only the Cypriots can apply the ‘tax’, why did they even agree to such a plan unless it met their objectives of protecting the foreign depositors. The EU could not give two hoots about large depositors so why the 9.9% cut, if it wasn’t for the benefit of Cyprus and the Russians? 9.9% was below 10% to make the pain acceptable, smaller depositors were used to bail out the bigger depositors – that is nothing to do with the bailout demands its a Cypriot plan.
“Punish”? the Cypriots lost their customers money, EU is refunding it, who is punishing who?
I believe it was the Cypriot parliament that rejected the initial plan to punish everybody with savings. It was part of the conditions dreamt up by the Eurogroup. Nobody cares about the Russians involved in this (that might change, but for now it’s not even clear if Putin gives a damn about them) – but they’re not really the issue here right now. The fact is the Europgroup wanted to go after everyone and throw the €100k deposit guarantee out of the window. We now know how far they’ll go to protect the euro (or their banks to be precise) and confidence has been shot all over the eurozone.
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I agree with you and logan et al that everyone has had enough warning, and certainly a bailout for Cyprus has been talked about for ages although I think they were talking ‘only 5 Billion’ then.
However, I doubt anyone could have been expecting a levy on savings with no notice other than the Politicians, (where have they stashed their loot now?) and, if they can do that there it could happen elsewhere, who knows? I don’t think it could happen to Spanish and Italian deposits unless contagion spreads and then capital controls are implemented at once.
I would see if you can track deposits and flows from Rajoy’s, Zapatero’s, Berlusconi’s Monti’s and any other of these scallywags’ accounts. Anyone got contacts in their Banks ? 🙄 😉
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Angie – A first clue that a bank or monetary system is at risk is when they start limiting the amounts you can withdraw from an ATM.
http://www.guardian.co.uk/business/2013/mar/24/eurozone-crisis-cyprus-bailout-eurogroup-meetingHad I funds in Cyprus it would have gone long ago. I suspect market savvy investors have already done the same.
The billions left are funds that probably had to stay. It’s not so easy these days to walk into a bank and deposit millions in cash from a plastic bag without an inquisition.
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@mgspain wrote:
Rule No.1: Don’t panic
Rule No.2: If you’re going to panic, panic first.Sounds like Douglas Adams?
Reminds me of a quip that went round when the crisis kicked off in 2008 (based on Kipling’s “If”): “If you can keep your head when all around you are losing theirs, then it’s probably because you don’t understand the gravity of the situation”
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Cyprus and Top Europe Officials Agree on Plan to Rescue Banks
BRUSSELS — Struggling into the early-morning hours to avoid a collapse of Cyprus’s banking system, European Union leaders on Monday agreed on a bailout package intended to keep Cyprus in the euro zone and rebuild its devastated economy.
The deal, struck after hours of meetings here, was approved by the finance ministers from the euro zone, the 17 countries that use the common currency. It would drastically prune the size of Cyprus’s oversize banking sector, bloated by billions of dollar from Russia and elsewhere in the former Soviet Union
The deal would scrap the highly controversial idea of a tax on bank deposits, although it would still require forced losses for depositors and bondholders. . .
Under the proposed deal, Laiki Bank, one of Cyprus’s largest, would be wound down and senior bondholders would take losses.
Depositors in the bank with accounts holding more than 100,000 euros would also be heavily penalized but the exact amount of those losses would need to be determined.
The plan to resolve Laiki Bank should allow the Bank of Cyprus, the country’s largest lender, to survive. But the Bank of Cyprus will take on some of Laiki’s liabilities in the form of emergency liquidity, which has been drip-fed to Laiki by the European Central Bank.
Depositors in the Bank of Cyprus are likely to face forced losses rather than any form of tax.
More here, New York Times:
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Its an ugly solution for an ugly situation. 🙁
Cyprus earned it’s living in part by financial off shore investment. Now that’s over what now for the island? Some estimates I have seen is a 20% drop in GDP and a prolonged depression.
One things certain the Russians and most other depositors will exit what’s left of their money as soon as they are able.
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The devil’s in the detail, still to be clarified. 🙄
However, this article mentions deposits over 100k even in Bank of Cyprus, could face losses of up to 40%.
I think the first 100k in any account is secure under EU rules, and amounts over that face the big levy 😕
Many job losses with both Laiki and Bank of Cyprus.
Ominous last para, reckons large deposits will leave both Spain and Italy so weakening their economies further 🙄
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I don’t see the proposed solution as being anything but fair. The banks were failing. Some had to be closed. The first 100k is secure as per the insurance agreement. Bond holders are toast. But this is much more fair that hitting taxpayers and savers with less than 100k.
Every time I exceeded the insurance limits here in the US, I opened a new account at a new bank and moved money to the new account so all my funds would continue to be insured.. I’m not sure how it works in the EU, but here the insurance is per bank and there is no limit to the number of accounts one can have a different banks.
One would assume that anyone with more than 100k would understand the responsibilities and risks, excepting the very few who may have been snagged with large transactions that occurred in this 2-week period.
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Gary why is it fair in Cyprus to steal from 100K depositors and allow other EU states depositors to be untouched? All other countries in trouble received bailouts far larger than Cyprus and bank deposits remained in tact. Only bank shareholder took a hit which is normal.
Are you saying it was because of risk? The Eurozone is supposed to have solidarity between nations and a risk reduced environment. It’s not fit for purpose.
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@GarySFBCN wrote:
Here are a two additional questions:
1. Was the situation so dire in Cyprus that something needed to be done?
2. If yes, what would have been a preferable solution?1. Yes the country and it’s banks were close to collapse because of lost investments in Greece and the financial crisis in Europe.
2. The preferable solution should in my opinion have been the same as any other Eurozone country. ie. Full bailout with depositors protected. They have no responsibility for the disaster. It’s state theft by any other name.Remember that a bailout is a loan, not a gift. Cyprus has to repay it back in full plus interest, except of course the money taken from depositors. 👿
When this thing unravels depositors will very likely have to suffer a 40% loss in both Bank of Cyrus and Laiki. The EU has created a precedent that will not be forgotten especially by Russia.
