Cypriot Austerity Measures

Spektor · 16 Mar 2013 at 17:32

Every Cypriot come Wednesday should head down to their nearest public building and take their 7-10% back in whatever they can get their hands on.

Dr House · 16 Mar 2013 at 17:32

Its crazy but the same thing happened via the backdoor here in the uk.

Low interest rates, high inflation and QE = same effect.

I bet there is going to a massive movement of money out of Spain and Italy on monday.

Calabi · 16 Mar 2013 at 17:40

Trifid said:
But it is not that is it? They don't have a choice, all their money is currently locked away for it to be divided up by the government.

Its a temporary high negative interest rate. They couldnt do it without locking it away.

I guess it might encourage spending(on mattresses) as everyone is going to empty their accounts on wednsday.

Hades · 16 Mar 2013 at 17:46

It will encourage people to withdraw their money as soon as they can afterwards. They can't stop their money being taken this time but can stop it being taken a second time. Not good and it may have further ramifications.

[TW]Fox · 16 Mar 2013 at 17:47

Spektor said:
Every Cypriot come Wednesday should head down to their nearest public building and take their 7-10% back in whatever they can get their hands on.

Yes, that'll work.

No1newts · 16 Mar 2013 at 17:52

Insane!

If I was a burglar I'd be robbing more houses in Cyprus from next weekend onward as they'll be stuffed full of cash!!

GAC · 16 Mar 2013 at 17:53

run on the banks come monday i bet now around the med.

Super Tigers · 16 Mar 2013 at 18:38

I don't think the Russian investors will be very happy at taking a 10% haircut on their savings. The Germans are not getting a good press with this bailout, they are pushing the Russian money-laundering story very aggressively, but the ordinary Cypriot is going to be punished in the pocket for other's misdemeanors.
Who next for a painful bailout - Slovenia, Hungary? Nervous times ahead for the EU.

Tute · 16 Mar 2013 at 18:47

Hades said:
It will encourage people to withdraw their money as soon as they can afterwards. They can't stop their money being taken this time but can stop it being taken a second time. Not good and it may have further ramifications.

This is what I think also. Isn't it just going to cause a massive run on the Cypriot banking system?

GAC · 16 Mar 2013 at 18:50

just re read that bbc page again and some how missed this bit before

The levy itself will not take effect until Tuesday, following a public holiday, but action is being taken to control electronic money transfers over the weekend.

Co-operative banks, the only ones open in Cyprus on Saturday, closed after people started queuing to withdraw their money.

how is that legal ?! we'l stop you moving YOUR money till we take a chunk of it. thats just wrong.

dowie · 16 Mar 2013 at 19:03

I don't generally agree with taxes on assets rather than income (aside from inheritance taxes)...

Calabi said:
Its a temporary high negative interest rate. They couldnt do it without locking it away.

I guess it might encourage spending(on mattresses) as everyone is going to empty their accounts on wednsday.

It isn't a negative interest rate...

Slam62 · 16 Mar 2013 at 19:14

Super Tigers said:
I don't think the Russian investors will be very happy at taking a 10% haircut on their savings. The Germans are not getting a good press with this bailout, they are pushing the Russian money-laundering story very aggressively, but the ordinary Cypriot is going to be punished in the pocket for other's misdemeanors.
Who next for a painful bailout - Slovenia, Hungary? Nervous times ahead for the EU.

Yes, who says it is laundered, if they could prove it was illegal , they would just seize it. The bottom line is forcible extorting of cash to pay the govts debts, a bit like taxes.

Malevolence · 16 Mar 2013 at 19:19

Absolutely shocking behaviour! What if somebody has multiple accounts, will they be having multiple muggings by the government?

Dolph · 16 Mar 2013 at 19:24

How is this different from any other tax? All taxes involve the non consensual removal of property by the government. how is this different?

Castiel · 16 Mar 2013 at 19:26

I can't see how this is legal. It will cripple Cypriot Banks and destroy any trust in them. What are they thinking?

d_brennen · 16 Mar 2013 at 19:30

Castiel said:
What are they thinking?

Money, money, money, naow! Honestly if Wonga could offer Cyprus a few billion YoYos for 28 days at 2000% they'd take it

Trifid · 16 Mar 2013 at 19:30

Dolph said:
How is this different from any other tax? All taxes involve the non consensual removal of property by the government. how is this different?

You are aware of what tax is owed (or can easily find out) before it is due. If you don't mind someone taking 7% of your banked wealth then can I have it?

Housey · 16 Mar 2013 at 19:31

Astonishing and incredibly risky move. This will not end well I fear, markets will **** it come Monday I suspect.

Jono8 · 16 Mar 2013 at 19:31

Punishing people who saved rather ran up debt. Seems fair....

Castiel · 16 Mar 2013 at 19:32

Dolph said:
How is this different from any other tax? All taxes involve the non consensual removal of property by the government. how is this different?

For one it is retrospective, secondly savers have already paid interest on their savings so they are being taxed twice, thirdly they are impeding an individuals right to their own property by stopping them withdrawing their money.

I can see this having a detrimental effect on banks in all the Eurozone countries that have economic problems when people realise a precedent has been set and they seek to protect their saving in other ways.