Got any dosh in Cyprus?

[Mel B]

Peter James - 2013-03-18 9:19 PM

 

RogerC - 2013-03-18 9:04 PM

I believe in terms of the 'State' doing the thieving there is a major difference.

What is it?

I can't see the difference between this and other forms of taxation.

Is there any more public consent for other forms of taxation?

 

This way seems a lot more open and honest than the way Britain has taken about 3 times as much from savers -surreptitiously through money printing and devaluation.

Peter, please can you explain to me how exactly I've had a vast amount of my saving 'nicked' by the British government? 8-)

[CliveH]

PLEASE - Do not think Quantitive Easing is something only the UK does!!

 

That is nonsense

 

The ECB (European Central Bank) virtually invented the concept and have been using it to "support" the Euro.

 

http://www.guardian.co.uk/business/2012/feb/28/european-central-bank-euro-eurozone

 

And it is not just the UK, or the Eurozone that have been players in the QE game.

 

The US has been in there doing it as well.

 

"More than three years after the financial crisis that erupted in 2008, who is doing more to bring about economic recovery, Europe or the United States? The US Federal Reserve has completed two rounds of so-called ‘quantitative easing', whereas the European Central Bank (ECB) has fired two shots from its big gun, the so-called long-term refinancing operation (LTRO), providing more than €1 trillion in low-cost financing to eurozone banks for three years.

For some time, it was argued that the Fed had done more to stimulate the economy, because, using 2007 as the benchmark, it had expanded its balance sheet proportionally more than the ECB had done. But the ECB has now caught up. Its balance sheet amounts to roughly €2.8 trillion, or close to 30% of the eurozone's gross domestic product, compared to the Fed's balance sheet of roughly 20% of US GDP."

 

http://www.europeanvoice.com/article/2012/april/the-big-easing/74100.aspx

 

And if you want a laugh - have a look at how Gordon Brown tries to rewrite history by citing all the facts then drawing all the wrong (but self serving) conclusions.

 

http://blogs.reuters.com/great-debate/tag/quantitative-easing/

 

We are far better off being outside the Euro. What the debacle of the Cyprus "deal" shows is that those in charge of the Eurozone have dispensed with any pretext of the EU being a "Common Market". It is all about saving the Euro and they really do not care if this causes market disruption.

 

And of course the EU started as a common trading block to reduce market disruption. So this current situation is a glimpse of what the EU has become - NOT what it should and could be.

 

What perhaps some people do not understand - is not the fact that Cyprus - being a bit of a basket case economy by most standards - was able to offer far higher interest rates to some such that even taking the 10% hit/steal you would still be marginally better off - it is the fact that enshrined in EU law is Investor Protection legislation that states that across the EU - deposits up to 100,000 Euro (£85,000 in UK) are sacrosanct - protected - by Law!

 

What the idiots have done is to state that this fundamental investor protection is compromised.

 

I think they live is such an enclosed bubble where the propping up of the Euro is their only goal - that they really do not understand the implications of their actions.

 

[RogerC]

Peter James - 2013-03-18 9:19 PM

RogerC - 2013-03-18 9:04 PMI believe in terms of the 'State' doing the thieving there is a major difference.

What is it?I can't see the difference between this and other forms of taxation.Is there any more public consent for other forms of taxation?This way seems a lot more open and honest than the way Britain has taken about 3 times as much from savers -surreptitiously through money printing and devaluation.

 

As a relative simpleton in terms of 'global finance' as I suspect the majority of the general public are the difference as I see it is:

 

Go to work, earn a wage...........pay tax on it and then save what you can after living expenses.

 

Deposit monies saved in the bank..(tax already paid on it).

 

Earn interest on deposits....pay tax.

 

The Government has already taxed the earnings and savings interest but now decides to take 10% (for sake of argument so please no pedants coming back saying it's not 10%) from what I have deposited in my savings account...........That to my simple fiscal mind is theft.

