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Deposits over €100K at the Bank of Cyprus will be taxed at 62.5%, sources tell Reuters. The...

Deposits over €100K at the Bank of Cyprus will be taxed at 62.5%, sources tell Reuters. The figure is far greater than officials originally indicated. Customers will get 37.5% of their deposits over the €100K threshold in bank shares while the remainder of their cash "may never be paid back." 
Comments (108)
  • bankingqueen
    , contributor
    Comments (135) | Send Message
     
    Coming to a country near you?
    30 Mar 2013, 12:19 AM Reply Like
  • aeroguy48
    , contributor
    Comments (756) | Send Message
     
    Like Amerika?
    30 Mar 2013, 12:33 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    I am thinking Germany. They were the chief architects of this plan.
    30 Mar 2013, 12:39 AM Reply Like
  • 8bravo
    , contributor
    Comments (29) | Send Message
     
    Did you ever live in Germany? I did until 2 years ago! This is one of the few countries which actually contribute to the European economy. Most of the countries just draw benefits without contributing anything to it! I'm glad that Cyprus has crushed. Their economy was almost entirely relying in being a tax heaven while the hard working people of Germany/France/Holland etc. were taxed to death. The whole thing is bad for the ordinary people but since deposits < €100,000 are not affected, I couldn't care less about the taxation of the rich guys. And honestly, who's holding such amounts in a bank account anyway? This money would better be invested, oh, wait, did I mention the only reason was to shelter it from taxation?
    30 Mar 2013, 01:49 AM Reply Like
  • Omer Altay
    , contributor
    Comments (512) | Send Message
     
    Funny thing is so many people in Italy/Spain/Greece thing that the EU is just benefiting Germany at the "expense" of everyone else - when in reality its quite the opposite. Poor hard working germans are carrying southern Europe while being told that they're taking advantage of them!
    30 Mar 2013, 03:08 AM Reply Like
  • pipopipo
    , contributor
    Comments (38) | Send Message
     
    So folks holding > 100K into deposits are considered rich by your standards? Poor guy. I know enough folks holding way over this amount in EU accounts, most have been saving modestly only. If northern European countries would adopt similar standards, you can kiss the Euro goodbey.
    30 Mar 2013, 03:22 AM Reply Like
  • cayman
    , contributor
    Comments (241) | Send Message
     
    so there are lots of small business owners with such accounts, what if you were a diligent saver. It aint right dude.
    30 Mar 2013, 03:49 AM Reply Like
  • Ray Lopez
    , contributor
    Comments (1611) | Send Message
     
    Actually that's not true on various levels. First, Germany/France/Holland makes money selling wares to ClubMed--hence the extension of credit to the same. Nobody forced the German and French banks to lend to Greece and Cyprus. Second, the average Greek actually works harder than the average German. The trouble for the Greek is that the German is more productive since they have more machinery. Third, being a tax haven as a way to make money is common--ask Switzerland. Do you think Swiss banks do not cater to crooks? But heh, don't let the facts get in the way of your morality tale fantasy. Happy investing.
    30 Mar 2013, 04:50 AM Reply Like
  • Maninder Batra
    , contributor
    Comments (572) | Send Message
     
    @8bravo, thanks for proving that you are a commie and a freeloader who wants to steal from the rich and successful.
    30 Mar 2013, 05:14 AM Reply Like
  • hyperion15
    , contributor
    Comments (69) | Send Message
     
    "Deposits over €100K at the Bank of Cyprus will be taxed at 62.5%"

     

    This already happens in America as inflation. It's just a more gradual process.
    30 Mar 2013, 05:33 AM Reply Like
  • caupachow
    , contributor
    Comments (471) | Send Message
     
    @bravo. Theft is theft!
    30 Mar 2013, 09:52 PM Reply Like
  • Christopher Hossli
    , contributor
    Comments (44) | Send Message
     
    Absolutely!!!! I'm just glad Switzerland never joined the Euro or the EU
    30 Mar 2013, 11:38 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    I don't understand why Germany allowed that.
    30 Mar 2013, 11:39 PM Reply Like
  • Christopher Hossli
    , contributor
    Comments (44) | Send Message
     
    Never allowed Switzerland not to join?
    30 Mar 2013, 11:43 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Yes. I hear Russians have money there. Plus, is it really fair for any country to not run themselves independently of Germany?

     

    I m also surprised that Germany is allowing the USA to carry on without imposing some pretty harsh austerity.
    30 Mar 2013, 11:49 PM Reply Like
  • Christopher Hossli
    , contributor
    Comments (44) | Send Message
     
    Well they've been standing up to Germany since 1914 so why stop now?
    30 Mar 2013, 11:51 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    But you must agree that is wrong, right?
    30 Mar 2013, 11:52 PM Reply Like
  • Christopher Hossli
    , contributor
    Comments (44) | Send Message
     
    Absolutely not! The Euro is doomed to failure. You can't have the same monetary policy without having the same fiscal policy. The only gripe I have with Switzerland is the SNB playing ''banana republic'' with the Swiss Franc by artificially controlling it. Other then that Switzerland continues to be the safe haven it has always been and should continue to stand up to Germany.
    30 Mar 2013, 11:58 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    I agree with you on the issue of fiscal vs monetary policy. If only all the Euro Zone countries voluntarily submit to German rule, we will have an unified fiscal policy of crushing austerity and recessions. If Switzerland stands up to the Germans they will just make austerity look bad. US is already doing that. I don't think Germans like that one bit.

