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The EU is preparing to take the apparent non-template that is the Cyprus bailout and incorporate...

The EU is preparing to take the apparent non-template that is the Cyprus bailout and incorporate some elements of it into a new law that would force haircuts on large deposits in banks that fail, economic affairs chief Olli Rehn has said. Bundesbank Jens Weidmann says that the Cyprus crisis shows that banks can be wound up. Along with Rehn's comments, it also shows that depositors' money is no longer safe in Europe.
Comments (36)
  • divinecomedy
    , contributor
    Comments (466) | Send Message
     
    This is why the Euro is rallying people, because the prospects of more seizure means your money will have more value, which is as it should be. After all if money is abundant, it's not precious no ?
    7 Apr 2013, 05:22 AM Reply Like
  • taharqa11
    , contributor
    Comments (31) | Send Message
     
    Is the US any different? The US gov doesn't guarantee deposits above a certain amount either. So what place is completely and unreservedly safe?

     

    People have to realize that no place is 100% safe and they should never forget that. Only a fool would put their money somewhere and not keep an eye on it.
    7 Apr 2013, 05:46 AM Reply Like
  • davidbdc
    , contributor
    Comments (3141) | Send Message
     
    That is correct. And actually in the IndyMac bank seizure uninsured deposits did take a loss - don't know what the final total ended up being but it started at 50%.

     

    What Americans should be more concerned about is once Bureaucrats and Politicians see this as an acceptable policy (which it should have been throughout the financial crisis) - they will interpret this as its ok to seize money outright (because they themselves don't understand how things should work). Then we'll see calls for a "one-time" wealth tax - undoubtedly to "pay for programs to strengthen the middle-class". That will lead to the nationalization of 401K accounts....... followed by IRA accounts........ followed by another "one-time" wealth tax........ onwards and onwards.
    7 Apr 2013, 06:21 AM Reply Like
  • Tack
    , contributor
    Comments (12721) | Send Message
     
    tah:

     

    You hit, tangentially, on one of greatest problems of today's society (especially in the U.S.) in this era, i.e., people actually believe and want that life should be risk free. In fact, they are so fervently against risk that they rush to augment restrictive legislation to prevent others from taking risk, too, even if they're willing.

     

    We can all die of boredom, as long as we're "safe."
    7 Apr 2013, 10:53 AM Reply Like
  • taharqa11
    , contributor
    Comments (31) | Send Message
     
    Tack:

     

    I've been living in West Africa for the past 6 years, and that experience has made me very much aware of the risk of doing even the most innocuous activity. However, as you imply in your last sentence, I rather like living in a place where real risk exists because life is more interesting lived in that fashion.

     

    I sometimes wonder if some of the depression and people shooting up schools and stores in the developed countries comes from the possibility that men need to have some risk in their lives to feel alive....
    7 Apr 2013, 11:49 AM Reply Like
  • WMARKW
    , contributor
    Comments (10244) | Send Message
     
    I wonder how my 91 year old mother feels about the level of risk I take with her relatively small investment portfolio?
    7 Apr 2013, 02:27 PM Reply Like
  • taharqa11
    , contributor
    Comments (31) | Send Message
     
    WMARKW: That depends. If her small investment portfolio is small because you invested it in Enron, Worldcom, Fannie and Freddie, and MF Global then I'll bet she isn't too pleased.
    7 Apr 2013, 02:51 PM Reply Like
  • Unsure Now
    , contributor
    Comments (406) | Send Message
     
    TAHARQA11

     

    West Africa huh?? Talking about taking risks,,

     

    Some comment on our school shootings there as well. We need risks so we shoot at schools?

     

    Are you serious?? We are very much alive as people, we don't need to shoot at our kids.. But I guess that's the logic where you come from eh??

     

    I must be different because I like my kids safe, and when my wife comes home I really don't want to meet her at the door with a shotgun in my hands either.. But that's just me !!
    7 Apr 2013, 04:46 PM Reply Like
  • The Long Tail of Finance
    , contributor
    Comments (695) | Send Message
     
    And by the way, if you go over the FDIC insured limit then just put your money in other banks until you've spread it around. Not really a big deal my friends to have all your money insured if you put it on deposit across several banks.
    7 Apr 2013, 04:56 PM Reply Like
  • taharqa11
    , contributor
    Comments (31) | Send Message
     
    Unsure Now:

     

    West Africa isn't really terribly dangerous but I do enjoy backpacking around the region by myself, which does carry some risk. Alaska would appeal to me if it weren't so cold.