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Everyone who has over 100,000 in an account will not be just a saver. Some businesses hold more than that at certain times. I know a seasonal one that can have a couple of million in credit and be overdrawn at other times. Surely all this closing and freezing accounts will wreck the economy, many businesses may close down. Then there are those Brits who moved money over for a house purchase and now can’t complete…some could have just cashed in a pension 😯 La Garde said it’s a good final outcome, no it’s not, just the beginning of the crash.
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You’re quite right katy, I read somewhere that it will include business accounts too, and, there are lots of large developers in Cyprus who are already having problems with the property market, plus tourism will be hit, hotels, restaurants, larger retailers etc the effects will be felt by all, so their problems will compound especially after capital flight starts too despite capital controls 🙄
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In the scheme of things 100k is not a fortune. It will hit ordinary retired people who have saved and worked hard as well as Russian mafioso.
I feel desperate sympathy for anyone in the process of property completion in Cyprus. Lawyers accounts will suffer the same fate. Across the board punishment like this will most definitely wreck the Cyprus for the future.
It’s a Pyrrhic victory and their politicians cannot claim any credit for it.
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http://www.ft.com/intl/cms/s/0/68c9c18e-955e-11e2-a151-00144feabdc0.html#axzz2OZSOn6l8
Cyprus to be model for future bailouts
The €10bn Cypriot rescue marks a watershed in how the eurozone deals with failing banks, with European leaders now committed to “pushing back the risks” of paying for bank bailouts from taxpayers to private investors, the chairman of the group of eurozone finance ministers has warned.
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There’s more at the link, but I don’t want to paste too much content from behind another site’s paywall
Next time round they will go after those with more than €100k savings as they did with Cyprus, only to find that now nobody holds more than €100k in savings. So they’ll have to steal people’s money some other way and it won’t be a model for future bailouts at all unless they break the €100k deposit guarantee.
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@GarySFBCN wrote:
Logan, it is complicated and I certainly don’t know all the facts, but it appears that this is limited to accounts over the insurance limit at specific banks, not all accounts at all banks in Cyprus, correct?
You have a point I think regarding fairness. If they hadn’t taken the money from large depositors they would have taken it via taxes or some other way. In fact if they had initially gone for deposits over €100k only instead of trying to go after everyone they might have caused less of an outcry. But as I just posted, next time round there won’t be any deposits with more than €100k in them, so they’ll end up taking the money via taxes or by breaking the deposit guarantee anyway.
The most important thing to do when it comes to fixing a bank is to make sure people have confidence in that bank, and that their money is safe. If you don’t do that then rather than fixing the bank you end up creating a zombie, which is precisely what the eurogroup just did.
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I have an account with FT so no problems with the paywall. Thanks Chopera for posting the link. I knew some statement had been made late in the trading day because the FX went bananas. Euro down.
Jeroen Dijsselbloem the Dutch finance minister has let the cat out of the bag. Tomorrow will come the smoothing of waters but really what an utter shambles.
Bank bonds and deposits in the Eurozone over a €100k are toast. How will business and individuals get credit in the future?
Perhaps this is the end on fractional reserve banking as we know it? Either way Europe’s in more trouble. The wisest thing someone once said was ‘when you find yourself in a hole, stop digging.’ 🙂 -
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It’s my belief that it’s slowly dawning on the international financial community that the Eurozone is toxic. I have felt that way since it began but as with all things age fosters wisdom.
Investment in Europe will in future require a risk premium. That means higher rates for everyone involved. The age of cheap and available money has ended.
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@Chopera wrote:
But as I just posted, next time round there won’t be any deposits with more than €100k in them, so they’ll end up taking the money via taxes or by breaking the deposit guarantee anyway.
Why on earth would anyone have over 100k in a single bank account? The fact that only 100k is insured is so fundamental its mentioned by most articles discussing ‘where to bank’ and surely every Independent Financial Advisor would drill that fact into you.
Bank bonds and deposits in the Eurozone over a €100k are toast. How will business and individuals get credit in the future?
Are you telling me this is something new?? the 18k insured limit was only raised to 50K in 2008. How can you claim to not have know this?
Read this
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@peterhun wrote:
Why on earth would anyone have over 100k in a single bank account? The fact that only 100k is insured is so fundamental its mentioned by most articles discussing ‘where to bank’ and surely every Independent Financial Advisor would drill that fact into you.
Exactly! I have never gone beyond the insured limit without opening a new account and that was before the “financial crisis.”
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@peterhun wrote:
@Chopera wrote:
But as I just posted, next time round there won’t be any deposits with more than €100k in them, so they’ll end up taking the money via taxes or by breaking the deposit guarantee anyway.
Why on earth would anyone have over 100k in a single bank account? The fact that only 100k is insured is so fundamental its mentioned by most articles discussing ‘where to bank’ and surely every Independent Financial Advisor would drill that fact into you.
Don’t ask me, ask the people who had over 100k in the Cypriot bank accounts that are being raided
@peterhun wrote:
Bank bonds and deposits in the Eurozone over a €100k are toast. How will business and individuals get credit in the future?
Are you telling me this is something new?? the 18k insured limit was only raised to 50K in 2008. How can you claim to not have know this?
Read this
The €100k limit was widely known about – but it didn’t stop people from placing more than that in bank accounts. As mentioned above, for large transactions and businesses it is difficult to get round holding large amounts of money in bank accounts
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@logan wrote:
Gary why is it fair in Cyprus to steal from 100K depositors and allow other EU states depositors to be untouched? All other countries in trouble received bailouts far larger than Cyprus and bank deposits remained in tact. Only bank shareholder took a hit which is normal.
The difference is that in those cases its was a sovereign default cause by inability of the government to borrow. The bondholders to those countries had to take a large haircut (50+%). Bank depositors didn’t need to take a hit because they were not the problem.
