Cyprus bailout deal #2

TOMs WIFE

Sorry, but a moderator (bluewolf) closing a perfectly legitimate thread because of words like "elite" and "cesspool"...what is boards coming to? Grow up and let people debate and stop acting like a teacher in primary school.

Cyprus bailout "deal"

Looks like the ordinary people in Cyprus are getting their pockets picked by Europe. Their deposits are getting raided, 6.75% on deposits under 100k and somewhere around 9% or those over that.

Sounds like pure and utter robbery and nothing else.

I wonder would our shower of elites in the sesspool that is the dail approve of such a dirty move here ??

And it seems that banks normally open on Saturday are closed today to prevent the inevitable run. The "raid" takes place on Tuesday after the holiday on Monday according to RTE news, so no opportunity to take out money, except at ATMs which have long queues and will inevitably run out.

Despicable.

eu/imf thieves


Bluewolf:
This not going to go anywhere constructive after "showers of elites" and "cesspool"

jaykay74

http://www.bbc.co.uk/news/world-europe-21814325

A lot of unhappy Russians I guess

"Russians that currently keep the economy afloat will leave the country along with their money," she added.

According to Reuters news agency, almost half of the depositors in Cyprus are believed to be non-resident Russians.
.
.
European regulators and politicians are convinced that a vast amount of cash in Cypriot banks belongs to Russian money launderers, our business editor writes.

gandalf

It seems the main driver for this was the suspicion that Russian Accounts were being used to launder money. Surely if this was the case it would have made more sense to apply this tax to non-resident accounts rather than punish ordinary Cypriots and ravage their hard earned savings. More Teutonic led bullying from the EU.

Chipboard

Fair play to you Tom's Wife for re-posting this. Unbelievable that a mod would see fit to stop a discussion about an event which may well be the most undemocratic thing to ever happen in a supposedly democratic country. I would expect this level of censorship from the likes of RTE or similar but not here. Some people are incapable of standing back from an event and seeing it for what it is. I am sure this was the case with many other notable events in history, that they were only recognised for the huge injustices which they were, years after the event.

This act by the EU/IMF is indeed despicable and may end up being a huge mistake as I seriously doubt if the people of Cyprus will take this lying down. It shows how desperate the situation in Europe is when politicians who call themselves democrats resort to raiding the savings of private citizens. Tuesday morning is going to be very interesting. I hope that it doesn't result in the death or injury of innocent people. Apart from what will happen in Cyprus I am sure that millions of people all over the EU and especially in Ireland, Greece, Portugal and Spain are tonight mulling over their next move in the knowledge that something similar could happen to them.

I was thinking today of the interview from a few years ago on RTE with Sean Fitzpatrick. I can't recall the details now but I think the programme was called One to One and the interviewer was Aine Lawlor. Seanie painted himself as the next messiah, waxed lyrical about how great Anglo was and all the rest. Everybody swallowed it hook line and sinker. It put me thinking that people rarely know the difference between a genius and a spoofer.

I believe that a similar dynamic is playing out at the moment in Europe. We have all these people like Mario Draghi and Christine Lagarde who pretend that they are in control and are managing the situation. Our politicians bow down before them and obey their every word. After the government made the decision to liquidate Anglo the press hung on every syllable from Mario Draghi's mouth the following day, as if his approval (had he given it) would mean that everything would be ok.

The truth is that Mario doesn't have a clue as to what is going to happen. He is stumbling from pillar to post like the whole European project and the day is coming (and its not too far away in my opinion) when all these people will look every bit as stupid as Seanie does now.

Thrill

Chipboard wrote: »

a discussion about an event which may well be the most undemocratic thing to ever happen in a supposedly democratic country.

The bailout must still be voted on by the Cypriot Parliament. Its not law yet.

Thrill

Below is the full statement by the President of Cyprus

He warns of the ramifications of no deal.......


It is well known that the deep economic crisis and the state of emergency in which the country has found itself did not come about in the last fortnight since we have undertaken the administration of the country.

The state of emergency and critical nature of the times do not allow me, as they do not allow anyone, to embark on a blame game.

In the extraordinary meeting of the Eurogroup, we faced decisions that had already been taken and came across faits accomplis through which we were faced with the following dilemmas:

On Tuesday, March 19 we would either choose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis, which would put a definitive end to the uncertainty and restart our economy.

A possible choice of the catastrophic scenario option would have the following consequences:

1. On Tuesday, March 19, immediately after the holiday weekend, one of the two banks in crisis would cease to operate, since the European Central Bank, following the decision already taken, would terminate the provision of liquidity. The second bank would suspend its work, and neither could avoid collapse. Such a phenomenon would instantly lead 8.000 families to unemployment.

2. The State would be obliged to compensate depositors in response to the obligation regarding guaranteed deposits. The capital required in such a case would amount to about 30 billion euros, which the State would be unable to pay.

3. A proportionate amount corresponding to the deposits of thousands of depositors for deposits over 100.000 Euro, would be led to a vicious cycle of asset liquidation, and these depositors would suffer losses of over 60%.

4. Such an uncontrolled situation would push the whole banking system into collapse with all the attendant consequences.

5. Thousands of small and medium enterprises, and other businesses would be driven to bankruptcy due to their inability to trade.

As a result of the above, the service sector would be led to a complete collapse with a possible exit from the euro. That, in addition to the national weakening of Cyprus, would lead to devaluation of the currency by at least 40%.

