Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi all! We have been experiencing an issue on site where threads have been missing the latest postings. The platform host Vanilla are working on this issue. A workaround that has been used by some is to navigate back from 1 to 10+ pages to re-sync the thread and this will then show the latest posts. Thanks, Mike.
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest
Cyprus bailout deal #2
Comments
-
Boulevardier wrote: »Am I the only person here who would not consider it completely mad for the EU (not just the Eurogroup, the whole EU) to come up with a 6.5 bn grant-in-aid for Cyprus, with no repayment strings attached?
I guess that's the essence of brinksmanship but then (IMHO) Ireland wasn't too enthusiastic to play that game at the time - count on the fear of contagion to force a deal versus vaporise your economy. People complain a lot but I moved to Ireland from Africa in 1982. It's like a gravy train now in comparison to Ireland in '82. I remember thinking "Africa was better than this place".
My personal opinion is that they may revisit the one-time-levy option. It wasn't a bad plan relatively speaking; unless you were rich and owned media outlets in which case it was the end of the freaking world. The financial markets blipped, then apparently decided they could care less about a €25bn GDP.
If given the option - 7% of your account over 20 grand to continue with pensions and health care and public services - I personally would have no problem. (ok, that's a fib, I wouldn't have been dancing in the streets either). On the other hand, I can only dream of having 20 grand in the bank so it would affect me how? :P
People on soc.politics have speculated for years on what would happen in the case of a banking collapse - credit controls and printing presses and euro exit. They are already implementing the first (is that legal?) so we may find out.0 -
-
That much? I didn't know that. (At the risk of starting something I shouldn't) I wonder how much of that was the Depfa/Hypo disaster.
Somewhere around a third - if you add in Sachsen (also IFSC based) it would be more. As far as I recall, the German authorities suggested Ireland might like to contribute to the Hypo bailout, and were told to get lost.
European bank bailouts, measured only by way of their impact on debt (so not including any cash like our NPRF or the Cypriot levy):
Country|BankSize end-2007 (€bn)|Bailout Impact on GG Debt (€bn)
AT|785|7.55
BE|1362|24.5
DE|6625|294.74
DK|745|8.23
EL|312|5.09
ES|3008|24.41
HU|43|0.5
IE|584|45.57
IT|2422|2.6
LT|5|0.87
LU|88|2.5
LV|12|1.34
NL|1807|44.51
PT|340|7.29
SE|1100|0.63
SI|35|1.31
UK|7329|122.26
Total|26602|593.9
See, some bailouts are small, while other bailouts are far away...
cordially,
Scofflaw0 -
Ireland, Southern Euro Zone, Britain, US, Japan and by the sounds of it several North European countries are all hurtling down an ever narrowing pot holed country road called "DEBT". All states no matter how mature or emerging are driving high powered delicately tuned cars that are fuelled on “near future politics” and “single perspective media”. None of these cars were built for this road and apparently all of them are now showing signs of fatigue and breakdown (none are guaranteed to be able to sustain this level of attrition)! Smaller countries are braking furiously to miss the impact whilst others are putting down the pedal in a belief that they can drive through and clear of any impact. All are playing the game of "chicken" and "brinkmanship". We are literally on a road to nowhere!
My questions are separate to the daily / weekly negotiations and triage that feeds this frenzy.
How did the industrialised World bring itself to this dead-end road?
Was it stupidity or was it planned short term gain? Either answer means that “we the people” are not asleep at the wheel but actually unconscious!
Who in fact owns this road called debt? If it’s all counties and all people then, we truly are lunatic boy racers! Where now is the actual seed wealth that enabled this debt to be created?
Maybe if one country actually stops and gets out of the car they can tell the rest of us what’s really happening!!!!!
Moderators; I beg your forgiveness if this analogy and angle is slightly off topic and but I also ask that you let us find forum and understanding of the lunacy and wealth shift (theft) that we have been a part of for the last number of years. Or maybe it’s not theft if the EU takes money from Cypriotes & Russians. Maybe I should call it a “haircut”?
Remember it was never meant to be a crash it was always meant to be a soft landing!0 -
Glengormanjay wrote: »Or maybe it’s not theft if the EU takes money from Cypriotes & Russians. Maybe I should call it a “haircut”?
Remember it was never meant to be a crash it was always meant to be a soft landing!
Christ. The EU isn't getting anything from the Cyprus deal. The reason that deposits have to be hit, is to avoid having Cyprus going above an unsustainable level of national debt. I.e. Cyprus will have to come up with some of its own bailout cash, much like we had to.
