[ElJefe]

(03-19-2013 12:38 AM)tenderman100 Wrote:  

You have LOANED money to a bank when you deposit money with them. You have not taken an EQUITY position. To take an equity position, you buy stock.

Most importantly, this is not about this bank, or that bank, failing. It is about the government -- read the EU Central bank -- confiscating the cash of citizens to re-orient the balance of payments deficit of a nation state. This is not about you, or me, investing is some enterprise that is going belly up and needs a cash infusion. This is about a supra-national state stealing money from individuals (Russian oligarchs count as individuals too).

It's that simple.

You lend the money a bank, but no bank can be sure of getting back all that it lent if the debtor goes bankrupt. Why shouldn't creditors with bank deposits not be required to run the same risk? If we did require this of them, they'd be far more critical of with whom they place their money, and risk-taking banks would be punished.

This is also a reason I suspect low-level inflation is a major scam from CBs that drive up inequality, because simply stuffing cash in the mattress is expensive in the long run. But that's another beast.

As for the bailout: I personally count myself as a conservative, but a one-time property tax makes the most sense to me. But only if we can be sure the government will learn from its mistakes. Which it won't. So it's not a good idea. Too bad.

[Handsome Creepy Eel]

Shifting the cost of this bailout onto deposits below the guaranteed amount is a serious mistake. The guarantee for small desposits is one of the most sacred promises that a government can give, and certainly the only barrier that prevents mass bank runs. I could have understood if it was just for foreign investments or the like, but this.... it's a huge no-no. Really stupid decision that will send the PIIGS countries to their deaths, and then the rest of the EU.

The Economist Wrote:

IT IS not a fudge, but it is still a failure. The euro zone’s bail-out of Cyprus, which was sealed in the early hours of Saturday, did get the bill for creditor countries down from €17 billion to €10 billion, as had been rumoured. But the way it did so was somewhat unexpected.

Almost €6 billion of the savings for taxpayers in euro-zone countries came from losses imposed on depositors in Cyprus’s outsize banks. A one-off 9.9% levy will be imposed on all deposits over the insurance threshold of €100,000 before banks reopen after a bank holiday on Monday. That idea had been in the air for a while, not least because a lot of those uninsured deposits came from outside Cyprus, and from Russia in particular. The politics of saving wealthy Russians with money loaned by thrifty Germans were always going to be tricky.

What had not been anticipated was a 6.75% loss for savers with deposits in Cypriot banks below the insurance ceiling. Cypriots woke up this morning to find bank branches closed to them. By the time they will be able to get at their money, it will be too late. The offer of equity in banks to replace the value of their savings is meant to be a balm but it’s not a choice they would have made. Why this decision was taken is not yet clear. The most plausible explanation is that the Cypriot government itself preferred to spread the pain rather than wipe out non-resident depositors and jeopardise its long-term prospects as an offshore financial centre for Russian and other money.

Whatever the rationale, it is a mistake for three reasons. The first error is to reawaken contagion risk elsewhere in the euro zone. Depositors have come through the financial crisis largely unscathed. Now they have been bailed in, some of them in breach of an explicit promise that they can be sure of getting their money back even if a bank goes belly-up.

[qazwsx]

(03-18-2013 08:59 PM)Roosh Wrote:  

(...)

This is where the gold crowd tries to assert their position, but less than 100 years ago, all gold was seized. Are they really safer than those who hold bank accounts?

(...)

Yes, as long as you store the gold in a safe country.

I use to read Simon Black of SovereignMan.com who is well informed at this regard and he often quotes Singapore, Hong Kong, and Austria as good places to foreigners store gold.

One example, just recently:

http://www.sovereignman.com/offshore/the...old-11062/ Wrote:

[...] both Singapore and Austria are full of options to purchase bullion, tax-free. In Austria, most banks sell Austrian Philharmonic coins– a 24 karat coin struck in 999.9 fineness that’s recognized around the world.

In Singapore, it’s also easy to buy gold at many banks, particularly the main branch of UOB downtown. Or if you prefer, you can stop in Hong Kong along the way and buy your gold there– Hong Kong banks consistently have ultra-low gold premiums.

A private box at Das Safe in Vienna starts at 360 euros per year (about $470). At Cisco Certis in Singapore, it’s much more cost effective at S$149 annually (about $120).

It’s also worth mentioning that if you are a US taxpayer, foreign safety deposit boxes where you have ultimate custody of your metal are currently non-reportable to Uncle Sam. [...]

Or else, you can always do some research about Bitcoins.

