Sucks to be from Cyprus

[Bonam]

Maybe they could get away with that in Cyprus. If the US had done that with their banks, world credit would have frozen and goodbye economic activity. The banks should have been nationalized in the short term.

Disagree. Banks are just banks, they provide a service. If one bank fails, another will quickly take its place, with modern technology and communication systems, likely within just a few days. The panic and worry about "omg what will happen if a bank fails" is overhyped hysteria, like the 2012 apocalypse or Y2K.

[TimG]

Great, so ordinary citizens get to be punished because the banks are cozy with the Russian mafia.

I question the need to tax small accounts. My only point is 7% is better than nothing if the deposit insurance could not cover what was owed.

[TimG]

If one bank fails, another will quickly take its place, with modern technology and communication systems, likely within just a few days.

No - this is not the case. Banks are so interlinked today that the failure of one bank can actually cause the failure of more banks (i.e. if Bank A owes Bank B billions then Bank B would go down if Bank A collapses). The system also depends on the fact that banks trust each other - if banks stop trusting each other because they are worried about getting stiffed if one fails then the financial system shuts down and then non-bank business start failing because they cannot access cash to keep their operations running.

Small banks can and should be allowed to fail - but a system wide banking collapse is a real concern and given the potentially catastrophic consequences it does make sense to err on the side of caution.

Edited March 18, 2013 by TimG

[Bonam]

No - this is not the case. Banks are so interlinked today that the failure of one bank can actually cause the failure of more banks (i.e. if Bank A owes Bank B billions then Bank B would go down if Bank A collapses). The system also depends on the fact that banks trust each other - if banks stop trusting each other because they are worried about getting stiffed if one fails then the financial system shuts down and then non-bank business start failing because they cannot access cash to keep their operations running.

Any evidence to support this mythology? Banks are interlinked, yes, but they are also quick to want to attract new customers. If one bank fails, another will only too gladly provide services to millions of new clients, and their interlinked nature will allow the transition to be relatively smooth.

Small banks can and should be allowed to fail - but a system wide

banking collapse is a real concern and given the potentially

catastrophic consequences it does make sense to err on the side of

caution.

Any entity that is for some idiotic reason considered "too big to fail" should be broken up into smaller ones.

Edited March 18, 2013 by Bonam

[Bonam]

I question the need to tax small accounts. My only point is 7% is better than nothing if the deposit insurance could not cover what was owed.

That is not an acceptable justification. When a robber in the street offers to only take 7% of your money, it's still theft. Same with this.

[TimG]

Any evidence to support this mythology?

Ah - just an understanding of the banking system to know that it is no mythology - it is a real risk. The only question is whether it is a likely outcome from any given crisis. Smaller crisis can be handled by letting banks go under - others require bailouts. There is no science that can allow one to distinguish between the two.

Here is what the US FED has to say about it:

http://www.clevelandfed.org/research/policydis/no9jan05.pdf

Banks take on and manage risk, and some bankers are better at it than others. So there will always be

occasional bank failures even in healthy financial systems. In fact, isolated bank failures contribute to

the efficiency of financial markets because they enable resources to be reallocated from poorly managed

and inefficient banks to well-managed institutions. Even otherwise well-managed banks may fail

as a result of overexposure to risk emanating from events thought to be so unlikely that the risk is often

acceptable to bankers and regulators before the event occurs. These failures, while often spectacular,

are isolated events with limited impact on the stability of the financial system and on people’s confidence

in it.

In a systemic crisis, multiple banks fail simultaneously, and the collective failure impairs enough of

the banking system’s capital so that large economic effects are likely to result and the government is

required to intervene. But how big is “enough”? There is no precise answer to this question.

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If one bank fails, another will only too gladly provide services to millions of new clients, and their interlinked nature will allow the transition to be relatively smooth.

This has nothing to do with 'attracting customers'. This has to do with how money needs to flow between banks in order for banks to function if this flow is blocked because banks don't trust each then the system shuts down.

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Any entity that is for some idiotic reason considered "too big to fail" should be broken up into smaller ones.

And you end up with things like the savings and loan crisis in the US in 80s. It cost $1 trillion 1980 dollars to clean up and all of those small banks were allowed to go bankrupt. IOW - you don't necessarily save any taxpayer money by having a lot of small banks. Edited March 18, 2013 by TimG

[GostHacked]

No - this is not the case. Banks are so interlinked today that the failure of one bank can actually cause the failure of more banks (i.e. if Bank A owes Bank B billions then Bank B would go down if Bank A collapses). The system also depends on the fact that banks trust each other - if banks stop trusting each other because they are worried about getting stiffed if one fails then the financial system shuts down and then non-bank business start failing because they cannot access cash to keep their operations running.

