Understandably there are a lot of shocked people in Cyprus this weekend and not a few frightened by events. I think its beyond outrageous that you `confiscate` large amounts of ordinary peoples savings to bail out banks that, frankly, were widely believed to be engaged in illegal money laundering for the Russians in the first place.
Just shows exactly what the EU and the Germans, in particular, think of ordinary citizens. Just pawns on a political stage. Disgusting and I feel for them.
However the fear must be that this sort of `pick pocketing` will catch on and other struggling economies, like Spain and others, will be the next for a clobbering. I would be suprised if there isn`t some panicking on the money markets tomorrow, and large amounts of cash being withdrawn all over Europe. Laundered money is stashed all over Europe and if a lot gets pulled out it will cause even more strains on struggling economies....What a mess.
I do hope things pan out especially for those living and investing on the Island, in particular, and that any problems arising are manageable. Either way it must be an unnerving time wondering what these legalised crooks are going to get up to next....Good luck to all
What's particularly worrying is that this is being done by the Cypriot government (if it actually happens - they have until close of play tomorrow, a bank holiday in Cyprus, to bring in emergency legislation to levy a tax on savings) as a condition imposed by the EU if Cyprus is to qualify for an EU bailout. Given that the country will face bankruptcy without the bailout, threatening the integrity of the Euro, you can imagfine the pressure they are under.
It is being stressed that this is a 'one-off' measure, not to be repeated in Cyprus or elsewhere, but with the track record of the EU how far can that be trusted? If it works, despite protests, in a small state such as Cyprus, the model and precedent then exists for larger scale deployment. The UK government will compensate some affected in Cyprus, such a service personnel, indirectly contributing to the Cyprus finance gap, again pretty much what the EU wants.
I suppose a positive side of this is that people worried about the safety of their savings may not just try to withdraw their money to stuff the mattress, they may decide to spend it, and THAT is really what the economies need for recovery.
Of course, if a government really wanted to ensure they were in a position to tax 'wealth', they would want to build a record of everyone's international assets ::) ......Anyway, be interesting to see what this does to the Euro, may even struggle as much as GBP! Interesting times....
Herein lies a valuable lesson. Salting all your dosh away is a mugs game. Spend the lot and go out in a blaze of glory.
Then go cap in hand to the state when its all gone belly up.
I'm now down to me last fiver)
Seriously. was reading that in France now you cannot withdraw more than 1000 euros from your own account in cash to make sure all transactions are traceable. Banking is a sick joke, no interest rates worth talking about and now able to pilfer ( and theft is what it is not a tax) what they want to make up for the countries financial failings.
QuoteOf course, if a government really wanted to ensure they were in a position to tax 'wealth', they would want to build a record of everyone's international assets ::) ......Anyway, be interesting to see what this does to the Euro, may even struggle as much as GBP! Interesting times....
Isn't this what they are already doing here in Spain, see next link
http://www.blevinsfranks.com/EN/news/104/976?newsCategoryPK= (http://www.blevinsfranks.com/EN/news/104/976?newsCategoryPK=)
Let's face it; Cyprus was rapidly becoming the quintessential "Sunny place for shady people". Banks that don't ask too many impertinent questions, a better than average interest rate & low tax rate. If they don't implement this levy, what is the alternative for a country that has no other source of income apart from tourism? Don't come to the UK with the begging bowl, we are skint after bailing out Iceland.
In the UK, savers are having their trousers pulled down with zip interest rates & eye watering taxes if you are stupid enough to be working. I recon the government has raked back 10% from our wealth over the past few years, they just have not been so up front about it.
Can just see the Spanish government licking their lips, now that looks a good idea.....
Anyone with major assetts in a Spanish bank should now be afraid...very afraid.
Quote from: stedge on March 17, 2013, 16:58:16 PM
Salting all your dosh away is a mugs game. Spend the lot and go out in a blaze of glory.
Absolutely! Maybe not the thing to do when you've got a young family (but who's got money to save with kids needing so much?), but once they've grown up, why not enjoy your cash while it lasts?