What is so fundamentally hard to grasp about this story? Where are people reading that the EU is demanding money for itself? I must be missing those headlines...0 -
In fairness, that hasn't stopped the EU at all thus far, as it is illegal to renege on depositor insurance as well; if they can wrangle their way out of that by labeling it a 'tax', they can wrangle their way out of giving Cyprus the money they need, no strings attached, as well (and could also directly legislate to make it legal).It would also be illegal, and a heck of a precedent, particularly as a way of saving rich Russians.
cordially,
Scofflaw
Ah, interesting, did not know that; I don't know the extent of it, but there is much talk about current EU problems being a solvency crisis rather than just a simple liquidity crisis, so as more economies across the EU slow down, exposing more cracks in banking/financial institutions (and contagion from that across countries), perhaps there will be plenty more bailouts on the way.The German banks have had a bailout to the tune of €295bn.
cordially,
Scofflaw0 -
KyussBishop wrote: »In fairness, that hasn't stopped the EU at all thus far, as it is illegal to renege on depositor insurance as well;
To repeat, deposit insurance applies ONLY when a bank fails. It does not apply while a bank continues to operate. Also it is up to each member state to honour (or illegally renege) on their respective deposit insurance scheme (not the EU).KyussBishop wrote: »if they can wrangle their way out of that by labeling it a 'tax',.
They don't need to "wrangle" anything - governments are free to impose taxes or levies on bank accounts if they so choose.
Offhand, I can think of some here. There is the levy you pay if you get a cheque card, one for an ATM card, one for a credit card and stamp duty applied on each cheque in a cheque book. And that's not counting D.I.R.T.
There is nothing illegal about those even if many are stupid (as "physical" money is way more expensive to process than "electronic" money and has much higher security costs to prevent bank robberies etc).KyussBishop wrote: »they can wrangle their way out of giving Cyprus the money they need, no strings attached, as well (and could also directly legislate to make it legal).
Nobody is obliged to loan Cyprus any money. There is a loan offer on the table (which can be withdrawn at any time). It is up to Cyprus what happens next.0 -
KyussBishop wrote: »In fairness, that hasn't stopped the EU at all thus far, as it is illegal to renege on depositor insurance as well; if they can wrangle their way out of that by labeling it a 'tax', they can wrangle their way out of giving Cyprus the money they need, no strings attached, as well (and could also directly legislate to make it legal).
They could do the latter, of course, but it's hardly going to get past some electorates. As to the depositor guarantee, it applies in liquidations, and is irrelevant to a government levy. There is no "blanket guarantee" that nothing will happen to deposits under the limit as people appear to think.
I don't think people read the law before deciding it's being broken.KyussBishop wrote: »Ah, interesting, did not know that; I don't know the extent of it, but there is much talk about current EU problems being a solvency crisis rather than just a simple liquidity crisis, so as more economies across the EU slow down, exposing more cracks in banking/financial institutions (and contagion from that across countries), perhaps there will be plenty more bailouts on the way.
It seems mostly to be a bank solvency crisis, certainly - if it's still being characterised in some places as a liquidity crisis I'd be a little surprised. Not a lot surprised, mind you, just a little. The liquidity crisis has exposed solvency problems, which to some extent are related back to the liquidity crisis - although in our case, for example, I would have said the bubble was already bursting to create a solvency crisis before the liquidity crisis stopped allowing the banks to juggle their way through.
cordially,
Scofflaw0 -
-
It doesn't matter what it is legally defined as, the entire point of it was to give depositors confidence that their money is safe, which it obviously is not.To repeat, deposit insurance applies ONLY when a bank fails. It does not apply while a bank continues to operate. Also it is up to each member state to honour (or illegally renege) on their respective deposit insurance scheme (not the EU).
It's exactly that there are legal loopholes allowing such actions, which is part of my point; if there are for this, chances are there are for the EU to provide direct monetary assistance.
Come off it; dipping into depositors funds below the insured limit, is an unprecedented move in the crisis thus far, and doing it as a 'tax' is nothing more than a legal nicety for reneging on the deposit insurance.They don't need to "wrangle" anything - governments are free to impose taxes or levies on bank accounts if they so choose.
Offhand, I can think of some here. There is the levy you pay if you get a cheque card, one for an ATM card, one for a credit card and stamp duty applied on each cheque in a cheque book. And that's not counting D.I.R.T.
There is nothing illegal about those even if many are stupid (as "physical" money is way more expensive to process than "electronic" money and has much higher security costs to prevent bank robberies etc).
That deposit insurance is totally meaningless now, for every EU country, because all you have to do is slap down a deposit tax, the moment before you liquidate a bank; that being the case, the deposit insurance was meaningless to begin with, and this is an obvious reneging of that.