Small banks can and should be allowed to fail - but a system wide banking collapse is a real concern and given the potentially catastrophic consequences it does make sense to err on the side of caution.

With banks owing each other, does that not elude to some incestuous type activities among the major banks? If so, why is that not a concern? Let them fail, or we are going to see a repeat in the form of another financial crisis.

[TimG]

With banks owing each other, does that not elude to some incestuous type activities among the major banks? If so, why is that not a concern? Let them fail, or we are going to see a repeat in the form of another financial crisis.

Banks "owe" each other because of their customers are constantly moving money in and out of different banks. You cannot have a competitive banking system without creating a complex web of cross holdings. Edited March 18, 2013 by TimG

[GostHacked]

Banks "owe" each other because of their customers are constantly moving money in and out of different banks. You cannot have a competitive banking system without creating a complex web of cross holdings.

If I move my money from one bank to another, there should be no problem with transferring any money, real currency or digital. I have let's say 10gs in the bank, and I decide to transfer 10gs to another bank. There should be no problem in doing so, because I have 10gs in the bank. I am in the black and that should not manifest into any issues with me accessing or transferring my money.

And how is it even competitive anymore when you see the events in Cyprus where money is simply being stolen right out of the accounts? This is sanctioned and government approved theft plain and simple. The bank can steal from you without a problem it seems .... but watch out if you steal from the bank,

[DogOnPorch]

In Mafia Russia...offshore account withdraws you!

[TimG]

There should be no problem in doing so, because I have 10gs in the bank. I am in the black and that should not manifest into any issues with me accessing or transferring my money.

That convenience only exists because banks trust each other to settle the inter bank debts that arise as a result of such transactions. See letters of credit:

http://www.crfonline.org/orc/cro/cro-9-1.html

The shipping industry was hit hard in 2008 because banks refused to issue these letters.

[eyeball]

Great, so ordinary citizens get to be punished because the banks are cozy with the Russian mafia.

Well, if Cyprus is a democracy and the government facilitated the coziness...then yes ordinary people should be punished too. If they're not responsible for the actions or inaction of their government who is?

[Bonam]

Well, if Cyprus is a democracy and the government facilitated the coziness...then yes ordinary people should be punished too. If they're not responsible for the actions or inaction of their government who is?

If it is a matter of punishment for a crime, then find a court that will convict the people of Cyprus for said crime. Not likely. Better to punish the specific individuals involved who facilitated any wrongdoing, be they government officials or bank executives.

[GostHacked]

Well, if Cyprus is a democracy and the government facilitated the coziness...then yes ordinary people should be punished too. If they're not responsible for the actions or inaction of their government who is?

Why should ordinary people suffer for the stupidity of the government? What if people tried to change things but the corruption continued? How does the average person know what areas of the government is corrupt.

[Michael Hardner]

Why should ordinary people suffer for the stupidity of the government? What if people tried to change things but the corruption continued? How does the average person know what areas of the government is corrupt.

eyeball asked If they're not responsible for the actions or inaction of their government who is?

What is the answer ?

[Boges]

eyeball asked If they're not responsible for the actions or inaction of their government who is?

What is the answer ?

It depends. In Greece it was found that a good number of people avoided paying taxes but demanded services from their government that we would find laughable.

If that's the case in Cyprus too, then yes it is the public's fault as well.

This measure seems like forced tax collection. In reality the CRA can do similar stuff if they believe you owe them more than you've paid.

What's galling about what Cyprus is doing, is that it's across the board. You could be struggling to save and be living pay cheque to pay cheque and you'll take a massive hit to the money you need to live.

[GostHacked]

It depends. In Greece it was found that a good number of people avoided paying taxes but demanded services from their government that we would find laughable.

If that's the case in Cyprus too, then yes it is the public's fault as well.

This measure seems like forced tax collection. In reality the CRA can do similar stuff if they believe you owe them more than you've paid.

What's galling about what Cyprus is doing, is that it's across the board. You could be struggling to save and be living pay cheque to pay cheque and you'll take a massive hit to the money you need to live.

But it's the same thing that is going on all over the place.

Let's take a Canadian example, how do we the public hold the government accountable with the money wasted on the F-35 program? How do we hold them accountable for allowing foreign companies to buy out Canada's natural resources?