QuoteSeriously. was reading that in France now you cannot withdraw more than 1000 euros from your own account in cash to make sure all transactions are traceable.
That doesn't surprise me at all. Is it new? I thought that rule was in place when I lived there. You have to justify every movement of your own dosh nowadays.
I had a small inheritance from the UK when I lived in France, and the money came in several cheques from a solicitor, over a few months. I got really fed up having to explain to my UK bank where each one had come from, and provide written proof. Then I started transferring it over to France, and the French wanted to know the same, and they even had the nerve to expect me to get the proof translated. They're still waiting for that! Then my UK bank wanted to know what I'd done with the money I'd taken out. Then of course it had to go on my tax returns. Ended up really wishing my father had left it all to a cats home! >:(
I read about the 1000 euro cash withdrawal limit on a French ex pats forum. I think it has been in force for a while...but that doesn't make it acceptable.
The Cyprus 'tax' on savers is theft pure and simple. Its easy to see governments of other EU bail out countries seeing an easy escape route. Just sit back and see how the Cypriots take this latest outrage. If after a bit of initial protest it all dies down they'll see it as a green light and all start dipping their grubby little fingers in the cookie jar. And lets be honest the Spanish authorities have got previous when it comes to ditching their integrity and abusing the system. (especially towards foriegners). Could be scarey times ahead if Cyprus takes this route..
Cyprus has a very disproportionate amount of cash on deposit compared to the size of it's economy, it's on par with the more well-known tax havens. Most of that cash is offshore accounts of folk who don't live in Cyprus, an incredible 50% is Russian tax avoiders / money launderers.
This is a cash for equity deal, not a straight money grab. You get shares in return which may turn a profit in a few years, or be worth nothing if the bank goes under. So everyone throwing a Benny & drawing out their cash, might not be the best tactic.
The alternative of no bail out is an even worse scenario.
He did not think this solution would work in a more standard mainstream economy.
The hard fact is that someone is going to have to pick up the tab. Should it be the Euro tax payer 100%, or should people with a vested interest in Cyprus pick up a slice?
I hope that Cyprus sets an example & jails a few of the chancers who got them in this situation. In the UK, this sort are untouchable.
The share certificates they'll be dishing out won't be worth wiping your backside with. So as far as the normal saver goes its a money grab end of. Its little comfort to ordinary ex pat or Cypriot savers that money laundering Russians will get caught out. Having got away with it once what if they find out its not enough and decide another 5% snatch might be a good idea further down the line?. If they make it possible which is debatable i'd say moving a portion or even all of your money might be a very good move.
As previous posts say, Cyprus is something of a special case because of the disproportionate size of its banking deposits versus the size of the national economy. THAT imbalance (largely Russian money) has been driven by over-generous and lax banking systems.... they have been happy to tolerate this in the hope of generating investment in Cyprus and, no doubt, 'other reasons'.
For the ordinary depositor though, including expats, the resulting crisis puts them betwen a rock and a hard place. Lose up to 10% to underwrite the EU bailout and hopefully save the Cypriot economy, or forego the EU bailout and see Cyprus exit the Euro. They would then need to revert to a Cypriot currency, with all deposits automatically converted to the new currency. There would be an immediate devaluation of up to 40%, with an even worse net result!
You can be sure the government would prevent significant withdrawals or transfers throughout this period, and imagine the difficulty of living through that!
The more alarmist parts of the UK press are already pointing to Italy and Spain as conceivably needing to learn from what happens in Cyprus, but the banking 'balance' is significantly different, hopefully, so anything along these line would simply not be worth the hassle/fallout.
Its already been said, but the old principle of saving for the future seems to have gone these days.... might as well just spend it and enjoy it. You can understand why the price of gold keeps rising, just about the only way of holding cash reserves with any confidence!
You dont need an alarmist press to make any expat worry about their saving deposits in Spain or Italy, most of us can work out what might happen next. Lets be honest, they do what the hell they want,nobody gives a toss anymore accept the people that are harmed. Look at our own country, we let anything happen and just accept it, we TWIT, we TEXT, we POST and YAK on about it then let the government spin doctors convince us its a good thing to be taxed up to the bloody hilt and Bankers are worth every penny of their Billions of pounds worth of bonuses, that MP's should get a new 25% pay rise and Eurocrats can just about write their own pay slips and expenses. To my way of thinking (i'm not political just go by whats in front of me), its a them and us situation, our rail system sums it all up, six first class carriages to every three pleb carriages.
