Keeping your money in Euro countries?

A dangerous precedent is being set by Eurozone finance ministers by suggesting and supporting that Cyprus effectively raid private bank deposits to bail out its ailing banks and government. The proposal is to tax bank deposits below 100k euros with 6.75% and bank deposits above that with 9.9%. This is theft, there is no other way to call it. And once a precedent is set there is no going back. This might happen in other cash strapped countries, and there are plenty of those these days, Spain, Italy, France, Portugal, Greece etc. It's a legal bank robbery as they ordered all banks shut on Saturday to avoid a run, and they have convened an emergency parliamentary meeting to debate this so called tax, today. I don't know how this can possibly be legal, but it's a sign of things to come, and one of the many reasons I'm becoming increasingly skeptical about the EU. If the cypriots had thought of this, I wouldn't have been so outraged, they're desperate, but the fact that this idea came from Eurozone finance ministers and the IMF makes it 10 times worse. The concept of property seems to elude the Eurocrats.

On top of this, Cyprus is built on finance, and it's by far the largest share of its economy. Without it, they'd be a third world country, they are effectively shooting themselves in the foot, and all that russian and eastern european cash they've been living large on, is going to rapidly move to safer places.

 

Story here:

http://www.reuters.com/article/2013/03/16/...E92E02220130316

It is an unmitigated disaster for sure. I read somewhere but can't find the article ANYWHERE that within 2 years the amounts taken from each account were to be returned to the account holder in a government backed bond.

 

That would lessen the sting for sure BUT this is a load of crap. I would look for Gold and the Dollar to go up SIGNIFICANTLY if this actually happens tomorrow.

 

Also I would look for mass rioting to break out because I guarantee you aren't going to take peoples money like this without a few of them getting very very angry.

It is an unmitigated disaster for sure. I read somewhere but can't find the article ANYWHERE that within 2 years the amounts taken from each account were to be returned to the account holder in a government backed bond.

 

That would lessen the sting for sure BUT this is a load of crap. I would look for Gold and the Dollar to go up SIGNIFICANTLY if this actually happens tomorrow.

 

Also I would look for mass rioting to break out because I guarantee you aren't going to take peoples money like this without a few of them getting very very angry.

They haven't even made a decision yet and the EUR is down, markets are down, and everyone is talking about this so called tax. Brussels insists it's a one off (like anyone cares), but once they go down this road there is no turning back, and the damage done will be impossible to repair. I'd argue the damage has already been done as Cyprus will never again be trusted as a financial center, only for simply considering this unjust tax. In fact I'd question keeping my money anywhere in the EU, considering this precedent has been set and other countries can follow suit.

About the compensation. they will give people affected shares in cypriot banks (which are completely worthless) that at some point in the future will be converted to government bonds backed by revenue from a huge natural gas field. Said gas field is at the very minimum, 5 years away from being exploited. It's a legal bank robbery supported and encouraged by the all mighty EU, that is always right and can do no wrong, which I'm starting to despise more and more each day.

http://www.thestreet.com/story/11872002/1/...mp;cm_ven=YAHOO

http://www.forbes.com/sites/deanpopplewell...artner=yahootix

A dangerous precedent is being set by Eurozone finance ministers by suggesting and supporting that Cyprus effectively raid private bank deposits to bail out its ailing banks and government. The proposal is to tax bank deposits below 100k euros with 6.75% and bank deposits above that with 9.9%. This is theft, there is no other way to call it. And once a precedent is set there is no going back. This might happen in other cash strapped countries, and there are plenty of those these days, Spain, Italy, France, Portugal, Greece etc. It's a legal bank robbery as they ordered all banks shut on Saturday to avoid a run, and they have convened an emergency parliamentary meeting to debate this so called tax, today. I don't know how this can possibly be legal, but it's a sign of things to come, and one of the many reasons I'm becoming increasingly skeptical about the EU. If the cypriots had thought of this, I wouldn't have been so outraged, they're desperate, but the fact that this idea came from Eurozone finance ministers and the IMF makes it 10 times worse. The concept of property seems to elude the Eurocrats.

On top of this, Cyprus is built on finance, and it's by far the largest share of its economy. Without it, they'd be a third world country, they are effectively shooting themselves in the foot, and all that russian and eastern european cash they've been living large on, is going to rapidly move to safer places.

