Cyprus, Banks, and the EU

Results 1 to 9 of 9
Like Tree1Likes
  • 1 Post By Jabberwocky

Thread: Cyprus, Banks, and the EU

  1. #1
    Head Bus Driver Big Lutz's Avatar Moderator
    Join Date
    Sep 2009
    Gender
    Male
    Posts
    5,319
    Blog Entries
    5

    Default Cyprus, Banks, and the EU

    So until last week I had no idea that Cyprus was a country, and then word came that the EU was granting them a bailout on their debt.

    It just had one tiny stipulation, that a tax of 6.75 per cent on deposits of up to €100,000, and a tax of 9.9 per cent above that threshold on banks.

    What happened next could be described as a Bank Run as people pulled their money from banks and ATMs, and the Government responded by shutting down all banks until Thursday, at which point the Parliament most likely would have voted on the deal, and people who haven't gotten their money out more than likely would be screwed.

    The Guardian has a pretty good live up to the moment page going showing events as they happen.

    Cyprus: banks shut till Thursday as government scrambles to amend savings levy - live | Business | guardian.co.uk

    What I cannot get, is how any one in the EU thought this would be a good thing, of course it would cause a bank run, but whats worse is now people in other countries will think their savings are not secure as a similar bailout could be passed there. This causes a bank run in other countries, and well, we see the beginnings of a new depression as banks lose all liquidity.

  2. #2
    Proud Pokeservative! 97SaturnSL1's Avatar
    Join Date
    May 2012
    Gender
    Male
    Location
    cuyahoga falls ohio
    Posts
    1,084
    Blog Entries
    18

    Default Re: Cyprus, Banks, and the EU

    ANOTHER Bailout??? Geez, Greece (ive lost count how many bailouts), Ireland, Spain and italy and now Cypress... Too bad these wont see a sucess story like how AIG, GM, and Chrysler were able to return to record profibility. I will be amazed if the EU still exists by 2020...

  3. #3
    Dragonborn Sorcerer Lord Naarghul's Avatar
    Join Date
    Dec 2012
    Gender
    Male
    Location
    Apocrypha
    Posts
    54
    Blog Entries
    2

    Default Re: Cyprus, Banks, and the EU

    What we have in Europe is a desperate attempt to stave off the same sort of financial chaos that caused the Great Depression in the 30s. A common misconception is that the Stock Market Crash in 1929 caused the Depression; in fact, it was the bankruptcy of the Austrian bank Creditanstalt that caused a global financial panic and led to a multitude of bank failures all over both Europe and the U.S. Severe deflation resulted, and Germany's finances went under for a second time in 10 years

    The idea behind the Euro was to prevent something like that in the past from happening. The sad truth is that the Euro may, in fact, be exacerbating the problem.

    Throwing another monkey wrench into this mess is that there are individuals and organizations in Russia that have a great deal of money stored away in Cyprus, some of which are rumored to be criminal. Vladimir Putin has already called this "dangerous". This could get very, very ugly, especially if criminal organizations are involved. And the last thing Europe needs is a bank run; such an event WILL cause the same kind of financial chaos the Creditanstalt bankruptcy caused.

    EDIT: A thought just occurred to me. The reason the Austrian bankruptcy in the 30s caused such a financial storm was because so many nations were on the gold standard at that time, making nations interdependent on each other's finances. The Euro basically accomplishes the same thing as the gold standard did.
    Last edited by Lord Naarghul; 19th March 2013 at 01:08 AM.
    In one fleeting moment from the land doth life flow...

    in the same fleeting moment, thou must live, die and know...


  4. #4
    Le Choléra Jabberwocky's Avatar Moderator
    Join Date
    Apr 2009
    Gender
    Male
    Location
    Silicon Hills, Texas
    Posts
    18,080
    Blog Entries
    687
    Add Jabberwocky on Facebook
    Follow Jabberwocky on Tumblr

    Default Re: Cyprus, Banks, and the EU

    Quote Originally Posted by 97SaturnSL1 View Post
    ANOTHER Bailout??? Geez, Greece (ive lost count how many bailouts), Ireland, Spain and italy and now Cypress... Too bad these wont see a sucess story like how AIG, GM, and Chrysler were able to return to record profibility.
    Why are you so sure?

