Cypress in Default

[WelshBloke]

Not sure if anyone already asked or not but is this for the whole Cyprus or just the Greek controlled area Cyprus?

I think only Turkey thinks that the Turkish republic has any authority over the north so it's all of Cyprus.

Edit: It's about the Cypriot banks anyway so it doesn't really matter where they are.

 

[OverVolt]

Cyprus is forced into this position because in the Euro they can't stealthily tax savings with inflation. The Countries don't have enough sovereignty to print their own money supply.

The euro is fun in a glad-im-not-there kind of way. Its like watching a car race for the crashes :awe:

The countries can't devalue their currency. They also can't make a misstep and acidentally send the "Take all your money out of the bank now" signal which they just did by accident. Its actually a mistake on part of the politicians/banks, because taxing deposits will never work.

Europe has always had problems because their currency is way too strong. The amount of debt they need to inflate away is enormous and they aren't printing enough money honestly. Its because inflation works against the countries who are in good financial shape, like Germany. And of course the countries with good financials have more say in the Euro about monetary policy.

This conflict has been playing out forever because of the united currency and all of the countries different needs for inflation.

 

[Jhhnn]

Well at the rate of the interest rate manipulation and inflationary measures in the US, the EU and UK are going money would be better off under a mattress or significantly better off being invested in precious metals or dare I say it put into the stock market but that itself is going to see your money shuffled away faster than keeping it under the mattress or buying up silver or gold as means to store your wealth and watch it grow in value over the long run.

As it stands now rate of return on interest from a savings account is completely and utterly pathetic. No one is "saving" anything in the traditional sense in which interest is significant enough to having a savings account with these bank earn enough interest to overcome fees (if any) and the effects of inflationary monetary policies.

You are confused, aren't you?

Yes, the Treasury & the FRB have been pursuing inflation. In the face of the collapse of the money supply (credit is money) in 2008, they must in order to escape the cascading & self reinforcing failure of hard money, deflation & hoarding. Those are the traditional results of a Capitalist looting spree such as the housing bubble. Otherwise, the economy would virtually collapse for lack of liquidity. All that money that was created & loaned is gone, but the debt remains, and there must be sufficient liquidity for that debt to be serviced- otherwise we can add default to the list of factors contributing to a debt deflation spiral.

Rich people commanding hoards of liquidity won't solve the problem. In many ways, it is the problem. Faced with a lack of demand that their own actions created, they see little reason to invest or risk. They don't have to do so. The economic rents they collect are more than adequate to serve their lifestyles even in a depression. They can and do hoard liquidity, driving down the yield on savings. Oh, wait- that's simple supply & demand...

Cyprus is in default for the same reason that others are in default, because of the ravages of the financial Lootocracy. It's "Free Market Financialized Capitalism" on the international scale. Vast fortunes change hands in such occurrences, and it's generally the perps who benefit most. It's their game, and people are dumb enough to let them do it, some are even dumb enough to see it as "Right".

 

[WelshBloke]

Is there a mod reading this that can correct the thread title?

It's giving me a headache.

 

[WelshBloke]

Cyprus is forced into this position because in the Euro they can't stealthily tax savings with inflation. The Countries don't have enough sovereignty to print their own money supply.

The euro is fun in a glad-im-not-there kind of way. Its like watching a car race for the crashes :awe:

The countries can't devalue their currency. They also can't make a misstep and acidentally send the "Take all your money out of the bank now" signal which they just did by accident. Its actually a mistake on part of the politicians/banks, because taxing deposits will never work.

Europe has always had problems because their currency is way too strong. The amount of debt they need to inflate away is enormous and they aren't printing enough money honestly. Its because inflation works against the countries who are in good financial shape, like Germany. And of course the countries with good financials have more say in the Euro about monetary policy.

Realistically what is everyone in the Euro zone going to do? They aren't all going to keep their money under the mattress.

I'd guess that some of the healthier European banks are going to get healthier and the weaker ones will whither.

 

[OverVolt]

Realistically what is everyone in the Euro zone going to do? They aren't all going to keep their money under the mattress.

I'd guess that some of the healthier European banks are going to get healthier and the weaker ones will whither.

[...snip...]

Ipso defacto, there is going to be severe austerity in Cyprus if the deposit tax has to be undone to prevent a run on the banks.

 

[WelshBloke]

[...snip...]

Ipso defacto, there is going to be severe austerity in Cyprus if the deposit tax has to be undone to prevent a run on the banks.

There going to be a severe tightening of belts there regardless of anything else. There's also going to be a run on the banks unless they keep withdrawals limited for a long time.

 

[Fern]

Is there a mod reading this that can correct the thread title?

It's giving me a headache.

If you have a problem with the title report the post (use the button on the lower left-hand of the post - looks like a caution sign)

Otherwise, you can post over in Moderator Discussions.

My understanding is that there's a 24 hour window before default, so I don't find it terribly misleading. I do agree that ideally the title should say "probably in default" since it hasn't actually yet occurred.