[Pepini]

Who benefits from this?

I was in a portuguese branch of Deutsche Bank the other day, and the workers said they didn´t had enough people to take care of new bank account openings.

With this measure the money will fly to Berlin and Paris, and capitalize this countries. And the peripheric countries will go more and more down the drain.

Cyprus have been severely laudering money for the Russians and Chinese. Maybe the idea of Brussels is a back lash on them.

Will see where this is going.

Why there is no high tax on the goods coming from China is something that I honestly think about every fucking day.
Maybe those idiots bureaucrats from Brussels, who think the world is all sunshine and rainbows, because they don´t even have a thin grasp of real life, should live one month with a cypriot minimum wage.

[cool]

This won't make Cyprus solvent.

It seems like the powers that be will go to any lengths to preserve the ill-conceived euro and the the EU.

[qazwsx]

As for government robbery, they have other more refined ways of doing so without people get too hungry at him.

Since the creation of central banks, governments have been confiscating people's wealth through inflation (i.e., currency devaluation). When it is done very gradually (like it has for example in USA for the last decade), it is almost unnoticeable. And that way they manage to pay the government debt smoothly. But still, they are robbing people.


"Inflation is taxation without legislation." - Milton Friedman

Even the master champion of inflation had a moment of sanity:
"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. (...)
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." - John Maynard Keynes

[j r]

(03-19-2013 12:38 AM)tenderman100 Wrote:  

(03-18-2013 10:09 PM)j r Wrote:  

Everyone here is acting as if making depositors take a haircut is some sort of grave violation, but why shouldn't people lose some of their money if the bank they've deposited in goes under?

People have come to view money in the bank as being completely risk free, but why? There is a mistaken view that putting money in the bank is like putting in a vault where it sits until you need it. In reality, depositing money in the bank isn't much like locking it in a vault at all. For all intents and purposes, when you deposit money in the bank, you're essentially taking an equity position in that bank. It doesn't feel that way because we're used to a system where the government insures our deposits, explicitly through deposit insurance and implicitly by backing the entire banking system. Maybe that's not the best way to manage systemic risk.

By trying to complete remove risk from the system, we may have completely screwed up the system's ability to adequately manage risk.

Not gonna let this one pass.

There's a reason that when you put money in a bank it is called a "demand deposit." When you demand it, they have to give it to you.

You have LOANED money to a bank when you deposit money with them. You have not taken an EQUITY position. To take an equity position, you buy stock.

Most importantly, this is not about this bank, or that bank, failing. It is about the government -- read the EU Central bank -- confiscating the cash of citizens to re-orient the balance of payments deficit of a nation state. This is not about you, or me, investing is some enterprise that is going belly up and needs a cash infusion. This is about a supra-national state stealing money from individuals (Russian oligarchs count as individuals too).

It's that simple.

I don't know enough about Cyprus to have a view. My comment was an overall comment about government-backed deposit insurance and about how te financial system currently manages risk.

[j r]

(03-19-2013 06:21 AM)qazwsx Wrote:  

As for government robbery, they have other more refined ways of doing so without people get too hungry at him.

Since the creation of central banks, governments have been confiscating people's wealth through inflation (i.e., currency devaluation). When it is done very gradually (like it has for example in USA for the last decade), it is almost unnoticeable. And that way they manage to pay the government debt smoothly. But still, they are robbing people.


"Inflation is taxation without legislation." - Milton Friedman

Even the master champion of inflation had a moment of sanity:
"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. (...)
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." - John Maynard Keynes

You are misunderstanding both Keynes and Friedman. They are talking about significant levels of inflation that cause real price instability. A constant rate on 1 or 2 percent inflation doesn't constitute an inflation problem. Sure, if you took a thousand dollars and put it in under your mattress for ten years it would buy a lot less, but why the fuck would you put a thousand dollars under a mattress for ten years?

[qazwsx]

(03-19-2013 06:44 AM)j r Wrote:  

(03-19-2013 06:21 AM)qazwsx Wrote:  

As for government robbery, they have other more refined ways of doing so without people get too hungry at him.

Since the creation of central banks, governments have been confiscating people's wealth through inflation (i.e., currency devaluation). When it is done very gradually (like it has for example in USA for the last decade), it is almost unnoticeable. And that way they manage to pay the government debt smoothly. But still, they are robbing people.