     

    Why make austerity look bad by not pursuing it? Just imagine how much misery we could have had if all the counties in the world followed the German model and went for austerity?
    31 Mar 2013, 12:01 AM Reply Like
  • 8bravo
    , contributor
    Comments (29) | Send Message
     
    Among the people I know In Germany as well as in California I'm one of the few unconditionally endorsing free market economy and loathing most kinds of government intervention. I am also one of the few being kinda successful in both career and investing. Next time better think before you write such stupid nonsense!
    31 Mar 2013, 03:01 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Somalia is know to have unconditional free markets.
    31 Mar 2013, 03:39 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    Not unlike western governments, Somalia is held back by a corrupt (and violent) government.
    31 Mar 2013, 03:41 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    There are many parts of Somalia with no Govt at all. The ultimate free market capitalism rules there. It's like heaven.
    31 Mar 2013, 03:42 PM Reply Like
  • Omer Altay
    , contributor
    Comments (512) | Send Message
     
    Capitalism requires a rule of law to thrive. Somalia is a terrible example. There is no rule of law. No courts to enforce contracts. No government to stop violent crime.
    31 Mar 2013, 03:52 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Rule of law? You mean we need a Govt? Whatever happened to unconditional, unfettered free markets?
    31 Mar 2013, 05:07 PM Reply Like
  • Christopher Hossli
    , contributor
    Comments (44) | Send Message
     
    Was that directed to me or Macro Investor? For the record though I am 100% with you. Get the government out of the way of all of it and just let the market flow as it will.
    31 Mar 2013, 05:16 PM Reply Like
  • Christopher Hossli
    , contributor
    Comments (44) | Send Message
     
    There is a fine line between Ayn Rands Free market capitalism and anarchy.
    31 Mar 2013, 05:17 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Spot on Christopher. We want absolutely no govt whatsoever, just like Somalia.
    31 Mar 2013, 05:22 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    Rule of law is required for true capitalism to take place. That does not mean rule of law should supply endless entitlements to the "poor", which you advocate. It also doesn't mean that the rule of law needs to get so complex and over-reaching that it restricts free market capitalism.
    31 Mar 2013, 05:29 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Who would elect this Govt that doesn't help the voters at large in any way whatsoever, but instead just caters to the owners of capital, John? Will this be a democracy or a plutocracy?
    31 Mar 2013, 05:34 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    The populace could elect such a government. We (US citizens) did at one point, when the US Constitution was actually adhered to, and "general welfare" did not mean free cell phones and "food stamps".

     

    I would say insuring the domestic peace and tranquility helps "the voters at large" a great bit. A military that can defend us from enemies (foreign and domestic) is also a plus (this should not include nation building, etc.)

     

    You can have government which prevents anarchy, but said government does not have to coddle the general populace from cradle to grave.
    31 Mar 2013, 08:09 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    I agree man, since when is food a component of welfare? So many people throughout the ages have been perfectly happy while hungry. The nerve of some modern people, I tell you.

     

    Now, back on point, do you think in a democracy there is any chance of electing a plutocratic govt which then installs a police state (as you seem to love)? That's rather feudal, no?
    31 Mar 2013, 08:12 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    Are you saying the founding fathers designed the United States as a police state? Sounds like it.

     

    If 'general welfare' in re: feeding the people consisted of soup kitchens, would that be sufficient? Or is 'general welfare' only that when "poor" (read: lazy) people can take their government loaded EBT/SNAP cards to the local convenience store and spend at will?
    31 Mar 2013, 08:40 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Oh no, I am not saying that at all. That's your contortionist view of the early days for the USA. The Founding Fathers would side with the Democrats if they were alive today.

     

    But you clearly like a plutocratic govt backed by a police state. That's what Somalia is. The warlords are rich and run the country. It's a pure form of free market capitalism.

     

    I don't care which way the poor gets food as long as they do get food, and it is the most efficient way to get the poor food. Since we live in the 21st century, I think we should use the latest technology when we can.
    31 Mar 2013, 08:50 PM Reply Like
  • Omer Altay
    , contributor
    Comments (512) | Send Message
     
    James Madison clarified what "General Welfare" meant in the constitution. The constitution is very specific in what authority the federal government has (enumerated powers).
    31 Mar 2013, 09:39 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    You should file a lawsuit then with the USSC.
    31 Mar 2013, 10:02 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    What about all men being created equal? Do I not also qualify under that rule to get EBT/SNAP? Don't you see it as unfair that the government does not pay for my food, subsidize my rent, and supply me with a cell phone? Shouldn't you also receive those benefits? I mean, after all, if you are going to paint 'general welfare' with such a broad brush, shouldn't we all get those freebies?
    31 Mar 2013, 10:34 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    When you were a kid, and your kid brother had fever, and your mom gave him tylenol, did you used to whine, John, that she must giv eyou tylenol too?
    31 Mar 2013, 10:48 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    I would not need the Tylenol. A majority of EBT/SNAP/WIC/S8 , etc. recipients don't "need" those programs, either.