Fern
Super Moderator

 

[WelshBloke]

If you have a problem with the title report the post (use the button on the lower left-hand of the post - looks like a caution sign)

Otherwise, you can post over in Moderator Discussions.

My understanding is that there's a 24 hour window before default, so I don't find it terribly misleading. I do agree that ideally the title should say "probably in default" since it hasn't actually yet occurred.

Fern
Super Moderator

It was more to do with the spelling really.

 

[DCal430]

So which is best?

Get none of your money when the bank goes bust.
Get some of your money in a disorderly bank run.

The bank will still go bust if their is a bank run. So you will still get nothing.

 

[DCal430]

They will likely have to put a limit on daily withdraws, such as 100 or 200 Euros a day. This will stop the bank from collapsing from a run.

 

[WelshBloke]

The bank will still go bust if their is a bank run. So you will still get nothing.

Yeah it'll go bust because everyone took their money out rather than going bust because there was no money to take out.

In short would you rather your bank went bust before or after you had a chance to take your money out?

 

[nextJin]

You are confused, aren't you?

Yes, the Treasury & the FRB have been pursuing inflation. In the face of the collapse of the money supply (credit is money) in 2008, they must in order to escape the cascading & self reinforcing failure of hard money, deflation & hoarding. Those are the traditional results of a Capitalist looting spree such as the housing bubble. Otherwise, the economy would virtually collapse for lack of liquidity. All that money that was created & loaned is gone, but the debt remains, and there must be sufficient liquidity for that debt to be serviced- otherwise we can add default to the list of factors contributing to a debt deflation spiral.

Rich people commanding hoards of liquidity won't solve the problem. In many ways, it is the problem. Faced with a lack of demand that their own actions created, they see little reason to invest or risk. They don't have to do so. The economic rents they collect are more than adequate to serve their lifestyles even in a depression. They can and do hoard liquidity, driving down the yield on savings. Oh, wait- that's simple supply & demand...

Cyprus is in default for the same reason that others are in default, because of the ravages of the financial Lootocracy. It's "Free Market Financialized Capitalism" on the international scale. Vast fortunes change hands in such occurrences, and it's generally the perps who benefit most. It's their game, and people are dumb enough to let them do it, some are even dumb enough to see it as "Right".

http://krugmandebate.com/

 

[DucatiMonster696]

You are confused, aren't you?

Yes, the Treasury & the FRB have been pursuing inflation. In the face of the collapse of the money supply (credit is money) in 2008, they must in order to escape the cascading & self reinforcing failure of hard money, deflation & hoarding. Those are the traditional results of a Capitalist looting spree such as the housing bubble. Otherwise, the economy would virtually collapse for lack of liquidity. All that money that was created & loaned is gone, but the debt remains, and there must be sufficient liquidity for that debt to be serviced- otherwise we can add default to the list of factors contributing to a debt deflation spiral.

A deflationary period and allowing failure is necessary in the face of such mal-investments in the economy. Without it economies don't clear the books of toxic assets. Inflation and government bailouts prevent the ability of economy itself from being able to flush out the system of bad investments by suppressing the forces which would otherwise move in and impose losses onto those who bet big and failed, e.g. the suppression of bond raiders as government buys up massive amounts of its own bonds only to create a dangerous bond bubble as result.

Furthermore those who benefit the most from a loose monetary policy are the very wealthy you claim to dislike.

Those with the means to take out large amounts of debts and purchase up assets at a whim without the fret or worry of incurring a significant amount of debt compared to their own earnings. In contrast the average person is now drowning in debt because being a saver is fool's game in this environment where gains from their own meager savings are eaten up by the continual expansion of the money supply and pitiful gains on interest.

Thus in the end all we are doing is putting off the pain of dealing with these issues in the present and shoving them off into the future in hopes that things will work themselves out. However meanwhile the average person is being robbed of their ability to save money while their wages are unable to keep up with the expansion of the money supply and more market bubbles are beginning formed as investors seek to chase profits with false expansionary and inflationary wealth so that they are more apt to take greater and greater risks.

Rich people commanding hoards of liquidity won't solve the problem. In many ways, it is the problem. Faced with a lack of demand that their own actions created, they see little reason to invest or risk. They don't have to do so. The economic rents they collect are more than adequate to serve their lifestyles even in a depression. They can and do hoard liquidity, driving down the yield on savings. Oh, wait- that's simple supply & demand...

Than I guess you buy into the notion that the wealthy are indeed investing and producing wealth under this policy which is trickling down onto the average person in this current environment and that the gains/new highs in the stock market being propped up by the Fed's continual purchasing of 85 billion dollars of toxic assets every month will somehow work their way down to the average person via Wall Street.

Of course I know you don't buy that view but to believe that by robbing savers of the ability to save now or that bailing out "Too big to fail" toxic companies that you are somehow securing their best interest in mind for the little guy is also just as foolish. However that is what the "Lootocracy" has led you to believe because it was they after all who have crafted this loose money and interest rate manipulation policy so as to save themselves at the expense of everyone else.

