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Swiftly endorsed by euro zone finance ministers, the plan will spare the east Mediterranean island a financial meltdown by winding down Popular Bank of Cyprus, also known as Laiki, and shifting deposits below 100,000 euros to the Bank of Cyprus to create a "good bank".
Deposits above 100,000 euros in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki's debts and recapitalize Bank of Cyprus through a deposit/equity conversion.
A 10% tax on deposits sounds so much better than this deal.
How on Earth can they possibly think this will lead them in the right direction?
I can't imagine a sane foreign investor ever thinking about investing in Cyprus now. Talk about stupidity!
Deposits above 100,000 euros in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki's debts and recapitalize Bank of Cyprus through a deposit/equity conversion.
I fail to see how that is any different than in the United States. Depositors are insured by the FDIC for up to 250k (192k euros) if the bank collapses, anyone's money deposited over 250k is lost. If depositors in Cyprus have significantly more than 100k in any one account, it's there own stupidity for losing that money. People are still learning the hard lessons in life. Real Estate CAN go down in value, Big companies CAN go out of business and Banks CAN fail, protect yourself by diversifying your investments.
Quote:
Originally Posted by bmw335xi
A 10% tax on deposits sounds so much better than this deal.
Well the problem I see with the 10% tax is when people made the deposit into the bank, there was nothing about 10% deposit tax, your changing the rules halfway through the game. I would foresee lots of lawsuits from depositors in such a case. The 100k insurance cap was always in place, too bad if you didn't read the fine print. It's an existing rule and it's perfectly Legal. No lawsuit is going to help you block the process.
Last edited by TechGromit; 03-25-2013 at 08:49 AM..
I agree with TechGromit, if you have more in the bank than what is federally insured, than you are taking a risk.. the only thing is a lot of people back when they put the money in the bank thought they'd never see that risk. Now the whole world should learn a lesson on the backs of quite a few unfortunates.
But this plan is still better than placing a 10% tax on EVERYONE that has an account, especially if their money is still in the safety threshold of being insured by the government.
Now the whole world should learn a lesson on the backs of quite a few unfortunates.
Unfortunately people who do not study history are doomed to repeat it. This isn't the first time depositors lost money in a bank collapse and will not be the last.
The government of Cyprus is taking the money to pay off the debts of the banks, don't you get that?
The government is putting all the 'safe/insured' deposits in 1 bank & the uninsured deposits in another bank. Then, the government will push the bad bank through bankruptcy court... giving depositors a % of their original amount.
The banks had used the deposits to make bad loans, what do you think should happen?
And people why the rich make sure there is a bond market for sovereign debts ? Who would keep more than a 100k in a bank account? Its pretended , pretend money, once removed.
Banks lend out the money which returns again as a deposit. This is loaned out again. Thus under a gold standard we pretended there were more gold coins. We pretended not to know until we found out we were not pretending anymore. Called a bank run, a sudden realization that your gold was a prostitute. Now we pretend there is gold, when there isn't. We pretend there is not enough fiat money to cover our pretended balance that we know wasn't there when it was a gold standard , but now pretending to pretend that the money is there until we stop pretending about the bank credit while pretending there is not enough fiat money to cover what we are not pretending anymore. Then the banker decided to stop pretending we are under a gold standard too and printed up the money for themselves while making us pretend the money is not there as if we ran out of key board stokes.
I've heard that when the Bolshovics took power in Russia, they executed all the bankers. I imagine this was a very popular move. Frankly, my answer is that first the bankers should all lose their jobs for mismanagement, and have all their money stripped away, so that they are forced to take responsibility for losing other people's money that they were entrusted with. What is interesting is that the European Central bank thinks this is quite OK for depositors to lose their funds if the bank fails. This will raise a red flag to anyone who has money in a European bank. I imagine that a lot of folks, especially in countries like Spain, Portugal, and Italy will be pulling their funds out of banks.
This might bring a whole new meaning to the phrase, "To the mattresses".
I agree with TechGromit, if you have more in the bank than what is federally insured, than you are taking a risk.. the only thing is a lot of people back when they put the money in the bank thought they'd never see that risk. Now the whole world should learn a lesson on the backs of quite a few unfortunates.
But this plan is still better than placing a 10% tax on EVERYONE that has an account, especially if their money is still in the safety threshold of being insured by the government.
The lower tax amount on everyone was still a plan that had been considered. It's not like they said - Oh those accounts cannot be touched, those are INSURED. Any money in a savings account is at risk it seems even if everyone wasn't hit this time.
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