Cypriot Austerity Measures

Radiation · 26 Mar 2013 at 13:14

If they want to fix things they need to remove most of the debt and/or expect to be paid less over a far longer period, most of the economic problems are due to greed and unfair wealth distribution, when we change the system so you can't make much money off of money without creating stuff and when we remove ideas like supply and demand and serious debt things will get better.

Nate--IRL-- · 26 Mar 2013 at 13:30

GAC said:
yeah a run is a bad thing, but the european central bank, the imf and the cypriot gov will be happy as long as they have there cut first before the run.

Cut of what? There is no money in the banks, that is the point.

Nate

GAC · 26 Mar 2013 at 13:38

a cut of the supposed savings of people i guess. as honestly none of us know how much money is or isnt in these banks.

Nate--IRL-- · 26 Mar 2013 at 14:04

GAC said:
a cut of the supposed savings of people i guess. as honestly none of us know how much money is or isnt in these banks.

We do know, there is none. That is the whole point. The EU isn't taking a cut, they are lending the money because the banks are bankrupt.

Nate

Iraklis F.C. · 26 Mar 2013 at 14:09

What do you mean there is none?

Nate--IRL-- · 26 Mar 2013 at 14:20

Iraklis F.C. said:
What do you mean there is none?

The bank doesn't have the minimum required Assets to cover it's Liabilities (ie deposits) and needs a loan to bail them out. That is the problem.

If they don't get a loan, the depositors lose 100% of their deposits.

Nate

GAC · 26 Mar 2013 at 14:24

and this is where it goes to pot, they have some money but not enough maybe, yes, no and or probably. thanks to the fun ways this all gets reported and how its a close shop on getting straight answers no one will know till long after all of this.

Nate--IRL-- · 26 Mar 2013 at 14:34

GAC said:
and this is where it goes to pot, they have some money but not enough maybe, yes, no and or probably. thanks to the fun ways this all gets reported and how its a close shop on getting straight answers no one will know till long after all of this.

Bad reporting aside, it is very much known as to what is going on. No Closed shop at all.

What doesn't help is people screaming "Ze Germns are stealing Cypriot moniez!!!11!!" When they have no clue about the situation themselves.

Nate

Judgeneo · 26 Mar 2013 at 15:52

When we reported yesterday that over the past week, the Russian depositors in Cypriot banks had managed to find loopholes through which to pull out billions in supposedly halted deposits (courtesy of bank shutdowns and capital controls) some, accurately, balked: if that were the case the Cyprus Centeral Bank would need a proportionate increase in emergency funding from the ECB (in the form of ELA) to make up for the deposit outflows. Which is why moments ago Welt reported precisely what we had been expecting to read all morning: the Cyprus Central Bank is about to demand even more cash from the ECB to plug the holes left from the stealthy Russian outflows.

CYPRUS CENTRAL BANK PLANS EXPANDING EMERGENCY CREDIT: WELT
CYPRUS PLANS EXPANDING EMERGENCY CREDIT BY EU2.5B-EU3B: WELT
DIE WELT CITES UNIDENTIFIED PERSONS FAMILIAR WITH THE MATTER
Remember: this is just a feeler by the Cyprus Central Bank in direction Frankfurt - the last thing Cyprus wants is to expose just how big the full liquidity hole is resulting from the stealthy Russian deposit outflows. We expect when all is said and done, the full incremental bailout needs to rise in the double digits.

http://www.zerohedge.com/news/2013-...entral-bank-set-expand-emergency-credit-€3-bi

It seems that every single external commentator, and most of the large asset managers have been saying exactly the same thing all week.

Business' will start to collapse soon over there, I really feel for the country.

Iraklis F.C. · 26 Mar 2013 at 21:12

http://www.reuters.com/article/2013/03/26/eurozone-cyprus-luxembourg-germany-idUSL2N0CI1FW20130326

ahem

Judgeneo · 26 Mar 2013 at 22:29

By golly gosh.

80%

Cyprus Finance Minister Michael Sarris has said uninsured Laika depositors could face an 80pc haircut, and might have to wait up to seven years for a payout.