"Inflation is taxation without legislation." - Milton Friedman

Even the master champion of inflation had a moment of sanity:
"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. (...)
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." - John Maynard Keynes

You are misunderstanding both Keynes and Friedman. They are talking about significant levels of inflation that cause real price instability. A constant rate on 1 or 2 percent inflation doesn't constitute an inflation problem. Sure, if you took a thousand dollars and put it in under your mattress for ten years it would buy a lot less, but why the fuck would you put a thousand dollars under a mattress for ten years?

These days, to put it under a mattress or in a savings account or buying treasury bonds is almost the same. Inflation will suck your wealth anyway. And even in the stock markets... unless the stocks you own go up a lot (with such turmoil and volatility, it's not easy to pick those ones nowadays), inflation will slowly eat it up.

I don't buy the idea the govermnents are constantly trying to sell us that the inflation is just like 1 or 2% per year. I don't belive official stats for that purpose, when everyone can look around and empirically observe the real figures are much higher, especially since the crisis.

Highly indebted governments, and the American is the most indebted, have only one way to pay theirs debts: taxes and inflation. So we can definitely expect a higher level of both in the near future since the debt is even growing everyday. And probabbly not even the recent US oil & natural gas boom will be enough to reverse it.

[Tex Pro]

Shit just got real:

Cyprus Set to Reject Bailout, Citing Tax on Bank Deposits

http://www.nytimes.com/2013/03/20/busine....html?_r=0

OTOH, like I said there is some good news for poon-hounds who plan on visiting Europe soon:

Euro weakens vs. dollar, vulnerable to developments in Cyprus

http://www.reuters.com/article/2013/03/1...1120130319



I wish the Euro would go back to trading at less than one-to-one value against the dollar. That would make traveling within Europe (at least countries with the Euro) a hell of a lot cheaper.

[Kitsune]

This situation makes me glad I have several months worth of money in cash within ten feet of me.

[Alpharius]

“Why? While the bailout of Cyprus is a fascinating case study and raises interesting theoretical questions about moral hazard for policy wonks and talking heads, here is the reality: It is largely irrelevant to the global economy. Cyprus is tiny; its economy is smaller than Vermont’s. And the bailout is worth a paltry $13 billion, the equivalent of pocket lint for those in the bailout game. Even the larger issue about bailing out a country by taking money from depositors — which quickly created outrage around the world — seems overblown.” - Andrew Sorkin http://nyti.ms/XWTE6Q

[tenderman100]

(03-19-2013 06:12 AM)Pepini Wrote:  

Who benefits from this?

I was in a portuguese branch of Deutsche Bank the other day, and the workers said they didn´t had enough people to take care of new bank account openings.

With this measure the money will fly to Berlin and Paris, and capitalize this countries. And the peripheric countries will go more and more down the drain.

Cyprus have been severely laudering money for the Russians and Chinese. Maybe the idea of Brussels is a back lash on them.

Will see where this is going.

Why there is no high tax on the goods coming from China is something that I honestly think about every fucking day.
Maybe those idiots bureaucrats from Brussels, who think the world is all sunshine and rainbows, because they don´t even have a thin grasp of real life, should live one month with a cypriot minimum wage.

You can google images of the bank runs in the 30s -- long lines outside banks waiting to get to the teller to withdraw money.

At Cypress you saw one version of the modern run -- lines at the ATM.

But there is another modern version of the bank run -- setting up accounts at banks in solvent nations, and moving money with your computer.

Or even more sophisticated -- turn your Euros into pounds or dollars or Swiss francs, and move them into accounts that handle those currencies.

The Euro as an enterprise is doomed -- it's a dead man walking. Why? Central planning always fails -- and the Euro is central planning on a huge scale. More productive nations (read more productive PEOPLE and INDIVIDUALS) will fund the excesses of the least productive and least hard working -- until the productive say to the unproductive, "No mas!!"

Of course, the ironies are excruciating. The Euro was seen as a way to make Europe unified, and somehow put a permanent end to the destructive wars on the continent. But now we have a silent economic war -- the have nots holding out their hands for handouts from the haves.

And who is the biggest "have." Why, Deutschland, of course, the nation at the heart of so many of these European wars. Deutschland won't declare war, but it will leave the union eventually, and let the others fend for themselves. It won't be blitzkrieg, and the buildings will still be standing, but the non-Germanic societies will flow down the sewer of history.

And this time there will be no Eisenhower to come and save them.

