EU Stealing Your Savings
20 March 2013, 02:27 PM
#93
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Would it be feasible for Cyprus gov't to limit withdrawal amounts from banks? Populace would not be happy but at least they would get to keep their savings and withdrawal limits can be increased as financial pressures ease, say with Russian help.
May be the Chinese could step in? Small change to them and much needed oil. Or BP?
dl
May be the Chinese could step in? Small change to them and much needed oil. Or BP?
dl
Last edited by David Lock; 20 March 2013 at 02:28 PM.
20 March 2013, 02:40 PM
#94
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But doing so would allow them to tap in to the export markets, giving growth, plus cheaper holidays which should boost tourism, which after a banking collapse, would be the biggest industry they have.
20 March 2013, 03:02 PM
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Would it be feasible for Cyprus gov't to limit withdrawal amounts from banks? Populace would not be happy but at least they would get to keep their savings and withdrawal limits can be increased as financial pressures ease, say with Russian help.
May be the Chinese could step in? Small change to them and much needed oil. Or BP?
dl
May be the Chinese could step in? Small change to them and much needed oil. Or BP?
dl
Cyprus central bank preparing law to curb deposit outflows and also preparing a law on bridge/bad bank, according to CYBC
, we could then go to war with the Turks in the north of Cyprus - jobs for our army and it's suppliers,. I know it sounds ludicrous, but it's probably as sensible as the way the EU has handled things so far
20 March 2013, 03:03 PM
#97
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20 March 2013, 03:29 PM
#98
Yep. I suspect you may be right, and I have maintained pretty consistantly that thing are going to get much worse for the majority
one narrative that attempts to explain the current crisis goes, loosely, as follows:
By the 1970s, the post-war mixed economy model of capitalism had run out of puff. The long post war boom led to a lower rate of profit for capital as full employment meant workers received a bigger slice of the cake.
ultimately capitalism demands the best return on capital, not its most productive use
Unemployment coupled with the free-market reforms of the late 1970s and 1980s broke the power of industrial labor and shifted the focus of western economies from manufacturing to finance.
and financial capitalism delivered higher profits (better returns), and a by product was the suppressing wages (certainly real wages in the US have not risen for the last 30 years). But since market economies can only function if there is sufficient demand for goods and services, a way had to be found to boost consumption.
That was achieved through higher levels of personal debt, (the rise thru the 90's of cheap credit - underpinned by ever rising house prices) cheerfully provided by the newly liberalised financial services sector. Growth rates were kept artificially high, and the tax revenues thereby generated allowed governments to spend more than they could actually afford.
To complete the picture, the debt was shifted across national borders by globalisation, so China would lend America the money to buy the cheap industrial products being made in the factories of east Asia, and Germany would do the same for the less competitive members of the eurozone, such as Greece and Spain.
witness, as I did first hand, row upon row of brand new 50K Audi's used as taxi's in the Canary Islands and Athens airports -- I remember thinking at the time, "how the fvck do these peasants afford these cars"
one narrative that attempts to explain the current crisis goes, loosely, as follows:
By the 1970s, the post-war mixed economy model of capitalism had run out of puff. The long post war boom led to a lower rate of profit for capital as full employment meant workers received a bigger slice of the cake.
ultimately capitalism demands the best return on capital, not its most productive use
Unemployment coupled with the free-market reforms of the late 1970s and 1980s broke the power of industrial labor and shifted the focus of western economies from manufacturing to finance.
and financial capitalism delivered higher profits (better returns), and a by product was the suppressing wages (certainly real wages in the US have not risen for the last 30 years). But since market economies can only function if there is sufficient demand for goods and services, a way had to be found to boost consumption.
That was achieved through higher levels of personal debt, (the rise thru the 90's of cheap credit - underpinned by ever rising house prices) cheerfully provided by the newly liberalised financial services sector. Growth rates were kept artificially high, and the tax revenues thereby generated allowed governments to spend more than they could actually afford.
To complete the picture, the debt was shifted across national borders by globalisation, so China would lend America the money to buy the cheap industrial products being made in the factories of east Asia, and Germany would do the same for the less competitive members of the eurozone, such as Greece and Spain.
witness, as I did first hand, row upon row of brand new 50K Audi's used as taxi's in the Canary Islands and Athens airports -- I remember thinking at the time, "how the fvck do these peasants afford these cars"
20 March 2013, 04:05 PM
#99
Have I got this right?
If the Germans stick their boot in and insist that Cypriots take the hit on their savings then if/when the banks open there will be a run and they will collapse with literally no money left. So the Russian boys will lose out big time as their dodgy money will be gone.