In Cyprus this is comparatively little sovereign debt, the banks were in trouble because and the deposits were large compared to its GDP.
The banks have lost the depositors money so Cyprus is only (in theory) obliged to protect up to 100K.Don’t ask me, ask the people who had over 100k in the Cypriot bank accounts that are being raided
Apparently its because the Cypriots did not ask where the money came from, and according to Russia, its was stolen.
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@peterhun wrote:
@logan wrote:
Gary why is it fair in Cyprus to steal from 100K depositors and allow other EU states depositors to be untouched? All other countries in trouble received bailouts far larger than Cyprus and bank deposits remained in tact. Only bank shareholder took a hit which is normal.
The difference is that in those cases its was a sovereign default cause by inability of the government to borrow. The bondholders to those countries had to take a large haircut (50+%). Bank depositors didn’t need to take a hit because they were not the problem.
In Cyprus this is comparatively little sovereign debt, the banks were in trouble because and the deposits were large compared to its GDP.
The banks have lost the depositors money so Cyprus is only (in theory) obliged to protect up to 100K.Don’t ask me, ask the people who had over 100k in the Cypriot bank accounts that are being raided
Apparently its because the Cypriots did not ask where the money came from, and according to Russia, its was stolen.
Fine, next time there won’t be any Russian criminals to go after. There won’t be anybody holding more than €100k in their bank accounts. So who will they go after then?
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“The interior minister, Socrates Hasikos, encapsulated the mood, describing the European Union and International Monetary Fund-backed bailout as the best of a very bad bag of choices.
“We had got to the point where we were discussing a [depositor] haircut of between 50% and 60%,” he said, adding that the Cypriot parliament’s rejection of the first accord, with its highly controversial levy on depositors big and small, had been hugely negative for the country’s banks. “So this is the best we could get.””
http://www.guardian.co.uk/business/2013/mar/25/cyprus-saved-at-what-cost
Fine, next time there won’t be any Russian criminals to go after. There won’t be anybody holding more than €100k in their bank accounts. So who will they go after then?
Without massive over loading of the banking system there wouldn’t have been a problem. The reason the Cypriots for into trouble is that they gambled on greek bonds, buying them after the crisis started and were able to offer high interest rates due to the very high yield.
Without those high rates they wouldn’t have attracted so much money and been able to gamble even more on Greece. -
@logan wrote:
Remember that a bailout is a loan, not a gift. Cyprus has to repay it back in full plus interest, except of course the money taken from depositors. 👿
When this thing unravels depositors will very likely have to suffer a 40% loss in both Bank of Cyrus and Laiki. The EU has created a precedent that will not be forgotten especially by Russia.
Loans are never repaid by governments, never mind bankrupt ones.
He notes that the EU has made no economic projections for Cyprus, so has no idea how or when it will get its €10bn back from this country.
They are never going to see that €10bn back. The economy is crushed for the next God knows how many years. As soon as people can take their money out the banks, they will take it out. If I’ve €10,000 in the Bank of Cyprus, why would I leave it there?
http://www.guardian.co.uk/business/2013/mar/25/eurozone-crisis-cyprus-bailout-deal-agreed
Laiki depositors will lose 100% over 100K and BoC about 40%.
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Some of you just don’t get it. Everyone holding over 100,000 in Cypriot accounts aren’t super rich or Russian oligarchs 🙄 A businessman on TV tonight laid out cheques on the table today waiting to be paid in.Most were for around 20,000 each. As he said…what does he do, pay them in and see a 30% reduction (or more). Ironically if someone has a holding of 102,000 they will find themselves with around 71,400 whilst another with a holding of 99,000 will find themselves intact…how fair is that 😯
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just brilliant. Most of the hot shots have apparently been able to withdraw their funds while the banks have been closed in Cyprus.
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@katy wrote:
Ironically if someone has a holding of 102,000 they will find themselves with around 71,400 whilst another with a holding of 99,000 will find themselves intact…how fair is that 😯
No, the first 100k is fully protected and the 100 or 40% loss is on the amount over 100K
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@peterhun wrote:
@logan wrote:
Remember that a bailout is a loan, not a gift. Cyprus has to repay it back in full plus interest, except of course the money taken from depositors. 👿
When this thing unravels depositors will very likely have to suffer a 40% loss in both Bank of Cyrus and Laiki. The EU has created a precedent that will not be forgotten especially by Russia.
Loans are never repaid by governments, never mind bankrupt ones.
Of course they are. Bonds are nearly always repaid on maturity – if not then it’s a hard default and all hell breaks loose. Governments might issue more debt to repay existing loans, but that’s not the same as non-payment
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Zero Hedge reckons the Russians have already got their money out of Cyprus anyway
While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money. No one knows exactly how much money has left Cyprus’ banks, or where it has gone. The two banks at the centre of the crisis – Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus – have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia’s Uniastrum Bank, which put no restrictions on withdrawals in Russia. So while one could not withdraw from Bank of Cyprus or Laiki, one could withdraw without limitations from subsidiary and OpCo banks, and other affiliates. Just brilliant
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As Ardun posted, it would appear most of the Russian money has already left Cyprus somehow, where is it going to? Newsnight yesterday interviewed a Russian who worked with the Government, when asked this question he said the money is going to other off-shore areas mainly in the Far East. It won’t be going to Spain/Italy/France etc especially after the gaffe by the Dutch Finance Minister who said ‘Cyprus is a Template’ for future EU bailouts which sent markets tumbling. He had to tone this down later, but the cat is out of the bag it seems 🙄
It was also reported that the London property market would benefit from all of this 😉
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Since most of the modern world is connected to the same central banking system it’s very easy to see where the money dissapears too. The problem is that it’s the bankers that owns this network and they will not spill their beans as long as the money doesn’t go to place that is not connected. They might spill info if the money goes to a place where the government controls the central bank connected to this network though. http://www.bis.org/ Just give “whatever” Rothschild a phone call and ask them where the money has gone 😆
List from 2003
Afghanistan
Iraq
Sudan
Libya
Cuba
North Korea
IranCuba, Iran “soon gone”, North Korea “soon gone” are the only ones left.