 

Story here:

http://www.reuters.com/article/2013/03/16/...E92E02220130316

 

Why is it theft? Do they expect a free handout? Taking a 6.9% hit is a lot better than the money disappearing in banks that go belly up

Why is it theft? Do they expect a free handout? Taking a 6.9% hit is a lot better than the money disappearing in banks that go belly up

 

Aside from the fact that the "they" who have the deposits isn't the same "they" who worked out this bailout deal, there is also the little matter called deposit insurance. You know, where the government tells you your deposits are backed their full faith and credit in the event banks go belly up? Except when the government changes its mind I guess.

Aside from the fact that the "they" who have the deposits isn't the same "they" who worked out this bailout deal, there is also the little matter called deposit insurance. You know, where the government tells you your deposits are backed their full faith and credit in the event banks go belly up? Except when the government changes its mind I guess.

 

Cypriot banks don't have deposit insurance

Only a matter of time before the USA takes this approach.

Only a matter of time before the USA takes this approach.

 

Don't see that happening at all.

Sounds like treason

Don't see that happening at all.

No fcuking way. Why would it happen? We've been through double digit inflation and a depression. Ain't happening

No fcuking way. Why would it happen? We've been through double digit inflation and a depression. Ain't happening

 

Not to mention we have a TON of citizens who would not take kindly too this happening. We don't take stuff like this sitting down. Forget politicians worrying about re-election...they would be worried about making it from the office to the house.

Why is it theft? Do they expect a free handout? Taking a 6.9% hit is a lot better than the money disappearing in banks that go belly up

 

Well, when someone, government or anyone else, arbitrarily removes money from your savings account against your wishes, what else can it be? What's the difference between doing it with a pen and paper or with a gun if the result is the same? Everyone with a CY bank account will be affected by this, people who's only fault is using Cyprus as a financial center or who happen to live there. There are a lot of retirees from northern Europe living in Cyprus for example. Some may take a hit of up to 12.5%, because the tax on deposits larger than 100k will be higher. And the thing is it's just 2 banks and the gvt in need of a bailout, the rest are fine. It's just plain wrong.

The thing that worries me most is the dangerous precedent that would be set if this law passes, especially since it has the full backing of EU finance ministers, other EU countries might do the same in the future should the need arise. Money would no longer be safe in european banks.

 

A little distrust of the government is always healthy, imo.

 

Cypriot banks don't have deposit insurance

Yeah they do, ECB guarantees all deposits up to 100k. But no one will be eligible for reimbursement since this is a 'tax'.

Only a matter of time before the USA takes this approach.

 

The U.S. has other things it can do to mitigate the financial situation if it absolutely had to. For example, a VAT ("Value-Added" (!!!) Tax). Most all of these Euro countries have high VATs already. The U.S. has none right now. The U.S. also has historically low tax rates right now. We could also raise the cap on the payroll tax if we had to.

Yeah they do, ECB guarantees all deposits up to 100k. But no one will be eligible for reimbursement since this is a 'tax'.

 

That was my understanding as well, and you're correct, this isn't technically reneging on the deposit insurance because the banks haven't failed yet, but if the government can help itself to your deposits whenever it decides it needs to to keep banks from failing, the entire concept of deposit insurance is meaningless.

The U.S. has other things it can do to mitigate the financial situation if it absolutely had to. For example, a VAT ("Value-Added" (!!!) Tax). Most all of these Euro countries have high VATs already. The U.S. has none right now. The U.S. also has historically low tax rates right now. We could also raise the cap on the payroll tax if we had to.

You do have VAT in the US, it's called 'sales tax', granted it's lower than in Europe where it varies from 16-25%, but it is the same thing, a consumption tax.

 

That was my understanding as well, and you're correct, this isn't technically reneging on the deposit insurance because the banks haven't failed yet, but if the government can help itself to your deposits whenever it decides it needs to to keep banks from failing, the entire concept of deposit insurance is meaningless.

 

That isn't the worst part of it, my concern is that this mentality of 'helping themselves' with people's money has the full backing of an organization that claims to protect the rights of 500 mil people, and at some point in the future seeks to govern them. There was an article I read earlier which claimed eurozone finance ministers were "Stunned by the backlash". A very concerning and ugly precedent will be set if this goes through.