Since we are not protesting in the streets en-mass, then we are to blame for our governments screw ups as well. Many of the screw ups we wont know about. Our government is wasting money all the time, and when the complaint is aired, we have a plethora of people who say 'who cares'. ....... so I guess we will eventually see this kind of thing that is happening in Cyprus and the EU as a whole.

But this is a different ball game with the EU. The people of Cyprus elected their government. The Cyprus government then appoints people to the EU. Brussels now controls Cyprus, so the people who are could be causing the issues are not even elected by the people therefore they cannot be held accountable for that.

Cyprus no longer has the sovereign capacity to handle it;s own affairs because it was all sold off to the EU which is now calling the shots.

[Boges]

I just heard on the radio that they're looking to exempt people with less that 20,000 euros in their bank accounts. Makes sense.

[Canuckistani]

But it's the same thing that is going on all over the place.

Let's take a Canadian example, how do we the public hold the government accountable with the money wasted on the F-35 program? How do we hold them accountable for allowing foreign companies to buy out Canada's natural resources?

Since we are not protesting in the streets en-mass, then we are to blame for our governments screw ups as well. Many of the screw ups we wont know about. Our government is wasting money all the time, and when the complaint is aired, we have a plethora of people who say 'who cares'. ....... so I guess we will eventually see this kind of thing that is happening in Cyprus and the EU as a whole.

But this is a different ball game with the EU. The people of Cyprus elected their government. The Cyprus government then appoints people to the EU. Brussels now controls Cyprus, so the people who are could be causing the issues are not even elected by the people therefore they cannot be held accountable for that.

Cyprus no longer has the sovereign capacity to handle it;s own affairs because it was all sold off to the EU which is now calling the shots.

But I think the question if not the people, who, is a good one. Sure, hold the govt accountable, as in elect somebody else. But the govt has no money, that's the people's money they're administrating. If the country wants a bailout from other countries, then the country, ie the people, have to dance to that tune. There's nobody else there to dance with. Ofcourse I would suggest that Cyprus give Russian mobster depositors a close shave before going after the little guys. But as we've seen in the US, the big guys always seem to do just fine, it's the little guy who winds up holding the can. You don't like that, vote for govts that are more pro little guy.

[punked]

It depends. In Greece it was found that a good number of people avoided paying taxes but demanded services from their government that we would find laughable.

If that's the case in Cyprus too, then yes it is the public's fault as well.

This measure seems like forced tax collection. In reality the CRA can do similar stuff if they believe you owe them more than you've paid.

What's galling about what Cyprus is doing, is that it's across the board. You could be struggling to save and be living pay cheque to pay cheque and you'll take a massive hit to the money you need to live.

What is happening in Cyprus isn't rocket science follow the money:

Cypriot banks, had the vast majority of their money invested in Greek bonds, and this is where the mistake lies. In case you are wondering, this is probably a combination of incompetence, and historical/cultural connections between Cyprus and Greece. As soon as the EU took the decision to wipe the value of those bonds by 80% for saving Greece, banks in Cyprus took a huge hit and these are the effects now. Its the same thing that happened in Spain, banks inflated a bubble and now the average person needs to pay for it.

[punked]

I just heard on the radio that they're looking to exempt people with less that 20,000 euros in their bank accounts. Makes sense.

They aren't doing anything. The voted down the bail out. They went to Plan B a wealthy Russian or 5 is swooping in to bail them out. BTW word on the street is the Russians are willing to help because they are about to lose their only naval base in that area when Syria falls so buying out Cyprus will sure help them as a world power.

Edited March 20, 2013 by punked

[Guest Derek L]

They aren't doing anything. The voted down the bail out. They went to Plan B a wealthy Russian or 5 is swooping in to bail them out. BTW word on the street is the Russians are willing to help because they are about to lose their only naval base in that area when Syria falls so buying out Cyprus will sure help them as a world power.

Perhaps you'd best listen to the accented words spoken on the streets of Akrotiri..........sounds more Cockney then Russian.

[eyeball]

I wonder how many Russian officials have money squirrelled away amongst the Mafia's assuming the two can even be distinguished from one another?

[-TSS-]

Politically, it is impossible to come out of this very well. The alternatives are to let Cyprus fall and hence the risks to the euro-zone, or, bail Cyprus out and effectively make European tax-payers subsidise shady Russain oligarchs who have stashed away money in Cyprus.

[eyeball]

Corruption makes the money go around, the money go around, the money go around...

The minute the income gap threatens to stop expanding is when the real shit will start hitting the fan.

Wait for it.