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Quite embarrassing that the President made sure his friends got their money out in time. “Rumours so far”.
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If the banking system is so inept or criminally-run that anyone could move ‘billions and billions’ through electronic wire or by other means during the banking system freeze, and there are no ‘checkpoints’ at all, it would be wise for Cyprus to be kicked-out of all European “associations”, including the euro, IMMEDIATELY.
Are there no adults in charge?
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@GarySFBCN wrote:
If the banking system is so inept or criminally-run that anyone could move ‘billions and billions’ through electronic wire or by other means during the banking system freeze, and there are no ‘checkpoints’ at all, it would be wise for Cyprus to be kicked-out of all European “associations”, including the euro, IMMEDIATELY.
Are there no adults in charge?
The same could be said for all of the banks. None of them were fit for purpose.
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@peterhun wrote:
Gary ignore the rumors, its all bullshit.
Anyone smart would have got their money out a long time as Logan said.
Only the fools and criminals were left and they wouldn’t have a chance to do anything.
Do you include decent hard working businesses in this classification 🙄
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According to this article, Cypriot residential property prices will fall further although they are already down by 50% in some areas 🙄
http://www.incyprus.com.cy/en-gb/Top-Stories-N … -stop-work
Plus George Osborne says the Treasury is working on a ‘British Solution’ for the 13,000 UK customers of Cyprus Popular Bank (part of Laiki) who could lose some of their savings above the 100k cut-off limit. Not sure whether this applies to branches in the UK 🙄
Can see that going down well with the millions of Savers in the UK whom the Treasury doesn’t bother to help yet helps the Liars Loans fraudsters 😡
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The press from all over have gone mad over Cyprus and it’s hard to make sense of it. The amount taken from investors with over 100K in their accounts started off at 9.9% and now ranges up to 90%.
90%? It’s unlikely to be correct but such rumours do affect the markets and who on earth is going to invest in Cyprus in the foreseeable future?
And contagion? What a nasty word. And it worries me.
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I have to add to my post above that if Osborne helps out these 13,000 savers with this Cypriot Bank either in Cyprus or UK branches then he will have set a precedent to help 100’s of 1000’s Brits living in Spain, Portugal, Italy, France etc etc or who bank in UK branches belonging to foreign Banks that face a similar fate as Laiki.
So maybe good news for Brits in Spain after all, George will look after you 😛
However, not sure what the British tax payers will think of this move as our debt grows and grows 🙄
The ‘Osborne and Cameron’ comedy act rolls on, you just never know what they will get up to next 😆
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I’m not kidding seriously, Osborne has definitely come out with that proposal possibility for helping those British Savers with that bank 😯 😮 😕 🙄
You can really hear the rumblings and implications elsewhere if he does, it will mean we can save anywhere and when it goes wrong, just say ‘ahem, I know I live and bank in this obscure island paradise called wonga wongaland’ with another million Brits and our bank has gone phut, so we’d like our money back as per the Cyprus initiative Georgie Boy’ 😆
UK taxpayers and savers are so, so, generous when the Marx Bros: Groucho=Cameron, Harpo=Osborne, Chico=Clegg, Zeppo=King as in Merve ask for more 🙄
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@angie wrote:
I have to add to my post above that if Osborne helps out these 13,000 savers with this Cypriot Bank either in Cyprus or UK branches then he will have set a precedent to help 100’s of 1000’s Brits living in Spain, Portugal, Italy, France etc etc
The precedent has already been set.
The Uk protected 230,000 Icesave depositors 100%, with no maximum. It cost £2.5billion, a large part of which was eventually recovered.
13,000 savers look to be small change.
And I believe its been done before (or since). The only time UK savers will loose out is if UK banks fail, so maybe its better to bank abroad.
Or maybe not.
From the link, as some of you have difficulty believing it:
The EFTA court has now ruled out any prospect of the UK suing Iceland for the interest cost, and clarified that governments are not liable to cover the cross-border depositor guarantee obligations of their banks.
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The ruling also makes a mockery of the cross-border European banking rules. Governments are currently prohibited from stopping a bank operating in the country while remaining subject to the host nation’s regulator. The court ruling means that host nations have no responsibility for foreign depositors in the event of a collapse. Savers can only recover their money from the bank directly, through the administration process, which could take years .Jóhannes Karl Sveinsson, Iceland’s Supreme Court Attorney, said: “This is cross-border banking. The EU has an enormous problem [with it]. They are trying to improve the situation. I would think this ruling would give them a reason to speed up what they are doing.”
Thats one interpretation. The ruling said the government does not have to support the guarantee fund if ‘its not possible’, not just overseas depositors.
The levy was also declared to legal on the BBC web site a few days ago.
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peter, I also agree the precedent has been set, I’d thought of Iceland but was trying to compare them with this Cypriot debacle, as many Brits with Cypriot banks actually live in Cyprus (retired to the sun) while Brits who invested in Iceland did not live there, only banked there for eye catching interest rates, yet UK PLC still bailed them out of their losses.
This precedent could effectively protect millions of Brits in Spain and elsewhere, that’s if the UK could fund the cost and get it past the UK taxpayers 🙄
It’s a right old can of worms, can’t believe Osborne is considering it, but good luck to all those Brits in Spain if they can get it in writing 🙄 😉 Would cost the UK Billions if everything EU went pearshaped 🙄
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@katy wrote:
Do you include decent hard working businesses in this classification 🙄
Well, the point I was making that getting out of Cyprus would have been possible as it was obvious for a very long time there was a crash on its way. It didn’t need subterfuge after the close down.
According to the vice chairman of the bank that shut, most Cypriots keep loyal but there has been a steady out flow of funds for a long time.
“To be fair to the rest of the board, they felt that the European Union would never let Cyprus go down, they would never let Laiki go down,” Pavlou said.