The second choice was the controlled management of the crisis, through the decisions taken and which can be summarized as follows:

1. Ensuring the liquidity of the banks and the rescue of the banking system through their recapitalization.

2. Rescuing 8.000 jobs in the banking sector and thousands of others which would be lost as a corollary of not maintaining the operations of banks.

3. Total rescuing of deposits, with just the exchange of a small percentage of savings with shares of the two banks. Currently, these shares do not have their full value, but with the economic recovery they will repay most it not all of the amount that will be cut.
4. This option results in a drastic reduction of public debt, makes it manageable and sustainable and relieves future generations from the burden of repayment.

5. It saves provident and pension funds and avoids taking other tough measures such as wage and pension cuts that were put on the negotiations table.

6. It avoids further recession and the risk of the vicious circle of a second memorandum.

We are not aiming to gloss over the situation. The solution chosen may be painful, but it was the only one that would allow us to continue our lives without adventures. It's a decision that leads to the historic and permanent rescue our economy.

In the next few hours we will all have to take responsibility. Tomorrow I will address the Cypriot people.

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Manach

The Politics forum is a place for a reasonable and mostly measured discussion of the serious political issues. The bailout of Cyprus and the impact of such on its citizen's of major impact, IMHO very worrying and deserves a serious discussion. However, the original thread OP seemed to be a bit subjectively more suited to AH than here, so I reckon that Bluewolf acted in order.

nesf

Hey guys, please don't discuss moderation in threads, if you want to do that PM one of the mods.

A Dub in Glasgo

It has been proven time and time again that it is much simpler and straight forward to mug the ordinary folk for the sins and crimes of the elite

Thrill

Tim Worstall, a Forbes contributor, on what could be a dangerous precedent in the Cypress bailout.....Government reneging on Deposit Insurance.

http://www.forbes.com/sites/timworstall/2013/03/16/the-cyprus-bank-bailout-could-be-a-disastrous-precedent-theyre-reneging-on-government-deposit-insurance/


Extracts....

Under the system until yesterday all depositors in Cypriot banks were insured up to the value of €100,000 with any one bank.

Today that solemn and governmental promise has been shown to be false.

And not even the European Union nor the European Central Bank are going to make them stick to it. Indeed, very much the other way around. The EU and ECB are insisting that the Cyprus authorities breach this deposit insurance provision.

The problem is when government has said “we’ll insure this” and when push comes to shove they say “err, no, we won’t”. And the problem with this is that it makes all future EU deposit insurance worth that much less.

The article basically says that Government promises of your savings being insured up to a certain amount, to prevent bank runs, could now be viewed as meaningless by savers if another crisis raises its head in the future.

CptMackey

Manach wrote: »

The Politics forum is a place for a reasonable and mostly measured discussion of the serious political issues. The bailout of Cyprus and the impact of such on its citizen's of major impact, IMHO very worrying and deserves a serious discussion. However, the original thread OP seemed to be a bit subjectively more suited to AH than here, so I reckon that Bluewolf acted in order.

While this may seem to be the case if I posted something's along the lines of "they took our money anglea this , fourth reich that etc " that would have been for after hours. My opinion of that house in Dublin staffed by those highly paid people is just my opinion of them and the dail. There are other ways to target money laundering by overseas accounts other than stealing people's hard earned savings.

There some times seems to be an air of all Europe does is right on the politics forum and any dissenting voice is shot down but I digress.....

This deal is fundamentaly bad for the people of Cyprus. I can't imagine I'd be pleased if the Irish government had given me shares in Anglo for a portion of my deposits on the say of some financial kingpins in the troika

Manach

CptMackey wrote: »

This deal is fundamentaly bad for the people of Cyprus. I can't imagine I'd be pleased if the Irish government had given me shares in Anglo for a portion of my deposits on the say of some financial kingpins in the troika

- No argument from me there.

oscarBravo

CptMackey wrote: »

This deal is fundamentaly bad for the people of Cyprus. I can't imagine I'd be pleased if the Irish government had given me shares in Anglo for a portion of my deposits on the say of some financial kingpins in the troika

Without disagreeing that it's a harsh deal, the question is: was there a better deal available? The alternative seems to have been a bank collapse, which would have cost the depositors a lot more.

nesf

CptMackey wrote: »

While this may seem to be the case if I posted something's along the lines of "they took our money anglea this , fourth reich that etc " that would have been for after hours. My opinion of that house in Dublin staffed by those highly paid people is just my opinion of them and the dail. There are other ways to target money laundering by overseas accounts other than stealing people's hard earned savings.

There some times seems to be an air of all Europe does is right on the politics forum and any dissenting voice is shot down but I digress.....

This deal is fundamentaly bad for the people of Cyprus. I can't imagine I'd be pleased if the Irish government had given me shares in Anglo for a portion of my deposits on the say of some financial kingpins in the troika

You are more than welcome to post dissenting opinions on the EU in this forum. There are a lot of pro-EU posters but that is not because of moderation policy and moderation policy does not reflect that. If you had posted the above, especially the final paragraph, as the OP of the other thread it would never have been locked. If you start a thread with various things like EU-thieves etc there is a problem because from the outset we have a degeneration into name calling rather than actually debating the issue and this is a really important issue. We want more serious debate on this forum, we prefer if people don't descend into name calling of any kind but focus on the facts.