Did I say anyone was obliged to? No. The decision is not Cyprus's alone, because the EU is perfectly capable of providing any kind of bailout package it wants, and they've traded depositor confidence across the EU, for a measly €6 billion.Nobody is obliged to loan Cyprus any money. There is a loan offer on the table (which can be withdrawn at any time). It is up to Cyprus what happens next.0 -
Advertisement
-
Let's face it. What Cypriot would put another penny into a Cyprus bank after this.0
-
But it doesn't want to provide a different kind of bailout package where that additional measly €6bn is provided, because its citizens (at least the ones in the rich countries) won't wear it.KyussBishop wrote: »The decision is not Cyprus's alone, because the EU is perfectly capable of providing any kind of bailout package it wants, and they've traded depositor confidence across the EU, for a measly €6 billion.0 -
You don't view it as a reneging of depositor insurance though? If you can dip into insured deposits, just by calling it a 'tax', the moment before you liquidate the bank, then deposit insurance is completely meaningless.They could do the latter, of course, but it's hardly going to get past some electorates. As to the depositor guarantee, it applies in liquidations, and is irrelevant to a government levy. There is no "blanket guarantee" that nothing will happen to deposits under the limit as people appear to think.
I don't think people read the law before deciding it's being broken.
The EU just got around the illegality of that, by calling it a tax; if they utilize loopholes for something like that, they can for other things.
Separate to that, there is also some grumbling about the ECB bond buying program being illegal, with threats of potential legal action on that.
Part of what I've read, in bits, regarding the solvency crisis now as well, is that it's not being properly dealt with either, with Europe still not having properly isolated the bank solvency issues from issues with sovereign debt (though not totally sure on the details of that).It seems mostly to be a bank solvency crisis, certainly - if it's still being characterised in some places as a liquidity crisis I'd be a little surprised. Not a lot surprised, mind you, just a little. The liquidity crisis has exposed solvency problems, which to some extent are related back to the liquidity crisis - although in our case, for example, I would have said the bubble was already bursting to create a solvency crisis before the liquidity crisis stopped allowing the banks to juggle their way through.
cordially,
Scofflaw
So it looks like that may be causing more problems in the near-future, as more EU economies slow.0 -
That's an unbacked assertion, and it doesn't make any logical sense either, because you are saying EU citizens, would prefer a massive loss of confidence in their deposits, instead of directly creating €6 billion, which would have practically zero effect on the wider EU economies.But it doesn't want to provide a different kind of bailout package where that additional measly €6bn is provided, because its citizens (at least the ones in the rich countries) won't wear it.0 -
I think German and Dutch citizens probably have as much confidence in their deposits as they ever did. Italians and Spanish not so much.KyussBishop wrote: »That's an unbacked assertion, and it doesn't make any logical sense either, because you are saying EU citizens, would prefer a massive loss of confidence in their deposits, instead of directly creating €6 billion, which would have practically zero effect on the wider EU economies.
But it is as clear as day that the German and Dutch (etc) citizens don't want to create €6bn to capitalise Cypriot banks, unless you think that their leaders don't represent their wishes. Now that would be an unbacked assertion.0 -
So a governments actions always represents the will of the people; naturally then, you think the initial actions of the government in Cyprus, in approving reneging of depositor insurance, represented the desires of the Cypriot people?I think German and Dutch citizens probably have as much confidence in their deposits as they ever did. Italians and Spanish not so much.
But it is as clear as day that the German and Dutch (etc) citizens don't want to create €6bn to capitalise Cypriot banks, unless you think that their leaders don't represent their wishes. Now that would be an unbacked assertion.
You don't speak for the German or Dutch citizens, to say what they would or would not approve of, and there is no hint that there was even any floating of such a proposal either.
What exact reasons would they have, for opposing it? Neither Germany or Denmark would be providing funds in the circumstance I'm talking about, so what exact problem would their citizens have with it?0 -
Broadly speaking, governments do represent the will of the people. Obviously the Cypriot people don't want to have their deposits taxed, but I didn't see the protesters putting forward too many alternative proposals last week.KyussBishop wrote: »So a governments actions always represents the will of the people; naturally then, you think the initial actions of the government in Cyprus, in approving reneging of depositor insurance, represented the desires of the Cypriot people?
I don't, but their governments do, and their governments aren't willing to print money right now. I don't see any substantial body of dissenting opinion on the ground in Germany or the Netherlands, and certainly not at the political level.KyussBishop wrote: »You don't speak for the German or Dutch citizens, to say what they would or would not approve of, and there is no hint that there was even any floating of such a proposal either.
I guess they're afraid of inflation or damage to their credit rating. Maybe they just don't like the idea of handing more money to feckless southern states.KyussBishop wrote: »What exact reasons would they have, for opposing it? Neither Germany or Denmark would be providing funds in the circumstance I'm talking about, so what exact problem would their citizens have with it?
Personally I think that a bit of money creation would do little harm, but it isn't on the cards in the short term anyway.0 -
I have emptied my bank account. I consider it preferable to keep what little I have in my home, where I can more easily defend it from the thieves roaming abroad than I can from the thieves in Leinster House and Brussels. If there was ever one single event likely to provoke a run on banks throughout the EU, then this is it.
