Yes but at the end of the day they will have to pay for it one way or another. I guess the government thought they could stick it to the Russian depositors but the follow through let them down...
Lessons from Cyprus
- Thread starter Duke of Marmalade
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Yes but at the end of the day they will have to pay for it one way or another. I guess the government thought they could stick it to the Russian depositors but the follow through let them down...
Duke of Marmalade
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From what I read this evening, they need to come up with 5.8b of which about 3b would have come from the Russian deposits. This now will not happen so they are left to fund their entire contribution themselves. In the mean time the banks remain closed and it is estimated that people probably have enough cash to see them through the weekend, but come Monday...
Only time will tell if it was a smart move or not
Originally posted by Jim2007. "From what I read this evening, they need to come up with 5.8b of which about 3b would have come from the Russian deposits. This now will not happen so they are left to fund their entire contribution themselves." "Only time will tell if it was a smart move or not"
I have a gut feeling that it was not a smart move. The Government in Cyprus could possibly have upped the tax on the Russian deposits by another 500m and no one would care much. The possibility now is that the natives will bear the brunt of the alternative austerity package with little or no contribution from the absentee Russians.
I have a gut feeling that it was not a smart move. The Government in Cyprus could possibly have upped the tax on the Russian deposits by another 500m and no one would care much. The possibility now is that the natives will bear the brunt of the alternative austerity package with little or no contribution from the absentee Russians.
Can someone explain why the Russians are off the hook? Is this based on the assumption that Cyprus will borrow from Russia instead of Europe?
I presume the option to impose a levy only on deposits over €100k is still open to Cyprus (if their parliament agrees to it)?
I presume the option to impose a levy only on deposits over €100k is still open to Cyprus (if their parliament agrees to it)?
There are too many if's butts and and's to say what will happen.
Yes the parliament can impose the levy but if they don't it may not turn out to be the best option for the general Cypriot population.
It is only my opinion and I am not an expert on matters financial. I do not agree with the principle of taxing the deposits under 100k where the normal guy thought that they were not at risk from anything like levies etc.
Yes the parliament can impose the levy but if they don't it may not turn out to be the best option for the general Cypriot population.
It is only my opinion and I am not an expert on matters financial. I do not agree with the principle of taxing the deposits under 100k where the normal guy thought that they were not at risk from anything like levies etc.
SeamusCoffey
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Plan A involved taxing past earnings (by cutting money on existing deposits)
Plan B involves taxing future earnings (to pay interest on additional loans)
Both are unsavory, but someone has to pay.
Looking at Cyprus today, I think I have to agree with this. Cyprus is really looking into the abyss. Ironically, after taking a stand against the troika bailout proposals, they may now have to go back to plan A and beg for it back. The alternative is increasingly looking like closing their banks with total loss for all depositors, and figuring out some way to print a new currency.
Printing a new currency is not a possibility - no one would be willing to accept it. Event it were issued people in Cyprus would continue to use the Euro, the dollar or perhaps Sterling.
When you print a new currency you make it illegal not to accept it, impose exchange controls on others (i.e. the euro) and make all government payments (public service pay, state payments) in the new currency to get it into circulation. And, of course, any money held in back accounts turns into the new currency overnight. You'll have a currency black market too, but that's life.
First of all under EU rules covering the free movement of capital, Cyprus has very limited authority to do any of what you are suggesting... secondly they can't even get a levy through parliament, let alone try and go for a currency change. It's a non started.
Hi,
Yes there is a 5% dirt rate in Cyprus agreed to by the ECB/IMF Years ago,which rich Russians take a huge advantage of.
Now the ECB wants something back for allowing these rich Russian Bond Holders away with such a low dirt for so long.
What's wrong with that???
I only feel sorry for the ordinary worker like myself getting caught up in the billions making millions scenario over in Cyprus.
Just like exactly what's happening to all of us in Europe??
Yes there is a 5% dirt rate in Cyprus agreed to by the ECB/IMF Years ago,which rich Russians take a huge advantage of.
Now the ECB wants something back for allowing these rich Russian Bond Holders away with such a low dirt for so long.
What's wrong with that???
I only feel sorry for the ordinary worker like myself getting caught up in the billions making millions scenario over in Cyprus.
Just like exactly what's happening to all of us in Europe??
Duke of Marmalade
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What a week!
The Lessons form Cyprus are really quite different than they appeared when I opened this thread.
1. The 100k deposits are safer than ever.
2. Over 100k on the other hand is fair game.
3. The policy of spreading your deposits around bekow 100k is totally sound.
4. Deposits over 100k should seek out best security, though the possibility that all banks, even good ones, could have been targetted is still scary. Personally, the Post Office is best for deposits in excess of 100k.
5. Nobody is ever going to leave or be pushed out of the Euro.
6. The Euro will survive.
7. Kenny is an idiot. He welcomed the original announcement
Ok, he is EU president and he has to support the cause, but couldn't he have used his Paddy's Day jamborees to conveniently forget to comment.
The Lessons form Cyprus are really quite different than they appeared when I opened this thread.
1. The 100k deposits are safer than ever.
2. Over 100k on the other hand is fair game.
3. The policy of spreading your deposits around bekow 100k is totally sound.
4. Deposits over 100k should seek out best security, though the possibility that all banks, even good ones, could have been targetted is still scary. Personally, the Post Office is best for deposits in excess of 100k.
5. Nobody is ever going to leave or be pushed out of the Euro.
6. The Euro will survive.
7. Kenny is an idiot. He welcomed the original announcement
Ok, he is EU president and he has to support the cause, but couldn't he have used his Paddy's Day jamborees to conveniently forget to comment.In no.3 above did you mean to say above instead of below? If deposits below 100k are safer than ever then there is no need to spread them around?
If someone has, say, 199k split equally between two Cypriot banks affected by this deal are they ok or are they hit?
Sure. The obvious corollary is that if Cyprus were to leave the eurozone it would also leave the EU. I think most people speculating about the undefined process for leaving the euro over the last couple of years assume that it probably means leaving the EU also. We're talking about an Armageddon scenario for Cyprus. Fortunately it looks like it's not going to come to that. At the same time, Cyprus has found (as has Ireland) that you cannot dictate terms to the big boys in the EU.
Duke of M
You mention An Post as a better bet than than the banks maybe, but aren't hard earned(and pretaxed) savings there just as vulnerable to any Government (but especially this one) who might be excited at the new-found prospect of mugging ("a la Cypress") of ordinary people to pay off Govt. debt?
You mention An Post as a better bet than than the banks maybe, but aren't hard earned(and pretaxed) savings there just as vulnerable to any Government (but especially this one) who might be excited at the new-found prospect of mugging ("a la Cypress") of ordinary people to pay off Govt. debt?
Duke of Marmalade
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Nothing is certain in this life or this crisis other than death and taxes. But try to envisage the situation where AP savings are raided. My judgement is that this is the absolutely last target from a political perspective. It doesn't amount to a whole lot of dosh so if the Government are being forced to that well, the game is real and truly up. IMHO AP savings are even safer than German deposits, for example. I think a scenario where Ireland defaults on its ECB commitments and Germany retaliates by hitting Irish residents' deposits, whilst extremely unlikely, is more likely than the Governement being forced to raid AP savings.
But I could be wrong