Cypriots Stunned by Forced Savings Cuts

[shiny!]

Re: Cypriots Stunned by Forced Savings Cuts

They come to you tomorrow, in the USA, and say they're taking 5% of your savings for the good of the country and it fixes the fiscal deficit and brings down debt/gdp, you sit there and you take it. What's the alternative, for a 5% hit, pick up and move? Where, to another country that's going to do the same thing? Most people will belive their govt that tells them it's for the good of the country, so get ready and accept it. I'm not saying it's good, but most have no alternative but to accept, you can argue the fact that contract law has been broken all day long, it's just that it's never existed in these circumstances to begin with.

Agree in principle with what you're saying, but most Americans have little to no savings to be taken. Their money's tied up in their houses and they live paycheck to paycheck. Or they don't have a house and they still live paycheck to paycheck. Of all my friends, I only know a few who have a few thousand $$ stashed away for emergencies.

Some have small IRAs and 401Ks. Only a few have brokerage investment accounts. Who here thinks these will be confiscated?

Is there ANY safe place to put one's money anymore? Even Switzerland bent over to comply with IRS reporting requirements. Many foreign banks won't open accounts for U.S. citizens anymore, and if they did, there's no iron clad assurance that the money would be safe there.

We can talk all day about the safest ways to invest: stocks, bonds, commodities, gold... but it looks more and more like the entire financial/banking system is starting to break. What to do in that case? Gold? Silver? Beans? Will it really come to that?

EJ said the monetary system would break down in 2019, IIRC. Is this what a breakdown looks like in the early stages?

(For the record, I don't want to dodge any legitimately owed taxes, I just don't want what's legally mine stolen to pay off debt that I never signed on to.)

[big67]

Re: Cypriots Stunned by Forced Savings Cuts

People here in Italy is acutely aware of the implications of the Cyprus move (because something similar already happened in 1992 in Italy under the government of mr. Amato, with a overnight levy of 0.6% on every bank account).

After friday we are not sleeping well at night.

I am already taking some of my money out of my principal bank account, just in case we will need it in the middle of a banking crisis, and I already redistributed the rest between two different bank accounts in order to minimise the impact of a progressive levy and also to be able to take money out at the fastest rate possible (two ATM cards are better than one).

Does anybody have any further suggestion?

[Chris Coles]

Re: Cypriots Stunned by Forced Savings Cuts

People here in Italy is acutely aware of the implications of the Cyprus move (because something similar already happened in 1992 in Italy under the government of mr. Amato, with a overnight levy of 0.6% on every bank account).

After friday we are not sleeping well at night.

I am already taking some of my money out of my principal bank account, just in case we will need it in the middle of a banking crisis, and I already redistributed the rest between two different bank accounts in order to minimise the impact of a progressive levy and also to be able to take money out at the fastest rate possible (two ATM cards are better than one).

Does anybody have any further suggestion?

http://www.bullionvault.com/

[don]

Re: Cypriots Stunned by Forced Savings Cuts

Not privy, by a long shot, with the politics behind the apparent faltering of the Cyprus Gambit but the protesting Cypriots are not leaving the country and may have had an impact on the possible cancellation of the move.

On a more personal note, does anybody think storing cash in short term Treasuries adds another layer of savings protection than leaving it in a bank or credit union? Dipping into treasuries has significant global political implications.

[thriftyandboringinohio]

Re: Cypriots Stunned by Forced Savings Cuts

Agree in principle with what you're saying, but most Americans have little to no savings to be taken. Their money's tied up in their houses and they live paycheck to paycheck. Or they don't have a house and they still live paycheck to paycheck. Of all my friends, I only know a few who have a few thousand $$ stashed away for emergencies.....

Two factors make the amount pretty big.

First is the magic of large numbers, there are over 300 million Americans, plus millions of businesses, plus foreign folks banking in the US.

Second, although the average small fry spends the whole paycheck right away, in the aggregate it all gets back to the bank. The landlords deposit all the rent checks; the mechanics deposit all the day's receipts; the dentists deposit all their daily billings...most of them consider themselves small fry too.

At any given moment there are trillions of dollars of savings deposits and small-denomination time deposits in US banks available to seize.
I'll bet our resident Fed data geeks like bart or Finster or EJ could grab the average daily number for us without much trouble, and my guess is it's a big number, in the trillions of dollars, on the average Friday night in US bank checking and savings accounts.

[big67]

Re: Cypriots Stunned by Forced Savings Cuts

http://www.bullionvault.com/

I'm already a customer .

[littleshark]

Re: Cypriots Stunned by Forced Savings Cuts

http://www.bullionvault.com/

What's your experience with bullion vault. You feel confident your bars are secure and registered and there is no risk of fraud?