To put it another way, I came onto this forum earlier to start a thread on this if there wasn't one already there. I think this is a very dangerous precedent being set here and while it's still up to the Cypriot Parliament to agree to these bailout conditions so there is still a respect for sovereign power I strongly dislike the action that has been proposed with respect to depositors. I've read on the BBC I believe that this was done because of worries about Russian money laundering through domestic Cypriot banks but why then are we seeing domestic account holders being hit? I imagine it's because this Russian money is being handled by residents or something but it still leaves a very bad taste in my mouth. Believe me there is absolutely no wish to censor this issue, it is an issue that badly needs to be discussed here, all I would ask is that you consider which forum you're posting in before composing a post. In AH, your OP would probably have been perfectly acceptable, here it was not. I appreciate that it's extremely annoying to have a thread of yours locked and doubly so when it's a hot political issue that demands immediate discussion.

KyussBishop

oscarBravo wrote: »

Without disagreeing that it's a harsh deal, the question is: was there a better deal available? The alternative seems to have been a bank collapse, which would have cost the depositors a lot more.

Yes; the EU could have negotiated any other terms they liked on the deal. The alternatives are not only what Cyprus has to offer, they are what they EU is capable of offering.


As things are, this is a seriously dangerous decision by the EU, because confidence in deposits across the entire EU have just been undermined (potentially undermining the Euro itself), and the next EU country where there is even a hint of need for a possible bailout (which with the uncertain economic/political future of the EU, is far from unlikely), will have a much higher risk of bank runs.

The cost of potential bank-runs in the future, across other EU countries, is far higher than just forking out the money for this bailout, instead of taking it from depositors; setting this precedent is one of the most monumentally reckless and stupid decisions they could have taken.

oscarBravo

nesf wrote: »

I've read on the BBC I believe that this was done because of worries about Russian money laundering through domestic Cypriot banks but why then are we seeing domestic account holders being hit? I imagine it's because this Russian money is being handled by residents or something but it still leaves a very bad taste in my mouth.

From what I gather, if the haircut had been confined to the Russian depositors, it would have to have been in the order of 30%, and while 10% will be reluctantly worn by the Russians as the "price" of laundering money, a bigger haircut would have killed off the offshore banking business in Cyprus.

oscarBravo

KyussBishop wrote: »

Yes; the EU could have negotiated any other terms they liked on the deal. The alternatives are not only what Cyprus has to offer, they are what they EU is capable of offering.


As things are, this is a seriously dangerous decision by the EU, because confidence in deposits across the entire EU have just been undermined (potentially undermining the Euro itself), and the next EU country where there is even a hint of need for a possible bailout (which with the uncertain economic/political future of the EU, is far from unlikely), will have a much higher risk of bank runs.

The cost of potential bank-runs in the future, across other EU countries, is far higher than just forking out the money for this bailout, instead of taking it from depositors; setting this precedent is one of the most monumentally reckless and stupid decisions they could have taken.

Granted that it's a move that has potentially damaging consequences, I'm always a little nonplussed at the idea that somehow the finance ministers didn't think of that, and that they've arrived at this deal through a process of collective stupidity.

I think it's probably a little more realistic to assume that they are aware of the potential dangers, but still feel that this is, on balance, the best deal that they could offer.

As for the risk of contagion, the case can (and will) be made that Cyprus is quite unique in Eurozone banking circles, and that the reasons this depositor haircut was imposed don't exist in other countries.

Given that the German opposition would almost certainly have voted down any proposition that involved fully bailing out Russian oligarchs, what do you think the deal should have been?

P_1

oscarBravo wrote: »

From what I gather, if the haircut had been confined to the Russian depositors, it would have to have been in the order of 30%, and while 10% will be reluctantly worn by the Russians as the "price" of laundering money, a bigger haircut would have killed off the offshore banking business in Cyprus.

So in effect, it's a 'tax' to preserve Cyprus' financial services industry?

I have to admit it is a worrying new 'weapon' that the EU have in their 'arsenal'. Taxing the interest of savings is fine but there's something inherently wrong with taxing the principle.

oscarBravo

P_1 wrote: »

So in effect, it's a 'tax' to preserve Cyprus' financial services industry?

That's probably an oversimplification, but in a sense it's at least partly true.

I have to admit it is a worrying new 'weapon' that the EU have in their 'arsenal'. Taxing the interest of savings is fine but there's something inherently wrong with taxing the principle.

It seems a bit off-colour to talk of weapons - the EU and IMF are giving Cyprus a buttload of money it very desperately needs, and imposing (harsh, granted) conditions on the giving of the money.

P_1

oscarBravo wrote: »

That's probably an oversimplification, but in a sense it's at least partly true. It seems a bit off-colour to talk of weapons - the EU and IMF are giving Cyprus a buttload of money it very desperately needs, and imposing (harsh, granted) conditions on the giving of the money.

True perhaps 'tool' might be a better choice of wording.

The conditions (well at least the headline ones) do strike me as being rather harsh though.

Having said that, it could just be down to optics. A percentage tax rise could arguably raise more without causing such an uproar.

It could also be a useful tool to get money circulating again, it doesn't exactly do much good to have it sitting unused in bank accounts afterall

KyussBishop

oscarBravo wrote: »

Granted that it's a move that has potentially damaging consequences, I'm always a little nonplussed at the idea that somehow the finance ministers didn't think of that, and that they've arrived at this deal through a process of collective stupidity.