I realise that Governments can still take our money by increasing indirect taxation but I thought that the primary concern was to increase market confidence in the banking system, thereby lowering borrowing costs. I'm at a loss to see how this does that.0 -
I have emptied my bank account. I consider it preferable to keep what little I have in my home, where I can more easily defend it from the thieves roaming abroad than I can from the thieves in Leinster House and Brussels. If there was ever one single event likely to provoke a run on banks throughout the EU, then this is it.
I realise that Governments can still take our money by increasing indirect taxation but I thought that the primary concern was to increase market confidence in the banking system, thereby lowering borrowing costs. I'm at a loss to see how this does that.
You get paid cash in hand?0 -
Advertisement
-
-
What's that got to do with it? What I get paid goes into a current account, I don't get paid 20 years accumulated savings every week, which is what was in my deposit account.
Disclaimer - people can do what they want with their money
In this case, you don't have confidence in the banks, why do you have confidence in the cash in your hands?
Of course if everyone did the same and pulled their money out of the banks - well, let's just say it would get very 14th century very quickly.
i.e. a lot worse than it is now0 -
I just heard on the radio, it has been decided that 20% of 100k or more will be confiscated.0
-
Except we're not 'broadly speaking', we're talking about what the people want, and it is pretty immediately obvious that in Cyprus, the governments action did not represent the will of the people; it takes only one counterexample, to disprove the claim that government actions are synonymous with what the people of that country want.Broadly speaking, governments do represent the will of the people. Obviously the Cypriot people don't want to have their deposits taxed, but I didn't see the protesters putting forward too many alternative proposals last week.
If you can find any poll (just a single one), over any issue, where 50% or more people disagree with actions of government, your claim is wrong.
Seriously, inflation from €6 billion, when the total money supply is in the range of ~€9 trillion? That's nonsense, any inflation from that amount would be totally insignificant.I guess they're afraid of inflation or damage to their credit rating. Maybe they just don't like the idea of handing more money to feckless southern states.
Personally I think that a bit of money creation would do little harm, but it isn't on the cards in the short term anyway.
There is pretty much no downside at all to just creating such a tiny amount of money and giving it to them, and it could have been used to protect depositor confidence (which is much more valuable, and the reneging of which, may cost a lot more than a measly €6 billion in the future); it is a perfectly good alternative, which shows that the choices are not solely in the hands of Cyprus, but they are primarily in the hands of the EU, and the EU has chosen yet another needlessly destructive and reckless path.0 -
No downside? A ridiculous claim. what would stop Cyrprus still repeating the same thing? When every other country just gets €6bn for nothing while suffering no consequences I doubt they would be to happy when they have to raise taxes for that kind of money.0
-
Disclaimer - people can do what they want with their money
In this case, you don't have confidence in the banks, why do you have confidence in the cash in your hands?
Of course if everyone did the same and pulled their money out of the banks - well, let's just say it would get very 14th century very quickly.
i.e. a lot worse than it is now
That's just the point. If I , as an insignificant depositor, have lost confidence in the Eurozone banks, how much more affected are the major depositors going to be? I still have the option to buy collateral or to convert my cash to another currency. I think it was a major gaffe on the part of those politicians, who are continually harping on about maintaining the stability of the banking system, and avoiding the threat of contagion. What must depositors in Spain or Italy be thinking.0 -
Advertisement
-
That's not obvious at all. We don't know what the people of Cyprus want, and nor do they, because the menu of available choices isn't known yet.KyussBishop wrote: »Except we're not 'broadly speaking', we're talking about what the people want, and it is pretty immediately obvious that in Cyprus, the governments action did not represent the will of the people; it takes only one counterexample, to disprove the claim that government actions are synonymous with what the people of that country want.
If they were given a straight choice between a modest haircut and an immediate bank collapse with unknown consequences, they would probably pick the former.
Obviously if a no strings attached €6bn transfer was available, they would pick that instead. It isn't.
My claim was that governments broadly represent the will of the people. That isn't wrong just because they sometimes don't.KyussBishop wrote: »If you can find any poll (just a single one), over any issue, where 50% or more people disagree with actions of government, your claim is wrong.
It may well be nonsense, but the fear of it isn't. In the same way that taxing Cypriot deposits can damage confidence in the deposit guarantee throughout southern Europe, printing money can damage confidence regarding inflation and prudent fiscal policy throughout northern Europe.KyussBishop wrote: »Seriously, inflation from €6 billion, when the total money supply is in the range of ~€9 trillion? That's nonsense, any inflation from that amount would be totally insignificant.
If the Cypriots are to get a free €6bn (even if it could be done legally), fairness dictates that the Irish, Greeks and Portuguese also get some transfers. Can opened. Worms all over the place.KyussBishop wrote: »There is pretty much no downside at all to just creating such a tiny amount of money and giving it to them ...0 -
Of course they wouldn't repeat the same thing, that's idiocy; there's nothing stopping the conditions on a deal, being greater regulation to stop that happening again.Chucky the tree wrote: »No downside? A ridiculous claim. what would stop Cyrprus still repeating the same thing? When every other country just gets €6bn for nothing while suffering no consequences I doubt they would be to happy when they have to raise taxes for that kind of money.
You don't collectively punish an entire country, to make an example out of a profligate financial/banking industry (of which, in their case, was in great part down to their exposure to the trouble in Greece); you want to get the country back on its feet again, not crater them into the ground.0 -
Right, "we don't know", which can be applied exactly to German/Dutch citizens as well.That's not obvious at all. We don't know what the people of Cyprus want, and nor do they, because the menu of available choices isn't known yet.
You were attributing the (assumed) views of certain governments, to the will of their people, which is logically wrong; the exception (that there are times government action does not match the will of the people) proves the rule here (that government action does not automatically represent the will of the people).My claim was that governments broadly represent the will of the people. That isn't wrong just because they sometimes don't.
What fear? From who? You're assuming things here and applying views towards entire populations, without backing.It may well be nonsense, but the fear of it isn't. In the same way that taxing Cypriot deposits can damage confidence in the deposit guarantee throughout southern Europe, printing money can damage confidence regarding inflation and prudent fiscal policy throughout northern Europe.
The ECB has already created over €1 trillion so far, there is no logical reason why anybody would be scared of €6 billion here (the very idea is absurd); yet people definitely are scared now about their deposits, and the cost of that in itself, could end up well exceeding €6 billion as the crisis unfolds.
It's really silly the fearmongering put forward about inflation, with such a tiny amount of money; people never seem to understand how inflation actually works, or how to interpret the effects of money creation (which happens all the time in the private banking system). The views, consciously or not, amount to 'private money creation good, public money creation bad'.
The Cypriots would be getting €6 billion to fulfill depositor insurance; if the ECB backed deposits < €100,000, with the option of using money creation to fulfill that as a last resort (opting for debt where it does not make debt vs GDP unsustainable), then great the crisis in confidence over deposits is solved (and without having to load Cyprus with unsustainable debt in the process).If the Cypriots are to get a free €6bn (even if it could be done legally), fairness dictates that the Irish, Greeks and Portuguese also get some transfers. Can opened. Worms all over the place.0 -
We know much more clearly what the German and Dutch citizens want, as expressed through their elected representatives, and opinion polls and general reporting from those countries. We know that they are very lukewarm on the various bailouts in general.KyussBishop wrote: »Right, "we don't know", which can be applied exactly to German/Dutch citizens as well.
That's quite different from what we know about the wishes of the Cypriots, since we, and they, don't even know what their choices are yet.
I didn't say it did. I said that Government's are generally representative of the will of the people.KyussBishop wrote: »You were attributing the (assumed) views of certain governments, to the will of their people, which is logically wrong; the exception (that there are times government action does not match the will of the people) proves the rule here (that government action does not automatically represent the will of the people).
I'm not assuming anything. Northern European concerns about inflation and lax fiscal policy are well accepted.KyussBishop wrote: »What fear? From who? You're assuming things here and applying views towards entire populations, without backing.
You must see your own inconsistency here. You find it absurd that people would be worried about a tiny bit of money creation, but quite natural that depositor confidence throughout Europe has the potential to be destroyed by haircuts being applied to a tiny number of depositors.KyussBishop wrote: »The ECB has already created over €1 trillion so far, there is no logical reason why anybody would be scared of €6 billion here (the very idea is absurd); yet people definitely are scared now about their deposits, and the cost of that in itself, could end up well exceeding €6 billion as the crisis unfolds.
It's really silly the fearmongering put forward about inflation, with such a tiny amount of money; people never seem to understand how inflation actually works, or how to interpret the effects of money creation (which happens all the time in the private banking system). The views, consciously or not, amount to 'private money creation good, public money creation bad'.0 -
You don't "know" anything about what the Dutch or German people want in this particular matter (use of public money creation), by using their government as a proxy, because as we've established, government action does not automatically represent the will of the people.We know much more clearly what the German and Dutch citizens want, as expressed through their elected representatives, and opinion polls and general reporting from those countries. We know that they are very lukewarm on the various bailouts in general.
That's quite different from what we know about the wishes of the Cypriots, since we, and they, don't even know what their choices are yet.
The only correct answer here, is "we don't know", because unless you poll or ask the Dutch/German population what they think, then we don't know what they think.
That always depends on the matter being discussed, and it's not logically true to say that because a government supports a particular action (or inaction) that the people do as well (which is the link you were making).I didn't say it did. I said that Government's are generally representative of the will of the people.
There is no indication that creating €6 billion would have any such concerns attached, and it has nothing to do with fiscal policy, because we are talking about private banks here.I'm not assuming anything. Northern European concerns about inflation and lax fiscal policy are well accepted.