  5. #5
    Dragonborn Sorcerer Lord Naarghul's Avatar
    Join Date
    Dec 2012
    Gender
    Male
    Location
    Apocrypha
    Posts
    54
    Blog Entries
    2

    Default Re: Cyprus, Banks, and the EU

    The Finanical News Everyone’s Watching in Cyprus: Parliament Votes ‘No’ on Tax | TheBlaze.com

    Quote Originally Posted by The Blaze
    NICOSIA, Cyprus (TheBlaze/AP) — With zero votes in favor, 36 votes against, and 19 abstentions, Cyprus’ parliament voted Tuesday to reject the controversial depositors tax included in its $13 billion bailout deal.

    The rejection leaves Cyprus’s bailout in question. Without external funds, the country’s banks face collapse and the government could go bankrupt. Nicosia will now have to come up with an alternative plan to raise the money: the government could try to offer a compromise bill that would be more palatable to lawmakers.

    The bill, which had been amended Tuesday morning to shield small deposit holders from the deposit tax, was rejected with 36 votes against and 19 abstentions. One deputy was absent.

    “No to new colonial bonds, no to subjugation, no to national dishonor and raw blackmail,” said house speaker Yiannakis Omirou during the debate before the vote.

    After the vote failed, he said political leaders will have a meeting with the president on Wednesday to discuss the next steps.

    Nicholas Papadopoulos, the chairman of the parliamentary finance committee, said banks would remain closed “for as long as we need to conclude an agreement” but stressed this would be “in the next few days.” Banks had been ordered to remain shut until Thursday while the bill was debated and amended, to prevent a bank run.

    Papadopoulos said Cyprus wanted wants a renegotiation of its bailout deal.

    But the idea of seizing savings was something Cyprus rejected. “It has not been (implemented) in any other country in Europe and we don’t wish to be the experiment of Europe.”

    Hundreds of protesters outside Parliament cheered in jubilation and sang the national anthem when they heard the bill had not passed.

    Under the original deal reached in Brussels late Friday to qualify for the 10 billion euro bailout from other eurozone countries and the International Monetary Fund, Cyprus had to raise 5.8 billion in additional funds by taxing all bank accounts. Those under 100,000 euros would pay 6.75 percent, and those above that amount would be taxed at 9.9 percent on their deposits.

    Facing fury at home and from Russians who make up an estimated third of the total amount in Cypriot banks, the government amended the bill Tuesday to exempt small depositors with up to 20,000 in the bank.

    But the change was not enough for lawmakers.

    The country’s central bank governor, Panicos Demetriades, had recommended that no accounts be taxed below 100,000 euros – the amount that are supposed to be insured by the state if a bank collapses.

    “The credibility of, and trust in the banking sector depends on this,” said Demetriades.

    Although Cyprus is the smallest eurozone country to be bailed out, the details of the plan had sent shockwaves through the single currency area as it was the first time savers’ banks accounts have been directly targeted. Other bailed out countries such as Greece, Ireland and Portugal have raised funds by imposing new taxes.

    Proponents of the deposit seizure argued it would have made foreigners who have taken advantage of Cyprus’s low-tax regime share the cost of the bailout of the banks, which have been hit hard by their over-exposure to bad Greek debt.

    Finance Minister Michalis Sarris flew to Moscow Tuesday afternoon to meet with his Russian counterpart, arriving there shortly before the vote – and promptly dismissing rumors that he had offered to resign in the interim.

    Andreas Charalambous, a senior official at the ministry, said the aim is to extend repayment of a (EURO)2.5 billion loan Russia granted Cyprus in late 2011 when the country could no longer borrow from international markets.

    He said Cyprus was also looking for “potential interest for further investment in the country.”

    Opponents say a blanket charge on people’s bank accounts will hurt ordinary Cypriots more, and could shake the confidence of all in the country’s banking sector. And by going after deposits, European policymakers have set a precedent that could be repeated in the future. The worry of bank runs across Europe lies at the heart of market concerns.

    Charalambous said Cypriot authorities believe depositors should be protected, but that a wholesale exemption for those below (EURO)100,000 would mean a “disproportionate” burden on large savers, and a “very detrimental” knock-on effect on economic growth.

    “Because of the size of the estimated (bailout) needs, the burden on those above (EURO)100,000 would be such that it would again impact small people because it would destroy the ability of the country to attract foreign investment,” Charalambous said.