Cyprus is in default for the same reason that others are in default, because of the ravages of the financial Lootocracy. It's "Free Market Financialized Capitalism" on the international scale. Vast fortunes change hands in such occurrences, and it's generally the perps who benefit most. It's their game, and people are dumb enough to let them do it, some are even dumb enough to see it as "Right".

There is nothing free market about not allowing failure in a the economic system. There is nothing free market about interventionist central banks distorting interest rates and pumping money into the system so that a moral hazard of negative savings and risk taking occurs and sees people pushed into markets which have been and still are distorted by central bank actions and creating new mal-investments.

 

[DCal430]

Yeah it'll go bust because everyone took their money out rather than going bust because there was no money to take out.

In short would you rather your bank went bust before or after you had a chance to take your money out?

But most will be left with nothing as they will be too late to take their money out. If their is a run most will NOT have a chance to take their money out, because their will be no more money to take out..

 

[Jhhnn]

Nice job, Ducati Monster- you created a mess that can't even be quoted.

Business depressions existed & were actually worse before the advent of the FRB & others like them. Your beliefs like Anarchist420's unshakeable belief in the notion that private charity would have solved the great depression and prevented more of the same over the time that the New Deal has sustained millions of Americans when what they believe in wouldn't.

That's what happens when you believe in lies- you can't even comprehend the truth. What you believe is entirely too satisfying at an emotional level for you to ever question it. You can't because of your conditioning.

 

[DCal430]

Worst will be for the Bank Employees, thousands of them are now unemployed and their retirement is now gone, their is no government backing for private pension in Cyprus, these people will be left destitute.

 

[OverVolt]

Nice job, Ducati Monster- you created a mess that can't even be quoted.

Business depressions existed & were actually worse before the advent of the FRB & others like them. Your beliefs like Anarchist420's unshakeable belief in the notion that private charity would have solved the great depression and prevented more of the same over the time that the New Deal has sustained millions of Americans when what they believe in wouldn't.

That's what happens when you believe in lies- you can't even comprehend the truth. What you believe is entirely too satisfying at an emotional level for you to ever question it. You can't because of your conditioning.

If you suppress the business cycle too far you risk the entire economy. That much is obvious. I like Austrian economics more than Keynes.

Keynes was only concerned with his own life. Just convince policymakers to do a debt binge for the duration of his lifetime and (???) after.

Well we are at the (???).

 

[WelshBloke]

Worst will be for the Bank Employees, thousands of them are now unemployed and their retirement is now gone, their is no government backing for private pension in Cyprus, these people will be left destitute.

I can't imagine that having the Cypriot government backing my pension would fill me with confidence at the moment.

 

[WelshBloke]

But most will be left with nothing as they will be too late to take their money out. If their is a run most will NOT have a chance to take their money out, because their will be no more money to take out..

Depends if they are only allowed to take out limited funds when the banks reopen. I'd imagine that that is what will happen.
I think that's standard practice if there's any danger of a run.

 

[DucatiMonster696]

Nice job, Ducati Monster- you created a mess that can't even be quoted.

Business depressions existed & were actually worse before the advent of the FRB & others like them. Your beliefs like Anarchist420's unshakeable belief in the notion that private charity would have solved the great depression and prevented more of the same over the time that the New Deal has sustained millions of Americans when what they believe in wouldn't.

That's what happens when you believe in lies- you can't even comprehend the truth. What you believe is entirely too satisfying at an emotional level for you to ever question it. You can't because of your conditioning.

I take this as attempt at non-response to the points I raised due to a lack of effort on your part.

As for your statement about business cycles of downturns well I they have existed and need to exist to clear out bad bets made in the market place when a distortion exists or has been created via interest rate manipulation and/or loose money policy, especially when mal-investments are allowed to become pervasive and live on a malignant manner.

 

[DucatiMonster696]

If you suppress the business cycle too far you risk the entire economy. That much is obvious. I like Austrian economics more than Keynes.

Keynes was only concerned with his own life. Just convince policymakers to do a debt binge for the duration of his lifetime and (???) after.

Well we are at the (???).

What is interesting is that Keynes acknowledge that once government's have hit the zero bound rate of nominal interest rates (Basically when governments reach close to zero but never less than zero on their nominal interest rates vs inflation) and no significant economic effect has taken place well then they are simply screwed. Which oddly I bet Jhnnn would reject wholeheartedly.

 

[mshan]

"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."

...

"Cyprus government spokesman Christos Stylianides said: "We averted a disorderly bankruptcy which would have led to an exit of Cyprus from the euro zone with unforeseeable consequences."

Asked about the level of losses on uninsured depositors in Bank of Cyprus, he told state radio: "The assessment is that it will be under or around 30 percent."

http://news.yahoo.com/cyprus-eu-imf-agree-draft-proposal-rescue-banks-002707963.html

 

[mammador]

ha. A country named after a rap group!

It's good that commonist China hasn't had any fiscal issues yet.

 

[PottedMeat]

what happens when you lose a bunch of the russian mafia's money?