 

I can see a run on the banks once they re-open in Cyprus.  Public trust will have been be destroyed and no one will want their money 'on deposit' again due to the likelihood of yet another 'raid'.

 

[CliveH]

Agree 100% Roger

 

 

[Dave225]

Things are now starting to get a little murkier. It appears that it was started by the Dutch Finance Minister who decided to call a 'secret' meeting while all the heads of government were on their way back to the airport to fly home on Friday. At that meeting were said Dutch finance minister, German finance minister, French Finance Minister, Ms Lagarde of IMF fame and a few others, but not the Cypriots. It was 'agreed' by all that if Germany was to hand over any more cash then the Cypriots had to make some input, and as Cyprus has no assets apart from banks, then that is where the hit was to fall. This was then passed to the Cypriot government to do the maths. Merkel has an election in September and all Europe must burn if necessary to ensure she is re-elected.

 

It all reminds me of the situation faced by Czechoslovakia in 1939 when Hitler 'demanded' the Czechs accept help from Germany or.....face the consequences. Nowadays the Germans stated that accept the terms or we bust all your banks.

 

Just to make it all murkier still Putin has got into the fray and is demanding a piece of the action in the Med for some money, which has the EU bureaucrats running scared as the thought of Putin and the Russians prowling the Med is a bit nervy. That of course has in turn got the Yanks twitching and so all in all a very fine mess indeed, so who will blink first??

 

Of course Osborne and Putin could play hardball and demand that neither of their citizens are taxed in this way, but although Putin might do it, Osborne certainly will not. although he could argue that this is against all EU rules of free movement and protection within the EU.

 

And of course just as soon as the banks open money will flood out of Cyprus and go where???? Caymans, Germany?? That makes it even worse.

[Retread24800]

You could call this an effective devaluation by C10% sounds better doesnt it? Better than the devaluation I, and thousands of others have suffered since 2005 when we had our pensions in the U.K devalued. If you had a pension of £1000 in 2005 this would have given you an income in Europe of 1470€ that has been devalued now to 1140€ a devaluation of the pound Stirling of 28% in today's terms

[CliveH]

This latest from one of the "pinks".

 

"Outcry over the tax, branded "astonishing" by Goldman Sachs chairman Jim O'Neill, has forced the Cypriot government back in to talks to renegotiate part of the bailout plan.

 

President Nicos Anastasiades had previously agreed to raise €5.8bn from taxing bank deposits as a condition for receiving a €10bn package from international lenders.

 

Deposits over €100,000 would have been taxed at 9.9%, and 6.75% would have been levied on deposits below that level.

 

The tax would not just have penalised Cypriots but a large number of overseas investors, including UK expatriates, and would have especially hurt Russia, whose banks have $12bn sat in Cyprus alongside a further $19bn from corporates, according to ratings agency Moody's.

 

Following an initial outcry over the weekend, and a sell-off in some equity markets, a vote will now take place which may see the plan scaled back.

 

But what does the news mean for markets in the short term?

 

Equities

 

O'Neill said he expected a knock-on effect in the near term, with investors shunning other regional banks.

 

"I wouldn't be surprised if markets gave a risk-premia to other global banking centres which are perceived as not being quite so stringent in attracting less desirable investments," he said.

 

"Additionally, this would be similar for peripheral euro-area banks and markets, and it will require considerably more thought from European policymakers to ensure this doesn't get out of control."

 

This was playing out early today, with equity markets down across Europe, including in the UK.

 

Run on banks?

 

Many of the biggest losers throughout today's session have been banks, including Soc Gen and BNP Paribas, down 5% and 4.2% respectively.

 

UK banks were faring no better, with RBS off 4.8% and Barclays off 4.5%.

 

Pensions expert Dr Ros Altmann said the plan makes a "mockery" of bank safety, adding the idea is a "monumental error of judgement" that could cause bank runs across Europe.

 

""The whole point of depositor protection is to reassure ordinary people that they can trust the system and know that their money is going to be protected at least up to the promised level," she said.

