Cyprus banks to steal DEPOSITOR'S money

You may have thought that a bank deposit was safe, unless a bank went bankrupt,
and even then a modest nestegg would be backed up with Government guarantees.
Not today in Cyprus, where they are about to debate taking 9.9% from depositors accounts to pay debts.
If you only have a few thousand Euros, they are generously only going to take 6.75%, and they don't call it stealing they call it a levy.
http://www.bbc.co.uk/news/world-europe-21832187

Thoughts?

 

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This is already being discussed at
http://www.sciforums.com/showthread.php?133084-Apocalypse-Soon&p=3052775#post3052775

Unless it becomes so big that it warrants a separate thread, continue there.

 

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Do you think all tax is theft?

 

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It's basically a wealth tax, which has been implemented in many other countries. If it's legal to do so then no issues. If it is not legal to do - but the country will fall without it - then it might be the better of two bad options. Since Cyprus has a democratically elected government, if the people are not OK with this, they will oust the current government and elect new leaders.

 

It is a very stupid idea to make people think their bank deposits can be confiscated to pay government. Do that by taxing, not by collapsing the banking systems with public fear. In the era of fractional banking their is typically no more than a few percent of deposits as cash in the local bank vaults and in the US the total cash in all banks plus the FDIC there may be 5%.

Something like 92% of all money in the US is electronic bits in computers, not green paper cash. If banks go under there goes most of the money in the US for many weeks until things could get straighten out. Bills could not be paid, etc. with banks closed for a few weeks.

The idea of just taking funds from banks deposits is so stupid, no one is claiming to be the father of it and all are saying it is bad idea, which causes very destructive runs on the banks. In a day or two Cyprus will announce it was just an early April fool’s trick (or something).

It ain´t actually going to happen. Best bet as to what will happen is Russia will bail out Cyprus and get in exchange the names of all the Russian depositors. About 60% of all deposits in banks of Cyprus are owned by Russians, mostly crooks, tax dodgers, or unreported bribes! Russia, like China, is starting to crack down on these cheats. (also like china, not if well connected politically)

 

Great damage done. And for what benefit?
It makes you wonder if the conspiracy theorists may have something,
and that it's all some twisted plot.
Why do this?

The distrust might conceivably benefit Bullion buyers,
although Gold did not shift much today. Current price $1604.80

@Billvon
Wealth tax. Yes, a wealth tax which hits the poor. It's getting commonplace.

 

Because then the government gets $13 billion. And that might be enough to prevent complete collapse of the banking system.

So the question might be - do depositors want to lose 10% of their money, or 100% of it?

 

They can't lose 100% of it. Not in the normal manner.
In the event of bankruptcy, most ordinary people's deposits are protected by European deposit insurance rules.
This is a despicable attempt to get round those rules by a loophole.

see http://online.wsj.com/article/BT-CO-20130318-709360.html

 

Wait until the Russian Mafia weighs in on the matter. They have some big money in Cypriot banks.

http://www.cnbc.com/id/100565542

This isn't over until at least Thursday when the banks are suppose to reopen.

 

They are cooking up batches of Polonium as we speak.

 

Those don't work during an economic collapse. There is not enough money in any accounts, anywhere, to pay out all EU depositors if their banks go under.

 

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They have time to break a few kneecaps before they go nuclear. I don't think this is end of the world as we know it.

 

I believe the deposit insurance is capped at 100,000 Euros. While technically it is true that there is not enough money to pay out all of the claims, the ECB could create enough money to pay all claims. It would devalue the currency. But it could be done if needed.

And given recent history, I think all central banks will do whatever they need to do to prevent a run on banks.

 

It's being described as an 'Electronic Mugging', with a total estimated pot of €70 billion at stake of which at least €20 billion is thought to have been deposited by Russians alone. It's being suggested in European circles that they believe much of the Russian deposits are laundered money and as such the EU is unhappy at the idea of bailing out money launders. This being said though it's much smaller percentages that have been proposed than the original 40% levy they were suggesting should be imposed, this however was probarbly a bluff to make people feel better about the later figures to be anounced of 6.75% for deposits of under €100,000 and the 9.9% figure for deposits over €100,000, because clearly a 40% levy would have generated far more revenue from the estimated €70 billion in deposits than the €10 billion guarantee being offered under the terms of the bailout agreement.

The really worrying thing though is just how badly this will indeed affect Europes banking sector, because many will see this as a potential test run for future banking levy's on deposits in much larger EU countries that have failing economies. Also of great concern for people with bank accounts in countries such as Spain, Italy, Portugal and Ireland is the way that the banks acted over the proposed Cypriot levy, because they started by sectioning off the either 6.75% or 9.9% from all bank accounts so no one could access this money, this all came with absolutely no warning remember, then they froze everyones bank accounts stopping them from withdrawing money from cash machines or making electronic transfers and have remained closed and will do so until at least Thursday. None of this bodes well for depositers across Europe, but finally we come to probarbly the most worrying aspect of all, they are completely ignoring the EU's banking depositors guarantee scheme, effectively meaning the EU can now, by declaring it a tax, take at will money from anyone's bank accounts within the EU.

 

That is the fear. But I don’t think it will go far. This was a poorly conceived scheme. Wealth taxation is neither a new idea nor a bad idea. Donald Trump once proposed a wealth tax for the US. I have in the past proposed a wealth tax. The fear is if a tax haven like Cyprus can do this, tax havens might not be as safe as wealthy individuals once thought. You can bet a number of wealthy individuals are shivering in their Blahnik boots this evening.

http://www.cnbc.com/id/100565180

http://en.wikipedia.org/wiki/Wealth_tax

 

LMAO!

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Yes, it's not all bad.
I propose a 40% levy in the Caymans and Zurich.
That would cause some squealing.

 

Why can't any government anywhere just keep to a strict balanced budget? Why is it so difficult to make a standard and stick to it as many good, honest hard working countries have done and are doing today? It seems that governments are not doing what they are supposed to be doing by allowing spending to far exceed income from taxes. Reducing spending, where possible, would be the better way to go even if it means fewer jobs within the governments rank and file.

 

Because most PEOPLE don't want a balanced budget. They want lots of stuff (healthcare, wars, roads etc) and want low taxes. So they vote for people who promise them that.

If you define "what government is supposed to be doing" as "implementing the will of the people" - they are doing exactly what they're supposed to be doing. It's a very poor long term solution, though.

Agreed - but again, no one wants that.

 

Governments are supposed to do certain things that keep their country in good financial account not keep having to tax more to get what is needed done.

The will of the people isn't what many programs that governments are implementing but only want larger governments to have more jobs for those working within the government.

To reduce spending is what the MAJORITY of citizens wants to have happen so why isn't that happening, I guess the government isn't listening very well.