     

    In terms of my comment about risk and mental stability, people are different. Some people do not like risk, and so they are more comfortable in places where things are predictable and safe. Others find that kind of life suffocating and they may lash out in illogical and self-destructive ways. I was in no way making a blanket statement about behavior or peoples' motivations in developed countries.
    7 Apr 2013, 05:18 PM Reply Like
  • Unsure Now
    , contributor
    Comments (406) | Send Message
     
    TAHA

     

    I applaud you for your independence. However the killings in the USA in our schools were basically mentally disturbed people. Good luck and enjoy your backpacking..
    Be safe !!
    7 Apr 2013, 07:03 PM Reply Like
  • jhooper
    , contributor
    Comments (5328) | Send Message
     
    Long tail

     

    You can also do that with CDARS.
    7 Apr 2013, 08:38 PM Reply Like
  • jhooper
    , contributor
    Comments (5328) | Send Message
     
    Alaska is warm in summer, but the Mosquitos are a nightmare. Try Kennicott in the wrangle saint Elias range.
    7 Apr 2013, 08:39 PM Reply Like
  • css1971
    , contributor
    Comments (870) | Send Message
     
    Nothing has changed.

     

    This is not new.
    This has been the case for over 200 years. (Carr vs Carr 1811)
    This is also the case in America as well as the UK and Europe.

     

    The money you have in a bank account is *not your money*, it is the bank's money, you have invested in the bank and like any investment you can lose all or part of it. You are simply a creditor.
    7 Apr 2013, 06:14 AM Reply Like
  • WMARKW
    , contributor
    Comments (10244) | Send Message
     
    While I agree at some level - not investor, but creditor, these ideas may be of interest. See:

     

    http://bit.ly/10IrYiE

     

    Demand Deposit Meaning:
    In deposit terminology, the term Demand Deposit refers to a type of account held at banks and financial institutions that may be withdrawn at any time by the customer. The majority of such Demand Deposit accounts are checking and savings accounts.

     

    Demand Deposit Example:
    For example, a Demand Deposit was once thought applicable only to checking accounts. Nevertheless, because of the immediate availability of funds deposited in savings accounts and money market accounts, these are now often also considered Demand Deposits. Demand Deposits now often comprise a major component of a nation’s money supply because of the immediate ability of Demand Deposits to be available to purchase goods and services and to satisfy the payment of debts. In the United States, a bank or financial institution must by law make Demand Deposits available to its customers within a set period of time and the financial institution must advise its customers in writing of this policy.
    7 Apr 2013, 02:32 PM Reply Like
  • june1234
    , contributor
    Comments (2495) | Send Message
     
    Cyprus aint over. Banks are scheduled to open up for "business as usual" soon. If I live on that island and have had limited access to my bank account for 6 weeks it ain't 300 Euros I'm going to be looking to withdraw when they open up again. I doubt they will
    7 Apr 2013, 06:20 AM Reply Like
  • lostagain
    , contributor
    Comments (36) | Send Message
     
    Great equality in the world! When Russian Money builds mega-yachts in Hamburg it is clean money but when it is parked in Cypriot banks is dirty money and we can send it to the barber. Somebody stop them before the so called Union falls on all our heads
    7 Apr 2013, 09:11 AM Reply Like
  • june1234
    , contributor
    Comments (2495) | Send Message
     
    Big depositors might take it as the countries have been doing last 5 years . Call these deals what they are bank bailouts no risk for any of them they keep receiving more and more
    7 Apr 2013, 11:07 AM Reply Like
  • yliu54
    , contributor
    Comments (170) | Send Message
     
    It will be interesting to see tonight's future's reaction.
    7 Apr 2013, 12:27 PM Reply Like
  • minecanary
    , contributor
    Comments (411) | Send Message
     
    Since Putin gave the Russians a time limit to bring their cash home or risk dismissal, you are going to see 2 things happen - bank runs in all tax haven countries ahead of the deadline and a lot of job openings in Russia if the official feels they have stolen enough already.
    7 Apr 2013, 12:40 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4009) | Send Message
     
    Connecting the dots suggests that property rights will be the first to go in the NWO. This is already happening in many cases. Emboldened politicians will soon realize that the majority of their constituents will support their attacks on property for the simple reason that most people have very little property to lose.
    7 Apr 2013, 02:27 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8412) | Send Message
     
    Crash Monday!?

     

    Another Bear trap?

     

    When $VXX went to 21.2+ on Friday I bought strike 21 calls expiring Friday and I tripled my money on that in 6 hours. Tripled. MacroTrader challenged me to buy $VXX puts at that time. It was hardly a challenge. It was a gimme.

     

    I would like another gimme on Monday. Come on EU you can do it for me.
    7 Apr 2013, 03:04 PM Reply Like
  • Unsure Now
    , contributor
    Comments (406) | Send Message
     
    MI

     

    You are great at posting your winnings after the fact...Always a winner eh??

     

    Do you think anyone takes your posts seriously ? You loved silver but sold and made a profit in the past. Go look back at your posts how you were LONG on silver...