There is nothing inconsistent about that, people have lots to worry about if their deposits are no longer safe, and people have nothing to worry about from the EU creating the tiny amount of €6 billion, to maintain a guarantee on deposits < €100,000 (it would in fact bolster the guarantee and peoples confidence).You must see your own inconsistency here. You find it absurd that people would be worried about a tiny bit of money creation, but quite natural that depositor confidence throughout Europe has the potential to be destroyed by haircuts being applied to a tiny number of depositors.0 -
Advertisement
-
What people should learn from this is your money is not 100% safe in banks (not that it is any safer at home under the bed). Certainly not advisable to have all your wealth in one basket. Noonan can say that we would never do that here. Don't believe that either. If we have learned anything its we cannot trust our politicians either.0
-
It was interesting listening to Michael Noonan today on RTE News. He talked, when asked about the 40% tax being put on any anyone with over €100,000 in a Cyprus Bank Account, about the tax and said European Banks, not Cypriot Banks. I'm left wondering if this is in reference to those other European countries seen as likely to need a bailout, and wonder if this, if true as applying to all European banks, might lead to a run on them if news breaks of bailout requests. I can't find a podcast of the item on RTE's podcasts yet.
With regard to Cyprus, after Russia refused a Cypriot help request, I can see Russian account holders were going to empty their accounts following the initial tax reports, so the Cypriots were on a loser there and it made sense to burn the accounts for 40% anyway. I can't see the Cypriot banks opening soon until new Cypriot laws apply on movement of funds.0 -
Based on reports and rumors, the troika and Cyprus is getting ready to burn Cyprus's senior bold holders and private investors who have more than 100k in savings.
I still vividly remember how 'burning the bond holders' was the absolute no-no when we were discussing Irish bailout, and eventually almost all of the senior bond holders were paid off, and another part of the debt ended up as sovereign debt. At least media gave me the impression that the EU/ECB overlords were dead set against burning the senior bond holders as it would set the wrong precedence and it would ruin the trust in EU banks in general etc.
I am wondering why is the situation different this time around? I am hoping it's not because most of the senior bond holders of Irish banks were German banks / investment groups where as for Cypriot banks it's not them (Russian perhaps?)0 -
Cant the Irish people demand the names of the bondholders they are bailing out?0
-
Based on reports and rumors, the troika and Cyprus is getting ready to burn Cyprus's senior bold holders and private investors who have more than 100k in savings.
I still vividly remember how 'burning the bond holders' was the absolute no-no when we were discussing Irish bailout, and eventually almost all of the senior bond holders were paid off, and another part of the debt ended up as sovereign debt. At least media gave me the impression that the EU/ECB overlords were dead set against burning the senior bond holders as it would set the wrong precedence and it would ruin the trust in EU banks in general etc.
I am wondering why is the situation different this time around? I am hoping it's not because most of the senior bond holders of Irish banks were German banks / investment groups where as for Cypriot banks it's not them (Russian perhaps?)
There is a difference between senior bondholders and depositirs as far as I am aware .0 -
clairefontaine wrote: »Cant the Irish people demand the names of the bondholders they are bailing out?
Mine and your pension funds0 -
The Cyprus Mail have in interesting editorial. Unlike many shortsighted Irish and Cypriot whingers they lay the blame closer to home. Sound familiar?
http://www.cyprus-mail.com/opinions/our-view-we-ve-paid-ultimate-price-avoiding-responsibility/20130324IN CYPRUS we have a habit of blaming everyone else for our problems. We are always the victims of others, invariably foreigners who are hell-bent on causing us harm or destroying us, either because they are envious of us or want to subjugate us. This narrative has been used by politicians for decades as it allows them to absolve themselves of any responsibility for their poor judgement, mistakes and avoidance of difficult decisions.
...
This political immaturity was at its apogee ever since the Eurogroup decision for a levy on deposits was announced last week. Politicians, newspapers and TV pundits launched a concerted attack on the Eurogroup for its lack of solidarity, the German government for its vindictiveness towards Cyprus and the IMF for its plain nastiness. While there may have been some justification in these emotional outbursts, nobody was willing to concede that, perhaps, we were squarely to blame for putting ourselves in the position of needing a €17bn loan to save our economy from bankruptcy.
It was not the Eurogroup who told us to live beyond our means for years, building up the public debt as the state gave annual pay rises of six to seven per cent, outrageously high pensions and obscene retirement bonuses to public employees who were constantly growing in numbers. It was not Germany’s fault that our populist politicians, whose only concern was their re-election, happily sanctioned this profligacy because it also benefited them, politically and financially. And the European Commission was certainly not to blame for the Christofias government continuously ignoring its warnings and exhortations to put the precarious public finances in order or that it stalled the talks with the troika for months, allowing the situation to steadily deteriorate.
The avoidance of responsibility and blame-shifting is always combined with a poisonous populism that has led us from one disaster to another. It was this populist mentality that caused all the parties to take an uncompromising stance against the deposits’ levy that President Anastasiades agreed with the Eurogroup last weekend. They claimed their heroic negativity would cause havoc in the markets and force the EU to re-consider its outrageous proposal, while they foolishly assured people that Russia would come to our rescue.
Not only was their folly exposed by Thursday when it became apparent there would be no help from Moscow, but the practical consequences of defiant populism were evident as the re-structuring of Laiki Bank was announced and the deposits levy was no longer an option. The government spent all Friday in efforts to prevent the Bank of Cyprus from suffering Laiki’s fate, bailing in uninsured deposits to the tune of 25 per cent as a compromise.
...
Populism may have been shown up in the last week, but it was the politician who took the responsibility for a very difficult, but correct, decision that came under attack from everyone - President Anastasiades. It showed how much we appreciate real leadership in this country.0 -
I’m with clairefontaine, in order to have any Crisis Management Plan we really need to know the Big Picture, we need to know what the potential impacts truly are! – Who are the senior bond holders?
We are in crisis but my fear is that we are in constant debate relevant to our next move – “punch or block”? Where is the big picture solution? The difference between our Banks and Government is grey to say the least. I really do wonder who leads who? There are fundamental questions to be asked about
- The real and actual wealth of many Industrialised counties!
- Future ownership of our Banks and more importantly our money system!
- The overall mechanism of personal wealth growth (pensions) v's that of the system Banks (Private business), Investment Houses. Government (Enforcers and facilitators)
- Has the system got the right to recalibrate in order to protect itself above all else? It is very apparent that the rights and interest of people come an almost invisible second?
- How can the Industrialised World owe so much money and to whom do we owe it?
- If we own this money to ourselves friends and neighbours, then can we not find a more amicable and less destructive means of recalibration? Why should we make slaves and pawns of ourselves to each other?
- How much of this debt is real and actual how much is virtual?
- Who actually expects the US, Briton, Japan or Italy to ever pay or come close to being able to pay off their debt? Seriously their level of debt is growing exponentially!
- How can we ever find a solution to this crisis when the "system" is so dependent on the root issue? i.e. the system prospers from debt and debt creation!
- How can any society ever be free to prosper if it is burdened with growing rates of PERPETUAL debt?
Is it fair to suggest that we should better understand the Big Picture before we get pulled into the daily fight and the potetially destructive detail that comes with it?0 -
There is a difference between senior bondholders and depositirs as far as I am aware .
There are also virtually no senior bondholders - about €100m. I don't know whether they're being burned as part of this, but if those bonds are Laiki, then they probably will be. The main difference is that it will happen as part of the bank resolution process Laiki will be put into, which is also how the large Laiki deposits will lose money.
We still don't even have a bank resolution mechanism.
cordially,
Scofflaw0 -
There is a difference between senior bondholders and depositirs as far as I am aware .
In what sense do you mean? Yes different in the sense of who usually holds them and the mechanics of same, but not in terms of claims on assets.
I think depositors are ranked pari passu with Senior debt in the event of a bankruptcy. Both are the same thing; give your money to the bank and get it back (with interest) at a later stage.
That's the crazy thing I've seen on here; people who were screaming "burn the bondholders" were then screaming against the travesty of the depositors in Cyprus losing some money.
Why is this being done in Cyprus and not in Ireland? Well in Cyprus, the banking capital was not provided by bond to the same extent. The cynic in me would suggest that therefore there were no German or French bondholders in danger of losing billions! Simple as that.0 -
Advertisement
-
There are also virtually no senior bondholders - about €100m. I don't know whether they're being burned as part of this
I don't think it will be clear for a few weeks to what extent the larger depositors will be burned but, from what I've read, the bondholders will be completely wiped out.
Which is probably a good thing (minimal though the impact might be in this case). If bondholders are going to go around lending money to countries with bad credit at higher and higher rates, solely on the expectation that someone will eventually bail them out, burning their asses is a fairly clear message to cut it out. The next message might involve even more French Revolution style activity :P
What bluesteel posted above is echoed in the WSJ:Cypriot officials and politicians have spent much of the past decade cultivating the country's status as an offshore tax haven, its banks swollen with deposits—mainly from Russia. With the rest of the euro zone insisting that economic model can't continue, resistance from the Cypriot government and members of Parliament had been running high.
...
Wealthy foreigners—many of them Russian—have used the island's lenders to store cash, taking advantage of lax banking laws and low corporate taxes. It was because of this reliance on deposits, which have reached about four times the size of Cyprus's economy, that the euro zone and the IMF insisted that bank-account holders contribute to the cost of saving the country and its banks.
I see that the world continues unflustered with with the EU markets up this morning. I guess when you take 40% of the top 1%s money, the normal reaction of the other 99% (that's us) is "so what?".0 -
In what sense do you mean? Yes different in the sense of who usually holds them and the mechanics of same, but not in terms of claims on assets.