    In a Monday night teleconference, eurozone finance ministers concluded that small depositors should not be hit as hard as others. They said Cyprus should stagger the seizures more, but insisted that the overall take should stay the same.

    President Nicos Anastasiades, who was elected less than a month ago, told German Chancellor Angela Merkel Monday night that “the possibility of reducing the requirements from self-raised funds is being explored,” a Cypriot government spokesman said.
    Cyprus has backed off. But Russia is still angry and is threatening to pull all of its money unless Cyprus exchanges its natural gas and oil reserves.
    In one fleeting moment from the land doth life flow...

    in the same fleeting moment, thou must live, die and know...


  6. #6
    Proud Pokeservative! 97SaturnSL1's Avatar
    Join Date
    May 2012
    Gender
    Male
    Location
    cuyahoga falls ohio
    Posts
    1,084
    Blog Entries
    18

    Default Re: Cyprus, Banks, and the EU

    The russians better vacate all of their accounts in that place other wise very bad things may happen because i doubt russian millionares and companys are just all so happy to fork over their hard earned cash to bail this country out.

  7. #7
    Ghetto Biatch Toutebelle's Avatar
    Join Date
    Mar 2013
    Gender
    Male
    Location
    New York, USA
    Posts
    233
    Blog Entries
    10

    Default Re: Cyprus, Banks, and the EU

    Quote Originally Posted by 97SaturnSL1 View Post
    ANOTHER Bailout??? Geez, Greece (ive lost count how many bailouts), Ireland, Spain and italy and now Cypress... Too bad these wont see a sucess story like how AIG, GM, and Chrysler were able to return to record profibility. I will be amazed if the EU still exists by 2020...
    I am one of the biggest critics of the EU. I think it's making Europe look weak. It costs a lot of money to maintain. Besides, I don't think the EU benefits all of the countries involved. It certainly doesn't benefit poor countries like Poland, Hungary, and Romania. Even Italy and Greece are poor when compared to Germany, France, and the UK. I'm only glad that Russia is probably never going to be a part of it, since it's such a poor country with equally poor human rights.

  8. #8
    Proud Pokeservative! 97SaturnSL1's Avatar
    Join Date
    May 2012
    Gender
    Male
    Location
    cuyahoga falls ohio
    Posts
    1,084
    Blog Entries
    18

    Default Re: Cyprus, Banks, and the EU

    I am one of the biggest critics of the EU. I think it's making Europe look weak. It costs a lot of money to maintain. Besides, I don't think the EU benefits all of the countries involved. It certainly doesn't benefit poor countries like Poland, Hungary, and Romania. Even Italy and Greece are poor when compared to Germany, France, and the UK. I'm only glad that Russia is probably never going to be a part of it, since it's such a poor country with equally poor human rights.[/QUOTE]
    I dont think the EU would be weak and flawed if they didnt add in the non industustrial countrys such as greece and cypress. I wouldn consider Russia to be a poor country financially due to the oil and gas industrys over there and a lot of the money in Cypress is Russian money. I dont think many Russians will be happy to have THEIR money bailing out this island nation Since russian money does make a significant amount of money in Cypress banks.

  9. #9
    I! AM NOT! A MORON! Sith Droideka's Avatar
    Join Date
    Mar 2010
    Gender
    Male
    Location
    The Hidden Land
    Posts
    1,423

    Default Re: Cyprus, Banks, and the EU

    Ah, the sweet smell of the collapse of Socialism. By now, I think it's clear: the great European experiment has failed. Don't believe me? Because, this establishes a precedent. What if Greece or Italy or Spain copies Cyprus on the orders of Germany or some other power? What happens if taxing the banks becomes the last choice possible?

    It's clear: the socialists have run out of other people's money.
    ALL Pokémon Are EQUAL, But SOME Pokémon Are MORE EQUAL Than Others

    Oceania is at war with Eurasia Eastasia Eurasia Eastasia, and has always been at war with them!

    WAR IS PEACE. FREEDOM IS SLAVERY. IGNORANCE IS STRENGTH. GOD IS POWER.

    Next PolySci/Econ Test: November 8, 2016; Your crash-course will begin January 2013.

    Galvantula ≥ Kyurem > Mewtwo > Arceus

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •