Cyprus Levy on Bank Accounts

[A2QFI]

While the banks are shut until Wednesday the Cyprus Government appears to be trying to claw back some of the massive debt they have incurred with their EU bail-out. Accounts holding more than €100,000 will suffer a deduction of 9.5% and accounts under this amount will have a deduction of 6.75%. Additionally there will be a withholding tax imposed at source on interest earned. Source for this is a Times report by Philippe Naughton timed midday March 16th.

[Biggus]

BBC News - Shock in Cyprus as savers face bailout levy (http://www.bbc.co.uk/news/world-europe-21814325)

[Al R]

Does anyone know if this will affect HM Forces?

https://twitter.com/RAF_IFA_Echelon/status/313000680929517569

If anyone is out there and can retweet and/or ask the question, I'd be grateful.

[Courtney Mil]

Military Aviation.

[Canadian Break]

That's a bit harsh Courters - I think there a link is there - however tenuous - Flight Safety perhaps? CB

[Chris Griffin]

Come come Canadian,

We wouldn't want such a triviality which potentially seriously effects those currently serving to get in the way of all the WIWO_____ and Suez stories would we. :ugh:

[Al R]

.. I have just been told that it does (affect the troops). If that is the case, it looks like The Treasury will be indirectly bailing out Cyprus a little more because surely, it'll have to repay the losses?

[Canadian Break]

Steady on CC old chap - I represent that WIWO comment! However, I remember when I was in Cyprus 92-94 you couldn't walk down St Andrews Street on a Saturday without bumping into at least 3 or 4 Air Ranks who had retired to that Sceptered Isle. :ok:CB

[Al R]

Hmmm. WIWI Cyprus, it was Aphrodite's Isle of Love and Beauty. When did it get all Shakespearean then?

[Canadian Break]

When was that Old Chap?

[Al R]

.. 84-88 and then on and off through the 90s.

[Biggus]

Al R,

Reference post 9 - Othello?

[Canadian Break]

OK chap - here goes with a tenuous link for Shakespeare and Cyprus. Richard the Lionhear married Queen Berengaria - allegedly in Limassol. Richard the Lionheart and Richard the Third shared the same christian name and Shakespeare wrote a play called Richard III. Any good? A damn sight less tenuous linkl than some of those on here re Military Aviation (I think?). :ok:CB

[Biggus]

C B

Re military aviation.....

How about the fact that the UK has a long standing RAF base on Cyprus, which has personnel "permanently" based there (i.e. a normal full UK military tour as opposed to just a deployment) who presumably may well have opened Cypriot bank accounts to make life easier out there - and who therefore may just have had some of their money taken away.

I believe the AAC may have a permanent set up in Cyprus as well.

Tenuous enough for you?

Any more tenuous than discussing military pensions, PAYD, SFA conditions, annual pay rises, X factor, allowances, annual fitness tests, CCS, etc..... :ugh:

[haltonapp]

That will teach them to be so clever and join the euro, anyway, the Bundestag could not be seen to vote for a cash injection into Cypriot banks that were holding vast amounts of laundered Russian money. We all know where sympathy is in the dictionary, between S**t and syphallis and not far from squadron leader!

[Onceapilot]

DC will deem any losses of personal funds in Cyprus to be a "consequence of personal choice", me thinks?

OAP

[Al R]

Biggus, I had to google it.. but you win! :D

CB, I once asked a girl to get married, in Limassol. She agreed. :{

[StopStart]

A little rich Courtney, given your earlier strident defence of CoffmanStarter's right to create at least 3 topics a day on pretty much any subject under the sun.

Given that this subject might actually affect those actually serving I think this is a perfectly reasonable thread subject :hmm:

[Just This Once...]

I guess this has just heralded a potential run on the banks for whatever EU country needs the next bailout. Even the money-launderers will be looking for better investment opportunities.

Feel sorry for any HM Forces that are impacted by this.

[Canadian Break]

Biggus - do I detect a trace of malice in your post? My original post was trying, in a roundabout way, to point of the iniquities of the chaps and chapesses in Cyprus being pinged for their 6.5% contribution to the fund! Subsequent posts were just banter with AL R - all in the best possible taste. I am well aware of who is in Cyprus thankyou! If I have grasped the nitrogenous end of the stick with reference to your comment then I apologise unreservedly!CB

PS I did a full tour there - not just "in and out" dets.

[Al R]

One of the suggested reasons given last year when HMRC delisted all registered 'Qualified Recognised Overseas Pension Schemes' in Cyprus was because of the lack of a proper regulator and a credible banking system. Perhaps we shouldn't be surprised at this.

Having said that, if the capital flight hadn't been stopped, the panic of August 2011 could have been triggered again.

[Biggus]

C B,

No malice intended... In turn I have to say that although I read it, I missed the fact that post 5 was also written by yourself.

I suggest we're probably even on the "apologies" front... :ok:

[Canadian Break]

Biggus, in that case old chap, my fault - ****ty end of stick at the end of a ****ty day. I salute you (with a large glass (or two) of rather fine Burgundy). CB sends

[Al R]

Its not so much a bailout, more a bail in. It sets a potentially worrying precedent doesn't it? It might even play into the BoE's hands which has been dropping hints about negative interest rates for a while now in an attempt to stimulate spending.

Why would the middle classes want to run the risk of bailing out those who haven't saved by keeping excess cash on account and paying their High Street bank for the honour and running the risk of being bailed in by the State.. if they may as well spend it on that extension/holiday/new car instead?

[Courtney Mil]

Yes, point well made and I see the point. From the response there must be folks there with significant sums in Cypriot banks. My apologies to them. I retract my statement.

[A2QFI]

My partner, with a half built villa, and funds to finish it in €s in a bank in Limassol for one.

[Al R]

A2,

It won't be long before the Russians are buying up the shares that the people are being given in lieu of their money. It seems to me that its going to be the easiest way yet for Russia to buy influence in the region. Especially as the Cypriots have been courting the Russians in Moscow this week.

[ian16th]

This may seem a silly post. But please bear with an old man.

Back in 1962-64 when I did a tour at Akrotiri, there was a branch of Barclay's Dominion, Colonial and Overseas Bank, on the base and therefore within the Sovereign Base Area.

Is there a branch of Barclay's, or any other UK based bank, with a branch within the SBA and if so, how can any Cypriot law be applied to a bank in the SBA??

Mind you, I was living out in Limassol and had my account with Barclay's DCO on the seafront. But I believe that today no one lives out. All married guys have MQ's, don't they?

[NutLoose]

One would think it will kill any foreign investment through their banks dead and may scare foreign investment off from European banks where they are not well regulated.

[Spanish Waltzer]

ATMs emptied across Cyprus after savers learn 10billion euro bailout agreement includes levy on all bank accounts | Mail Online (http://www.dailymail.co.uk/news/article-2294388/ATMs-emptied-Cyprus-savers-learn-10billion-euro-bailout-agreement-includes-levy-bank-accounts.html)

According to the daily mail UK mil affected

[NutLoose]

What did they expect, you start in effect stealing money from people to prop up the bank and people will simply withdraw their money en masse to protect their assests from being stripped anymore, resulting in the banks being placed in even a more precarious position which will in turn drive more people to withdraw their funds and it will rapidly become a downward spiral. Is it as it used to be in RAFG a requirement to have a local bank account?

[phil9560]

Its basically effing state sponsored theft.And it sets a very worrying precedent.

[gijoe]

Cyprus - net contribution to the EU = nil.

Cyprus - take from the EU = loads - ask any local why they wanted to join.

Cyprus - not a world power, a world pest!

G:ok:

[India Four Two]

Expats and UK troops based in Cyprus will have their savings decimated

Nice to see that a Daily Mail journalist knows the correct meaning of decimated.;)

[gijoe]

Type of coconut?

:confused:

[AGS Man]

When I did my tour at Akrotiri in the mid 80s it was definitely a requirement to have a local bank account. If that is still the case I would say it's only fair that people are reimbursed. Interesting point about it applying to the SBAs. Having said all that there was never that much money left in my account after all the Kokinell and Kebabs. 6.75% of my overdraft wouldn't leave them much!

[Door Slider]

I bet Gordon Brown is kicking, himself wondering why he did not think of doing that!! I certainly would not have put it past him.

[high spirits]

Quote from the DM scaremongers
The UK’s Ministry of Defence declined to comment, but Government sources suggested Ministers were considering whether to help the British troops affected.


Read more: ATMs emptied across Cyprus after savers learn 10billion euro bailout agreement includes levy on all bank accounts | Mail Online (http://www.dailymail.co.uk/news/article-2294388/ATMs-emptied-Cyprus-savers-learn-10billion-euro-bailout-agreement-includes-levy-bank-accounts.html#ixzz2NmXyeGH4)
Follow us: @MailOnline on Twitter | DailyMail on Facebook

This is going to get pretty awkward.....

Anyone think that the Treasury will bail out HM Forces in Cyprus?

[Al R]

After a good bit of prodding by the UK, the Bank of Cyprus joined our Financial Services Compensation Scheme (FSCS) to protect 50,000 British savers from Greek exposure. It had about £1b over here which was previously covered by their version of FSCS (written on the back of a fag packet). It did that, at the time, to reassure UK savers that their money would be safe if it ever collapsed, so the SBA angle is interesting. But this isn't a collapse of course not.. no, its a 'tax' - the country hasn't collapsed :rolleyes: at all).

I don't think that Cyprus has any option though - it forgot the basics of growth and if you take shortcuts, there is always a payback. This crisis just accentuates the distrust (mistrust?) and shreds decades of financial integration. It is interesting that on the surface at least, the Germans have been arguing that this is a way of getting some of that laundered Russian money. In that case, chase the guilty to get 100% of it?

I don't imagine that many serving out there who will be too badly exposed, unless they have loans/funds parked in cash before buying a car etc. Like you, I didn't have too much money in the Pop at any one time - the bank manager used to call out across a crowded bank 'Hey, you.. when are you going to start banking with us again eh?'.

But maybe we preferred our banks like that; small, comfortable and normal.
http://widget.criteo.com/pac/display.js?resptype=gif&t1=sendEvent&p1=v%3D2%26pt1%3D0%26pt2%3D1%26wi%3DNaN

[4everAD]

I'm posted to Cyprus this Summer and this really worries me. I can't see how HMF there can be compensated bearing in mind they're actually getting something for their money, shares in the bank they're with. I know these shares are worthless but it is still something tangible. The British tax payer would have to buy these shares from the servicemen in order to compensate them.

[high spirits]

It will be interesting to see if any of the base funds are affected. Naafi, clubs, etc.

[500N]

Sad to see this happening.

What is the effect going to be throughout the rest of Europe
because surely some people will think "EU - better be careful".

The result is people being wary of having money in banks
if this type of unilateral decision is being made.

I agree with Nutloose, in the end it will make things worse.

[Wrathmonk]

which has been dropping hints about negative interest rates

Wasn't this for central loans to banks from the Bank of England and not being applied to individual savings? Granted, interest paid to joe public will drop to 0% but I didn't understand this threat to be similar to the Cyprus levy.

I'm posted to Cyprus this Summer and this really worries me

Do you still have to have a local bank account (been 15+ years since I had a permanent oversea posting:() or can you just maintain your UK account and pay everything by card / bank payment? Granted there will be charges/commission to pay and perhaps unfavourable exchange rate conversions but in the short term your money will be "safe" in the UK (although of course with a budget this weeks Mr O may see this as a great way to actually reduce our national debt.....).

Perhaps the MOD will reinstate pay parades. Or have your salary sent out to you in Euro Travellers cheques!:E

[Capetonian]

So glad I made a decision a few years ago to keep only 'hand to mouth' living funds in the EUssrZone. This will spread.

[SpringHeeledJack]

George Osbourne has just stated that anyone serving the country in Cyprus will be compensated for their losses....

[Al R]

Wrathers,

The High Street banks will then have to pass on those costs to you and I because the money that they will have been charged on will be (our) account holder deposits.

500,

The unfairness of the Cypriot situation is that the depositers have been pinged but corporate bondholders haven't. The retired nurse in Limassol will have placed her money into the Pop (or wherever) for safekeeping but the Goldman Sachs etc bond dept will have been invested in order to speculate on a return. But who got stung again - is that retired nurse the victim of immorality? It is sad too, that savers with smaller amounts weren't protected.

Cyprus didn't want to jeopardise its long-term prospects as an offshore financial centre for Russian and other money. So it taxed everyone up to 10% instead of punishing the launderers 100%; the default course of action these days for lazy and scared regulators. Still, saving wealthy Russians looking for a back door into the EU was always going to be tricky. It'll be interesting to see what happens with money in Latvia now; where do these Russians place their money?

If it wasn't for the Germans running things behind the scenes and raising the stakes, this bailout would have gone largely unnoticed. Evidence (if ever any was still needed!) that we are still in a very fragile condition. But this sort of measure, to para phrase Churchill, is like standing in a bucket of merde and trying to lift it by pushing up on the handle.

[Capetonian]

George Osbourne has just stated that anyone serving the country in Cyprus will be compensated for their losses....

As indeed they should be, but with what? Other people's money? And when that runs out?

[Lord Spandex Masher]

Well, we'll then compensate the other people.

[Onceapilot]

This really is a dirty third world type of trick. I guess it will mean expats who sell-up will suffer a 10% levy when the deal passes through the banking system?

OAP

[500N]

Al R

Yes, I had noticed that no mention of corporate bank accounts had been made.
It's always the case, the little guys get stung.

Either way, it's not a good look for EU regardless of how someone
whitewashes it because it was the EU finance ministers that were involved.

I think you will find people look at the way they save in a very different way
in the EU in the future, Just my HO.

[peter we]

"The result is people being wary of having money in banks if this type of unilateral decision is being made."

When you deposit money into a countries banking system you depend on that country to protect your deposit. It is not the responsibility of the EU or the UK (in the case of the Icelandic banks) to provide deposit protection for EU banks.

The EU has just protected 90-94% of depositors money in a country that has been know to be bad for several years.

They should be glad they got anything back, some depositors in Icelandic banks got 0% for the first couple of years and its rose to 90% a few years later.

The Germans have paid 10Billion for this bailout and depositors 5billion.

[Wrathmonk]

Al

I'll bow to your professional knowledge but I still don't think we would end up having to 'pay' to invest.

The idea of the BofE going for negative interest rates was to force banks to lend rather than stockpile cash (at least this is how I understood it - clicky (http://www.telegraph.co.uk/finance/personalfinance/savings/9899824/How-negative-interest-rates-would-affect-savings-and-mortgages.html)). As for costs - you could argue that, with a negative interest rate for bank to bank dealings, if the high street banks lent the money to joe public rather than 'investing' it with BofE (where they would pay for the privilege) they firstly wouldn't be paying the financial penalty and secondly they would be receiving interest from those they lent to. The economy gets a kick start and people/businesses can get the money they need.

Or am I just looking at it too simplistically?

[peter we]

I still don't think we would end up having to 'pay' to invest.

I completely agree. Depositing money in a back is NOT an investment, each country has to guarantee the 100% return of deposits within 3 months. It is supposed to be risk free.

However, if a country and its banking system is controlled by criminals (e.g. Iceland) then the banks can collect deposits without any intention or ability to repay it. EU law doesn't allow much control over this, but it seems they are willing to pay for it. Thanks Germany.

Or am I just looking at it too simplistically?

No, QE/inflation is already being used to steal from savers, its just they are getting more brazen with their techniques. You should not save money, blow it on having a good time (or fixed assets if you must..).

[500N]

Peter

"When you deposit money into a countries banking system you depend on that country to protect your deposit."

Agree but doesn't always occur as we see here.

"It is not the responsibility of the EU or the UK (in the case of the Icelandic banks) to provide deposit protection for EU banks.
The EU has just protected 90-94% of depositors money in a country that has been know to be bad for several years."


You are forgetting that the psuchology of people, the individual will not see it that way, they see it in the "I" sphere, could this happen to "me". Whether it could or not, they don't have the information to decide, all they will see is the
words "EU", "Finance ministers" and "unilateral decision" and that in
itself will put the wind up the population.

Runs on banks are caused by the "I" factor. Everyone knows that causing
a run on banks makes the situation worse but that doesn't stop 100% of
the population trying to withdraw all of their money even if it affects
the other 99% of people in a negative way, they don't care.

[500N]

Peter

When the banks re open and restrictions lifted, do you honestly think
people will leave their money in the bank that someone has just
taken 10% of ?

I doubt it. I wouldn't and would never trust the banking system again
or the EU for deciding it can go ahead.

As someone in the thread of JB said, what if these decisions are made
again in countries that have received a bail out - but the second time
they need money the EU finance ministers decide that a 10% skim
from all bank accounts should occur instead of money being provided
by the EU or one of the EU countries ?

This is why I think it will have a negative effect across the whole of Europe.

[Al R]

Wrathers,

I agree with your assesment - the BoE wants the banks to lend - 'Project Merlin' failed - and if the banks are receiving loans from interest, George Osborne is a happy boy.

But Lloyds TSB etc won't pay BoE whilst its customers simply sit on their cash without some attempt to use the customers to share the pain. Banks aren't even trying to lure cash in.. RPI is over 3% and a half decent instant access savings rate is just 2% so savers are in negative territory anyway. In effect, they ARE exposed to the effect of negative rates.

Gilt yields will also fall (the basis for annuities) which would mean even lower pension payouts - if you were considering going down that route. Whether the pain manifests itself directly as higher charges or indirectly, as even lower savings rates, the pain will be shared by those who don't do something to prevent it.

[high spirits]

I can't wait for this years Eurovision Song Contest. Wonder how many points Russia will give the Cypriot entry.....

[500 above]

Yes, I had noticed that no mention of corporate bank accounts had been made.

Corporation tax is to increase from 10% to 12.5% as of Tuesday as part of this robbery. All ATM's are now empty and the banks have said they will now remain closed until at least Thursday. Many shops are not taking debit/credit cards - cash only. There's a lot of people walking around with not much cash in their pockets, and no ATMs stocked for them to gain access to funds they have.

[Biggus]

That sounds like a recipe that is likely to lead to civil disobedience, i.e. rioting, looting and a general breakdown in law and order.

No doubt the politicians will say they didn't see it coming - the law of unintended consequences!!

[500 above]

I can also see that happening Biggus. The Electric Board, Water Board, Ports Authority and the Cyta telephone companies are all state owned and are now to be privatised. Those boys will strike/Pickett outside the Presidential Palace in Nicosia for that, as they have done in the past. That's only one step away from rioting Greek style.

[uffington sb]

It would seem, that according to the BBC, only troops (the army) are going to be compensated.
I have emailed them to point out the difference of just TROOPS or SERVICE PERSONNEL, I suggest you do the same.
How any times have these muppets done this?



BBC News - Cyprus bank levy: UK to compensate troops and government workers (http://www.bbc.co.uk/news/uk-21820237)

[Al R]

Lord Masher

That answer is easy.. in 2018, the new European 'bail in' regime takes effect! Big Brother will be getting even more hamfisted.

http://www.genevaassociation.org/PDF/Progres/GA2012-PROGRES55-Jassaud&Le_Lesle.pdf

The great difference between US and EU is that in US depositors are senior to bondholders. I mentioned the corporate bond holders and not anyone liable for Corporation tax because those are the people who take informed risk; not the retired plumber or nurse from Limassol.

Corporate bondholders cannot claim to be shocked if they lose money and they have been clobbered in Ireland and particularly last month, with SNS Reaal in Holland. Some investors there had investments taken off them outright - because they no longer had ownership, they couldn't claim protection via credit-default swaps.

SNS Reaal Investors Won (http://www.businessweek.com/news/2013-03-04/sns-reaal-investors-won-t-get-compensation-dijsselbloem-says)

Bizarrely almost, demand for a new class of subordinated debt is strong; capital bonds (co-co's) are new debt instruments that either convert to equity or get written down/off when the issuer falls low on capital. Barclays, UBS and (I think) The Royal Bank of Scotland are issuing them. You might argue that as red ink disappears slowly off balance sheets, they make sense.

But the fact that cash rich Asians are predominantly buying them, you have to wonder about the due diligence, and therefore, the logic and sense.

[Herod]

I know we've all heard it before, but yet another reason for staying out of the Eurozone. Our mob may be bad, but at least they are elected (and can be removed) and any changes to tax etc have to be presented in the Budget and passed by Parliament in the Finance Act. Seems to me this deal was agreed by largely unelected bureaucrats (EU and IMF). Who now would hold funds in Italy, Greece, Spain or Portugasl, where the same thing could happen?

[peter we]

That sounds like a recipe that is likely to lead to civil disobedience, i.e. rioting, looting and a general breakdown in law and order.

No doubt the politicians will say they didn't see it coming - the law of unintended consequences!!

So people are going to riot because of a 6.5% cut? It took a 75% cut in Argentina before it made a real difference. These accounts pay 5.5-11% interest. Cyprus bank - Deposits and savings. The best interest rate - 12.5 % (http://cyprusbank.org.ua/index/0-8)

And basically depend on the Germans offering protection for their very existence.

When the banks re open and restrictions lifted, do you honestly think
people will leave their money in the bank that someone has just
taken 10% of ?

I doubt it. I wouldn't and would never trust the banking system again
or the EU for deciding it can go ahead.

Let them put their money where its safe i.e German banks, I'm sure that is the intent. Most of the big depositors are Russians - they can riot in Russia (who is contributing 2.5billion to the bailout, BTW).

I've little sympathy for people who gamble on dodgy banking systems to make a higher return, if they get stung - tough. Everybody was forewarned by the Icelandic situation.

[Al R]

Peter, in principle you make a couple of good points, but Iceland was different; the g'ment was bust and refused to pay creditors.

I don't think that depositors are gambling or being greedy if they simply want somewhere 'safe' to put their money.. just sensible. Cypriot banks have been in a race for the past couple of years to generate Tier One capital (liquid money) in order to meet EU banking regs. Even the investors aren't being greedy; the relationship is calculated, mutually dependent and mutually beneficial.

The Popular Bank was almost nationalised last year because it was falling behind and ran the risk of going into default. Are people being greedy or are they not being stupid? If a bank funds are guaranteed, why would you put them with a bank that is paying less? Especially important in an uncertain economy like Nicosia's.

Savers haven't 'lost' their money, they simply exchanged part of their savings for shares - a moot point, I accept.

[Biggus]

peter we,

Err no!!! People are going to riot because they haven't got any food!!

If you read the post prior to my comment, you will see that the ATMs are apparently empty, the banks won't open until Thursday, and the shops are only taking cash...!!

If you haven't got enough cash to buy sufficient food to last until Thursday....

That is why there could be riots!!

[peter we]

but Iceland was different; the g'ment was bust and refused to pay creditors.

Actually the Icelandic Government did not refuse to pay its creditors (there is a whole load of BS you hear about Iceland that isn't true), they refused to bail out non Icelandic depositors because they didn't have a depositor protection scheme with money in it.

Cypriot banks have been in a race for the past couple of years to generate Tier One capital (liquid money) in order to meet EU banking regs

Then they are as stupid as the Icelandic banks because depositors funds are not Tier 1 or any other part of the banks capital they are liabilities - not assets.

That is why there could be riots!!

It takes 48hours without food before riots start. I think most people have enough food at home to last a good few days before starvation sets in.