I think it's probably a little more realistic to assume that they are aware of the potential dangers, but still feel that this is, on balance, the best deal that they could offer.

As for the risk of contagion, the case can (and will) be made that Cyprus is quite unique in Eurozone banking circles, and that the reasons this depositor haircut was imposed don't exist in other countries.

The finance ministers across the EU half a decade ago, failed to see the biggest economic crisis in 3/4 of a century coming, when all they had to look at was a graph of private debt vs GDP (something a minority of economists had been warning of for years); that plus the whole stream of incompetently bungled policies they've enacted between then and now, means they score high on collective stupidity.

The idea that they are competent at what they are doing, ended when the economic crisis began, and they haven't fared well in regaining credibility since.

That said, this is still massively surprising, even despite all of that; how on earth could they not see this undermining confidence? There is no way for them to even begin to get an objective idea of how much damage this will cause, because the future effects of this will be driven by psychology, by peoples loss of confidence in the security of their deposits.


The problem with this is not contagion from Cyprus, they are relatively insignificant in that regard; the problem is contagion from the every other EU country that hits economic trouble in the future (possibly needing a bailout), and the potential for a bank run because of people not knowing if their deposits are safe.

The crisis in the EU will go on for the best part of a decade, and there is much uncertainty as to both the economic and political future of the EU, so there is ample opportunity for this to cause serious contagion issues all over Europe, through undermined confidence.

oscarBravo wrote: »

Given that the German opposition would almost certainly have voted down any proposition that involved fully bailing out Russian oligarchs, what do you think the deal should have been?

The German opposition did not state this; there have been bailouts of other EU countries many many times thus far, which did not involve dipping into depositors funds, so this should have been modeled on the other bailouts, instead of undermining both confidence in deposits EU-wide, and potentially the Euro itself.

oscarBravo

KyussBishop wrote: »

The finance ministers across the EU half a decade ago, failed to see the biggest economic crisis in 3/4 of a century coming, when all they had to look at was a graph of private debt vs GDP (something a minority of economists had been warning of for years)...

How many of the finance ministers that were in office then are in office now?

...that plus the whole stream of incompetently bungled policies they've enacted between then and now, means they score high on collective stupidity.

And yet, much of the commentary I've read on this bailout has made the point that, painful as it has been, the policies implemented to date seem to have settled the crisis down to a large extent.

That said, this is still massively surprising, even despite all of that; how on earth could they not see this undermining confidence?

Incredible, isn't it? On balance, it seems more likely that they were aware of the probably impact on confidence, but still decided that it was better than the alternative.

It's too easy to assume that people who have made a decision that you disagree with are collectively stupid; that there's not a single one among them who is capable of understanding what's immediately obvious to you. It's also pretty arrogant, frankly.

There is no way for them to even begin to get an objective idea of how much damage this will cause, because the future effects of this will be driven by psychology, by peoples loss of confidence in the security of their deposits.

Again, there are two possibilities: either they didn't think of that; or they did, and decided that it was the lesser of two evils. As long as you persist in ascribing their decision to stupidity, you avoid having to consider the alternatives.

The problem with this is not contagion from Cyprus, they are relatively insignificant in that regard; the problem is contagion from the every other EU country that hits economic trouble in the future (possibly needing a bailout), and the potential for a bank run because of people not knowing if their deposits are safe.

The crisis in the EU will go on for the best part of a decade, and there is much uncertainty as to both the economic and political future of the EU, so there is ample opportunity for this to cause serious contagion issues all over Europe, through undermined confidence.

Yes. And - again - either nobody but you (and everyone else criticising this deal) thought of this, or they did, and went with it anyway.

The German opposition did not state this; there have been bailouts of other EU countries many many times thus far, which did not involve dipping into depositors funds, so this should have been modeled on the other bailouts, instead of undermining both confidence in deposits EU-wide, and potentially the Euro itself.

Which would make perfect sense, if the Cyprus situation was identical to every other country that needed a bailout. It self-evidently isn't, and a different approach was required.

thebman

oscarBravo wrote: »

How many of the finance ministers that were in office then are in office now?

How many of the staff that were in the office are there now?

Not for or against the rest of the post but one thing that can be questioned is how much power a minister actually has given the difference in electing a different government.

Most of our politicians aren't qualified in the areas they are in charge of and for that reason are terrified to do anything on their own initiative.

professore

Chipboard wrote: »

Fair play to you Tom's Wife for re-posting this. Unbelievable that a mod would see fit to stop a discussion about an event which may well be the most undemocratic thing to ever happen in a supposedly democratic country. I would expect this level of censorship from the likes of RTE or similar but not here. Some people are incapable of standing back from an event and seeing it for what it is. I am sure this was the case with many other notable events in history, that they were only recognised for the huge injustices which they were, years after the event.

This act by the EU/IMF is indeed despicable and may end up being a huge mistake as I seriously doubt if the people of Cyprus will take this lying down. It shows how desperate the situation in Europe is when politicians who call themselves democrats resort to raiding the savings of private citizens. Tuesday morning is going to be very interesting. I hope that it doesn't result in the death or injury of innocent people. Apart from what will happen in Cyprus I am sure that millions of people all over the EU and especially in Ireland, Greece, Portugal and Spain are tonight mulling over their next move in the knowledge that something similar could happen to them.