So in that eventuality the Russians are going to have to sort this mess out.
Buy the oil/gas exploration rights?
dl
If the Germans stick their boot in and insist that Cypriots take the hit on their savings then if/when the banks open there will be a run and they will collapse with literally no money left. So the Russian boys will lose out big time as their dodgy money will be gone.
So in that eventuality the Russians are going to have to sort this mess out.
Buy the oil/gas exploration rights?
dl
And if people loose trust in the banks (how not to) after the haricut this will happen.
20 March 2013, 04:18 PM
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Twitter reports of Spanish Finance ministers seeking 0.2% of Spanish deposits are now surfacing. I'll take it with a pinch of salt for now, until it is confirmed.
20 March 2013, 05:59 PM
#103
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I honestly reckon it could happen here. Not enough people seem to realise how badly off the UK is. Because we are a well developed, "sophisticated" economy, people have their heads in the sand .
I foresee extreme meltdown that makes the current double dipper feel like a couple of speed bumps compared to the Niagra Falls.
I foresee extreme meltdown that makes the current double dipper feel like a couple of speed bumps compared to the Niagra Falls.
21 March 2013, 12:27 AM
#105
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Last edited by SouthWalesSam; 21 March 2013 at 12:54 AM.
21 March 2013, 12:53 AM
#106
The posturing Cypriot politicians don't realise what a mistake they've made in voting the 'levy' down.
- Cypriot banks are about to fail,
- the govt can't afford to bail them out,
- the govt can't afford to pay the 85k deposit guarantee if the banks fail
- the economy's too weak to raise taxes (it's a tourist tax haven that lent big on property that's crashed in the bust)
- it's citizens don't readily do PAYE
At the start of the global bank crisis Cypriot banks were offering 4.5%+ interest on deposits.
If the Cypriot parliment had voted to set the levy at say: 1 years loss of interest above 85k; 2 years loss of interest above 150k and 3 years loss of interest above 500k, etc, collected in advance, it would have easily raised the 6Bn Euro it needed very quickly and taxed some of that dirty Russian money.
It could have passed an emergency 'never again' law, spent 3 days selling it to the populace and they might have escaped a run on the banks.
I can't see an easy way out of this now. Guess it's going to have to be a full 16Bn Euro EU bailout.
__________________________________________________ ____________
"Reports of the EU's death are greatly exaggerated", Mark Twain
- Cypriot banks are about to fail,
- the govt can't afford to bail them out,
- the govt can't afford to pay the 85k deposit guarantee if the banks fail
- the economy's too weak to raise taxes (it's a tourist tax haven that lent big on property that's crashed in the bust)
- it's citizens don't readily do PAYE
At the start of the global bank crisis Cypriot banks were offering 4.5%+ interest on deposits.
If the Cypriot parliment had voted to set the levy at say: 1 years loss of interest above 85k; 2 years loss of interest above 150k and 3 years loss of interest above 500k, etc, collected in advance, it would have easily raised the 6Bn Euro it needed very quickly and taxed some of that dirty Russian money.
It could have passed an emergency 'never again' law, spent 3 days selling it to the populace and they might have escaped a run on the banks.
I can't see an easy way out of this now. Guess it's going to have to be a full 16Bn Euro EU bailout.
__________________________________________________ ____________
"Reports of the EU's death are greatly exaggerated", Mark Twain
21 March 2013, 11:10 AM
#109
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1. A lot of the cost of a cheap holiday is in the flights which would be unaffected.
2. They would not be able to afford the German taxis, Japanese jetskis, Korean TVs, American Air conditioning units etc. Would be like a holiday from the 50s. OK if you're into walking and locally sourced food, but not where the big money is as a holiday destination
21 March 2013, 11:17 AM
#110
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I dunno, for me walking around somewhere never been and sampling the local food, is the holiday
I think people may HAVE to go for the good stuff in life for the next few years!
I think people may HAVE to go for the good stuff in life for the next few years!
21 March 2013, 11:21 AM
#111
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A run on banks in Cyprus could wipe out the savings of 60,000 Britons, including at least 12,000 pensioners, if the financial sector collapses.
Originally Posted by Telegraph Live
Meanwhile the ECB has helped pile the pressure on Cyprus by imposing a cut-off on its emergency liquidity assistance (ELA). It said it will maintain ELA at current levels until March 25 - the day the banks are due to re-open - but that the programme will then stop unless an EU IMF programme is in place that would ensure the solvency of the concerned banks. It's not clear what they would do if Cyprus secured a bailout from lenders other than the troika.
The banks can't open until this is resolved, if it is resolved at all, coupled with capital controls, which are legal thanks to the EU itself, a dangerous precedent has been set.