[AlpineSkier]

@Peter we

The Germans have paid 10Billion for this bailout and depositors 5billion

No. That's E 10 Bn from the IMF and the ECB, so I guess Germany will be in for about E 2 - 3 Bn.

[Al R]

Peter,

Like I said, Iceland refused to pay creditors. Perhaps if it refused to pay only those creditors who wore red socks on Tuesdays that would be sufficient reason to justify it to you?

Tier 1 capital is retained core capital which is made up from stock and disclosed reserves.

[Biggus]

Reference the possibility of rioting, time will tell, it can just start as a protest which escalates, but I think the veneer of civilization can prove to be pretty thin if people don't think there will be food on the table much longer....

[peter we]

Iceland refused to pay creditors. Perhaps if it refused to pay only those creditors who wore red socks on Tuesdays that would be sufficient reason to justify it to you?

No, Iceland refused to accept that bank deposits in Iceland were its responsibility. So they were not creditors to start with.

The EEA/EU agreed. The 20k euro (100k now) protection only applies up to the amounts stored in the country's protection scheme.

If a country doesn't want or cannot pay for the 'guarantee' there is no legal requirement for it to do so. Most countries have about 1% coverage of their bank deposits.

This is the case since 2008.

Remarkably the EU has protected amounts over 100k, they should get zilch. In fact why is the EU doing this, far too generous.

[500 above]

So people are going to riot because of a 6.5% cut? It took a 75% cut in Argentina before it made a real difference. These accounts pay 5.5-11% interest. Cyprus bank - Deposits and savings. The best interest rate - 12.5 %

People have rioted for less. Just look at any Cypriot football match! These guys have had enough. Peter, Cyprus has the most expensive electricity in Europe, highest priced milk, highest priced bread, a VAT increase in January, fuel has gone up 20% in two months, 14.7% unemployment (registered) and people can't put food on the table... See this article from January.

Urgent appeal to help Paphos needy - Cyprus Mail (http://www.cyprus-mail.com/colunteers/urgent-appeal-help-paphos-needy/20130123)

Oh, and the Ukranian based savings link you provided certainly isn't indicative of any Cyprus interest rate I've ever seen. Infact, the website looks home made. Certainly not a 6.5% cut, I assure you. You would be lucky to get 3-4% on a fixed savings account in Cyprus through the mainstream banks, and nothing on a current account. Of course, you probably know that a local defence tax is already deducted annually from the total account balance on top of pretty high bank charges.

Watch this space.

[Capetonian]

I am surprised that nobody has mentioned that France has practised legalised appropriation of assets, L'impôt de solidarité sur la fortune, (http://www.impots.gouv.fr/portal/dgi/public/particuliers.impot?espId=1&pageId=part_isf&impot=ISF&sfid=50) for years : Wealth tax in France: Our comprehensive guide to French wealth taxation - The Connexion (http://www.connexionfrance.com/wealth-tax-france-explained-impot-de-solidarite-sur-la-fortune-isf-10573-news-article.html)

[AlpineSkier]

But Cape, what's the difference between this and any other tax ? It wouldn't make any difference to me ideologically if they taxed cabbages or tea: the total take ( from me and for the country ) seem to be the only relevant issues. I see of course that this (out-of-date ) article mentions the political slant to the tax, but all taxes tend to have signifcantly greater effects on particular groups such as drivers, families, drinkers, smokers etc .

[Capetonian]

I think what fiundamentally differentiates this tax from others is that whilst generally tax is levied on entry (ie when you get the money) and on exit (when you spend it and when you die), the French tax you for having been sufficiently provident to accumulate assets to carry you through old age as you are taxed, on an ongoing basis, on your 'wealth'. It stinks of envy and socialism.

[ColdWarWimp]

No need for food riots. As of 8PM (local) last night supermarkets & garages were still accepting payments by bank card.

The main problems are due to no cash being available at the ATMs. I could not draw cash even on my UK bank card from any of the ATMs in my village, they have not been replenished since Thursday.

My firewood supplier has always been cash only operator, so I guess I should be thinking of modifying my log burner to run on petrol!

CWW:(

[ian16th]

500

I've just managed to use one.

Not to make a deposit, I assume :mad:

[teeteringhead]

Suspicious bar steward that I am, I can't help but notice that the Government has agreed to reimburse "those serving their Country". Question is, does that include dependants?

However unfair, it is clearly equitable if Mrs Baldrick, w/o Pte Baldrick, who works in a cafe downtown, "on the economy", should be in the same position as her co-worker Mrs Blighter, w/o ex SSgt Blighter who retired after his 22 to run a bar in Limassol.

But what if Mesdames Baldrick and Blighter work in the NAAFI within an SBA, as the SBAs are in many ways legally NOT in Cyprus - there's a clue in the name after all!

And then what of Mrs Upwardly-Rupert, the svelte wife of Major U-R of the Fractional Cavalry? She doesn't work (natch) but may well have some of her trust fund "available" to her in a local account.

As ever, knee-jerk reactions by pollies often suffer from unintended consequences, and make for unfair results.

[A2QFI]

Cyprus Parliament voting at 1600 UK time, PM needs 29 votes and 24 MPs will vote against so it will be close. Apparently Merkel did not want to be seen as supporting the money laundering schemes of Russian oligarchs so the terms for a bail-out were a bit harsh, allegedly.

[500 above]

Looks like the vote will be held on Tuesday now.

NEW Vote on deposit levy changed to Tuesday as Germany says open to changing Cyprus deal - Cyprus Mail (http://m.cyprus-mail.com/cyprus/new-vote-deposit-levy-changed-tuesday-germany-says-open-changing-cyprus-deal/20130318)

[ian16th]

TTH

But what if Mesdames Baldrick and Blighter work in the NAAFI within an SBA, as the SBAs are in many ways legally NOT in Cyprus - there's a clue in the name after all!Surely, what counts is not where they work, but where their bank is?

See my earlier post, which hasn't been answered.

Are there any banks in the SBA's today?

When I was on Aphrodite's Isle, Barclay's DCO and The Ottoman Bank each had a branch in RAF Akrotiri. But I lived out in Limassol, so it was more convieniant for me to use a branch on the seafront.

But then again, that was over half a century ago :sad:

[Top Bunk Tester]

As of just over two years ago there were certainly a couple of banks opposite the NAAFI, for the life of me I can't remember which, but in the early eighties if my memory isn't completely puddled they were Grindlays and Barclays but could be completely wrong, can't even remember who I banked with out there. I do know you had to have a Cypriot bank account though as has been mentioned earlier.

[Stuff]

Are there any banks in the SBA's today?

There's a branch of Laiki and Hellenic at Akrotiri and another Laiki in Dodge City, Episkopi.

I'm not sure that having a branch there is enough for the bank to be considered to be based in the SBA.

[Lonewolf_50]

A few comments ...
What did they expect, you start in effect stealing money from people to prop up the bank
The term "in effect" is extraneous in that sentence. What is going on is theft, plain and simple.
Its basically effing state sponsored theft.And it sets a very worrying
precedent.
It is not "in effect" theft, it is theft.

I agree, however, that it sets a worrying precedent . . . IF and only IFF they get away with it.

Other governing classes are watching closely to see how far these governmental thieves get away with it.

Seems to me time to learn a few things from Third World folks given (nice point above) this Third World stunt being pulled. Maybe what would get the attention of the political class would be a series of necklacing events featuring government officials involved in this decision. That might send the message loud and clear. I am eager to see what the "Cypriot Street" makes of all this.

[Fareastdriver]

Years ago they wouldn't have creamed off bank accounts; they would have just changed the currency with a variable exchange rate. It is a very effective way of disassembling fortunes without effecting the general populace. Used to be popular in the third world.

[A2QFI]

Russia is now talking withdrawing its €2.5 billion(?) loan, support or whatever it is

[peter we]

It is not "in effect" theft, it is theft.

By the Cypriot government, who failed to manage their banks and provide a depositor protection scheme big enough to bail out their banks.