I was thinking today of the interview from a few years ago on RTE with Sean Fitzpatrick. I can't recall the details now but I think the programme was called One to One and the interviewer was Aine Lawlor. Seanie painted himself as the next messiah, waxed lyrical about how great Anglo was and all the rest. Everybody swallowed it hook line and sinker. It put me thinking that people rarely know the difference between a genius and a spoofer.

I believe that a similar dynamic is playing out at the moment in Europe. We have all these people like Mario Draghi and Christine Lagarde who pretend that they are in control and are managing the situation. Our politicians bow down before them and obey their every word. After the government made the decision to liquidate Anglo the press hung on every syllable from Mario Draghi's mouth the following day, as if his approval (had he given it) would mean that everything would be ok.

The truth is that Mario doesn't have a clue as to what is going to happen. He is stumbling from pillar to post like the whole European project and the day is coming (and its not too far away in my opinion) when all these people will look every bit as stupid as Seanie does now.

I disagree about Mario. I think he would have done a lot more already were it not for the Germans blocking him at every turn. Agree on the others, and would put Trichet in with them.

KyussBishop

oscarBravo wrote: »

How many of the finance ministers that were in office then are in office now? And yet, much of the commentary I've read on this bailout has made the point that, painful as it has been, the policies implemented to date seem to have settled the crisis down to a large extent. Incredible, isn't it? On balance, it seems more likely that they were aware of the probably impact on confidence, but still decided that it was better than the alternative.

How many of them in office now, saw the crisis coming either? How many of them, have done anything other than bungle the handling of the crisis?

Where has the crisis settled down? We have significant unemployment, and we are still selling off public assets; it hasn't improved at all, it is getting worse every day. You judge progress in economic crisis, by the social cost, not by abstracted economic variables; every day unemployment stays so high, taxes stay increased, and public expenditure stays down (thus bleeding the private sector), is a further day the damage is compounded.

Really, the handling of the crisis is pretty universally bad, and all throughout the western world, the same economic orthodoxy/ideology that caused the crisis, is still dominant in politics; it's a mess.

5-6 years on, there are no real recovery policies put in place, and the future of Europe is still uncertain, with a breakup still being a high probability by the end of the decade, unless something changes.


If they were aware of the impact on confidence this action would have (something that they can not quantify), then that just compounds the level of stupidity involved in this action.

oscarBravo wrote: »

It's too easy to assume that people who have made a decision that you disagree with are collectively stupid; that there's not a single one among them who is capable of understanding what's immediately obvious to you. It's also pretty arrogant, frankly. Again, there are two possibilities: either they didn't think of that; or they did, and decided that it was the lesser of two evils. As long as you persist in ascribing their decision to stupidity, you avoid having to consider the alternatives. Yes. And - again - either nobody but you (and everyone else criticising this deal) thought of this, or they did, and went with it anyway.

This decision is stupid on its own terms, and you can find any number of economists out there saying exactly this right now; it's highly arrogant to put the people in charge of making these decisions, on a pedestal where they are assumed to have impeccable judgment and are free from fault, when undermining confidence in deposits is a facially stupid thing to do.

It's kind of an authoritarian mindset really, that suggests we should just trust them and avoid criticizing them, for an action that on its face is incredibly poorly judged.


The deposit tax, judging by this, only raises €5.8 billion; other EU member states raising that instead, is practically nothing, compared to maintaining confidence in deposits, across the EU.

Again, if they were fully aware of all the potential (and inherently unpredictable) consequences and did it anyway, that is incredibly stupid, that compounds the stupidity.

oscarBravo wrote: »

Which would make perfect sense, if the Cyprus situation was identical to every other country that needed a bailout. It self-evidently isn't, and a different approach was required.

Again, your assuming and giving benefit of the doubt here; how, exactly, is the Cyprus situation different, warranting a risk of depositor confidence all across the EU, for a mere €5.8 billion?

djpbarry

KyussBishop wrote: »

How many of them in office now, saw the crisis coming either?

You honestly think that not a single finance minister saw any potential problems on the horizon?

KyussBishop wrote: »

Where has the crisis settled down? We have significant unemployment, and we are still selling off public assets; it hasn't improved at all, it is getting worse every day.

Getting worse? Based on what metric? Because from where I'm sitting, things in Ireland are slowly improving.

KyussBishop wrote: »

You judge progress in economic crisis, by the social cost, not by abstracted economic variables; every day unemployment stays so high, taxes stay increased, and public expenditure stays down (thus bleeding the private sector), is a further day the damage is compounded.

Beggin' yer pardon sir, but public expenditure in Ireland is still way ahead of tax revenue. By that measure, I guess everything in Ireland is rosy?

KyussBishop wrote: »

...it's highly arrogant to put the people in charge of making these decisions, on a pedestal where they are assumed to have impeccable judgment and are free from fault...

Nobody is doing any such thing. You, however, are guilty of precisely the opposite, which is monumentally arrogant.

KyussBishop

djpbarry wrote: »

You honestly think that not a single finance minister saw any potential problems on the horizon?

Show me one that did, and show me what they did about it.

djpbarry wrote: »

Beggin' yer pardon sir, but public expenditure in Ireland is still way ahead of tax revenue. By that measure, I guess everything in Ireland is rosy?

The private sector is being bled dry still, or have you not noticed the huge amount of unemployed people? That, plus the decimation of public services and selling off of public assets, is constant damage being done to society and the economy (with unemployment in particular, that is an enormous amount of wasted productive potential), and yes, the longer that goes on, the worse the damage is compounded.