All very true. And now an attack on the free press by those that have most reason to keep secrets. At least we won't worry any more as we won't have a clue about how far we are really being shafted.
I hear Hugh Grant is all for it...well he would be wouldn't he after Divine Brown
I hear Hugh Grant is all for it...well he would be wouldn't he after Divine Brown
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Indeed he seems particularly keen to ram it down their throat :D :D
:D
Scary stuff in my eyes :o
If you think about it, what the Cyprus government are planning to do in taking money off people is exactly the same as the British government have been doing for a couple of years now with Quantitative Easing (QE or printing money).
When a government prints money it is effectively reducing the value (spending power) of everybody's savings. You only have to look at the effect on the exchange rate to see the effects of QE. 1.16 euros to the pound now whereas it was up around 1.47 only a few years ago.
QE is a much more sneaky way of doing exactly what the Cyprus government are doing. At least they are up-front and transparent about it.
If the government finances are in a mess they need money and there is only one place they can get it from - the people.
So stop worrying about it - they will get the money one way or another - they have no choice.
The Spanish government will get their hands on your money whatever you do to try to stop it.
Interesting theory....but the big objection here is that the EU ( or Germany to be precise) tried to break all the normal rules. The bondholders, who are in a position to know exactly what the Banks are doing ,and yet still invest, are the ones that previously have taken the loss. For them, any loss was spread over large investments. But this time, they have been left alone and the small savers, the ordinary people, who arn`t in a position to know and couldn`t be, have taken a direct hit. You thinks that`s right and just ?
Sorry in my book that is unacceptable...which is roughly the conclusion most others have come to and why they are all cobbling a plan B together. All the other banks, especially Spain, have been bailed out without directly plundering the savings of ordinary people whose life savings may be very modest anyway.
Mmm Voldermort you are right in what you say but there is more to it than that.
The bondholders are usually our pension funds so they are getting (or losing) our money that way. This time Cyprus has just cut out the middle man as it were.
You are also right when you say all of the other banks, especially Spain, have been bailed out - but where did the money come from to bail them out?
Each country in the EU contibutes to the ECB and other funds which have been used for these bail outs. Each country gets its money to contribute to these funds from you and me in taxes.
Again we all pay.
Governments don't have any money of their own. It is our money they borrow to spend on our behalf. In the same way banks and other financial institutions including bondholders don't have any money of there own. Banks only have money that we give/lend them.
It is only individuals that have money.
And it is not the money that matters anyhow really, that is just a token, it is virtual. It is having the will, the freedom and the choice of how to use those tokens that matters. Financial institutions don't have will, freedom and choice like that. They work within a very rigid framework. They simply borrow money and lend it out again.
Money cycles around in an economy. It is only of any value if it cycles througfh the hands of people. The economy would be of absolutely zero value if the money only moved back and forth between financial institutions. It would be of no use if part of the cycle were not through people's hands. That is the only way an economy can work.
At the end of the day it is us, the people, who exercise the choice of how we use money that will always pay in the end.
Indeed you are of course right, it is one big cycle and hence a rather large mess, but its the first time they have gone straight for ordinary people in the direct way, rather than as before. I think they have been left with a large problem to ponder this time and it will make them less likely to go down this route in the near future. Frau Merkel is, I understand, very annoyed with the plebs though :D :D
Couldn't agree more with everything you say Voldermort. As I said, at least Cyprus were open about it and not sneaky like other governments, the UK included. That is why there has been such an outcry as you say, but I do think people ought to realise that they shoudn't be shocked really. The Cyprus government will get that money somehow,
But not of course any money from the wealthy Russian oligarchs who I believe were forewarned about the Cypriot attack on bank deposits and withdrew all their money last week.
Frau Merkel ought to be very annoyed about that!