     

    I can't be bothered !! Others see right though you as well..
    7 Apr 2013, 04:53 PM Reply Like
  • idkmybffjill
    , contributor
    Comments (1554) | Send Message
     
    Actually, he has been buying puts on VXX spikes for a while, and I've followed him and made some decent money as well. I didn't have the balls to buy the puts that expired on Friday, but I bought ones that expire this upcoming Friday and am up 30-50% on those from Friday morning.
    7 Apr 2013, 04:56 PM Reply Like
  • Unsure Now
    , contributor
    Comments (406) | Send Message
     
    He is a she!!
    7 Apr 2013, 05:06 PM Reply Like
  • idkmybffjill
    , contributor
    Comments (1554) | Send Message
     
    Lol what?
    7 Apr 2013, 05:07 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    + 1. Those who brag about their winners.......
    7 Apr 2013, 06:37 PM Reply Like
  • Steve Bass
    , contributor
    Comments (254) | Send Message
     
    What am I missing here? All this talk about govt confiscation and not allowing people to take risk? Hello!

     

    Cyprus is about NOT taking the public's money - but assigning risk to those who took the risks.

     

    The world is bubbling over with too much risks (leverage, derivatives...) with distorted incentives (heads i win; tails the public loses) and no firewalls (removal of Glass-Steagel, Commod Mod. Act).

     

    Perhaps people are referring to the latest bill to cap IRA contributions. I don't like that either as it's a great way to invest tax free - but IRAs were set up to incent people to save for retirement? Once there is a 'reasonable' amount of money, why continue to give a tax break?

     

    Most investors realize what is happening with QE, right? It does devalue our excess debt, but it's a regressive tax on the middle class. It hurts savers if they don't know what they are doing - but most with significant savings do know (or have hired someone that does) - and most are benefiting from higher asset prices.

     

    The wealth divide has grown to levels not see since the Great Depression. It only makes sense to funnel some of that money back into the system to help those most negatively effect by QE.
    7 Apr 2013, 03:41 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4009) | Send Message
     
    The tax code is a political football used to raise cash to buy votes, reward contributors, incentivize behavior and punish enemies. Good policy rarely enters the picture. Just tell me the rules so I can plan my life accordingly. Dreaming of a better tax system is a waste of time.
    7 Apr 2013, 03:58 PM Reply Like
  • davidbdc
    , contributor
    Comments (3141) | Send Message
     
    Steve,
    Why not get rid of QE instead?

     

    And cut government spending as opposed to trying to inflate away its spending?

     

    And simply change the tax code so there are no exemptions for anyone?

     

    Then we might find long term job growth, more freedoms, and a growing middle class.
    7 Apr 2013, 09:50 PM Reply Like
  • Ray Merola
    , contributor
    Comments (3077) | Send Message
     
    What is the difference between banking news the article referenced, and the current FDIC protection for $250K?

     

    If a U.S. bank fails, and one has a savings account greater than the FDIC maximum in it, you can lose money.

     

    I believe I read the policy in EU works the same way: limits around 100K euros or 85K pounds.

     

    What's the hyperventilating about?
    7 Apr 2013, 05:45 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4009) | Send Message
     
    Good question. Demand deposits are unsecured credits and would be paid last in the event of a bank failure. Government insurance protects "the little guy" from losing his deposits. Perhaps the issue is whether failed banks should be recapitalized at all. The TBTF banks need not worry. They have convinced the politicians they are too important to be allowed to go under.The smaller banks are allowed to go under. Perhaps if we hadn't done TARP we would know the answer.
    7 Apr 2013, 07:11 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8412) | Send Message
     
    No crash tmrw because of Japan. Disappointing.
    8 Apr 2013, 01:06 AM Reply Like
  • kyleg17
    , contributor
    Comments (174) | Send Message
     
    Why would there of been crash tomo? I don't know why you would say that...
    8 Apr 2013, 01:30 AM Reply Like
  • idkmybffjill
    , contributor
    Comments (1554) | Send Message
     
    MI is being sarcastic.
    8 Apr 2013, 09:54 AM Reply Like
  • Aristiphones
    , contributor
    Comments (1327) | Send Message
     
    I don't know why I find this shocking but I do. The savers are literally suppose to pay for bad lending decisions via Government dictat? I understand "moral hazard" via bailouts..."rewarding bad behavior" as it were. But punishing good behavior so as to teach people....to never put your money in a bank? (Will it work? Can the "slow season cash market" be maintained using such a plan? Seems to me you're talking a catastrophic hit to the economy...in order to gain control (a "bail in") of the bank. This sounds even worse than moral hazard. "Plus it sounds mean as well." Will the euro rally on the news?
    8 Apr 2013, 05:37 AM Reply Like
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