Your metric is abstract economic variables, my metric is the damage dealt upon society.

Thrill

Cyprus has declared Tuesday a bank holiday.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_17/03/2013_488273

The Cypriot cabinet has declared Tuesday a bank holiday, for fear of capital flight, and this may even be stretched to Wednesday, as depositors are certain to withdraw huge sums

the European Central Bank insists on a rapid voting because there are already signs a domino effect will follow across European lenders and markets from Monday.

There is genuine fear of market unrest on Monday morning when stocks may crumble in the eurozone and bank accounts in other southern European bank may suffer.

I read last night that three parties are against the deal.

djpbarry

KyussBishop wrote: »

Show me one that did, and show me what they did about it.

You see, you are mistaking lack of political will with lack of knowledge. Take Ireland as an example - you really think FF didn't know what they were doing when they eroded the tax base and inflated public spending? You really think they were just plain stupid? Really?

KyussBishop wrote: »

The private sector is being bled dry still...

Again, based on what metric? Because, it looks to me like the private sector in Ireland is doing ok. Exports are up. Manufacturing output is up. GDP is up. Where is this bleeding you are referring to?

KyussBishop wrote: »

Your metric is abstract economic variables, my metric is the damage dealt upon society.

I'm sorry - my metric is "abstract"?!?

KyussBishop

djpbarry wrote: »

You see, you are mistaking lack of political will with lack of knowledge. Take Ireland as an example - you really think FF didn't know what they were doing when they eroded the tax base and inflated public spending? You really think they were just plain stupid? Really?

Even if I don't apply Hanlon's razor here, how exactly is malice any better?

If you're defending the argument based on the ministers choosing policy out of malice, then if they are doing that in the case of Cyprus that is far worse; much worse than simple stupidity. How is that conclusion any less arrogant than assuming stupidity, and how does that make the political decisions any more worthy of trust in this case?

djpbarry wrote: »

KyussBishop wrote:

The private sector is being bled dry still...

Again, based on what metric? Because, it looks to me like the private sector in Ireland is doing ok. Exports are up. Manufacturing output is up. GDP is up. Where is this bleeding you are referring to?

Really, don't be so willfully obtuse; read past your chopped quote, as when you deliberately ignore half a post, it's plain you're doing so for rhetorical effect, rather than an interest in addressing anything said:

KyussBishop wrote:

...or have you not noticed the huge amount of unemployed people? That, plus the decimation of public services and selling off of public assets, is constant damage being done to society and the economy (with unemployment in particular, that is an enormous amount of wasted productive potential), and yes, the longer that goes on, the worse the damage is compounded.

oscarBravo

We could be doing better, but we could be doing much worse.

http://goo.gl/lDssM

KyussBishop

oscarBravo wrote: »

We could be doing better, but we could be doing much worse.

http://goo.gl/lDssM

We could be doing much much better too, with actual recovery policies providing employment and reducing the public/private debt burdens, and pumping private industry back up; comparing to worse off countries isn't a good defense of the status quo, because you can justify anything with that line of argument, just by comparing bad policies in any country against Greece (and now Cyprus) or Somalia.

When you compare standards like that (be they political or economic standards), that inherently leads to a 'race to the bottom' in standards, where any worse-off place can be used to justify a reduction in standards.

Thrill

The Cypriot President is in talks with Brussels to change the terms of the Depositors Tax. Current proposals appear to be.......

plans to revise deposit tax on wires: under 5% for €0-100k, under 10% for €100-500k, around 13% for €500k+

http://www.businessinsider.com/report-there-are-already-plans-to-revise-the-cyprus-bank-tax-2013-3?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29


.

djpbarry

KyussBishop wrote: »

Even if I don't apply Hanlon's razor here, how exactly is malice any better?

If you're defending the argument based on the ministers choosing policy out of malice, then if they are doing that in the case of Cyprus that is far worse; much worse than simple stupidity. How is that conclusion any less arrogant than assuming stupidity, and how does that make the political decisions any more worthy of trust in this case?

I don't really know where you're going with this. The point is, you are assuming politicans to be unaware of alternatives to their actions. I am simply pointing this out to be an extremely arrogant assumption. Or naive - I'm not sure which.

KyussBishop wrote: »

Really, don't be so willfully obtuse; read past your chopped quote, as when you deliberately ignore half a post, it's plain you're doing so for rhetorical effect, rather than an interest in addressing anything said:

The only substantive point you made there is with regard to high unemployment, which nobody is going to deny is a problem.

However, you are insisting that the situation in Ireland is deteriorating. I am simply asking you to provide some substantive evidence to back that up.

KyussBishop wrote: »

When you compare standards like that (be they political or economic standards), that inherently leads to a 'race to the bottom' in standards, where any worse-off place can be used to justify a reduction in standards.

What standard are you using to quantify "damage dealt upon society"?

Scofflaw

P_1 wrote: »

So in effect, it's a 'tax' to preserve Cyprus' financial services industry?

I have to admit it is a worrying new 'weapon' that the EU have in their 'arsenal'. Taxing the interest of savings is fine but there's something inherently wrong with taxing the principle.

The Cypriots were apparently the ones that didn't want to raise the levy on deposits over €100k into double figures, which is why the levy on smaller depositors is there.