     

    If I had a kid brother (I don't), and he always got the ice cream that I worked for, I would cry foul. Wouldn't you?

     

    Or, what you're saying is he deserves the ice cream because I am more able to obtain the funds to purchase it, right? He should in no way work to get his own ice cream, right?

     

    My mother actually would have given me (or any of my other older siblings) a glass of orange juice, and painted my/their throats with mercurochrome, then sent us off to school, as she had to go to work (my father was usually not there due to working 16 hours/day, 6 days/week).

     

    Sometimes we'd ask if we could have some orange juice, too... Nobody was a fan of the mercurochrome.
    1 Apr 2013, 12:52 AM Reply Like
  • stepp
    , contributor
    Comment (1) | Send Message
     
    I honestly cannot understand how some people form an opinion about a country they (most probably) never heard of, only by listening to the media and reading what the Germans feed the news. First of all, most of these (>100k) accounts that are cut are also pension funds and charity funds. These are the "rich guys". Second, Cyprus economy is based more on providing services, due to its friendly corporate environment. I don't understand what do the "hard working" europeans expect from the countries of the South, since their centralized and German-controlled policies have made it impossible to compete with them in all industries. It is obvious that they just want it all. This is why German banks are now begging the "dirty" Russian funds to flow to their system. Lastly, you should be more careful when talking about a country you barely know. Cyprus is a country half-occupied by turkey. 40 years ago it suffered an invasion and since then some people are waiting to go back to their homes. Nevertheless, after the war Cypriots worked hard and managed to have a prestigious and strong economy that (sadly) entered the eurozone WITHOUT any funds from the EU (Cyprus were among the countries that contributed to EU). The only problem was that the banking system grew up too large for the "small" Cyprus economy. This still would not be a problem if the "hard-working" europeans did not force the Cypriot banks EUR4.8 bln losses (amount of their recapitalization) on the Greek gvt debt by forcing them to participate in the disastrous PSI. I can write for hours but this is not my intention. At least, before expressing your opinion do some research and don't just believe whatever information they feed you.
    1 Apr 2013, 06:00 AM Reply Like
  • astarkero
    , contributor
    Comment (1) | Send Message
     
    You're right, at 2%/year, it's a 30 year process.
    1 Apr 2013, 07:58 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    "A majority of EBT/SNAP/WIC/S8 , etc. recipients don't "need" those programs, either."

     

    How do you know? Have you gone and checked their individual case files? Or did you hear it on a right wing talk show?
    1 Apr 2013, 08:55 AM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    I guess I'm just less naive than you. I observe the world around me. I see the gubmint cards used by people fully capable of WORKING. I work in S8 housing often, and see multiple tenants who are fully capable of WORKING (many of those also reek of marijuana, which they have no problem getting the money for, apparently).

     

    Pull your head out of the sand, Macro. There are many, many (I argue a majority) of the people who receive "government assistance" who DO NOT NEED IT.
    1 Apr 2013, 09:16 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    I have better things to do with my time than spy on people who get Govt assistance.
    1 Apr 2013, 09:24 AM Reply Like
  • Christopher Hossli
    , contributor
    Comments (44) | Send Message
     
    To imply that I am advocating having an economic system like that of Somalia is both ignorant and shows a lack of even basic understanding of anything other then the Keynesian economics that we are all spoon fed in grade school. Go read ''Atlas Shrugged'', ''The theory of money and credit'' by Mises, and ''Man vs. The Welfare State'' by Henry Hazlitt and then come talk to me!
    1 Apr 2013, 09:17 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    You don't want the Govt out of the way so that those with capital can do what they please?
    1 Apr 2013, 09:34 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    Government has its place. Over-riding, burdensome regulations are not that place.
    1 Apr 2013, 09:43 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    What is Govt's place, John?
    1 Apr 2013, 09:50 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    Enumerated clearly in the Constitution, and expounded upon in the Bill of Rights.
    1 Apr 2013, 10:00 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Isn't that what the Govt does anyway even today?
    1 Apr 2013, 10:04 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    No, they over-step what is clearly laid out. Most of the various departments in the government today would not be considered government domain as the Constitution/BOR were originally stated.
    1 Apr 2013, 10:11 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Why is the USSC allowing that? Or could it be that the USSC, the ultimate arbiters of the Constitution, and all trained legal professionals are right, and you are wrong?

     

    Or is that not possible and you clearly know better than the USSC?
    1 Apr 2013, 10:12 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    Clearly I do.
    1 Apr 2013, 10:15 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Clearly.
    1 Apr 2013, 10:19 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4029) | Send Message
     
    Glad we agree on something. ;)
    1 Apr 2013, 10:33 PM Reply Like
  • David_BC
    , contributor
    Comments (2) | Send Message
     
    Seriously? A) Germany needs the spendthrift nations to buy its products & B) panic in the Euro benefits Germany since it keeps its exports cheap. Suggest you rethink your hypothesis.

