Shock in Cyprus as savers face bailout levy
I tend to see invest as more buying shares in a company or buying a bond or some other vehicle that will probably give a dividend or coupon in cash at some point. As opposed to speculation when you're basically just hoping the price will go up and there is no chance of a coupon or dividend ever.
Bank of Cyprus big depositors could lose up to 60% - http://www.bbc.co.uk/news/business-21982652
Words fail me...
Words fail me...
If they are doing that to institutions and businesses then the economy will surely collapse. Companies tend to work with minimum working capital requirments and if a big chunk of that is lost, the business will fold; no doubt.He adds that the larger than expected loss could also have devastating consequences for large depositors such as schools and universities
Am I missing something or does this mean that somebody that invested in an ETF therefore will not be affected?
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superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
it's quite bizarre this now. just about every decision to deal with debt in western countries, apart from the austerity forced on the PIIGS, has been a can kicking exercise. yet this seems almost an overreaction the other way, and it will kill the Cypriot economy.
i think this situation may have an anti-Russian element, but i suspect it's more about Germany using Cyprus as a testing ground for how to deal with other EZ countries that get into a compound debt spiral, with failed banks, and with little realistic hope of growth being able to even make a dent in the debt.
Germany may have simply lost patience and are saying, "you can stay in the Euro if you like, but these are our terms - take it or leave it [the Euro]". that approach makes sense imho, but doing it by stealing deposits and creating capital flight is punitive and OTT.
i think this situation may have an anti-Russian element, but i suspect it's more about Germany using Cyprus as a testing ground for how to deal with other EZ countries that get into a compound debt spiral, with failed banks, and with little realistic hope of growth being able to even make a dent in the debt.
Germany may have simply lost patience and are saying, "you can stay in the Euro if you like, but these are our terms - take it or leave it [the Euro]". that approach makes sense imho, but doing it by stealing deposits and creating capital flight is punitive and OTT.
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NileVentures
- Posts: 79
- Joined: Mon Oct 22, 2012 9:13 pm
SuperFrank - I agree with you. It is sad to say but there is an undercurrent of bad feeling towards Russia from the German man in the street. I have friends in Berlin who are saying that because of the upcoming German election, Cyprus has been given a kicking due to the amount of Russian money invested (laundered) in the country. The irony is, it was the Germans who were bending all the rules to allow Greece and Cyprus to join the Euro in the first place.
They want to build a federal Europe but can you image Californians voting to let the Bank of New Orleans go tits-up in a crisis!
In macro-economic terms, the way the situation has been handled raises the fundamental question: when is a deposit in a bank a safe-repository as opposed to an investment? IMHO €100,000 is far too low a figure to draw the line.
House burglars are going to have a field day with the amount of cash they are going to find hidden under mattresses.
They want to build a federal Europe but can you image Californians voting to let the Bank of New Orleans go tits-up in a crisis!
In macro-economic terms, the way the situation has been handled raises the fundamental question: when is a deposit in a bank a safe-repository as opposed to an investment? IMHO €100,000 is far too low a figure to draw the line.
House burglars are going to have a field day with the amount of cash they are going to find hidden under mattresses.