Russia is now talking withdrawing its €2.5 billion(?) loan, support or whatever it is

No problem, don't bail out any Russian account holders. They have no rights anyway and Iceland demonstrated that its even legal to do that within the EU if the situation is serious enough.

The advantage would be that Cypriots would not need to take a hit on their accounts at all.

[fly12345]

Don t ask for help unless you are prepared to accept the cure.

[Al R]

A2QFI - bung, blackmail.. bribe maybe?

Russia is now talking withdrawing its €2.5 billion(?) loan, support or
whatever it is

[NutLoose]

It's all a rather insidious, I cannot believe a European bank or Government is actually sanctioning this. The one thing the whole world has been doing since the financial crisis struck has been trying to prop up the banking systems.
Without the security I can forsee people removing their savings and putting them into other things. No wonder the Eurozone ministers are worried, a run on savings will bring the whole system down.

[CoffmanStarter]

NutLoose ... head nail the on hit ! If it does happen ... just watch what happens in Spain, Portugal, Italy ...

What's more idiotic is that in the grand scheme of things the proposed Cypriot "take" is peanuts. A$$ politicians :ugh:

[MrBernoulli]

I wonder if we will ever find out if any of the European politicians involved in approving this 'theft', be they Cypriot or otherwise, who had money in Cypriot accounts, managed to move their cash before the iniquitous announcement was made? I am willing to bet it did happen. :rolleyes:

[teeteringhead]

Fareastdriver they would have just changed the currency with a variable exchange rate exactly so! This is the biggest con of the whole Eurozone.

I am amazed how anyone can expect the same currency to "work" in Naples, Lisbon or Dublin in the same way as it does in Munich or Paris - let alone in Athens or Nicosia.

If you tell a lie big enough, and keep repeating it, people will eventually come to believe it.

Dr Joseph Goebbels

[Al R]

Subtle but worrying 'clarification' - the g'ment did agree to compensate Cypriot loss suffered by service personnel but it seems that the term now being used is 'unreasonable loss'.

Pensions (http://www.yorkshirepost.co.uk/business/business-news/pensions-safe-in-cyprus-crisis-1-5505614)

(Treasury minister Greg Clark has said) earlier announcements that more than 3,000 British service personnel based in Cyprus would be compensated by the Government if the levy goes ahead to ensure they would not suffer “unreasonable losses”.

[Capetonian]

I am amazed how anyone can expect the same currency to "work" in Naples, Lisbon or Dublin in the same way as it does in Munich or Paris - let alone in Athens or Nicosia.

That is the underlying flaw with the project. Instead of being amazed, you should remember that it was designed by politicians to serve their own interests and ego, not by economists. The f***wittedness of politicians has no limits.

[fantom]

RAF airlifting one million euros cash to Cyprus as contingency for the military.

Excellent.

[The Helpful Stacker]

RAF airlifting one million euros cash to Cyprus as contingency for the military.

Excellent.

{Insert comment relating to mover criminality here}

;)

[BEagle]

I hope this clever piece of information was only released after the aircraft had landed?

[teeteringhead]

Hope they don't have to divert.... Declaring cash when entering or leaving the UK

If you are arriving in the UK from a country outside the European Union (EU), or you're leaving the UK to travel directly to a country outside the EU, you must declare any cash of 10,000 euros or more (or its equivalent in other currencies) to customs officers.

HMR&C

[fantom]

I hope this clever piece of information was only released after the aircraft had landed?


BBC World Service over an hour ago - so absolutely everyone knows.

We could go and meet it...

[NutLoose]

Not one vote in the Cypriot parliament supporting the vote with 36 voting against and 19 abstaining.

BBC News - Cyprus MPs reject EU-IMF bailout tax on bank depositors (http://www.bbc.co.uk/news/world-europe-21842966)


I wonder where they go from here.

[Roland Pulfrew]

I was on holiday in Cyprus in (IIRC) the autumn of 2007. Cyprus was gearing up to join the Euro (1 Jan 08?). Speaking to the Cypriots they seemed pretty evenly split for joining the Euro or keeping the C£. I suggested they should keep the C£; I still have a few in my currency jar, maybe I will get to use them again. One can always hope! :ok:

[Al R]

€1,000,000 being sent over? By Herc I assume.

If they were smart, they could have converted it into USD and sent it on the back seat of a Tucano.

[NutLoose]

From the Beeb..

Appears the EU threat was just bluster


EU finance ministers had previously warned that Cyprus' two biggest banks would collapse if the deal failed to go through in some form.

But after the vote the European Central Bank (ECB) moved quickly to announce it would continue to provide support for struggling Cypriot banks "as needed within the existing rules".

German Finance Minister Wolfgang Schauble said he "regretted" the vote and that Cypriots must understand ECB aid was contingent on a reform programme.


Meanwhile, the UK ministry of defence said a plane carrying 1m euros had arrived in Cyprus as a contingency measure to provide military personnel and their families with emergency loans.

The money is to be used for British personnel and their families if cash machines and debit cards stop working.

One does wonder if this could be the beginning of the end of the Euro, at least one good thing would have come out of the Euro, and that is a levelling of the playing field in European currencies which means we won't go back to the old days of needing to be a Lira Millionaire to buy a pint in Italy.

[BEagle]

I suggested they should keep the C£; I still have a few in my currency jar, maybe I will get to use them again. One can always hope!

I guess there are probably a few old Cyp coins in my shrapnel pint pot too, Roly. Along with other long superseded currencies....

After returning to the VC10 having had time out at the UAS, I found some Escudos notes in the pot, so took them to Lajes on one trip - only to find that they were no longer accepted. So Marcelino's restaurant got them as their tip...as on another occasion did Chris Kebab, to whom I gave my last 500 Mil Cyp note!

Maybe I'll get the chance to use the Drachmas again before long? And the Pesetas and Lire? But not the Francs and Reichs.....Deutschemarks, I guess.

Running up a Turkish hotel bar bill until it reached 1000000 blats was pretty easy though!

When Incirlik's runway was being resurfaced, the RAF VC10 det moved to Antalya. Having declined the offer of some tip out in the bondhu (contaminated water), it was agreed that we would instead stay at the Sheraton - far more befitting for Ascoteers! So we had several glorious weeks alternately flying one day and lounging around the pool on the next. A side benefit being that if you let your bill mount up after the exchange rate changed (the Turkish Lire was invariably weakening against even the £), then waited until just before the next update, you could easily make the cost of a decent meal or two. But the Spams stopped all that, by insisting that hotel bills were to be settled weekly....:ugh:

[Llademos]

Why on earth did they airlift the money ... a million euros could all fit into a couple of (albeit heavy) suitcases on a passenger flight. Presumably the flight wasn't done especially for this purpose?

Ll

[teeteringhead]

Presumably the flight wasn't done especially for this purpose?
It did indeed go on a scheduled trooper.

[Milo Minderbinder]

So.......imagine the ramifications if Cyprus goes bust, is kicked out of the Euro and is bailed out by Russia. In exchange it leaves the EU and instead joins the CIS so coming under Russian political control.
That would give Russia control of the airfields and ports, of the gas fields around Cyprus and would enable basing in the eastern Med of Russian warships and aircraft, putting both the canal and Dardanelles at risk.
The Sovereign bases could also come under pressure.
It would be quite a shrewd political-military move by Russia, and I can't help wondering if some allies within the Cypriot and EU heirerarchy have somehow helped to contrive the situation.