[don]

NYTimes on the Cyprus Gambit - Nothing Here to Worry About, Go Back to Sleep

A Bank Levy in Cyprus, and Why Not to Worry

By ANDREW ROSS SORKIN

Never mind.

The last 72 hours have been filled with breathless proclamations of impending disaster after the European Union and International Monetary Fund indicated that they planned to take money directly from depositors with bank accounts in Cyprus as part of a bailout of that country.

Analysts and politicians compared the bailout plan, the first to include a levy on deposits that were considered to be insured, to government-sponsored larceny, and said it would cause a run on banks across Europe, if not a full-fledged global crisis.

“The very nature of banking has been shaken to its roots with this decision, for banking depends upon trust,” Dennis Gartman, the investor, wrote in a note to his clients. “Trust that has now been shattered; torn asunder, broken … destroyed.”

Jim O’Neill, chairman of Goldman Sachs Asset Management, called the decision an “astonishing move” with “little thought of contagion to the rest of the euro zone, and indeed perhaps the world.”

Mark J. Grant, a market commentator who has been predicting an economic apocalypse in Europe for years, went so far as to compare the terms of the bailout with “rape.” He said: “Pay attention please. The European Union and the European Central Bank and the I.M.F. have just advocated the confiscation of private property for their own indulgence.”

Even President Vladimir Putin of Russia got into the debate, given that much of the deposits in Cypriot banks are Russian. “Mr. Putin said that such a decision, if adopted, would be unfair, unprofessional and dangerous,” a spokesman said.

And yet here we are. And, well, nothing bad has happened.

There have been no re-enactments of “It’s a Wonderful Life,” with people lined up around banks in Italy or Spain — considered the next dominoes, if you believe the doomsayers. The stock markets in Europe dropped less than 1 percent. In the United States, investors shrugged their shoulders, too.

Why?

While the bailout of Cyprus is a fascinating case study and raises interesting theoretical questions about moral hazard for policy wonks and talking heads, here is the reality: It is largely irrelevant to the global economy. Cyprus is tiny; its economy is smaller than Vermont’s. And the bailout is worth a paltry $13 billion, the equivalent of pocket lint for those in the bailout game.

Even the larger issue about bailing out a country by taking money from depositors — which quickly created outrage around the world — seems overblown.

The worry is that the European Union and I.M.F. have created a dangerous precedent by making depositors share in the pain of the bailout. Historically, the goal of bailouts has been to raise confidence in banks so depositors don’t flee. The approach in Cyprus is at odds with that notion, raising questions about whether future bailouts in countries like Spain and Italy — if they are needed — could affect depositors.

The alarmist thinking is that depositors will move their money from troubled banks, creating a death spiral.

Even in the United States, some commentators used the Cyprus bailout as a scare tactic about what they speculated could eventually happen here.

“An executive order issued by the president to debit taxpayer bank accounts during a future financial emergency is entirely possible,” Andrew Gause, author of “The Secret World of Money,” said in a news release.

But, in truth, the smart money knows that the bailout of Cyprus says very little about future actions.

“I would assume that anyone in Spain, Portugal or elsewhere who knows about the taxation of Cypriot depositors also would know that the Cypriot banking system is a very different animal than anywhere else in the euro zone,” Erik Nielsen, chief economist at UniCredit, wrote in a note to clients.

Mr. O’Neill of Goldman also acknowledged: “I am sure it will not set a precedent.”

Cyprus is unique. Besides being tiny, its banking system looks different from those in most other countries. Much of the big money deposited in its banks is from foreign investors, including Russians who have long been suspected of money laundering. Those investors had fair warning that Cypriot banks were troubled. The issue has been simmering for six months. But those investors left their money in the bank, in part because they were gambling that the banks would be bailed out at no cost to them. If the current plan is approved, depositors will have lost that bet.

Worse, the strategy employed in the bailout of Greece — in which bondholders of its sovereign debt were paid less than face value — will not work in Cyprus. Cyprus’s banks own much of the country’s debt, so any effort to reduce that debt by forcing debt holders to accept less would only make the banks more troubled.

Given the brutal history between Russia and so much of Europe — and speculation that so much of the money is ill gotten — it is clear why it would be so politically unpalatable to countries in the euro zone, Germany in particular, to bail out Russian depositors. And even if the move were to create a run on the banks in Cyprus, the contagion would be limited.

There is very little chance that politicians would ever choose to use the model they developed in Cyprus in a country like Italy or Spain, where a run on the banks would have such profound implications. By the way, if you’re wondering why investors left so much money in troubled Cypriot banks, here’s a trivia question: Would you have been better off leaving your money in a bank in the United States or in Cyprus over the last five years?