 

"As soon as that trust is lost and depositors want their money back, the banks will no longer be able to function. It is likely that the actions in Cyprus will undermine trust and confidence in banks across other EU countries."

 

 

 

[nowtelse2do]

Mel B - 2013-03-19 8:51 AM

 

nowtelse2do - 2013-03-18 6:31 PM

 

1footinthegrave - 2013-03-18 6:04 PM

 

Perhaps they'd have a case under human rights law, can you nick my money when I've put it in a bank for safe keeping.

 

It has been suggested that it could be illegal, if so, will there be a new EU law brought out before long saying that the move is legal. >:-(

 

Dave

Surely if they take the money BEFORE though it cannot be construed as legal if they've had to legalise it afterwards?

 

Mel, not long ago they did say that they'll do anything to save the euro, wouldn't put anything pass them after all they are well paid politicians and on a gravy train >:-(

When two bit film stars and expense's fiddlers can stop the freedom of the press reporting (in some cases justified) their alleged misdemeanour's, and its in their own interest and bugger anyone else, then anything goes. Influential people can do anything they want.

 

Dave

[duetto owner]

cyprus being a minow in the EU was a test run to see the reaction.

 

if not too bad it will be used in other bailouts, if a disaster it will be cancelled.

 

Spain will be next i think unless they have a run on spanish banks, maybe italy too.

[CliveH]

A good analysis from the American perspective.

 

There is no run on the banks in Cyprus as yet because the banks are shut and the ATM's empty. They say the banks will open on Thursday.

 

http://www.businessinsider.com/cyprus-bailout-risks-europe-bank-runs-2013-3

 

But as this article indicates - it could come very fast.

 

Remember how we here in the UK reacted to Northern Rock?

 

 

 

 

 

[Guest pelmetman]

Is the end of the euro in sight?........... ;-)

[nowtelse2do]

Just starting to realise now why Germany started to bring home their gold reserves. They knew something we didn't.

 

Dave

[Brian Kirby]

CliveH - 2013-03-19 3:07 PM................Pensions expert Dr Ros Altmann said the plan makes a "mockery" of bank safety, adding the idea is a "monumental error of judgement" that could cause bank runs across Europe.

 

""The whole point of depositor protection is to reassure ordinary people that they can trust the system and know that their money is going to be protected at least up to the promised level," she said.

 

"As soon as that trust is lost and depositors want their money back, the banks will no longer be able to function. It is likely that the actions in Cyprus will undermine trust and confidence in banks across other EU countries."

 

Seconded! Good girl, that Ros. :-) I'm still expecting to wake up and find it was all a dream! :-D

[nowtelse2do]

RAF sent to Cyprus with 1.000.000 euros just in case it's needed for the armed service ect. Hope they don't deposit it into The Bank of Cyprus. :-D

 

Pound finishes the day at over 1.17 euro.

 

Dave

[Guest pelmetman]

Cyprus' parliament has rejected a controversial levy on bank deposits, proposed as part of an EU-IMF 10bn-euro (£8.7bn; $13bn) bailout package.

 

No MPs voted for the bill, with 36 voting against and 19 abstaining.

 

The finance ministry had modified the package, proposing an exemption for savers with smaller deposits, but opposition had remained fierce.

 

Thousands of protesters who had filled the streets outside parliament reacted with joy to the news of the vote.

 

EU finance ministers have warned that Cyprus' two biggest banks will collapse if the deal does not go through in some form.

 

However, there has been widespread outrage on the island at the prospect of ordinary savers being forced to pay a levy of 6.75%

 

The plan was changed to exempt savers with less than 20,000 euros (£17,000), with those over 100,000 euros charged at 9.9%, but this was not enough to placate critics.

 

Levy basics

 

Depositors with 20,000 - 100,000 euros deposited must pay 6.75%

Those with more than 100,000 in their accounts must pay 9.9%

Depositors will be compensated with the equivalent amount in shares in their banks

The levy is a one-off measure

 

Eurozone wants Cyprus to get 5.8bn euros from deposits, in exchange for a 10bn-euro EU/IMF loan

Total of about 68bn euros on deposit in Cypriot banks, foreigners hold about 40% - most of them Russians

 

Meanwhile, the UK ministry of defence said a plane carrying 1m euros was heading to Cyprus as a contingency measure to provide military personnel and their families with emergency loans.

