

Cyprus parliament delays vote on deposit levy to Monday - grist
http://www.reuters.com/article/2013/03/17/us-cyprus-parliament-idUSBRE92G03I20130317

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Karunamon
Maybe this is a terrifically ignorant comment, but it seems like the
government mismanages their finances, as a result, they want the everyman to
throw away 10% of their bank deposits?

WTF?

~~~
aristus
The banks, not the govt. But the bailout as structured tends to conflate the
two, which is part of the problem. Also it directly hurts retirees in country
while protecting rich foreigners (eg, holders of Cypriot bank bonds). It's WTF
from start to finish, a pretty shocking abuse of power by the rich northern EU
countries. Fairness and good governance have nothing to do with it.

~~~
bitcartel
The UK will compensate some of its expats:

 _"But I can tell you that for people serving in our military, people serving
our government out in Cyprus – because we have military bases there – we are
going to compensate anyone who is affected by this bank tax. People who are
doing their duty for our country in Cyprus will be protected from this Cypriot
bank tax."_

[http://www.guardian.co.uk/world/2013/mar/17/cyprus-
savings-l...](http://www.guardian.co.uk/world/2013/mar/17/cyprus-savings-levy-
uk-compensate)

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yk
So the Greek bonds get a haircut and in the process the Cyprus banks are
thrown under the bus. At the same time Germany, the Netherlands and Finland
enjoy the capital influx of insurances and some fonds, who are regulated such
that they can only invest in the Eurozone. These capital influx creates a nice
boom, low unemployment and ensures the reelection of the idiots who did throw
Greece under the bus in the first place.

This crisis would be so funny, if it would occur on any continent I don't live
on.

~~~
pasiaj
Who do you think threw Greece under the bus?

~~~
yk
For example Germany. ( I am not sufficiently knowledgeable on the interior
politics of the other eurozone members to assert with any confidence that they
were purely motivated by their chance of reelection. )

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jstalin
It's bald-faced confiscation of individuals' savings in order to bail out
mismanaged banks.

~~~
airesQ
If the Cyprus government, EU, FMI and ECB were to do nothing it is almost
certain that the depositors would see much less than 90 cents on the euro.

The depositors are being rescued here. They trusted their money to banks that
went on to make loans to the Greek government. The Greek government defaulted.
A significant portion of the depositors money is gone. Nobody is confiscating
anything. International institutions are helping Cyprus, by covering part of
the losses. Unfortunately there is nobody willing to pay the amount necessary
to make the depositors full again.

One might argue that this is bad, and that the EU/IMF/ECB should make the
depositors full, without an haircut, but that is another story.

~~~
Game_Ender
What about the bond holders though? If the banks go under they lose their
money as well, it seems to reason they should be taking a hit as well, not
just the depositors.

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justincormack
There are no more than a few hundred million in bonds. The banks were funded
by deposits not bonds. The junior bonds probably will be wiped out but the
amounts are tiny and there are no details released yet.

~~~
aristus
That does change things. Debt restructuring is a bit like musical chairs. If
there was truly no group left to haircut, to avoid default this had to be
done.

On the other hand, that €10B euro could have come from somewhere outside the
country, especially since it was the forced Greek bond haircut that caused the
crisis. I find it hard to believe that northern Europe isn't taking advantage
of this crisis to increase their influence.

~~~
justincormack
It could have been a gift not a loan. But Europe is not willing to do this,
partly as it would set a precedent, partly as half the depositors in Cyprus
were not Europeans, partly for other reasons...

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kyriakos
as a Cypriot who will lose part of his money I believe voting for this measure
is the best of the two options even though both are bad for us.

~~~
ctdonath
What's the other option?

In the USA, taking 7+% of everyone's savings on short notice would initiate a
civil war. Can't imagine how another alternative would be worse.

~~~
MoreMoschops
What would the two sides be? One side is presumably every citizen, but that
leaves no citizens on the other side. Sounds more like a revolution.

~~~
khuey
There are plenty of Americans who have essentially zero savings.

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mjn
Rather than recapitulating the same discussion of the general issue, might be
better to consolidate it in this other story that's been on the front page
longer: <https://news.ycombinator.com/item?id=5387228>

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jpdoctor
bjornsing's blog post is a good read, and gets it right imho.
[http://conscienceofanentrepreneur.blogspot.se/2013/03/whats-...](http://conscienceofanentrepreneur.blogspot.se/2013/03/whats-
wrong-with-cyprus-bailout.html)

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kyriakos
lets not forget that Cyprus has recently discovered natural gas and possibly
oil in its exclusive economic zone expected to be exploited in the next few
years. call it conspiracy theories but a weakened Cyprus is easier to manage..

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omgyeah
No, dude. Let's call it pure coincidence. Once in a billions.

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bradleyjg
These banks were paying 9+ percent interest on some accounts. If it sounds too
good to be true, it probably is.

~~~
mjn
Same happened with the Icelandic banks: in mid-2000, I knew several Americans
who rather ill-advisedly created accounts with forex brokers just to get ~8%
interest on ISK, a currency and economy they otherwise knew nothing about.
Seems to have been common, because the Icelandic banks had large deposit
inflows up until the crisis hit.

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TillE
It sounds like they can't get the votes to approve it, which makes sense. It's
gotta be political suicide. Either way the banks are going to be destroyed.

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opminion
Why good financial management is not a competitive factor amongst banks?

As in: bank with us because we are financially sound (instead of: because we
pay higher interest, or whatever). It's not happening yet.

~~~
untog
There's no reason it couldn't be. Within the US there are public figures
available stating which banks have been the best and which have been the worst
in the last few years.

There is nothing to stop customers banking on this basis. They still don't,
perhaps largely because the government insures up to $1xx,xxx in deposits (I
forget the number) so a lot of people are covered no matter what happens to
their bank.

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kyriakos
Deposits in Cyprus and the whole eurozone are covered by 100000 euro insurance
per account. The problem in the particular case though is that Cyprus Central
Bank in case the banks close down will be required to pay depositors a total
of 30 billion euro which it doesn't have.

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rosser
I'm asking out of complete naïveté in matters of global finance, but what's to
stop Cyprus from pulling an Iceland?

~~~
kyriakos
eurozone - cyprus cannot devalue its currency.