     

    On a global perspective the US and the Germans are engaged in an odd tango where neither wants to be seen to be devaluing their currency (strong dollar policy vs Euro dream) yet are finding ways to do that. Right now Germany is winning.
    8 Apr 2013, 02:04 AM Reply Like
  • martin3
    , contributor
    Comments (44) | Send Message
     
    there is the other side of the coin. germany has benefited a lot from exports
    16 Apr 2013, 04:52 PM Reply Like
  • Morrison International Acco...
    , contributor
    Comments (470) | Send Message
     
    This is a bankers worst nightmare. Imagine the new deposits line at the banks with this news in the mind of depositors.
    30 Mar 2013, 12:31 AM Reply Like
  • Unsure Now
    , contributor
    Comments (406) | Send Message
     
    NOT SO FAST !!

     

    Apparently this is a fliud situation that isn't over yet in Cyprus. Their Parlament doesn't accept it..Now do they leave the Euro?

     

    http://huff.to/XjyQWz
    30 Mar 2013, 06:07 PM Reply Like
  • caupachow
    , contributor
    Comments (471) | Send Message
     
    Morrison, there won't be any lines to deposit.
    30 Mar 2013, 09:53 PM Reply Like
  • Lakeaffect
    , contributor
    Comments (1178) | Send Message
     
    Cyprus needs to get out of the Euro. As does Greece and probably Spain, Portugal and Italy as well. With capital flow restrictions coming soon, the benefit of staying in the Euro is totally eliminated.

     

    Austerity will come via either high joblessness or high inflation. Staying in the Euro will cause them to suffer high unemployment, while leaving the Euro, high inflation. The latter spreads the pain wider and shallower. It's their choice, which medicine to take, but take it they must.
    31 Mar 2013, 02:35 AM Reply Like
  • justaminute
    , contributor
    Comments (861) | Send Message
     
    Can't help but feel bad for the depositors.
    30 Mar 2013, 12:34 AM Reply Like
  • davidbdc
    , contributor
    Comments (3184) | Send Message
     
    So it could really be taxed at 100% depending on how this new bank turns out.

     

    This should be a message to people that they need to pay attention to their own finances. The FDIC insurance is for 250K. If you've got more than that in an account you need to get it down to 200 and more the rest to another bank - even if it means opening several accounts.

     

    The other move folks may want to consider is to have shares in their long term holdings issued directly to them as opposed to sitting in their brokerage account. Eventually, a government is going to go after easily accessible wealth - and they will want to count all financial assets the institution holds. Specifically, Etrade is a firm with a lot of debt - situation is better than a few years ago but still not great. I'm sure there are others.

     

    As a larger percentage of people come to rely on government - whether its direct employment or "benefits" - they will readily vote to confiscate your assets for their own gain. The bankers will readily do it if it means they avoid jail and hold on to their jobs. The politicians will do it to soften the blow to anyone that bribes them, er I mean gives them campaign contributions (and 300K jobs to their wives, sons, daughters, brother-in-laws, etc).

     

    I feel bad for the many Cyprus small businessmen that probably held accounts with several hundred thousand dollars of their personal savings in banks where they had LOC. Not only are they losing a large percentage of their life's work, they will probably see their LOCs decreased going forward.

     

    But for those outside Cyprus, hopefully this will serve as a very loud reminder to be vigilant.
    30 Mar 2013, 02:06 AM Reply Like
  • css1971
    , contributor
    Comments (870) | Send Message
     
    The first sane comment in the thread.
    30 Mar 2013, 08:53 AM Reply Like
  • ianxponent
    , contributor
    Comments (621) | Send Message
     
    I seriously doubt that having paper stock certificates would shield you from that sort of confiscation.
    30 Mar 2013, 08:30 PM Reply Like
  • davidbdc
    , contributor
    Comments (3184) | Send Message
     
    You could be correct. But keep in mind when government does something its at the macro level. And to be clear I'm not comparing to Cyprus - they followed the rule of law (after their first proposal went down).

     

    Once a bureaucrat sees another find a way to claim more of private wealth, you can expect others to try to follow suit. So if/when the government decides to "claim" they have to do it in a manner that is quick - freeze accounts and take and then hope things will continue fairly normally afterwards. So if you've got $3 million in an institution - spread out in accounts, funds and stocks - its much easier to seize some of your wealth than someone that holds their stocks directly, has a bank account with 100K, and a couple hundred grand in stocks with brokerage firms.

     

    For the government to figure it all out would require the confiscation happens over time - which makes it less likely to happen as the population shows their discontent.