[Robert Cooper]

The Russians are apparently afraid that Cypriot banks are in such bad shape, that bailing them out by taking them over is too risky. Instead, they are taking a wait and see attitude.
With the European Central Bank ready to cut off emergency funding of Cyprus banks on Monday unless the government can come up with a bailout plan, Cypriot officials are desperately trying to come up with a "Plan B" that the EU will accept.
If Cyprus is forced back to "Plan A" and the depositor haircuts, another vote in parliament will be necessary. This time, with the ECB ultimatum staring them in the face, they will be forced to choose between political suicide and an economic meltdown.
Unless some miracle occurs and Cyprus figures out a way to satisfy the EU without taking money from depositors, it is likely that the haircuts will pass sometime before Monday.
The EU and IMF are determined to see their plan to confiscate private savings realized in preparation for a roll out across the EU. Remember, the EU is already pushing a plan to tax global financial transactions to pay for their unsustainable socialism. This is just the next step. So, along with indirectly taxing savings through the inflationary erosion of value, politicians will be directly taxing savings in a double hit. This is similar to the double taxation of corporate earnings - first at the corporate level, then as capital gains. Since EU and IMF politicians aren't elected directly, no double taxation without representation should become Europe's battle cry!
Look out Spain and Italy: you're next!

Bob C

[peter we]

Anything over 100k is not protected and normally is lost when a bank crashes. As the EU is financing the under 100k protection (because Cyprus is incapable of fulfilling its duties) it can hardly be called theft or confiscation of private savings. Its an investment loss. Iceland seized 100% of foreign bank accounts and the EU agreed that it was legal in the circumstances.

Why would anyone have over 100k in a bank account, let alone in a know basket case such as Cyprus? The Greeks moved their money abroad years ago.



If you are arriving in the UK from a country outside the European Union (EU), or you're leaving the UK to travel directly to a country outside the EU, you must declare any cash of 10,000 euros or more (or its equivalent in other currencies) to customs officers.

Have more than 5K and customs will interrogate you. Legally any police or customs officer can confiscate anything over 1K anywhere in the UK if they believe its the proceeds of crime.

[Stuffy]

Milo Minderbinder,

That is certainly a nightmare analysis. I suspect the Russians are playing some sort of long game. They are more interested than they are letting on.They do, after all, have $30 billion in the banks of Cyprus. Strange timing to the death of Berezovsky? I suspect clever foul play, i.e no evidence.

The proposed haircut is looking more like a scalping. The book of rules and agreements, has been thrown away. Is Cyprus a guinea pig for the rest of the Eurozone ?

Old Mother Merkel, aka the 'Stasi-Frau', has elections coming up in September, this is an important factor.

For those interested, you might like to read this book by Mitch Feierstein. It is very relevant:-

Planet Ponzi (Book) by Mitch Feierstein (2012): Waterstones.com (http://www.waterstones.com/waterstonesweb/products/mitch+feierstein/planet+ponzi/8669644/)

Mitch Feierstein talks about Planet Ponzi. - YouTube

[BEagle]

Have more than 5K and customs will interrogate you. Legally any police or customs officer can confiscate anything over 1K anywhere in the UK if they believe its the proceeds of crime.

Whew! That's OK then - only £Cyp 4.89 in the shrapnel pot - plus 60 mils!

As well as 33p Ascension, 4.365 Bahraini dinar, 66.50 Belgian francs, 5p Bermuda, 57p Channel Isles, 21.30 Czech koruna, 40.40 French francs, 1.17 German deutschemarks, 590 Greek drachma, 10.80 Hong Kong dollars, 500 Indian paise, 1700 Italian lire, 10p Malta, 540 Portuguese escudos, 4.45 Saudi riyals, 374 Spanish peseta, 200000 Turkish lira, 2 UAE dirham, £1.49 in obsolete UK coins, plus 5/- and a halfpenny in pre-decimal UK coins.

All of which are probably worth nothing!

But the $Can 4.00 is still legal tender, as is $US 9.92, including a 1962 Franklin half-dollar which has a high silver content and a 1980 Kennedy half-dollar which has no silver content.

The things one does on a cold, damp day.....:\

[high spirits]

So it's suddenly acceptable for state sponsored theft from someone who has over 100k in the bank is it? Why not 99.9k? What if that money is part of a legitimate business and belongs to customers and not the account holder.

The politics of envy (or socialism by a more accurate name)......

[Stuffy]

Indeed this was covered by a news item. A businesswoman has client's money in her account.

Perhaps Cyprus should do the same as Iceland, whose economy has recovered after two years of pain.

BBC News - Could Iceland be a model for debt-ridden Europe? (http://news.bbc.co.uk/1/hi/programmes/from_our_own_correspondent/9550667.stm)


Iceland Provides Blueprint for How to Deal With the Financial Crisis | FDL News Desk (http://news.firedoglake.com/2012/02/21/iceland-provides-blueprint-for-how-to-deal-with-the-financial-crisis/)

[NutLoose]

It's starting, UKIP are now recommending if you have savings in Spain, pull them out.

Ukip urges Brits to withdraw their money from Spanish banks - Telegraph (http://www.telegraph.co.uk/news/politics/ukip/9950083/Ukip-urges-Brits-to-withdraw-their-money-from-Spanish-banks.html)

Cyprus dreams left in tatters - Telegraph (http://www.telegraph.co.uk/news/worldnews/europe/cyprus/9949858/Cyprus-dreams-left-in-tatters.html)

You cannot simply decide to Steal people's money with the backing of the EU without the effects of that decision spreading like wildfire amongst those countries who's banking systems are teetering on the edge. Once you have let that particular genie out of the bottle, you will never put it back in.

Beginning of the end of the Euro?

[Herod]

Beginning of the end of the Euro?
We can but hope.. shame that Cyprus has to take the first hit though.

[smujsmith]

Sky news reporting a bomb at a cash machine in Limassol. Things could get quite ugly one thinks, I really hope not, the country has enough trouble already.

[exeng]

Easy init,

Take on the puny debts, save the nation and steal the reserves of gas or whatever.

Regards
Exeng

[Stuffy]

Exeng,

Perhaps that is the idea in the first place?

This story has more to run. The Russian depositors will not take lightly the 'scapling' they will get from this bailout. I expect a strong reaction at some stage. Work for hackers ?

Robert Peston of the BBC, puts things in perspective:-
The rescue of Cyprus won't feel like one to its people

"Although eurozone governments and the International Monetary Fund have rescued Cyprus, it probably won't feel like much of a rescue.
The second largest bank, Laiki, is being closed. Losses from its closure, which will be substantial - billions of euros - will be absorbed by holders of its bonds and those with deposits over 100,000 euros ($130,000; £85,000).
So at a stroke, one important source of credit to the economy will be eliminated.
There is some relief for those with savings of 100,000 euros or less, because their cash will be transferred to the Bank of Cyprus, the country's biggest bank, and kept intact.
But Bank of Cyprus too is being reconstructed. And the costs of making sure it has enough capital to operate safely in the future will also fall on its deposits greater than 100,000 euros. So these depositors too will incur losses running to billions of euros.
In the many months it will take to rehabilitate Bank of Cyprus, the prospects of it providing adequate credit to households and businesses are slim indeed.
Meanwhile, foreign banks operating in Cyprus will probably head for the hills, knowing that an economy already in recession will probably now contract at a rate of knots - causing penury to many.
So, in summary, getting any kind of conventional loan in Cyprus over the next year may be almost impossible.
In the long term as well, prospects for this economy will be extremely challenging: the country's important offshore banking industry, the business of looking after the tax-escaping cash of Russian businesses and individuals, is in effect being closed down forever. All those losses being heaped on large depositors are reason enough for anyone with a choice about where to place their cash to stay away from Cyprus forever.
So here is the Cyprus "rescue" in a nutshell:

An economy that will be starved of credit, and will therefore shrink rapidly and very painfully for citizens
An economy whose main industry, offshore banking, is being shut.
Although there may be some relief that smaller savings no longer face a 6.7% levy, Cypriot citizens may over time end up feeling more than 6.7% poorer as a result of this so-called bailout.
The price for Cyprus of staying in the eurozone will be as great as for the people of any of the currency union's over-indebted nations.
What should give the eurozone's leaders some pause for thought is that at some point the people of countries in financial difficulty may begin to wonder whether they are right to be paying this steep bill to preserve the euro."

