Cyprus and banks

[Dave2002]

I'm surprised that we've not opened up a debate on this yet.

1. If someone broke into my house and took £10k out of the tin box I keep under the bed )-: that'd definitely be theft. What difference does it make if it's done by the government? What difference does it make if my tin box is in fact a bank?

2. Two people have £100k. One leaves it in the bank - and is then deprived of £10k or more by the government. The other buys a very fast car the day before the government acts.

3. OK - we don't really care - Cyprus is a long way away, and "anyway, most of the money comes from Russian criminals"! This last statement is very probably incorrect. Even if not, taking a slice of the action is not the way for governments to behave.

4. Suppose someone has to pay a bill by a certain day. They carefully put aside £100k, of which (say) £50k is for the bill, to another bank/supplier. If the bill is not paid, penalties are applied - either more interest or some other form of penalty. The government stops bank payments, takes away at least £10k, and when the banks re-open the payment is late and penalties are imposed. The, presumed honest, trader loses a lot in the process.

5. After all this, is anyone going to want to invest in a bank in Cyprus anyway?

[Stunsworth]

And if the alternative is that your bank goes bust and you lose everything? What then?

[teamsaint]

I mentioned this on "We are all in it together."

If we are not worried about this we ought to be.

Banks (including the ECB) are and have been involved in wide scale theft, (bail outs, QE, unacceptable bonuses etc etc) and now it is all out in the open.


If I had a lot of cash in ANY bank I would be very careful about what I did with it.

[teamsaint]

the banks are going bust because of their own greed. Governments (and oppositions) are hand in glove with the banks.

Moral hazzard doesn't seem to apply to them.

[ahinton]

If I had a lot of cash in ANY bank I would be very careful about what I did with it.

Maybe so - but it would not matter where you kept your cash if not merely the banks but the currency itself were to go bust; whilst it's less likely, it's far from impossible for an entire currency to go under, especially if assisted in so doing by a bunch of scheming speculators with manipulatory agendas.

[teamsaint]

Maybe so - but it would not matter where you kept your cash if not merely the banks but the currency itself were to go bust; whilst it's less likely, it's far from impossible for an entire currency to go under, especially if assisted in so doing by a bunch of scheming speculators with manipulatory agendas.

I absolutely agree. We are kicking the currency can down the road. No wonder commodity prices are high.....
I may invest in valuable original music scores. Sure fire certainty.

[ahinton]

I absolutely agree. We are kicking the currency can down the road. No wonder commodity prices are high.....
I may invest in valuable original music scores. Sure fire certainty.

Not necessarily; whilst it's often true that antiques of many kinds tend to appreciate in value when stock markets and currencies are in bad shape, their financial "worth" is solely dependent upon currencies, so no currency, no "worth" in financial terms.

[Richard Tarleton]

A likely outcome is that people in Spain, Greece, Italy, Portugal etc. with deposits over 100,000k will withdraw them in case the same happens there, thus causing a run on the banking system in the Eurozone....

[teamsaint]

A likely outcome is that people in Spain, Greece, Italy, Portugal etc. with deposits over 100,000k will withdraw them in case the same happens there, thus causing a run on the banking system in the Eurozone....

good point.

perhaps this is what somebody somewhere wants.....

[teamsaint]

Not necessarily; whilst it's often true that antiques of many kinds tend to appreciate in value when stock markets and currencies are in bad shape, their financial "worth" is solely dependent upon currencies, so no currency, no "worth" in financial terms.

long term. new currency.
Plus you get groovy tunes, and impress your neighbours....but good points, AH.

[johnb]

It isn't only in Cyprus that money in bank deposits is being 'stolen'. Exactly the same thing has been happening in the UK, though in a gradual way. There was an interesting article on just this in Saturday's FT.

The government's policy is to force interest rates very low, partly through QE, but the Item Club forecasting group has calculated that someone who deposited £10,000 in 2009 will now have a £1,297 real terms loss (on average) and the Save our Savers pressure group has calculated the total cost as £200bn! This is transfer of wealth from savers to borrowers (the government, mortgage holders, etc, etc).

[Frances_iom]

one key requirement is to decouple the casino banks from the day-to-day banking needed for a modern society (the law forces people to have bank accounts) - Thatcher destroyed the Trustee savings bank, the Giro and the building societies - we need them to be re-invented and decoupled from the 'investment' banks.
Given that according to Dutch minister that Cyprus now forms a template for weak banks why would anyone leave any money in say Santender (Spanish) etc -

[teamsaint]

It isn't only in Cyprus that money in bank deposits is being 'stolen'. Exactly the same thing has been happening in the UK, though in a gradual way. There was an interesting article on just this in Saturday's FT.

The government's policy is to force interest rates very low, partly through QE, but the Item Club forecasting group has calculated that someone who deposited £10,000 in 2009 will now have a £1,297 real terms loss (on average) and the Save our Savers pressure group has calculated the total cost as £200bn! This is transfer of wealth from savers to borrowers (the government, mortgage holders, etc, etc).

the same kind of transfer is happening (and has done for a long time) from wages to capital.
there are lots of people who have been saying that there is a worldwide asset strip going on. But they are nutters, obviously.......

[Eine Alpensinfonie]

It isn't only in Cyprus that money in bank deposits is being 'stolen'. Exactly the same thing has been happening in the UK, though in a gradual way. There was an interesting article on just this in Saturday's FT.

The government's policy is to force interest rates very low, partly through QE, but the Item Club forecasting group has calculated that someone who deposited £10,000 in 2009 will now have a £1,297 real terms loss (on average) and the Save our Savers pressure group has calculated the total cost as £200bn! This is transfer of wealth from savers to borrowers (the government, mortgage holders, etc, etc).

Here they steal from public sector pension funds, and then lie about it. It's just a variation on the theme, except that the situation in Cyprus, Greece, Portugal and Spain is much worse. Cameron will probably blame their situation on the last Labour government too. And Angela Thatcher Merkel isn't exactly the kind of person I would like to meet...

[Dave2002]

one key requirement is to decouple the casino banks from the day-to-day banking needed for a modern society (the law forces people to have bank accounts) - Thatcher destroyed the Trustee savings bank, the Giro and the building societies - we need them to be re-invented and decoupled from the 'investment' banks.
Given that according to Dutch minister that Cyprus now forms a template for weak banks why would anyone leave any money in say Santender (Spanish) etc -

Ouch - maybe I should move my money out now! What's the best plan - diversification? We now move into the realms of currency transfers based not on the notion of currency speculation, but on the notion of spreading the risk over different currencies. My tin box should perhaps now include dollars, Euros - a few, pounds and maybe some other currencies, in an attempt to reduce the risks. Gold bars and platinum could also be added to the mix. What value is HMG's bank guarantee now - will it work against a run on Santander?