     

    Hopefully its an academic exercise. But I would stand by my assertion that you should pay close attention to insurance limits and diversify where you hold your wealth.
    30 Mar 2013, 09:00 PM Reply Like
  • RS055
    , contributor
    Comments (3308) | Send Message
     
    Cyprus did not have access to a printing press - to print euros. The US has an active, well-oiled printing press - to print Dollars.
    Cyprus was forced to go the direct confiscation route - because they did not have any other choice.
    The US already confiscates indirectly - through the negative real interest rate policy. I dont expect there will be any need to turn the whole economy upside down and cause political unrest with actual confiscation of nominal bank balances, when the current technique works so well.
    30 Mar 2013, 02:20 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4131) | Send Message
     
    There is not enough money to satisfy the public's thirst for more. Confiscation of wealth by any means necessary is inevitable.
    30 Mar 2013, 08:51 AM Reply Like
  • Kraken
    , contributor
    Comments (559) | Send Message
     
    Technically, the depositors are likely to lose alot more. Since the remaining 37.5% is in shares of said bank. Its likely the shares will fall substantially due to this crisis. So essentially depositors will get hit twice.
    30 Mar 2013, 02:22 AM Reply Like
  • RS055
    , contributor
    Comments (3308) | Send Message
     
    Iam also not sure that holding large amounts of cash at home, or actual paper stock certficates , or actual coins of gold in your basement will really protect you in a "planet of the apes" scenario. If you are trying to hedge yourself against a future where the legal system does not work, contracts mean nothing and private property rights are abolished - I very much doubt that your paper stock certificates will have any value. And your cash and gold coins may well subject you to danger from thugs of all stripes.
    30 Mar 2013, 02:25 AM Reply Like
  • davidbdc
    , contributor
    Comments (3184) | Send Message
     
    No, there is a lot of room between the Planet of the Apes and the shifting of respect for the legal system.

     

    I'd put forth that we've already seen the shifting start. Bondholders at GM were passed over for political payoffs. Contract law is clear and it wasn't followed.

     

    Likewise bondholders (and shareholders) at the banks should have been wiped out before any government money was used to prop them up.

     

    I don't subscribe to keeping all your cash and gold and silver under your mattress. But I do subscribe for realizing the future threats and taking practical steps to make it less easy for the government to take from me. Having your cash spread across accounts that are less than the FDIC insurance level is now just common sense.

     

    And finally, should we ever hit the Planet of the Apes scenario I'd prefer to have gold and silver than not. The real danger will be to those closest to cities. Food would become scarce and folks would move out from the city to areas they viewed as affluent. However I hope I never have to live through that. But I do think its unfortunately reasonable to prepare for government efforts to confiscate more and more of the private wealth that exists in the USA.
    30 Mar 2013, 02:49 AM Reply Like
  • RCMorea
    , contributor
    Comments (35) | Send Message
     
    No talking sense davidbdc! This thread is for ranting. It's OK...once in a while people need an emotional outlet. You can talk sense in almost any other thread at this site.
    30 Mar 2013, 06:16 PM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    Cypriot's have themselves to blame.In democracies the people select those who lead them ! And, they an, they alone can move on an fix things.Ireland was in the giant sucking sound and they put in place 180 austerity points and stuck too them. Soon they will go to the market and sell their bonds again ! It can be done..

     

    Should they take the pain and become productive the equity in the banks they got will be worth something. If not. Not !

     

    However, this does set a precedent and it recently happened with MF Global ! So it ain't new !
    30 Mar 2013, 04:00 AM Reply Like
  • lower98th
    , contributor
    Comments (1420) | Send Message
     
    Oh BT. What democracies? "Its not who votes that counts, but who counts the votes." Everything else is smoke and mirrors.
    30 Mar 2013, 08:00 AM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    Hi low98, :>)) USA fits the smoke an mirror..Ohhh it's just the concept I'm driving at ! Could go the China way ?

     

    "State Capitalism "

     

    Seems that is actually the US now.
    Or very much like US is currently going. If you life the smoke !
    30 Mar 2013, 08:09 AM Reply Like
  • Ray Lopez
    , contributor
    Comments (1611) | Send Message
     
    A thought for you types that think Russian mobsters got hit hard by this confiscation of greater than 100k euro in a Cyprus account: do you really think a super rich mobster has not already moved their money out? A few days ago a famous Russian billionaire --I think it was Abramovich--said he already had moved his money out of Cyprus and stood to lose only $10k. Most other self-respecting mobsters have done the same. No, the brunt of this will be borne by Cyprus small timers who don't have the wherewithal to move money to Switzerland. And it's not easy to move money out of Greece and Cyprus: the banks will not allow you (even before the crisis) to wire money out unless you can show a legitimate business reason (like you are an import/exporter, with the necessary licenses, and have paid your taxes). I know, because I live there. In fact, in Greece a few months ago a rich Greek woman tried to move several hundred million without filing the paperwork (which is onerous and difficult) and is now facing not only confiscation of her millions but jail time.
    30 Mar 2013, 04:57 AM Reply Like
  • tunaman4u2
    , contributor
    Comments (3241) | Send Message
     
    Whats amazing is the US just shrugged all this off... epic. This HAS TO hurt earnings in some capacity especially if Europe reignites another crisis
    30 Mar 2013, 06:21 AM Reply Like
  • Peter Matias
    , contributor
    Comments (92) | Send Message
     
    The reporting on Cyprus stinks.

     

    Why is the Bank of Cyprus bankrupt? Didi it default on a particular debt payment? To whom? When was it due?

     

    What are its assets worth? What are they? Did they crater? by how much? What is the total of its liabilities? Profits? losses? cash flow?

     

    Who are the current owner? Is their stake wiped out? Why wouldn't debtors just own the thing proportionally after a bankruptcy, whatever it might be worth?

     

    Who is paying out on the 100k guarantee, the Gov of Cyprus or the EU? What does the budget of the Cypriot Gov't look like? Debt? Deficit?

     

    What's it called when you guarantee something and you don't have the money to back it up?

     

    Who knows? Thanks for the bang up reporting job Reuters/ Bloomberg / CNN whoever; you all suck.
    30 Mar 2013, 07:53 AM Reply Like
  • RCMorea
    , contributor
    Comments (35) | Send Message
     
    I agree, some of these details would be nice. Some of them are out there though.

     

    The Bank of Cyprus is bankrupt because it invested a substantial amount of money in Greek bonds. This is the "central point" in my opinion.

     

    There has been a lot of chatter about whether junior bonds (1.4B) and senior bonds (150M) would be defaulted. There's been talk that "senior bonds" would be protected. I would think all bonds default before bank deposits, but it's not clear that will happen. I, too, would like to know this.

     

    Bank assets are worth--well, about 30% of deposits, apparently. I agree the total figure should be available somewhere.

     

    Assets are where they are supposed to be, such as they are. There's no allegation anyone ran off with them. It's just that they are Greek bonds.

     

    It does look like the defaulted depositors will get ownership equity in whatever is left over.

     

    The 100K guarantee was from the government of Cyprus, but they are broke too, and they can't print euros.

     

    So can this happen elsewhere? Well, I'd say anywhere in Europe. Even German banks can't print euros. In the US, I'd say you will get your dollars no matter what--how much purchasing power they have is another question.

     

    That's most of your questions at least.
    30 Mar 2013, 06:40 PM Reply Like
  • lower98th
    , contributor
    Comments (1420) | Send Message
     
    Very interesting article on how ECB cashed out/supported the Jr. Debt of Cypriot Banks, removing them as a cushion between the Sr Debt and the normally better insulated deposits. http://bit.ly/14DIcPp

     

    US bank model not so different. And now counterparty obligations here outrank deposits...Go JPM
    30 Mar 2013, 08:05 AM Reply Like
  • HAIRYWOLF
    , contributor
    Comments (158) | Send Message
     
    Guys, while feeling so sorry for rich Cypriots and so happy for the "ordinary" depositors with less then E100,000 in their accounts, you seem to forget a very important fact: approximately $38 billion of a total deposits of $62 billion on that island belong to Russian citizens!
    At least a good portion of that $38B has to come from oligarchs, Mafioso's and corrupt politicians. These people have never been familiar with the simple 3-letter word TAX.
    This fact was the one and only reason for the urgent visit of the Cypriot finance minister to Moscow last week. He was rebuffed, as we all know, and came back empty handed.
    Are we to expect a Russian military invasion of this sweet little island?? Something similar to their invasions of Hungary and Czechoslovakia not long ago?? Well, it's Russia now, not the Soviet Union any longer, but.......
    30 Mar 2013, 08:13 AM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    Notice Putin hasn't come to bat for the handful of Russians who weren't well connected and will take the hit ! Hey,he knows they were hiding out from the Russian Flat Tax ,so, they got what they deserved !

     

    Russia is not doing anything,but, shoring up the BRICS swap agreements and new bank.Plus,building energy partnership with China.
    30 Mar 2013, 08:18 AM Reply Like
  • davidbdc
    , contributor
    Comments (3184) | Send Message
     
    Much of that 38 Billion (if its really 38 Billion - you should read up on the fact that one of the Cyprus banks was partially owned by a Russian bank that was still allowing withdrawals all through last week) came from Russian corporations.

     

    Cyprus was basically an off-shore tax haven for Russian companies. The money was reinvested in Russia - thus the reason Cyprus was one of the leading foreign direct investors in Russia.

     

    The truth is that some lower level folks that are Russian probably lost money - but in a few years we'll probably learn that much of the "Russian Billions" was funnelled out of the country.

     

    The Russian Oligarchs and Mafia were just the boogeyman used to sell what the politicians decided to do.
    30 Mar 2013, 11:52 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Cyprus was to Russia what Delaware and Cayman Islands is to the USA. No more or less.
    30 Mar 2013, 12:07 PM Reply Like
  • HAIRYWOLF
    , contributor
    Comments (158) | Send Message
     
    This is from The Guardian (March 27):

     

    "Still, while many wealthy Russians pulled some of their money out, there are still billions belonging to "the little guy", or mini-oligarchs, or those who left Russia to escape the financial prying of Putin's government. That's the money that, ultimately, will help fund Cyprus's bailout"
    30 Mar 2013, 08:35 AM Reply Like
  • divestor
    , contributor
    Comments (182) | Send Message
     
    Why doesn't anyone ever mention that one should never allow deposits to exceed the limit in any bank? Anybody that exceeds the deposit limit (any country) is risking their money. I use 3 different banks to protect against that. If they stuck with the original plan to hit the deposits under the limit this would have been bad. From what I have read much of the big money was there for tax evasion reasons or illegal activity.
    30 Mar 2013, 08:43 AM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    @divestor, that is a smart thing to do,but,in a real crisis the FSLIC will most likely link your SS #. One bank at a time and aok,but, if a wave of banks were hit together you'd see only one covered for the full amount.!