[tenderman100]

(03-19-2013 09:33 AM)Osiris Wrote:  

“Why? While the bailout of Cyprus is a fascinating case study and raises interesting theoretical questions about moral hazard for policy wonks and talking heads, here is the reality: It is largely irrelevant to the global economy. Cyprus is tiny; its economy is smaller than Vermont’s. And the bailout is worth a paltry $13 billion, the equivalent of pocket lint for those in the bailout game. Even the larger issue about bailing out a country by taking money from depositors — which quickly created outrage around the world — seems overblown.” - Andrew Sorkin http://nyti.ms/XWTE6Q

I like Andrew Sorkin, he's a pretty reasonable guy, but when somebody from the The New York Times says, "No biggie, nothing to see here," that means it IS a big deal.

[Hencredible Casanova]

Simon Black has been anticipating scenarios like this for a long time via his blog http://www.sovereignman.com.

http://www.sovereignman.com/finance/this...ght-11251/

[Veloce]

I hope the Euro tanks.

$200 for a Michelin 3-star meal? (it's currently $500-$900 per person)

$40 'fuck n suck' in Amsterdam?

$100 to party in Ibiza?

Fuck yeah.

[el mechanico]

(03-19-2013 09:49 AM)thedude3737 Wrote:  

I hope the Euro tanks.

$200 for a Michelin 3-star meal? (it's currently $500-$900 per person)

$40 'fuck n suck' in Amsterdam?

$100 to party in Ibiza?

Fuck yeah.

I eat lunch in Greece in the 90s for 85 cents. Souvlaki, fries, coke.

Taxi from Glyfada to Athens center or Piraeus $3.00

Bring back the Drac!

[tenderman100]

(03-19-2013 09:57 AM)el mechanico Wrote:  

(03-19-2013 09:49 AM)thedude3737 Wrote:  

I hope the Euro tanks.

$200 for a Michelin 3-star meal? (it's currently $500-$900 per person)

$40 'fuck n suck' in Amsterdam?

$100 to party in Ibiza?

Fuck yeah.

I eat lunch in Greece in the 90s for 85 cents. Souvlaki, fries, coke.

Taxi from Glyfada to Athens center or Piraeus $3.00

Bring back the Drac!

Right -- that kind of exchange rate makes sense because Greece is actually quite poor.

They have been denying it for so long, but they are beginning to find out.

[Bad Hussar]

Ha. If the EU is stupid enough to go ahead with this a couple of their top bureaucrats are going to end up with slugs from a Makarov embedded in their head.

If you really have to steal money steal it from the poor and defenseless, not from a group of oligarchs who are among the most brutal on the planet. If recent Russian history, as written, is to believed these people think nothing of eliminating those who get in their way.

I agree that cash held in a bank should be (almost) untouchable. As others have mentioned it's not one particular bank in Cypress that is being targeted, but ALL banks. You can't say "Well, people were stupid enough to put their money in a bank that was obviously in trouble so they are getting what they deserve." It's all banks in the country. It's not like it's reasonable to say that a Cypriot should have put his money in a German bank or something. There are probably regulations against this anyway. You can't say it's fair for depositors to get screwed because they have the misfortune of being born in Cypress.

[Menace]

Wars have started over less than this.

[Veloce]

When business is good for el mech he has dreams of this:



5 bucks for that combo! Shit ain't the 90s anymore...

[deuce]

(03-19-2013 01:25 AM)Prophylaxis Wrote:  

What does this mean for poon?

Way to stay focused man!

[porscheguy]

(03-19-2013 09:57 AM)el mechanico Wrote:  

(03-19-2013 09:49 AM)thedude3737 Wrote:  

I hope the Euro tanks.

$200 for a Michelin 3-star meal? (it's currently $500-$900 per person)

$40 'fuck n suck' in Amsterdam?

$100 to party in Ibiza?

Fuck yeah.

I eat lunch in Greece in the 90s for 85 cents. Souvlaki, fries, coke.

Taxi from Glyfada to Athens center or Piraeus $3.00

Bring back the Drac!

El Mech on a beach near Athens after 2 weeks of eating Souvlaki for 85 cents per meal.

[Menace]

One of el mech's cousins made a very relevant video about this:

[BIGINJAPAN]

Tenderman you forgot to take into consideration that Euro as a whole has the most gold out of anybody on the planet. Unlike the US which we all know has none, same with Canada and Japan, these countries could conceivably collapse first and there by increase the value of the Euro.

Now the Eurozone did NOT recapitalize their banks like the US did during the last crisis, so their banks are in a lot of trouble. But the governments do not have a 100 trillion in liabilities like the US has. Those liabilities are rapidly becoming due as we speak. I believe this is the first year that SSC pays out more than it takes in.

Either way all countries are fucked royally. I guess we will see who survives the longest.