Capital controls might hit the average saver and ordinary members of the public hardest but they are cheaper and politically easier than asking German or other EU taxpayers to underwrite Cypriot bank deposits, even if they do belong to a British pensioner.
Restrictions including limits on cash-machine withdrawals, are also legal under Article 65 of Europe's internal market rules allowing the emergency measures to preserve “public policy and security”.
This means that even when banks in Cyprus open next Tuesday there will be tight controls to stop British savers, or anyone else, moving their cash out of a banking sector that has lost all credibility and where deposits have already been threatened.
The nightmare scenario is contagious bank run, if the Cyprus banking crisis spreads like wildfire to Spain and Italy as savers take fright and move their cash to safe havens in Northern Europe. In that scenario capital controls become widespread triggering a new credit crunch and pushing a fragile eurozone to collapse.
Restrictions including limits on cash-machine withdrawals, are also legal under Article 65 of Europe's internal market rules allowing the emergency measures to preserve “public policy and security”.
This means that even when banks in Cyprus open next Tuesday there will be tight controls to stop British savers, or anyone else, moving their cash out of a banking sector that has lost all credibility and where deposits have already been threatened.
The nightmare scenario is contagious bank run, if the Cyprus banking crisis spreads like wildfire to Spain and Italy as savers take fright and move their cash to safe havens in Northern Europe. In that scenario capital controls become widespread triggering a new credit crunch and pushing a fragile eurozone to collapse.
21 March 2013, 12:44 PM
#112
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That'll be the thinking just after the First World War ended...
21 March 2013, 02:17 PM
#114
Yes.
The great Depression in 1929. Took a World War and nearly two decades to recover. But it recovered.
We've had several basket case economies around the world since then (Argentina, Nigeria, Mexico, for example).
Italy's was probably one of the current EU's worst economies with the Lira falling to around 2,400 to the pound, new govertment every few month, mass strikes, etc.
The southern EU countries problems are little to do with the Euro. It's mostly existing structural faults in their enonomies and jumping up to lifestyles (pensions, welfare, etc) their states could not afford from the taxes they raise.
At least being in the Euro means there's hope of a bailout by other members and the IMF.
The great Depression in 1929. Took a World War and nearly two decades to recover. But it recovered.
We've had several basket case economies around the world since then (Argentina, Nigeria, Mexico, for example).
Italy's was probably one of the current EU's worst economies with the Lira falling to around 2,400 to the pound, new govertment every few month, mass strikes, etc.
The southern EU countries problems are little to do with the Euro. It's mostly existing structural faults in their enonomies and jumping up to lifestyles (pensions, welfare, etc) their states could not afford from the taxes they raise.
At least being in the Euro means there's hope of a bailout by other members and the IMF.
21 March 2013, 02:31 PM
#115
Economic cycles have run the same since the the Dutch Tulip Boom of 1636.
They just have a bigger real life impact on more of us due to globalisation, for example.
The cycle runs on aspiration, confidence, greed, fear then bust. Then some new controls and regulations are introduced and off we go again 'til next time.
Gordon Brown thought he had the answer to the 'end of boom and bust in the UK' but history shows you never know exactly what's going to pop up and bite you on the bum next.
And yes, it will be okay again. We're human beings. We're survivors.
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Last edited by SouthWalesSam; 21 March 2013 at 04:33 PM.
21 March 2013, 02:36 PM
#116
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I don't really care what taxi they drive. I don't choose a holiday destination based on it. I suspect that most of these vehicles were heavily subsidised, as they were in the Canaries. Strangely enough, once the subsidies on the German cars was cut, a majority of the taxi drivers in the Canaries went to running cheaper French vehicles. Again, when I'm on holiday, I don't go there to watch the television.
21 March 2013, 02:58 PM
#117
Rubbish. Alpha Bank and BoCyprus (2 biggest) were up to their ears in property loans to Cypriot and Greek developers when the global crash started and both countries’ property markets crashed.
Alpha Bank decided to attract money by offering incredible interest rates to depositers. To fund these rates they tripled their spreads on mortgages and loans ("it's in the small print") and upping fees.
They got the money in but gradually the borrowers walked away and the Greeks couldn’t ever pay. So eventually they got to here.
Stop trying to blame the EU for every mess an over-borrowed, poorly financially regulated country got itself into.
21 March 2013, 04:28 PM
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Someone somewhere took a decision that now no-one, nowhere, appears to have made – to impose an unprecedented levy on bank deposit holders in Cyprus.
Last edited by ScoobyWon't; 21 March 2013 at 04:29 PM.