I think depositors are ranked pari passu with Senior debt in the event of a bankruptcy. Both are the same thing; give your money to the bank and get it back (with interest) at a later stage.
That's the crazy thing I've seen on here; people who were screaming "burn the bondholders" were then screaming against the travesty of the depositors in Cyprus losing some money.
Why is this being done in Cyprus and not in Ireland? Well in Cyprus, the banking capital was not provided by bond to the same extent. The cynic in me would suggest that therefore there were no German or French bondholders in danger of losing billions! Simple as that.
Too simple. In fact, Cypriot banks have very similar levels of eurozone funding to the bailed out Irish banks - about 8-10%.
cordially,
Scofflaw0 -
Well the Irish banking system relies on bondholders to provide capital, so burning them would have destroyed our entire banking system. There are almost no bondholders in Cypriot banks to burn so it doesnt make a huge difference to them. The lack of bondholders is also the reason why they must go after depositors.Based on reports and rumors, the troika and Cyprus is getting ready to burn Cyprus's senior bold holders and private investors who have more than 100k in savings.
I still vividly remember how 'burning the bond holders' was the absolute no-no when we were discussing Irish bailout, and eventually almost all of the senior bond holders were paid off, and another part of the debt ended up as sovereign debt. At least media gave me the impression that the EU/ECB overlords were dead set against burning the senior bond holders as it would set the wrong precedence and it would ruin the trust in EU banks in general etc.
I am wondering why is the situation different this time around?0 -
"burning them would have destroyed our entire banking system"
No it wouldn't. The overwhelming evidence is that bondholders, who are gamblers themselves, would have accepted the logic of Ireland's position.
It was the ECB that forced us into the guarantee. We could and should have not done it.0 -
Boulevardier wrote: »"burning them would have destroyed our entire banking system"
No it wouldn't. The overwhelming evidence is that bondholders, who are gamblers themselves, would have accepted the logic of Ireland's position.
It was the ECB that forced us into the guarantee. We could and should have not done it.
The ECB didn't force us into the guarantee - where on earth did you get that idea? The ECB was as surprised and annoyed by our guarantee as everyone else in Europe was, and are on record as being so expressing particularly their annoyance at not having been consulted in advance.
And what "overwhelming evidence" are you going to show us that bondholders would have "accepted the logic"? They didn't do so in Denmark, or anywhere else - they put funding costs up for other banks, and sued.
regards,
Scofflaw0 -
I get the feeling that when a lot of people here mention the word 'bondholder', what they're imagining is this.0
-
Scofflaw, you have ended your post with "regards" instead of "cordially." I'm hurt.
However, if you are right that it wasnt the ECB that makes it even worse. It means our guarantee to the bondholders was asinine in the extreme.
If bondholders sue we must fight them. This is about moral and social justice, not just economics.
Rojomcdojo, I admit that when I think of bondholders, I imagine a certain scene from "Merchant of Venice." I hope that doesn't make me anti-Semitic.0 -
Rojomcdojo wrote: »I get the feeling that when a lot of people here mention the word 'bondholder', what they're imagining is this.
And what they're not imagining is a pencil-pushing fund manager at Allianz, but the second is the reality.
People seem not to make any connection in their minds between the "bit of wealth I've prudently saved, and have in a wealth fund", and where that money might be invested on their behalf. But the great floods of capital that have characterised the global system for the last couple of decades are based in part on the mobilisation of those small savings.
cordially,
Scofflaw0 -
Boulevardier wrote: »Rojomcdojo, I admit that when I think of bondholders, I imagine a certain scene from "Merchant of Venice." I hope that doesn't make me anti-Semitic.
So, would it come as a massive shock to you to find out that our own credit unions, banks, and pension funds were bondholders?0 -
Advertisement
-
Boulevardier wrote: »Scofflaw, you have ended your post with "regards" instead of "cordially." I'm hurt.
However, if you are right that it wasnt the ECB that makes it even worse. It means our guarantee to the bondholders was asinine in the extreme.
Well, not only is there no evidence for the ECB being behind our guarantee, but a good deal of evidence against it, including the statements of Brian Lenihan and the ECB at the time.
As so often, there's a good Seamus Coffey rundown, which saves me from reassembling all the evidence in question. However, if you want sources, and Dr Coffey has not provided them, I probably have most of them.
We do have good evidence that in 2010, the ECB intervened forcefully to make the Irish government take their bailout, in exactly the same way as they intervened in Cyprus, but people seem willing to conflate that intervention, and the famous "ECB letter", with events in 2008, two years earlier. You wouldn't have thought events so recent could become the subjects of myth and folklore, but there we go.Boulevardier wrote: »If bondholders sue we must fight them. This is about moral and social justice, not just economics.
Unfortunately, it's settled in courts of commercial law.
cordially,
Scofflaw0
![[Deleted User]](/applications/dashboard/design/images/defaulticon.png)
Advertisement