“I had a different view to that. I believed that there was that danger very clearly.”
http://www.cyprus-mail.com/chris-pavlou/popular-bank-board-thought-eu-would-not-let-it-fail/20130326
Few ex-pats banked in Cyprus, they got out.
peter, I also agree the precedent has been set, I’d thought of Iceland but was trying to compare them with this Cypriot debacle, as many Brits with Cypriot banks actually live in Cyprus (retired to the sun) while Brits who invested in Iceland did not live there, only banked there for eye catching interest rates, yet UK PLC still bailed them out of their losses.
The eye catching interest rates were about 0.2% higher than elsewhere.
I think the bailout would be for the ‘passport bank’ customers in the UK, not expats in Cyprus. This is how Icesave operated, they were regulated and deposit protected by their home country’s regulator. They don’t pay into the Uk deposit protection scheme and when the bank fails, the deposit protection fund refuses to protect the under 100K depositors or the over 100K (in Icesave case the figure was 18k).
I thought they have clamped down on this. Having foreign banks collecting depositors funds claiming they are insured then refusing to honour that insurance is appalling.
The UK is going to have to protect the depositors in Popular Bank, just like Icesave.
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I’ve never known a time when public distrust of politicians and bankers has reached current levels, everywhere, but especially in southern European countries.
I have a friend who is one of the above mentioned, but I keep it very quiet, and so does he.
A few years ago, he was one of the most popular guys in town.
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@Rocker wrote:
A few years ago, he was one of the most popular guys in town.
The considerable trick with banking is to survive the regular crashes. I read a Nordic analyst opinions about Icelands bankers, he said they lived on an island with limited education facilities and tried to do business with much smarter people without understanding their limitations. He said the Icelanders bough every piece of crap they could and he help sell it to them.
Part of the problem was that they did understand a basic mathematical concept as none of them had ever been taught it at school and it never occurred to them that them were miss-informed (Mike never explained what it was). The education system was so limited that nobody spotted this basic mistake. And Icelandic banks only employed Icelanders, so Mike and his London banker mates merrily shafted them.
When things are booming banking is easy, when its not, the idiots lose everything.
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Iceland is so corrupt they can control the surveys about how uncorrupted they are. The country is and always has been run by by a group of 12 families, speak out of turn and they can destroy you. Cyprus could well be the same, maybe not, but .
“he didn’t actually confirm who his father was but now I can work it out from his business card”
Only the families are allowed to surnames, working out who is who may not be straight forward. But everything in Iceland is driven by family and party membership.Corralito in Eurozone.
Cyprus capital controls to be “loose” but island-wide
http://www.cyprus-mail.com/cyprus/new-cyprus-capital-controls-be-loose-island-wide/20130326
Capital controls cannot be loose or they don’t work. Give it a day or two and they will tighten up.
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One of the reasons why the UK and Dutch governments bailed out savers in the collapsed Icelandic banks was because the investments were heavily marketed in both those countries.
However it’s clear from now on Germany and some other influential members of the Euro Group now believe in ‘bail-ins’.
http://www.guardian.co.uk/business/2013/mar/26/cyprus-bailout-eurozone-clash-savers
The message is clear if you invest your money in Eurozone banks you are nothing more but an insecure creditor and liable to loss if they go belly up. That’s fine at least they have informed us all. We should now expect a high risk premium before considering investing in the Eurozone.
Without this risk premium why on earth would anyone put their money into Eurozone banks? In a global world it is not necessary. These people seem not to have the remotest clue about market economics or competition.
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The 100k limit seems to be the key. To be honest it’s things like stamp duty and/or cgt where the governments can really rake it in.
As for where to keep your money, remember there is always the risk of a major currency depreciation. I like most of us hope it doesn’t happen again but suppose the pound dropped against the Euro by 20-30%? Unlikely? Maybe, but unless they sort out all the spending, something will have to give.
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Following our property purchase and eventual sales in Spain years ago, for some reason we went off to Cyprus to look at a lovely villa plot in Peristerona overlooking Polis about 7kms away. Put a deposit down too. We thought it had more of a British :legal, Banking, road, health etc system as well as safe haven for funds and low taxes, documents in English etc. We must have been mad but the developer reneged on the deal fortunately, a lucky escape for us, he turned out to be a crook and went on the run, one other developer we thought was nice, went to jail. We did get our £3000 Cypriot deposit back after a while, less £100 which developer probably charged for a meal he gave us at his family run restaurant.
The point of this and to confirm what peterhun said, was that we found out that Cyprus like Iceland is most definitely run by just a few big families in Government and especially property, who do not let anybody get in their way, they can be ruthless, and that includes customers. This really shocked us, it was a Cyprus Mafia for sure. Mind your own business there, don’t complain about your property not being quite right etc and you are left in peace, otherwise the heavies come round 🙄
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The point of this and to confirm what peterhun said, was that we found out that Cyprus like Iceland is most definitely run by just a few big families in Government and especially property, who do not let anybody get in their way, they can be ruthless, and that includes customers. This really shocked us, it was a Cyprus Mafia for sure. Mind your own business there, don’t complain about your property not being quite right etc and you are left in peace, otherwise the heavies come round
I’ve never been to Cyprus or Iceland. However I have visited places that just “felt” as if they were run by a few families. Maybe it’s just me, but I can usually sense when something isn’t quite right.
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@logan wrote:
The message is clear if you invest your money in Eurozone banks you are nothing more but an insecure creditor and liable to loss if they go belly up. That’s fine at least they have informed us all. We should now expect a high risk premium before considering investing in the Eurozone.
Without this risk premium why on earth would anyone put their money into Eurozone banks? In a global world it is not necessary. These people seem not to have the remotest clue about market economics or competition.
And what has changed? Only in the Eurozone do you have unlimited depositor protection or did, only Ireland (lol, as if Germany is going to fund that) now offers it. The security of your money depends on the country you deposit in. Germany is obvious a very safe place to be unlike the PIIGS.
100k euros compares well with most countries, better than Russia’s 18k.
Logan you know this very well so why the fake shock horror?
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@peterhun wrote:
@logan wrote:
Logan you know this very well so why the fake shock horror?