He adds: "If Parliament had voted on March 17 [instead of March 19], maybe we could have saved Laiki Bank... It's obvious that Germany wants to impose its will on the people of the South. They didn't want to show to German taxpayers that they would pay to save Russian depositors' money.
"France was silent. But France will have problems some time, and will need help from its partners too... We have a good relationship with Russia and we want to keep it that way.
"The EU showed us they didn't want us to leave the euro. They cancelled a summit with Japan, and sent an aircraft for us to travel to Brussels.
"It is one thing to say Greek PSI was bad for us but another to say Greece didn't help us or that it was Greece's fault. I am sure the people of Cyprus can the differences.
"Capital control measures to be finalised tomorrow."

http://www.telegraph.co.uk/finance/debt-crisis-live/9953844/Cyprus-bailout-live.html

Paaul Krugman speaks sense:

A correspondent whom I respect has (gently) challenged me to say plainly what I think Cyprus should do — leaving aside all questions about political realism. And he’s right: while I think it’s OK to spend most of my time on this blog working within the limits of the politically possible, and relying on a combination of reason and ridicule to push out those limits over time, once in a while I should just flatly state what I would do if given a chance.

So here it is: yes, Cyprus should leave the euro. Now.

http://krugman.blogs.nytimes.com/2013/03/26/cyprus-seriously/

aardvark · 26 Mar 2013 at 22:41

Judgeneo said:
Paaul Krugman speaks sense

thats the first time i've seen that happen!

Castiel · 26 Mar 2013 at 23:46

Does the deposit levy affect all depositors (subject to the minimum deposit) in all banks in Cyprus or only the Laiki bank and Bank of Cyprus?

dowie · 27 Mar 2013 at 00:33

Iraklis F.C. said:
When Lehman Bros. went bust, what happened to the deposits? people lost their money in this case as well?

Lehman Brothers wasn't a bank in that sense it was an investment bank - i.e. its business was built around capital markets.

You're confusing it with a commercial bank i.e. the sort of banks we're talking about in this thread which are in the business of taking deposits and making loans.

dowie · 27 Mar 2013 at 00:39

Castiel said:
Does the deposit levy affect all depositors (subject to the minimum deposit) in all banks in Cyprus or only the Laiki bank and Bank of Cyprus?

I believe it is just those two - Laiki being broken up into a 'good bank' and 'bad bank' (wonder if any of the British Govt advisers to Cyprus had some previous experience with northern rock

) and the depositors from both who are facing a haircut being given shares in Bank of Cyprus(+ merged good bank) as some form of compensation. (realistically it seems like a token gesture)

GAC · 27 Mar 2013 at 08:28

Nate--IRL-- said:
Bad reporting aside, it is very much known as to what is going on. No Closed shop at all.

What doesn't help is people screaming "Ze Germns are stealing Cypriot moniez!!!11!!" When they have no clue about the situation themselves.

Nate

you tell the people who will be losing 30% or more of there savings about how its not a close shop.

as for the germans stealing it, thats just red top media being stupid. the point id bring up is, why does cyprus have to find £7billion from savers for £10 billion from the ecb, when greece has had 200 billion and spains had 100 billion or there abouts for no such clauses.

as for luxemburg im guessing they are getting a tad worried if they ever have to ask for help now.

Iraklis F.C. · 27 Mar 2013 at 09:29

80% haircut is the latest official news...

Nate--IRL-- · 27 Mar 2013 at 13:43

GAC said:
you tell the people who will be losing 30% or more of there savings about how its not a close shop.

as for the germans stealing it, thats just red top media being stupid. the point id bring up is, why does cyprus have to find £7billion from savers for £10 billion from the ecb, when greece has had 200 billion and spains had 100 billion or there abouts for no such clauses.

as for luxemburg im guessing they are getting a tad worried if they ever have to ask for help now.

The Reason is the Debt to GDP ratio. They cant afford a €17bn loan. They'd never be able to go to the bond market for money again.

Nate

Castiel · 27 Mar 2013 at 15:18

Nate--IRL-- said:
The Reason is the Debt to GDP ratio. They cant afford a €17bn loan. They'd never be able to go to the bond market for money again.

Nate

It also suits Germany to drastically alter the economic model of Cyrus in its favour...as one of the links above points out. People are very naive if they think that this approach is not in some way beneficial to German economic interests.

JonJ678 · 27 Mar 2013 at 16:21

Castiel said:
People are very naive if they think that this approach is not in some way beneficial to German economic interests.

You must have a great deal of faith in the economic competence of the EU. This may benefit Germany, it may hurt it - but I don't think there's reason to believe that the EU has any idea which.