 

The money is to be used for British personnel and their families if cash machines and debit cards stop working.

 

'Against the interests of Cyprus'

 

Several MPs during the parliament debate on Tuesday evening denounced the proposed plan as "blackmail".

 

President Nicos Anastasiades had urged all parties to back the bailout, saying Cyprus will be bankrupt if the deal does not go ahead.

 

But he also said earlier on Tuesday that MPs were likely to reject the levy, despite the modifications.

 

"They feel and they think it's unjust and that it is against the interests of Cyprus at large. But I have to admit that it was something which was not expected by the troika and by our friends, the Eurogroup."

 

He has called an emergency meeting of political party leaders on Wednesday morning to discuss the way forward.

 

The president of the Eurogroup of eurozone finance ministers, Dutch Finance Minister Jeroen Dijsselbloem, emphasised on Monday that no other eurozone country would be forced to impose such a levy.

 

The Cyprus central bank chief, Panicos Demetriades, has warned that scrapping the tax on small savers would scupper the plan to raise 5.8bn euros in total from bank deposits. He also predicted account holders could suddenly withdraw 10% or more of the total in Cypriot banks if the levy was imposed.

 

 

Opposition MP Pambos Papageorgiou says any tax on savers will be rejected by parliament

Fearing a run on accounts, Cyprus has shut its banks until at least Thursday. The local stock exchange also remains closed.

 

Cyprus' banks were badly exposed to Greece, which has itself been the recipient of two huge bailouts.

 

Russian anger

 

Mr Demetriades said that he favoured imposing the levy only on deposits larger than 100,000 euros, with eurozone finance ministers also suggesting such a move.

 

Instead, they argue that wealthier savers should pay the levy at a higher rate - losing more than 15% of their investments, correspondents say.

 

However, many of those larger deposits are held by Russians, and Russian leaders have already reacted angrily to the Cypriot levy - on Monday President Vladimir Putin called it "unfair, unprofessional and dangerous".

 

 

 

It would help if the European authorities could explain more clearly why this will not set a precedent for the future”

 

 

Stephanie Flanders

Economics editor

 

Of the estimated 68bn euros in total held in Cypriot bank accounts about 40% belongs to foreigners - most of them thought to be Russians.

 

The government fears a higher levy on these larger deposits would prompt many large investors to withdraw from the island and would effectively destroy its financial sector.

 

Russia has also said it may reconsider the terms of a 2.5bn-euro loan it made to Cyprus in 2011, which was separate from the proposed eurozone bailout.

 

Cypriot Finance Minister Michalis Sarris arrived in Moscow on Tuesday to see if the repayment on that loan could be delayed until 2020, and whether the interest rate could be reduced.

 

Officials said he would also be looking for "further investment" in his country, correspondents report, with some speculating this might mean Russian access to Cyprus' large undeveloped gas deposits.

 

The BBC's Mark Lowen in Nicosia says it now appears that a proxy battle of sorts is taking place over Cyprus: on the one side the EU is pushing for a lighter burden on lower savers and, on the other, Russia is angry because its wealthy nationals would be taxed hard in Cyprus.

 

Meanwhile, the tiny Cypriot economy's future hangs in the balance.

[John 47]

So, if Cyprus doesn't accept the deal the two biggest Cypriot banks could fail, leaving all investors with nothing. The bulk of those investors appear to be the Russian Mafia. The Russian Mafia runs Russia. Simples - do nothing and let the Russians prop up the banks that hold a large slice of their ill-gotten gains (lol). Anyone else got a financial problem I can solve?

[Guest pelmetman]

I think Russia has just bought it self an island in the med 8-)

[John 47]

Ironic, isn't it, that much of Russia's history has been about trying to secure a base in the Mediterranean? Several wars and millions of deaths and now they could get it without firing a single shot!