     

    He is something MOST investors should already know ! It is safer to keep cash with your broker.They have way more coverage to protect much more cash.I'm much happier when SIPC insures my cash than the FSLIC.. If ?! I want it all.Not partial payments and scattered accounts.

     

    I had clients in Washington and Ca. when banks collapsed.They were made whole in time,but, got coupons for amounts over $ 10K.. SIPC is much stronger than FSLIC IMHO and covers more than $250K
    30 Mar 2013, 08:54 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4131) | Send Message
     
    What would Aristotle do?
    30 Mar 2013, 08:58 AM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    Aristotle would sit at Starbucks and wait for the drone !
    30 Mar 2013, 09:00 AM Reply Like
  • divestor
    , contributor
    Comments (182) | Send Message
     
    Good points. I lumped everything into "Bank" when in fact I use a Credit Union for one, bank for another and brokerage for a third. I believe all 3 use different insurance to cover deposits.
    30 Mar 2013, 10:24 AM Reply Like
  • RM13
    , contributor
    Comments (920) | Send Message
     
    Regardless, it's very easy to move money from banks into investment accounts - it's several pushes of the button. So the boundary between SIPC and FSLIC may not be as sharp as you indicated and likely become fuzzy if US has similar issues - which means that limits across both will be similar.

     

    US doesn't suffer same issues as Cyprus or Europe - they can print currency at the stroke of few buttons as well. If and when stability of US banking system would come into question, dollar printing/currency devaluation would be secondary to stability of the system, so no, US is not Cyprus. I do agree that it is wise not to exceed 250k limit in any banking or brokerage accounts, however.

     

    Finally, the real problem here for eurozone is the rejected initial plan that targeted insured banking deposits. Savings of about 6 billion dollars on the side of EU on Cyprus bailout will be magnitude more costly for banking system in periphery of Europe when all small depositors 'diversify' their holdings into Switzerland and Germany. This assures southern European banking bailout, good luck with that.
    31 Mar 2013, 12:47 AM Reply Like
  • css1971
    , contributor
    Comments (870) | Send Message
     
    Some misunderstandings evident.

     

    1. Money in your bank account is the bank's not yours. (Carr vs Carr)
    2. When depositors get wiped out in a bank failure the €100k or so insurance is provided by the national government, not the bank, not the ECB, not the EU.
    3. They'll likely take all or almost all the money and you get to claim on the government provided insurance. It may take a long time.
    4. It's possible the government may also be insolvent, the insurance is then only worth the paper it's written on.

     

    All in all, better not to invest in a bank likely to go bust.
    30 Mar 2013, 09:05 AM Reply Like
  • PeakOiler
    , contributor
    Comments (298) | Send Message
     
    The old world: income taxation; the new world: asset taxation. Soon to be ubiquitous.
    30 Mar 2013, 09:51 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Where this act was right or wrong is another story, but it is a legitimate question to ask if this is coming soon to other countries. It is logical to conclude that the architects of this plan would apply it to their own countries at the first opportunities. That country would therefore be Germany, as this was a German designed plan.

     

    If I were a German with money in a German bank, I would be moving my money out. Unless, of course, I were to believe that Germany would never practice what it preaches to other countries. Which may very well be true.
    30 Mar 2013, 11:29 AM Reply Like
  • Tack
    , contributor
    Comments (14390) | Send Message
     
    I find much of the outrage expressed by some about the "confiscation" of "theft" of money from Cyprus uninsured depositors mostly hilarious. Many of these folks are the same ones, who express similar outrage that the taxpayers' money was "stolen" by TARP or depositors' money is "stolen" by ZIRP.

     

    What would those same critics be saying if there had been no TARP and U.S. banks had been allowed to fail on a wholesale basis, and there would have been legions of above-FDIC-limits U.S. depositors, who would have lost not 62% of their funds, but 100%?

     

    This is plainly hypocrisy.
    30 Mar 2013, 12:54 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4131) | Send Message
     
    Tack: It all depends on whose ox is being gored. Don't tax me, don't tax you, tax that man by the tree.
    30 Mar 2013, 01:51 PM Reply Like
  • Rico59
    , contributor
    Comments (279) | Send Message
     
    Why don't you take another crack at that?
    30 Mar 2013, 03:10 PM Reply Like
  • Lakeaffect
    , contributor
    Comments (1178) | Send Message
     
    It's one thing to take taxpayer money, and money from future generations of Americans, and bail out the banks who mismanaged themselves so badly that they had to be bailed out.

     

    What I find offensive is that NOT ONE of the sleazy jerks has been sent to jail. Most are still running their banks, collecting big salaries and bonuses, having a great time schmoozing with the President and his cronies over at the Fed and Treasury. These guys are no different than the ones who got in trouble at Enron, but all they do is pay a little fine, disavow any illegal or immoral behaviours and then go happily on their way.

     

    Tell me what happened to Sarbanes Oxley. There is a provision in there that the CEO is liable for the actions of his organization. That he cannot claim ignorance or say that he was unaware what his minions were doing. The CEO has the ultimate responsibility to ensure that controls are in place and he has to attest to that every year before audited financial statements are released. So, tell me, why isn't Jon Corzine in jail?