Not fake shock Peter. I’m attempting to expose the fraud that is the European Union. Many of the Cyprus investors believed their money was safe if put on deposit within the Eurozone, believing it has the support of the ECB. That is how it has been sold to the public. Most of them will not have thought it may be different or carry a higher risk because it was Cyprus and not Germany.
Its too easy to call them naive. That is how the single currency area was portrayed when they wanted agreements passed. Now the thing has failed they now look to investors to contribute to it’s continuation.
It’s clear a great deal of capital has already left the Eurozone as a consequence of this mess and in the future that trend will continue. The risk premium does not exist.
Now Cyrus has severe capital controls, another breach of Eurozone principals. Europe is no longer fit for purpose.
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How weird is this, winners and losers? 🙄
Newsnight yesterday showed examples of large businesses in Cyprus issuing invoices for 100k plus to other large businesses who in turn scramble to pay-in this amount by cheque but it gets held up in the banking system because of the problems.
The 40%+ tax then gets deducted from the sender’s account, because he still has the money.
The recipient receives the 100k after the levy so still gets 100k.Or, the recipient does receive the money just before the levy but ends up losing the 40%+
Apparently, quite a few of these are in the pipeline, and same applies to those who think they’ve completed on property, a potential nightmare problem. Wonder what the legal implications will be for those shortchanged, and those who cannot complete on property? 🙄 😯
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The whole project is done in such a bad manner that I wouldn’t fault anyone for thinking that it was just a sham from the beginning.
I like to look at what works in the “free” corporate world and apply that to this situation.
A big company has a board “parliament”, etc, etc. If a big company buys a smaller company it usually take around 1-2 years to get it running efficiently together and in the end 10-15% of the buys are deemed faulty in the end but there are still many good examples where it works.
When it comes to two equally big companies that are supposed to merge it’s looked upon with big sceptisism because its very hard to do in a good way. A big power struggle usually ensues and around 60-70% of the mergers usually ends up being bad decisions. The corporate leaders that even suggests mergers with three or more companies are usually laughed upon and will find themselves looking for greener pastures. Two examples. Daimler-Chrysler “separated them in the end” and AstraZeneca “10 years and still not working” are examples of this where the corporate cultures in those different entities couldn’t work together.
People working with mergers and aquisitions knows this very well and put in place things to combat the differences in culture, power ambitions, organisation etc. One of the first thing they suggest is choosing one place for their head office, corporate culture, one corporate language “you may often be allowed to use another language in other branches if everyone attending speaks it”. Either you accept it or you can go. There is no room for covering stuff up. The corporate world is not forgiving as the political sphere where you might get away with hiding facts, numbers, lie etc for years and years. The owners demand results.
Apply this to the EU. You have a bunch of big nations trying to merge where at the same time a bunch of smaller nations that should in all honesty for the best succes just be bought up. We deny our cultural differences “politicians in the south sees their voters as clients that needs bribing etc”, everyone even in joint gatherings demand their own “corporate language”. When choosing where to place our head office we can’t even decide where to put it so we move it from Strasbourg to Brussels from time to time. The rules have been written so the individual nations can live their own life to a large extent but the bureaucrats still strive for an “empire” instead of just free trade. Then every facets of people working in the EU “politicians, helpers, etc” caters to becomming more and more loyal to the bureaucratic process instead of the populace that chose them. Loyal bureaucrats are promoted and the others are let go. Then they are suprised that it’s hard to control it’s the member states populaces when they get angry about them moving in this direction with bad results. How can you even try and expand from just trading with each other to a sort of international welfare system without a common tax system and clear rules.
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Excellent reasoning Ardun one of the best posts I have read on here.
I agree that because of the unsound structure of the Eurozone in it’s present form it’s doomed to failure. It is simply a question of time.
What I believe will be the tipping point is Italy or Spain collapsing due to it’s inability to fund itself on international markets. Insufficient funds to bail the country out, collapse of the banking system, haircuts all round and exit. Bring it on and lets be rid once and for all of this Frankenstein structure.
Slovenia is likely to be next. Italy very unstable politically, Spain in long term depression. ‘Beware the ides of March.’ 👿
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Let’s not forget that lots of residents and businesses are mired in their own personal misfortunes in Cyprus.
Businesses expected to go bust because they hold more than 100k (and millions in some cases) but can’t trade properly now, includes Hotels, restaurants, developers, suppliers of goods and materials etc the holiday industry will take a hammering.
Stories of Brits who sought a life/retirement in the sun wishing they could sell (they can’t) and return home now because they’re going to lose money and their properties have more than halved in value, they no longer trust Cyprus.
5 year recession/depression expected at least.
Banks deposits depleted by loss of Russian money forcing more banks to close and affecting the public.
There are lots of crooks in Cyprus and it is like a mini Spain in many respects, except feels more British which is what attracted the Brits in the 1st place 🙄
Paradise is not all it’s cracked up to be sometimes, better the devil you know, at least UK property has not halved in value yet! With your UK property profits you can pop off to the sun when you want and to different places! 😉
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http://www.guardian.co.uk/world/2013/mar/28/slovenia-next-candidate-eurozone-bailout
quote:
After Slovenia, who’s next? The research house Capital Economics has its money on Malta and Luxembourg.Minors before majors.
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The media seems surprised that there was no panic when the Cypriot banks opened yesterday although things were tense 😮
Why would they think people would panic, they could only withdraw 300 euros and could not make bank transfers so little point panicking? 🙄
However, Cyprus deposits fell 2.9% in February before the crisis, and Savers from the other 16 members of the single currency withdrew 18% of their cash during February from Cypriot banks, so some clearly anticipated or were in the know as to what was coming 😉
The good news for Cyprus is that their holidays are expected to get a lot cheaper 😛
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“Why would they think people would panic, they could only withdraw 300 euros and could not make bank transfers so little point panicking? “
I agree & note that none of the reporters had mentioned this after commenting about an orderly behaviour. Further as the same amount i.e. €300 could be drawn from the ATM machines there was no point to he Bank.