[Dave225]

I suspect the EU will come up with another plan to basically loan the money that was to be appropriated, and get it back somewhere else. They dare not let Cyprus fall as the repercussions would be horrendous in places that do matter. I also suspect the Dutch Finance minister will be getting a move soon.

[RogerC]

.............and people 'still' think the EU is a good thing?

 

(and I do mean the EU as opposed to what the collective 'we' thought was going to remain as the EEC....a trading block ....no more no less).

 

Fiscal and political integration is going to prove to be the most disastrous/divisive thing to befall Europe since Hitler marched into Poland...........

 

[Syd]

 

This really demonstrates just how utterly stupid the political leadership really are.

It beggars belief

[Guest pelmetman]

Welcome to Cyprustan :-S

 

Tim Marshall

Foreign Affairs Editor

 

The Russians have made Cyprus an offer it can refuse, but only if the EU throws more money at the problem.

 

Gazprom, the world’s largest extractor of natural gas has offered to bail out the Bank of Cyprus in return for effective exclusive control of the gas reserves off the coast of the island.

 

This would mean Cyprus does not need to accept the terms of the EU bailout offer.

 

The Cypriot government’s motives are obvious - it can leverage the Russian offer into getting a better deal from the EU to try and placate its furious voters.

 

The motives of the EU are obvious. To keep Cyprus inside the Eurozone in order to save the euro.

 

 

And the Russians? Well their motives are also clear…

 

If Cyprus did accept the deal, then Gazprom beats the world’s other energy companies to a very attractive piece of real estate. If that costs $10bn (£6.6bn) or so, that is not too big a deal for Russia’s largest company.

 

But the offer is not purely commercial.

 

The Russian government owns 50.02% of Gazprom and its chairman is a former prime minister of Russia.

 

The offer to Cyprus needs to be seen in the same light as the (currently troubled) agreement between Russia and Israel over the Tamar gas field off the coast of Israel.

 

President Putin himself paid a visit to America’s closest ally in the Middle East last June. It was a clear statement of intent and part of a unified foreign policy.

 

Both the Tamar deal, and the Cyprus offer are part of Russia’s strategy to ensure it is a player in a region of growing energy importance, especially at a time when the United States may become less interested due to the coming boom in domestic shale gas production.

 

Since the fall of the Berlin Wall in 1989 Russia’s influence in the Mediterranean and the Middle East has waned. It was ten years until a weakened Russia began to try and re-establish itself in its ‘near abroad’, never mind on the global stage.

 

Russian food stores cater for some of the 30,000 Russians living in Cyprus

 

Since then it has succeeded in pushing its influence back out into the world and it keeps a close eye on opportunities to do so.

 

The eurozone crisis was one such opportunity. Banks in Cyprus, which are crucial to its economy, were heavily exposed to the debts built up by successive government in Greece.

 

Cyprus’s debt rating eventually sank to junk status effectively excluding the island from international markets.

 

In late 2011 the Russians came in with a loan of $2.5 bn (£1.66bn) at favourable rates.

 

Favourable rates buy influence, influence can lead to power, and Russia is trying to gain more of both with its latest offer.

 

Russia is back, whether or not its latest ploy in Cyprus works, it means business - and gas is big geopolitical business.

[John 47]

Bloody 'ell - I thought I was joking when I offered my "solution" and it turns out to be fact! I think I've just found a new post-retirement career as a financial advisor (lol) (lol) (lol)

[nowtelse2do]

And BP a partner in Gazprom (future name Gazump) :-D

 

Dave

[Guest pelmetman]

The EU says that those who invested in Cypriot Banks should take the hit............and it looks like the new deal is people with over a 100k get a 25% hit 8-)..........

 

Silly me I always thought it was share holders that invested in banks :-S...........but it seems that savers are now investors *-)

 

Once people clock that fact..............should lead to another run on the banks in the rest of the PIGS *-)