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Old 17.03.2013, 10:30
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Cyprus "One Time" Bank Deposit "Tax"

The decision to enforce a deduction from every Cyprus bank Account (between about 7 and 10 percent) is in retrospect going to seen as one of monumental stupidity with few parallels*. At least that is my opinion.

This clumsy act is going to be a massive destabilizing force on Banks because of the loss of confidence that it will cause. Only the slightest rumor of future problems will send people scurrying to empty their bank accounts to avoid any partial confiscation of their assets, with the potential to precipitate huge bank failures.

In the next few days, we are probably going to see desparate attempts reassure bank depositors and to present this as an "absolutely exceptional" case that could "never" be repeated.

I guess it would never happen here in the same form because the same effect, if necessary, would almost certainly be achieved by adjusting the already established wealth tax. This would seem almost fair in comparison with the arbitrary Cyprus solution.


*even Bremer's disbanding of the Iraqi army does not come close to matching this.
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Old 17.03.2013, 11:14
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Re: Cyprus "One Time" Bank Deposit "Tax"

It is theft.
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Old 17.03.2013, 15:30
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Re: Cyprus "One Time" Bank Deposit "Tax"

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with the potential to precipitate huge bank failures
That's the plan.

And it's just the beginning.
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Old 17.03.2013, 15:40
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Re: Cyprus "One Time" Bank Deposit "Tax"

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The decision to enforce a deduction from every Cyprus bank Account (between about 7 and 10 percent) is in retrospect going to seen as one of monumental stupidity with few parallels*. At least that is my opinion.

This clumsy act is going to be a massive destabilizing force on Banks because of the loss of confidence that it will cause. Only the slightest rumor of future problems will send people scurrying to empty their bank accounts to avoid any partial confiscation of their assets, with the potential to precipitate huge bank failures.

In the next few days, we are probably going to see desparate attempts reassure bank depositors and to present this as an "absolutely exceptional" case that could "never" be repeated.

I guess it would never happen here in the same form because the same effect, if necessary, would almost certainly be achieved by adjusting the already established wealth tax. This would seem almost fair in comparison with the arbitrary Cyprus solution.


*even Bremer's disbanding of the Iraqi army does not come close to matching this.
Will be interesting to see if there will now be substantial withdrawls from banks in Greece, Spain & Italy.
Also if there is a reciprocal effect on the Swiss Frank if people try to stuff their money here ?

Last edited by marton; 17.03.2013 at 15:53.
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Old 17.03.2013, 15:48
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Re: Cyprus "One Time" Bank Deposit "Tax"

Seems possible that the Cyprus Parliament will reject this solution; anyway they have delayed the vote until tomorrow.
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Old 17.03.2013, 15:52
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Re: Cyprus "One Time" Bank Deposit "Tax"

I would not be surprised to see a run on banks in Italy, Spain and Greece and at the same time a rush to gold and CHF. This is a really foolish move that will contract the weak economies further.
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Old 17.03.2013, 19:48
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Re: Cyprus "One Time" Bank Deposit "Tax"

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I would not be surprised to see a run on banks in Italy, Spain and Greece and at the same time a rush to gold and CHF. This is a really foolish move that will contract the weak economies further.
That's exactly what I was thinking.

Not sure about this one:
"The scope of potential contagion to other peripheral countries in terms of deposit outflows and sovereign debt is considerably more limited than if such a decision would have been taken in previous programs," analysts at Barclays said in a note. "We consider the likelihood of a bank run in other periphery countries to be limited, including in Greece."

This could spread all over other weak countries.
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Old 17.03.2013, 22:14
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It's disgusting

Not because depositors are hit. But because it is a levy so not covered by bank guarantees for the "little" guys under 100000.

The 6.7% is needed because the levy on above 100,000 is only 9.9%. I guess that's the price of the 2.5 billion Russian loan :/.

Or are they trying to save the high net worth haven status?
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Old 17.03.2013, 22:26
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Re: Cyprus "One Time" Bank Deposit "Tax"

= More money for Swiss banks.
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Old 17.03.2013, 23:03
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Re: Cyprus "One Time" Bank Deposit "Tax"

It is illegal under EU rules to attach to depositors funds.

I hope they jump the rotten Euro ship tomorrow.

What it confirms for me is that banks cannot be trusted, governments cannot be trusted, and finding an alternative way of securing funds should be high on the agenda with the means to do so.
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Old 18.03.2013, 02:12
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Re: Cyprus "One Time" Bank Deposit "Tax"

My opinion is that Germany wants to dissolve the Eurozone and does not want to take the blame/political cost. Thus Germany is trying to force a third country out of the Eurozone.

It may sound like a good and smart strategy but after the breakup of the Eurozone Germany's success is not at all guaranteed. It seems like the German people cannot see what is coming for them too. IMHO they rely too much on exports to China which will not happen.

The Americans also seem already to change their stance. Media controlled by the USA are against the levy imposed in Cyprus and now blame Germany for the mess in Europe (check Forbes).

The following years are going to be very interesting for sure.
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Old 18.03.2013, 02:26
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Re: Cyprus "One Time" Bank Deposit "Tax"

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It is illegal under EU rules to attach to depositors funds.
And which rule would that be then???
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Old 18.03.2013, 02:31
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Re: Cyprus "One Time" Bank Deposit "Tax"

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My opinion is that Germany wants to dissolve the Eurozone and does not want to take the blame/political cost. Thus Germany is trying to force a third country out of the Eurozone.

It may sound like a good and smart strategy but after the breakup of the Eurozone Germany's success is not at all guaranteed. It seems like the German people cannot see what is coming for them too. IMHO they rely too much on exports to China which will not happen.

The Americans also seem already to change their stance. Media controlled by the USA are against the levy imposed in Cyprus and now blame Germany for the mess in Europe (check Forbes).

The following years are going to be very interesting for sure.
And how exactly would it be in Germany's interests to see their currency appreciate by say 10% to 20%?
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Old 18.03.2013, 07:38
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Re: Cyprus "One Time" Bank Deposit "Tax"

let's see what happens today:

http://www.cnbc.com/id/100561394

http://www.cnbc.com/id/100561653
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Old 18.03.2013, 08:00
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Re: Cyprus "One Time" Bank Deposit "Tax"

And I read that Greek depositors with funds in Cyprus will be spared so as to stop any runs on Greek banks. It's a strange world!
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Old 18.03.2013, 08:21
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Re: Cyprus "One Time" Bank Deposit "Tax"

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And I read that Greek depositors with funds in Cyprus will be spared so as to stop any runs on Greek banks. It's a strange world!
Do you happen to have a reference please?
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Old 18.03.2013, 08:25
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Re: Cyprus "One Time" Bank Deposit "Tax"

I read it this morning in the ipad version of The Telegraph.
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Old 18.03.2013, 08:26
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Re: Cyprus "One Time" Bank Deposit "Tax"

Thanks
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Old 18.03.2013, 08:30
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Re: Cyprus "One Time" Bank Deposit "Tax"

This is what it says.
"The only other people being spared are Greeks who hold accounts in Cyprus, as any move against them could lead to a run on the banks in Athens."
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Old 18.03.2013, 08:45
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Re: Cyprus "One Time" Bank Deposit "Tax"

The problem is that the rich ones will be able to put their money in the Swiss banks while the average person won't be able to and again, will be the one being milked.

Friends in Spain are being nervous.
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