[ian16th]

high spirits

What if that money is part of a legitimate business and belongs to customers and not the account holder.I cannot speak for Cypriot law, but in the UK, when money is put into a bank account, that money is legally OWNED by the bank. Not the account holder.

As we have seen, in the case of the bank going bankrupt, the account holder is most definitely not the 1st in line for any assets.

[high spirits]

Ian,
Yep, fair point but as usual the 'law of un-intended consequences' will bite the Eurozone firmly in the plums. Read the words of the Dutch Finance Minister this afternoon about this being a 'template for future bailouts'. This has rattled the market and is only likely to end in an uncomfortable nights sleep for many who will stuff their mattresses with cash because they can't trust the banks.

[peter we]

So it's suddenly acceptable for state sponsored theft from someone who has over 100k in the bank is it? Why not 99.9k? What if that money is part of a legitimate business and belongs to customers and not the account holder.

The politics of envy (or socialism by a more accurate name)......

If a bank goes bust you lose everything, the government may give you back something in this case up to 100k, but its not really guaranteed.

Until a few years ago you would have got back 90% up to 20k and nothing after that.

The guarantee is - basically - optional and the levy perfectly legal.

If you think you have some sort of divine protection with your money in a bank account then you are naive.

Ian,
Yep, fair point but as usual the 'law of un-intended consequences' will bite the Eurozone firmly in the plums.

Its intended.

The effect of a bank crash on people is well known by bankers. They obviously want people to spend money and not save which is why negative interest rates are under consideration.

[VinRouge]

Some pretty high level chess going on here. Effectively, Ze Germans are destroying the financial services industries of other competing European nations. Hardly cricket, but I suppose ze Germans can sell it to their electorate as a reason to support smaller nations.

Germany always was an export nation. It appears as though they are now looking to expand their financial services exports. Thank Christ we never joined the euro, or Hitlers idea for a unified Germany would have come 70 years later!

Quite interesting that uk property could be seen as a safe haven, if we can just get the NIMBYs to pipe down over green belt development.

[high spirits]

'The effect of a bank crash on people is well known by bankers. They obviously want people to spend money and not save which is why negative interest rates are under consideration.'

If that is Obergruppenfuhrer Merkels idea then I would suggest that she has been smoking too much of the Dutch Finance ministers Class A stash. Banking is all about confidence. This sorry episode has not only shot the golden goose, it has been tortured first and then hung out to dry.

If it is about ruining the financial institutions of other countries, then fair enough. It is a retarded plan that will end badly.

[lomapaseo]

"
Quotes from Calvin Cooledge:
"Borrowed money, even when owing to a nation by another nation, should be repaid. They hired the money didn't they? Let them repay it. 1925, Public Years. p.108

[NutLoose]

So with the worry of losing your savings in the EU with banks struggling, where does that leave you, shift your currency out of the EU or to the strongest performing Country within it? Ohh hang on that will be Germany.... Hmmmm nice plan there Merkels ...

It will destroy the banking system.

[Herod]

Buy gold; until they find a way of taxing it as an asset. They will.

[Stuffy]

Some say, wars are no longer fought with weapons but finance.

€10 billion is not much when measured against the bailouts for Spain and Greece.

Why devastate Cyprus ?

There is some game or agenda being played out here. Look, now I am a 'Conspiracy theorist'. The elite have been after a cashless society for years. Perhaps these are the first major moves toward that end?

Contagion is likely. I suggest banking in Singapore and Brasil.

Hero - Yes ! Gold and silver, and make sure it really is in the bank.

In the 1930's, gold was confiscated in the USA. Sound familiar?

[VinRouge]

Gold isn't a good idea. They froze gold transactions back in the 70's, no reason why they couldn't again.

Cyprus is the sacrificial lamb. Now every other nation struggling (piigs watch out) knows the rough deal that faces them. Greece was too big, too big to fail. Cyprus however.....

The message is stark... Either cut your public expenditure, including, but not limited to state pensions, or we will raid your bank accounts. The bailout pot is not limitless and the Germans will not allow hyperinflation.

I give it a week before there will be runs on banks across the euro zone. May be a good week to get shorting national indices.

[Al R]

The reality is, someone has to carry the can; but who? The retired nurse in Limassol, the Cypriot who works at WSBA, Germany and the Troika.. or those depositors with big accounts in Cypriot banks (wealthy Cypriots, Russians, Brits etc)? We now know the answer - the last in that list and it doesn't really matter how you got to the conclusion, the fact is, the conclusion was always going to hurt someone. The issue is, what are the ramifications of the bigger picture?

German pensioners face a real lowering of standards from the early 90s and to an extent, I can understand the common or garden type German worker now saying ''Look, we don't care if you look on us as control freaks, thats in the past and we don't care.. bottom line is, we have had enough of paying for the Euro''. Germany and the troika have navigated with the constraints they were facing and lets not be naive - there is a German election next year. Do we really want an unsettled and divided Berlin?

Did anyone watch Boris Johnson last night? I did and I ended up thinking ''Nice bloke to an extent, the kind of bloke you'd have a pint with, but my god - if he's the answer, what was the question again?''. And its the same for the EU. I cannot imagine a greater decimation and undermining of the principle of a unified economic and financial area that what has happened here, amounts to. And thats the really big issue in my humble opinion.

There can be no such thing as a currency union in which capital cannot flow freely; that was always one of the principles of the EU. We have seen, once and for all, and finally, a rejection of one of the fundamental goals of European economic unity, not, frankly, some mineral oligarch stamping his feet in anger. I live in Rutland, if I wanted to cross the border to draw cash from Stamford (top place to live in the UK according to The Times incidentally!), and couldn't, there wouldn’t really be much of a currency policy in the UK - and thats what we are seeing in the EU. Whether we accept it or not, the reality is, we are seeing a two or three tier Euro.

We saw him off yesterday, he died last week of MND, but I was reminded yesterday of something one of my old Sgts (Paddy Wilson, 1(F) early 1990s) told a Flight Commander quite robustly at Vigo Wood about the dispersal of Harriers - and its a truism. Similarly, if you save in any European bank, in principle, why wouldn't you move your wealth somewhere safer, or even park it in cash under the bed (loads of risks with that!), the minute you detected any hint that your country was in a Cyprus type scenario? Someone mentioned gold; sure, of course controls may be levied on gold, just as they could be on folk with 3 or 4 rental properties.

The issue now of Political and Regulatory Risk is likely to be far higher than it ever was, and possibly as relevant these days as Shortfall, Investment and Inflation Risk. The worrying thing is, Cyprus snored for months, we all saw it coming - they were having naps and sleeping off the Keo. The next time there is a banking crisis in Europe, it will move much faster and it will be far harder to control. There will be lots more unrest as savers try to avoid bank account future losses and capital controls.

And that’s a scary proposition indeed, especially if you look at the French situation and remind yourself how the French react to something as mild (in comparison) as farming controls!

[Stuffy]

Historically, every attempt at currency union has failed.

They cannot control something called 'Bitcoin'.

Bitcoin - Wikipedia, the free encyclopedia (http://en.m.wikipedia.org/wiki/Bitcoin)

Bitcoin (http://bitcoin.org/en/)

[VinRouge]

Cypriot Finance minister now stating that largest depositors could face a 40% cut to their savings.... Ouch.

I hope he knows the Cypriot mafia arent going to be best pleased and I wouldnt mind betting a few high level officials will get drilled for this.


Its also worth pointing out that none of this is good for political stability in the eurozone and I bet we see a strong shift to the extremeist end of the left or right.

I wonder what Germany's pound of flesh would have been for the equivalent euro bailout of the QE thats currently in circulation if we, god forbid, had joined the Euro?

Time to get on IGIndex. Some indicies to short.

[Stuffy]

I assume that you are including the dreaded Russkie Mafia?

Right and left extremism is already a reality.

[ian16th]

Is it not true that the Isle of Man, Jersey and Guernsey are not part of either the EU or the Eurozone?