The reason the banks are too large for Cyprus to bail out is because they're full of Russian money, and the northern countries wanted to bail in Russian depositors. The EU Commission itself was opposed, while the Parliament is opposed to hitting smaller depositors - but any bailout deal requires the northern countries on board, because they're the solvent ones that can back a bailout deal, and they wanted a depositor bail-in.

cordially,
Scofflaw

KyussBishop

djpbarry wrote: »

I don't really know where you're going with this. The point is, you are assuming politicans to be unaware of alternatives to their actions. I am simply pointing this out to be an extremely arrogant assumption. Or naive - I'm not sure which.

As I already said in my last post, you're assuming malice on their part, how would that be any less arrogant?

There are any number of economists out there right now, in many major online news outlets, labeling this the stupid policy decision it is; I'm not sure where you are going with this, as you seem to be picking at this for the sake of it.

That's a steady thing I've noticed in replies from you before; you like to drag things into endless circular rounds of contrary nitpicking, where you deliberately selectively read/reply to posts, mostly raising the same issues that have already been addressed in the posts you're replying to (even things being addressed in the very same sentence you reply to, but which you like to cut off to pretend it was never said, so the quote in your reply looks consistent).

It makes replying to you rather pointless, as you simply selectively ignore or reframe posts, for rhetorical effect, meaning replying to you quickly boils down to repeating what has already been said, while you thereafter primarily try to obtusely ignore what was said, to throw in rhetoric and opt for snidey point scoring.

Scofflaw

4.legs.good wrote: »

The ECB are the ones threatening them with collapse!

No, the ECB are pointing out that one of their banks is insolvent, and therefore cannot qualify for ECB support. Legally, the ECB can only support solvent banks, because they can only offer liquidity support:

The European Central Bank had another shock for him: the island’s second-largest bank, Laiki, was in such bad shape that it no longer qualified for the eurosystem’s emergency liquidity assistance – the cheap central bank loans that teetering eurozone banks need to run their day-to-day operations.

The message, delivered by the ECB’s chief negotiator, Jörg Asmussen, meant that if no deal was reached, Laiki would collapse, probably bringing the island’s largest bank down with it, and saddling Nicosia with a €30bn bill to reimburse accounts covered by the country’s deposit guarantee scheme. It was money Nicosia did not have. All of the island’s account holders would be wiped out.

http://www.ft.com/intl/cms/s/0/f890566a-8f24-11e2-a39b-00144feabdc0.html#axzz2NpJHU2Me

It's the same problem we had with Anglo.

cordially,
Scofflaw

nesf

Scofflaw wrote: »

No, the ECB are pointing out that one of their banks is insolvent, and therefore cannot qualify for ECB support. Legally, the ECB can only support solvent banks, because they can only offer liquidity support:



http://www.ft.com/intl/cms/s/0/f890566a-8f24-11e2-a39b-00144feabdc0.html#axzz2NpJHU2Me

It's the same problem we had with Anglo.

cordially,
Scofflaw

Laiki is a major commercial bank I believe, Anglo wasn't. While it was believed at the time that the collapse of Anglo might bring the house of cards down, post facto this has I think been questioned. Replace Anglo with BoI or AIB and you have a better analogy of the potential fallout from the collapse of Laiki. If their second largest commercial bank is insolvent then they are really, really between a rock and a hard place. They are in a far more urgent position than we were running up to the bailout.

Scofflaw

nesf wrote: »

Laiki is a major commercial bank I believe, Anglo wasn't. While it was believed at the time that the collapse of Anglo might bring the house of cards down, post facto this has I think been questioned. Replace Anglo with BoI or AIB and you have a better analogy of the potential fallout from the collapse of Laiki. If their second largest commercial bank is insolvent then they are really, really between a rock and a hard place. They are in a far more urgent position than we were running up to the bailout.

It does seem to be the case that their two largest banks are in trouble:

Without that loan, the country faces default, the consequences of which would be painful, Mr. Anastasiades warned.

"First, it would have resulted in the immediate cessation of operations at one bank, and would have led to the suspension of operations at [Cyprus's] second big bank, and that would have finally led us to the complete collapse of the banking system," said Mr. Anastasiades, who has been in office for just over two weeks.

I can understand the principle here - bailout money is not free money, but comes from other countries, who have to put their credit on the line to get it (that is, they're going into debt on the bailed-out country's behalf, something which seems often to be entirely ignored in these debates), and depositors benefit directly from bank rescues.

I can also understand the delicate balance the Cypriot government is trying to strike between taxing Cypriot small savers and not over-taxing large Russian depositors.

And I don't see by any means that bailing-in depositors is outrageous in itself, given that the other choice is taxing everybody - which in this case would have meant taxing Cypriots for the next n years to pay for the protection of Russian oligarchs, whether they had money in the protected banks or not.

At the same time, the potential for contagion is high, and we'll only see whether it happens and how badly when the markets are open, while protecting Russian oligarchs' fortunes with European taxpayers' money in any way is pretty objectionable. It's also going to give the EU and the member states yet another headache when it comes to further treaty revisions, because it will make the EU highly unpopular in Cyprus, and quite deservedly so in some ways - of course, it will also make the institutional EU unpopular, which is a little unfair, given they've opposed this.

On that note, I can't help but notice our "friends" the IMF were fully on board with the depositor levy:

Mr Schäuble was not alone. Several officials involved in the talks said he not only had backing from the Finns, Slovaks and to a lesser extent the Dutch. The International Monetary Fund, which had been urging depositor haircuts for months, had won the argument over the skittish European Commission, which had long worried that seizing depositor assets could spark a bank run in Cyprus and, potentially, elsewhere in the eurozone.