The answer: You would have been better off in Cyprus, even after the bailout, when your money was “confiscated.” If you had 100,000 euros in a Cypriot bank account over the last five years, where the interest rate has averaged about 5 percent, you would have about 127,600 euros today. Even after the bailout, which would require you to give up 10 percent of your deposit — 12,760 euros — you would be left with 114,840 euros. The American bank? The $100,000 you deposited at Bank of America five years ago is about $105,100, at the going rate of about 1 percent interest a year.

[thriftyandboringinohio]

Re: NYTimes on the Cyprus Gambit - Nothing Here to Worry About, Go Back to Sleep

The article contains a pretty amazing set of weak excuses.

- people are are getting hysterical and making WAY too much fuss about this
- see, you were wrong, nothing bad happened as a result
- Cyprus is just a tiny place, completely inconsequential
- those depositors were Russian criminals, they deserve to have their money taken
- the Russian criminals didn't even get hurt that much, they kept some undeserved gains

To me, this article and the lame excuses it presents are as troubling as the original bank action in Cyprus. Feels like a scoundrel caught in the act and trying to double-talk his way out of it.

"The lady doth protest too much, methinks."

[globaleconomicollaps]

Cypriot parlament rejects "bailout"

http://www.telegraph.co.uk/finance/d...lout-live.html



Latest

18.23 Apparently they voted with a show of hands.

18.16 So they voted after all. And surprise surprise, the bank levy bill has been defeated. There were 36 votes against, and 19 abstentions. One MP didn't even show up. Cyprus's parliament has 56 seats.

[jabberwocky]

Re: Cypriots Stunned by Forced Savings Cuts

Not privy, by a long shot, with the politics behind the apparent faltering of the Cyprus Gambit but the protesting Cypriots are not leaving the country and may have had an impact on the possible cancellation of the move.

On a more personal note, does anybody think storing cash in short term Treasuries adds another layer of savings protection than leaving it in a bank or credit union? Dipping into treasuries has significant global political implications.

This has been my opinion for years, though, in the collapse previously, all accounts were "protected". This has been a period where treasuries have constituted money, and the real risk is in the currency. As the world's primary reserve, the dollar should act as final refuge until it doesn't, and that revulsion will signify the end of the present IMS.
I am perenially amused when I hear experts talk about ANY risk-free asset, anywhere and in all time.

[ProdigyofZen]

Re: Cypriots Stunned by Forced Savings Cuts

This has been my opinion for years, though, in the collapse previously, all accounts were "protected". This has been a period where treasuries have constituted money, and the real risk is in the currency. As the world's primary reserve, the dollar should act as final refuge until it doesn't, and that revulsion will signify the end of the present IMS.
I am perenially amused when I hear experts talk about ANY risk-free asset, anywhere and in all time.

This is one of the questions that lead me down the path of truth pertaining to the IMS.

When I first started in "the game" people quoted the "risk-free" asset. I kept thinking to myself; what is risk-free?

Obviously I knew they were referring to treasuries but it still didnt make any sense to quote all bond prices in the world off of the spread with the risk free asset.

I wondered; What happens when the risk-free asset is no longer riskless?

[BadJuju]

Re: Cypriots Stunned by Forced Savings Cuts

http://greece.greekreporter.com/2013...id-eu-bailout/

I've been hearing rumblings that one of the banks in Cyprus has been sold to a Russian entity now. I cannot confirm it, though.

[don]

Re: Cypriot parlament rejects "bailout"

http://www.telegraph.co.uk/finance/d...lout-live.html



Latest

18.23 Apparently they voted with a show of hands.

18.16 So they voted after all. And surprise surprise, the bank levy bill has been defeated. There were 36 votes against, and 19 abstentions. One MP didn't even show up. Cyprus's parliament has 56 seats.

Stay tuned for the End of the World FIRE dance.

[globaleconomicollaps]

Re: Cypriot parlament rejects "bailout"

Stay tuned for the End of the World FIRE dance.

Cool! Sounds like a Bohemian Grove naked dance party!

https://www.youtube.com/watch?featur...&v=FVtEvplXMLs

Alex Jones bringing it (in case you don't know what your leaders do) - Since 1873, the Global Elite Has Held Secret Meetings in the Ancient Redwood Forest of Northern California.
Members of the so-called "Bohemian Club" include Former Presidents Eisenhower, Nixon and Reagan.
The Bush Family Maintains a Strong Involvement. Each Year at Bohemian Grove, Members of This All-Male "Club" Don Red, Black and Silver Robes and Conduct an Occult Ritual Wherein They Worship a Giant Stone Owl, Sacrificing a Human Being in Effigy to What They Call the "Great Owl of Bohemia."
Now, for the First Time in History, an Outsider Has Infiltrated Bohemian Grove with a Hidden Digital Video Camera and Caught the Ritual on Tape.

See what you miss out on by being home in bed at 11:00?