I guess the people who were there perhaps did not have a card, pin number, expired card etc.
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Banks deposits could now be plundered by 60%. It’s opened ended theft. 👿
http://www.guardian.co.uk/world/2013/mar/30/bank-of-cyprus-depositors-lose-savings
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To get back to the reality of Cyprus’s effect on the Spanish property market. The world now knows that anything over 100K is no longer safe, and Spain being in the Eurozone will no longer attract investors wanting to invest more than 100K.
As that awful story in the Telegraph indicated, if you sell for 200K, you will probably lose 60% of the extra 100K. It really couldn’t get any worse.
Perhaps the only way to sell property in Spain now is to reduce the price to 99,999 Euros. For a lot of people that will mean one nasty haircut.
But when the panic dies down, the Eurozone will survive, you can’t dismantle such a monster, it’s far too big to fail.
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@Rocker wrote:
To get back to the reality of Cyprus’s effect on the Spanish property market. The world now knows that anything over 100K is no longer safe, and Spain being in the Eurozone will no longer attract investors wanting to invest more than 100K.
As that awful story in the Telegraph indicated, if you sell for 200K, you will probably lose 60% of the extra 100K. It really couldn’t get any worse.
Perhaps the only way to sell property in Spain now is to reduce the price to 99,999 Euros. For a lot of people that will mean one nasty haircut.
But when the panic dies down, the Eurozone will survive, you can’t dismantle such a monster, it’s far too big to fail.
If I were being cynical, I’d assume it’s all an attempt to persuade people with large cash reserves to go out and spend it, either on houses or cars or whatever. But our leaders couldn’t be so blatant, could they?
According to this, sales of houses not financed by mortgages (ie cash buyers) in Spain is rising…
http://ibexsalad.blogspot.co.uk/2013/03/cash-is-king-get-out-of-cash.html
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Although there are still protests in Cyprus, outside Banks and Parliament, things seem to be relatively quiet now. I read that a British woman who had just sold her house there has had the funds frozen in her account, she cannot remit them to the UK, so, does anyone have an idea of when this levy on savings will take effect and what the final percentage will be? 🙄
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They are still saying 60%, but final figure to be announce on 8th April, tomorrow
http://www.cyprus-mail.com/cooperative-banks/final-haircut-figure-expected-tomorrow/20130407
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It’s legalised state theft. 60% is a big lump out of €100K.
I saw on TV a Brit pensioner who was persuaded to buy a bank bond in Cyprus for €100k, his life savings to earn 4.75%. 👿More ‘Trouble ‘at Mill’ this coming week with Portugal and it’s courts ordering the EU bailout unconstitutional. Good on ’em, the sooner this doomsday system of EMU is finished the better.
The government is at risk of collapse.
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Why do you keep blaming the EU? the Cypriot banks/Government gambled the money on Greek bonds and loans to Greek companies. They paid high interest and attracted large deposits.
For a few years Cypriots made a lot of money from this gamble. They lost. But they still have their pensions, the bank workers. For example, five years in the Eurozone working at Popular bank and an IT worker and his wife still have 750K euro pension pot.
Do you really believe its the EU’s fault for refusing to fund un-insured investors and depositors?
Do you think all failing companies should be nationalised as well?
>>Brit pensioner who was persuaded to buy a bank bond in Cyprus for €100k, his life savings to earn 4.75%.
Who ‘persuaded’ him to gamble his life saving in a banking systems that has been known to be in imminent danger of failing for TWO YEARS?
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@peterhun wrote:
Why do you keep blaming the EU? the Cypriot banks/Government gambled the money on Greek bonds and loans to Greek companies. They paid high interest and attracted large deposits.
EU membership encouraged member state bond buying and investment in national projects It was the Euro group who insisted on Cypriot depositors haircuts.
For a few years Cypriots made a lot of money from this gamble. They lost. But they still have their pensions, the bank workers. For example, five years in the Eurozone working at Popular bank and an IT worker and his wife still have 750K euro pension pot.
It’s not yet clear yet what austerity measures will hit the public in Cyprus but pensions are likely to be slashed.
Do you really believe its the EU’s fault for refusing to fund un-insured investors and depositors?
EMU in it’s original form encouraged investors on the basis of the bank guarantees and the credibility of the Euro.Do you think all failing companies should be nationalised as well?
No they should fail.>>Brit pensioner who was persuaded to buy a bank bond in Cyprus for €100k, his life savings to earn 4.75%.
Who ‘persuaded’ him to gamble his life saving in a banking systems that has been known to be in imminent danger of failing for TWO YEARS?
It’s unfortunate but he probably believed in the bank guarantee and the credibility of EMU. Not everyone is financially savvy. -
While I initially supported this plan, when they were discussing about 10% being taken from any amount over 100,000, this new plan is ridiculous, unfair and can possibly shake the financial world to its core.
Just as I believe that a lot of the motivation for ‘austerity’ is really an attempt to get ‘accountability’, especially in Greece, this ‘bail-out’ plan is an attempt to begin tapping-into money being ‘laundered’, and like the misguided imposition of austerity measures, it will have disastrous effects. There are many financial havens in the world, including Luxemburg, Malta and Switzerland within Europe. Switzerland has already begun to comply with countries regarding the reporting of account there. Instead of the world’s governments having a disciplined and organized approach on how to deal with these financial havens (assuming they want to), we have this muddled approach in Cyprus.
What is unfair is the punishment of ‘innocent bystanders’, those who happen to have accounts over 100k and those bond holders who were sold the bonds, many of whom truly lack the cerebral capacity to know better.
What is even more unfair is the LACK of punishment of the financial/banking industry bosses and government officials who allowed this to happen. Put them in jail first, confiscate all of their familial holdings, track-down all of their global financial holdings and then begin the process of figuring-out what amount/percentage they need to confiscate from account holders.
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this new plan is ridiculous, unfair and can possibly shake the financial world to its core.