[aw ditor]

IOM is a "British Crown Dependency". Relationship with the EU is ....... ........ ...?

[Stuff]

They cannot control something called 'Bitcoin'.

<thread drift>

Go and tell the US because they are trying to regulate it right now US to regulate Bitcoin currency at its all-time high - tech - 26 March 2013 - New Scientist (http://www.newscientist.com/article/mg21729103.300-us-to-regulate-bitcoin-currency-at-its-alltime-high.html)

</thread drift>

[Robert Cooper]

Reuters is reporting that although the major banks were supposed to be closed, some depositors were able to access their funds through a variety of means. And no one knows how much cash left the country.

Apparently EU negotiators knew something was wrong when the Central Bank of Cyprus requested more banknotes from the European Central Bank than the withdrawals it was reporting to Frankfurt implied were needed. The Cyprus Popular Bank (Laiki) and the Bank of Cyprus have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks' largest depositors.

This is important because the bailout deal is very dependent on the government being able to seize up to 40% of deposits over 100,000 euros in order to meet the demands of the EU for a contribution of 5.8 billion euros toward the bailout. If enough cash managed to squeeze out of the country, Cyprus will come up short in its contribution and the EU may back out of the deal.

Bob C

[Al R]

Rumours too, of some strange hedge fund transactions in the days leading up to the initial announcement.

[Pontius Navigator]

The only difference that I can see is that our Government take 20% or 40% from you before you bank it whereas the Cypriots are now planning to take it after you have banked it.

I am told by my daughter who was recently in Cyprus that you only pay tax on your first income. Apparently a storeman at Akrotiri worked 7-1 for the usual peanuts and paid taxes accordingly. Back home he could run his restaurant etc tax-free. True?

The infrastructure improvement in Cyprus is amazing post 1974. Two new airports, motorways, paved streets, designer street lighting etc etc.

In Madeira they also have a superb new motorway and tunnel system. When the EU funds dried out they simply borrowed more. The numbers were pretty similar to Cyprus and that is just a province of Portugal. I believe their overdraft will take generations to repay.

And our parish council in rural Lincs, pop 2,500, wants to borrow £640k for a White Elephant. Ugh!

Much of the money in Cypriot banks, allegedly of dubious provenance, has probably come from untaxed sources and I suspect that may have been the logic for a 40% hit with €100,000 plus being a not wholly unreasonable limit.

[Nomorefreetime]

I am told by my daughter who was recently in Cyprus that you only pay tax on your first income. Apparently a storeman at Akrotiri worked 7-1 for the usual peanuts and paid taxes accordingly. Back home he could run his restaurant etc tax-free. True?

That is the exact reason when you drive around town and see a shop with a few dresses in the window, the shop is hardly ever open. 1st business. I also believe this is a truth

[ian16th]

PN,

Apparently in terms of Euro's per Kilometre the most expensive road in the EU is on the Island of Reunion!

It is the N5 up to Cilaos.

I have at least driven a hire car over its length :ok:

[peter we]

Historically, every attempt at currency union has failed.

I suppose England's currency union with Scotland could be called a failure.

[Stuffy]

Thanks for that 'Stuff'.

I will tell Max Keiser.

[Al R]

When I marched into a shiny Hiring in Limassol, I asked why there were steel rods vertically protruding from the flat roof. Ah, I was told, thats for the next floor. Horrified, I asked if there were builders expected. No, I was assured, it was simply done to avoid paying tax. If the building wasn't 'finished', tax liability wasn't as onerous.

The Germans were obsessed with hoovering up countries into the Euro. They complain now about lax tax and dodgy Russians, but they still threw out the due diligence guidebook; 'incompetent' doesn't come close - ignorance is no excuse? Greece was cooking the books, everyone knew that these countries were disasters waiting to happen.

But everything was still subordinated to the myopic and pompous collective absurdity of the 'grand plan'.

[Stuffy]

Excellent post AI R.

[Pontius Navigator]

I have copied the following from another forum but it is germane to this topic even though 2 years old:

You really must watch and listen to this right to the end! I notice this didn't make the news in 2011 or since!

Absolutely brilliant piece of oratory by a relatively unknown Member of the European Parliament (MEP) Godfrey Bloom.

He echoes the thoughts of many people entirely! Including mine! Don’t stop listening when he sits down – the best bit is at the end!



Debt Crisis was Created by Politicians and Central Bankers - Godfrey Bloom MEP - YouTube (http://www.youtube.com/watch?feature=player_embedded&v=OnGxfrWaqP8)

[Stuffy]

Pontius Navigator,

Good one !

Here is the longer version with Nigel Farage.

Bloom is given the Soviet treatment (full version with Farage & 2nd expulsion) - YouTube

Nigel Farage: "The Guy is a Bloody Idiot & Communist" Fox Business 06-20-12 - YouTube

[Al R]

Investment bankers and politicians serve different masters. One paid by shareholders, the other by voters. Both have seperate agenda and there is not a lot of common ground, either morally or philosophically. Both need each other but neither share the same roadmap and as a consequence, financial markets and economic conditions aren't automatically correlated either. Farage is unusual in that he used to be an investment banker.

Markets and managers are positioning themselves according to instinct and philosophy. Spain is quietly releasing some worrying data too, so many are nicking profits where they can, salting reserves or buying cheaply elsewhere. Some are being contrarian and some are taking big longer term views. Cyprus is where we were at 5 years ago; the news this morning that our banks need to almost double the Basel Accord requirements should protect consumers but don't expect much lending or better savings rates in the short term.

[Stuffy]

Cypriots trapped by draconian capital controls

http://www.cityam.com/article/cypriots-trapped-draconian-capital-controls (http://www.cityam.com/article/cypriots-trapped-draconian-capital-controls)

[VinRouge]

How long can the euro endure?

Vast Greek war claims against Germany explode like a 'time-bomb' - Telegraph (http://www.telegraph.co.uk/finance/financialcrisis/9981837/Vast-Greek-war-claims-against-Germany-explode-like-a-time-bomb.html)

“The purpose was to gather all the material available so that the political leaders can check the data,” he said.
The Greek foreign ministry said this morning that the report would be sent to the State Legal Service “so that legal elaboration, assessment and setting out of the claims of the Greek State can be carried out and a relevant opinion submitted.”
The report was first leaked to the Greek newspaper To Vima over the weekend in a story entitled “What Germany Owes Us”.
The panel concluded that Athens has legitimate grounds to press claims. “Greece never received any compensation, either for the loans it was forced to provide to Germany or for the damages it suffered during the war,” it said.
The newspaper said the issue has “detonated like a bomb” at a critical juncture when Greece is under intense pressure from creditors. “The government should publish all the findings and determine its position on this sensitive issue,” it said.
The inclusion of the First World War has baffled historians. Greece declared war against the Central Powers in 1917 and mostly fought against Bulgaria. “I have never hear anything like this before. It is crazy,” said one Greek writer.
There has long been a vociferous lobby calling for war reparations from Germany, with the so-called “National Council” calling for as much €500bn to cover stolen art work and the loss of 50pc of economic output over almost four years.

[Stuffy]

http://greece.greekreporter.com/2013/01/16/greece-wants-germany-to-pay-for-w
wii/ (http://greece.greekreporter.com/2013/01/16/greece-wants-germany-to-pay-for-wwii/)

The Germans haven't got it any more?

Germans want gold reserves returned (http://mobile.wnd.com/2013/01/germans-want-gold-reserves-returned/)

[chippy63]

Al R,

There was no tax liability until the building was actually completed. As long as the bare re bars were there, no tax!

[Al R]

The EU was aware that Cyprus and Greece were not suitable to join the gang but negligently didn't bother itself (and us all) with proper due diligence. It chose instead to enhance grandiose political ideology and vanity.

[airborne_artist]

Farage is unusual in that he used to be an investment banker.


He was a commodities/futures trader really. It's a part of investment banking I suppose, but not what the bankers would call investment banking.