José Manuel Barroso, the commission president, and Marco Buti, the top civil servant in the commission’s economics directorate, had even contemplated a programme that excluded the IMF, one senior official involved in the talks said. But by then, multiple officials said, the commission had lost credibility in Berlin.

“The Germans said, ‘Better a programme with the IMF than with the European Commission’,” said the senior official involved in the talks. “In my counting, five to six member states would not have supported a programme without the IMF.”

http://www.ft.com/intl/cms/s/0/f890566a-8f24-11e2-a39b-00144feabdc0.html#axzz2NpJHU2Me

Sucks to be pretty much everybody in this one, but, again, there are unpleasant consequences in letting your banks blow themselves up to multiples of your economy.

cordially,
Scofflaw

nesf

I actually just realised how bad this is, the two banks going bust will cost around €30 billion to the Cypriot Government and by extension the economy. Cyprus' total GDP is only around 28 billion dollars. Cyprus already has a debt to GDP ratio of 68.5%. This would push it to what? I'm far too tired to work it out tonight but we must be approaching 200% and they are already junk status rated on their bonds.


No wonder they're accepting a bailout on such draconic conditions, they really and truly have no other choice.

Scofflaw

nesf wrote: »

I actually just realised how bad this is, the two banks going bust will cost around €30 billion to the Cypriot Government and by extension the economy. Cyprus' total GDP is only around 28 billion dollars. Cyprus already has a debt to GDP ratio of 68.5%. This would push it to what? I'm far too tired to work it out tonight but we must be approaching 200% and they are already junk status rated on their bonds.

No wonder they're accepting a bailout on such draconic conditions, they really and truly have no other choice.

Well, GDP 2013 expected was €17.5bn, according to Eurostat. So a €30bn hole in their banks would be 170% of GDP all by itself. Total would be 240% of GDP.

As it is, with a bailout of €10bn, they hit 125% of GDP - without the depositor bail-in, that would be 170%. As with Greece, the private sector bail-in has been set to bring them within swimming distance of sustainability.

If they reduce the levy on smaller deposits to 5%, then someone with life savings of €25k is paying €1250 towards keeping Cyprus sustainable. It's not nothing, but it's not their life savings being wiped out either. Had we had a similar bail-in here, I'd probably have been OK with it as opposed to those tax rises and service cuts we've had as a result of the bank debt (as against those for the deficit).

cordially,
Scofflaw

KyussBishop

The decision for funding the bailout isn't limited to loaned (public debt inflating) or taxed funds though; as far as the deposit levy is concerned, that comes to around €6 billion, which is a very small amount of money on the large scale of things, and may not have been worth the cost of undermining depositor confidence across the entire EU, which may easily outstrip that €6 billion (will see tomorrow, when the markets open).

That part of Cyprus's bailout could have been funded by ponying up the money without adding it to their national debt, or even by direct monetary financing (such a small amount, that the EU-wide economic impact would be insignificant); whatever the likely political complaints, the alternatives were/are there, and may be very cheap compared to the potential damage of undermining depositor confidence across the entire EU.

KegglesMcS

Does anyone actually really believe their bank accounts were raided? Seems ludricous to me.

djpbarry

KyussBishop wrote: »

As I already said in my last post, you're assuming malice on their part, how would that be any less arrogant?

I'm assuming that various ministers were advised by their respective civil servants of their options. I'm assuming it's unlikely that, at the outset, all Eurozone ministers (let alone all EU ministers) agreed on a course of action. I'm assuming that what was enacted was a compromise between the different positions initially held.

It's not a simple binary choice between ignorance or malice.

Sierra Oscar

The parliament vote to approve the bailout deal has been postponed again until tomorrow, as the leading government party does not have the sufficient parliamentary numbers to approve the deal.

The banks will remain closed indefinitely until the vote occurs, which could be later in the week if this trend continues.

hatrickpatrick

TOMs WIFE wrote: »

Bluewolf:
This not going to go anywhere constructive after "showers of elites" and "cesspool"

How are you defining constructive? Sometimes rage is perfectly legitimate, this is certainly one of those times.

P_1

Sierra Oscar wrote: »

The parliament vote to approve the bailout deal has been postponed again until tomorrow, as the leading government party does not have the sufficient parliamentary numbers to approve the deal.

The banks will remain closed indefinitely until the vote occurs, which could be later in the week if this trend continues.

Have to say that that is a frighteningly authoritarian move.

nesf

P_1 wrote: »

Have to say that that is a frighteningly authoritarian move.

Their option is? I mean would there be a cent left in the banks if they opened them tomorrow morning?

P_1

nesf wrote: »

Their option is? I mean would there be a cent left in the banks if they opened them tomorrow morning?

Probably not, but continually closing the banks till the parliament votes the 'right' way is certainly unsettling.

nesf

P_1 wrote: »

Probably not, but continually closing the banks till the parliament votes the 'right' way is certainly unsettling.

I think it's keep the banks closed until the parliament has definitely gone one way or the other. The Government there might get away with a few days of keeping the banks closed trying to get the votes to pass it but it's not like they can close the banks for very long before the entire country grinds to a halt.

InchicoreDude

Everyone is talking about the levy on the bank accounts.

But are there other terms to this bailout? Like, will there be increased taxes for people in Cyprus too?