Its not a new plan. Until 5 years ago only 20K Euro was protected in banks. Many banks have failed before and depositors lost any amount over the insured amount, all over the world.
Giving depositor 100% protection is exceptional and unusual. It is NOT a legal requirement by EU law or US or other countries laws.
Infact the insurance scheme is run by the financial system of the country hosting it – banks, insurance companies etc. The Government MAY lend to the scheme and the financial industry repays the payout over the following few years – this is what happened with Icesave and Northern Rock in the UK.
However, it is not a EU requirement for a government to bail out its own banks, never mind other countries banks.
In the case of Cyprus they took in deposits 7x their GDP, gambled it on Greek bonds and made them selves very rich in the process.
When their gamble failed they demanded the EU refund them in entirety.
How more communist can you get?
this ‘bail-out’ plan is an attempt to begin tapping-into money being ‘laundered’, and like the misguided imposition of austerity measures,
How can I make it more clear; the Cypriots lost the money by gambling it. The EU/IMF is GIVING them 10billion, not taking it away.
EU membership encouraged member state bond buying and investment in national projects .
They didn’t encourage gambling 20billion euros on Greek bonds because they gave a 25% yield. Cypriots didn’t invest in national projects, they bought Mercedes and gave themselves million euro pensions.
It was the Euro group who insisted on Cypriot depositors haircuts.
No, it was – apparently – the IMF who suggested it and the Cypriots thought it was a good idea. The general public now realize it was a catastrophic mistake to reject the 6.5% haircut. Standard EU law has now been applied and everything is legally correct.
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Peter.
By ‘gambling’ do you mean investment in Greek bonds? If so so many other institutions especially in Germany and France did the same. The difference is they could stand the loss easily whereas Cyprus being a smaller economy could not. The bond market is not a casino. It’s an instrument of investment which allow individual nation states to raise capital. You may as well say all investment is gambling.The IMF did have a role in the haircut discussions but the Euro Group were the leading force. They were lending the bulk of the €10bn. Cyrus went along with it because they wanted to avoid bankruptcy. Why do you constantly defend the EU actions? Merkle initially praise the haircut for all depositors and I believe Germany pushed for it in private discussions.
The bailout is not a gift it’s a loan with interest. Cyrus will be paying it off for generations.
Bank Guarantees to certain amounts are a treaty obligation of EMU. Individual member states are obliged to honour them. I accept in the case of amounts of over €100k the risk is the depositors. However no other state within EMU requiring a bailout have enforced this haircut or had it forced upon them. Why has Cyprus been singled out?
They were made an example of because they indulged in off shore banking attracting hot money from Russia and elsewhere.
The EU did not like it and decided to punish the Cypriots for not falling behind their particular line and destroy the counties means of making a living.I also believe Cyrus became isolated when it rejected a peace plan drawn up by the UN to reunify the island.
Do as we say or else. That’s the EU system of democracy.
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The bond market is not a casino. It’s an instrument of investment which allow individual nation states to raise capital. You may as well say all investment is gambling.
In the City, trading offices are called Risk. Thats because the return you get is in proportion to the risk you take.
Everything you invest in is a risk, it is a educated risk, but is is definitely a gamble.
Greek bonds were paying over 25% at one point, why do you think such a high return was offered if they were NOT a high risk gamble?
Bank Guarantees to certain amounts are a treaty obligation of EMU. Individual member states are obliged to honour them. I accept in the case of amounts of over €100k the risk is the depositors. However no other state within EMU requiring a bailout have enforced this haircut or had it forced upon them. Why has Cyprus been singled out?
Because a) all the money being protected was in deposits – the banks lost depositors money not bonds. Greek bonds were given a 65%+ haircut. In the case of Cyprus there were not enough bonds to cover the loses ( all the bonds/shares etc were given a 100% haircut)
b) Cyprus is not ‘too big to fail’.
c) The previous government built up a 10billion debt in attempt to get past the election. This made it impossible for the IMF/EU to lend them anymore without the debt being unsustainable.
d) The lender are running out of money and patience
e) why should taxpayers pay for other countries gambling habitsI also believe Cyrus became isolated when it rejected a peace plan drawn up by the UN to reunify the island.
Nothing to do with it. The EU probably is very happy that Greece has a veto over Turkey’s membership application
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This shows the culpability of Eliades and Karydas. While they were assuring the board that the bank had “significantly reduced” its holdings of Greek bonds and the “risk is low”, at the same time they hid the fact that on December 1 they had again bought 50 million bonds and on December 10, 2009 (the day before the above-mentioned board meeting) another 100 million.
This was considered calculated deception of the board by members, but even though this is gist of the matter, Eliades avoided addressing it in his announcement. But this was not the end of the matter. Four days later, on December 15, the bank bought another 305 million bonds, on January 4 of the following year another 50 million, on January 5 45m, January 7 25m, January 8 25m, January 12 200m and January 14 100m.
The buying frenzy continued until March 19 by which time the total holdings had become 2.106 billion. There were two more purchases on July 4 and September 4 of 2010, by which time the whole world knew that Greece was, in effect, bankrupt. So, in October 2010, exactly a year after it had unloaded them, the Bank of Cyprus held 2,068,350,000 Greek government bonds.
http://www.cyprus-mail.com/opinions/truth-sounds-suspect-over-boc-buying-greek-bonds/20130407
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Cyprus is to sell off it’s gold reserves to help finance the bail out. Their economy is predicted to shrink almost 9% this year.
http://www.bbc.co.uk/news/business-22106187The country now needs €23bn way above what they thought only a couple of weeks ago and a sum larger than the entire economy.
http://www.guardian.co.uk/business/2013/apr/11/cyprus-bailout-leaked-debt-analysis-bill
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According to this article Cyprus is considering offering citizenship to Russians and foreigners generally if they’ve lost more than 3 million euros in the levy on deposits. How very generous of them, I think it would be the last place I’d want to live following a mugging and daylight robbery 😯 🙄
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As an investment I would be more interested in the apartment in Sothall at 160,000. Some interesting comments below
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