     

    You sit there and make your smug comments. It just tells me that you are one of them. There is a lot of anger out there, and it's getting worse each day with all this crap that is going on. You should be concerned about this, not just blowing it off with one of your daily smart ass comments.
    31 Mar 2013, 02:57 AM Reply Like
  • Tack
    , contributor
    Comments (14390) | Send Message
     
    Lake:

     

    "There is a lot of anger out there...."

     

    That's the whole point. It's anger for anger's sake. The same folks who wail about the taxpayers' money being "stolen," here in the U.S., to keep the banks afloat, so depositors didn't lose a dime, now complain bitterly because the EU didn't do the same thing and allowed (foolish) depositors in 11% CD's, backed by Greek bonds, to lose some of their funds.

     

    We live in an age, where relativist teaching tells everybody that all things, behaviors and choices are "equal." There is no right or wrong. There should be no consequence to making choices. They're all good. Everything should be happy, painless and risk- and cost-free.

     

    Then, they discover that the real world doesn't work that way, so they get angry, at anybody, everybody.
    31 Mar 2013, 04:46 AM Reply Like
  • Sherwoodalpha
    , contributor
    Comment (1) | Send Message
     
    What about the depositors at the other banks operating in Cyprus, other than BOC and Popular Bank? All the news is about the latter.
    30 Mar 2013, 02:34 PM Reply Like
  • Unsure Now
    , contributor
    Comments (406) | Send Message
     
    Lets see now that the % is finalized what reaction happens in Cyprus.If they just sit on their hands the template worked to perfection..
    30 Mar 2013, 03:20 PM Reply Like
  • tiger8896
    , contributor
    Comments (643) | Send Message
     
    37.5% of the amount over 100K in bank shares and 65% up in smoke as taxes. That's like confiscating 100% of your money over 100K if you have to take worthless bank shares. Sounds preposterous, I'll wait until until its official.
    30 Mar 2013, 03:52 PM Reply Like
  • maxiedog
    , contributor
    Comments (122) | Send Message
     
    We have a principle in the West. It was called 'innocent until proven guilty'. We have another that forbade the assumption of 'guilt by association'. In the posts I have read the HNW depositors in Cyprus banks are presumed to be Russian mafia types etc. and so 'deserve it'. How is this certain? Why have these people not been investigated by EU authorities before now if they are? Secondly, what about those that definitely are not. There will be some. Even one innocent should be protected our principles. It is what makes us different. The robbery of depositors in Cyprus shows that the troika are as bad as these Russians and others presumed as crooks.
    30 Mar 2013, 04:23 PM Reply Like
  • Unsure Now
    , contributor
    Comments (406) | Send Message
     
    MAX

     

    I might add if they KNEW what accounts were mafia money why not just freeze those accounts?

     

    Nope, that is the excuse. This was a test drive going flawless so far. Those Citizens really need to get rowdy so that this isn't tried again. If they just sit and take it Germany will be laughing all the way to the bank ( pun inteneded )
    30 Mar 2013, 05:49 PM Reply Like
  • RJKRJK
    , contributor
    Comments (164) | Send Message
     
    How did the Russian mobsters move all of their money out of the Cyprus banks? They guaranteed the safety of all banking presidents and their families.
    As for maxiedog, does he somehow think that Cyprus is in the US so it's bank must abide by US law? Very confused.
    30 Mar 2013, 05:10 PM Reply Like
  • rambler1
    , contributor
    Comments (628) | Send Message
     
    With rates already as low as they are in this country. I've been taking money out and putting it in my "mattress". Whats the point of earning nothing to help finance & bail out everyone who did the wrong things or people who saved their money & basically got screwed?
    30 Mar 2013, 08:14 PM Reply Like
  • Ron Myers
    , contributor
    Comments (256) | Send Message
     
    The Russian "whales" who were well connected all went to London and took their deposits out - there were no restrictions on overseas branches of these banks as they were getting liquidity from the banks in their own countries. The reason the haircut is so high now is because the whale depositors took billions out of the bank in the week and a half negotiation period while those left took out nothing. From looking at the events at least some the players involved - probably on the Cypriot parliament side at the very least - knew this and the delay tactics were in place to give these depositors a chance to take their money out.

     

    The people losing here are primarily Cypriot retirees and small business owners as well as wealthy but less well off Russian depositors. Contrary to what people believe not all Russians depositing in Cyprus were criminals. Many were legitimate business owners who were not even that wealthy and deposited in Cyprus because of the stable Euro currency and perceived safety of the European banking system (LOL in hindsight but this type of bank run was common in Russia) and historic relationship between the two countries.

     

    In short this is a criminal outrage. Lessons learned:

     

    - Europe is a complete failure and everyone in charge is either incompetent, corrupt, unwilling to do the right thing for Europe while looking to extract maximum benefit for themselves, and most likely all three

     

    - Core eurozone countries will never commit to anything that could cause their taxpayers to lose money ever even in real and not nominal terms and in most cases will only agree to programs that will almost certainly make money for their country

     

    - The bottom may not even have set in yet in the periphery as shocking as that may be; certainly economic data have shown no signs of turning around
    30 Mar 2013, 10:23 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Since when has any imperialist power done anything but extract from their colonies?
    30 Mar 2013, 11:06 PM Reply Like
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