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Not everyone who's being hurt here was "parking money abroad". They're stealing 6.75% of ordinary people's savings. That's shockingly unfair and stupid. Does a

by gruseom 14y ago

Not everyone who's being hurt here was "parking money abroad". They're stealing 6.75% of ordinary people's savings. That's shockingly unfair and stupid. Does anyone know why they didn't restrict this to accounts over the insured 100K limit? It makes no sense to me why they would take the political hit of doing something this evil. If it's about taxing Russian criminals' billions as we're hearing, why would they need to raid average citizens' accounts?

benjiweber 14y ago
We had ~5% inflation for a while (in the UK). Our savings lost a similar amount due to government policies, yet there wasn't such an outcry.
OGinparadise 14y ago
They're stealing 6.75% of ordinary people's savings. That's shockingly unfair and shockingly stupid. Who is stealing? Certainly not EU. It sucks for the people involved but the country has no money. So instead of having an extra tax on real estate or income they added a tax on this and they can collect it in a minute. Others would have complained about an extra tax on their income, electricity, property etc as well. At least here outsiders pay too, otherwise the Cypriots would have paid a larger share.
- droopyEyelids 14y ago
  Isn't that a question of semantics? Sure, when the government does this, it is called a tax. However, this was a surprise tax levied on unaware people, leaving them with no chance to plan or prepare themselves, by people who they didn't vote for (from how I understand it). To me, it doesn't seem too far off the mark to call it theft.
  - waitwhat 14y ago
    This tax works because it was a surprise. What do you think would have happened if, say, they gave 48 hours notice?
- gruseom 14y ago
  To me the word "tax" includes some expectation that the funds be used (however imperfectly) for the public good. But the bailout-and-austerity regimen seems to be about protecting financial institutions at common people's expense. For example, it wasn't the Greek people being bailed out, but rather the banks who lent to Greece. Yet we don't hear about that, we hear about irresponsible Greek bus drivers and the like. (As a side point, such fanning of nationalistic flames has served its diversionary purpose well in this case, but is really playing with fire.) It seems to me the bottom line is clearly: are the bondholders of insolvent institutions expected to take a hit as well? If the answer is no, as it mostly has been throughout this crisis, that's "heads I win tails you lose" — rotten both morally and from a market point of view. The bondholders in this latest case are not touched at all, according to http://yanisvaroufakis.eu/2013/03/17/cyprus-stability-levy-another-sad-euphemism/ http://yanisvaroufakis.eu/2013/03/17/cyprus-stability-levy-a.... (You make a good point that this surprise tax isn't the worst way they could do it, but that's what makes it so puzzling politically. The way they're doing it is so naked, so brazen, that it's bound to cause a larger backlash. Everyone can understand someone reaching into their bank account and taking a fistful; that's political poison. Why didn't they find a worse way (if need be) to do it, cloak it in complexity, and exempt the poorest citizens to mitigate criticism? Something along those lines would be standard political practice, and it's puzzling why they didn't do it in this case. Is it simply that Cyprus doesn't matter? Edit: I now see that the Economist is asking the same question.)
  - TillE 14y ago
    > The way they're doing it is so naked, so brazen, that it's bound to cause a larger backlash. Quite right. The more I think about it, the more I believe there's an extreme risk that this could be the first domino in a catastrophic chain reaction. All because of a few lousy billion dollars that surely could have been borrowed and paid back in a more reasonable fashion. I don't get it. I don't understand how the people involved here could be so enormously stupid. Just as it looked like the Euro crisis was ebbing, they're set to reignite it in a whole new way.
    - vacri 14y ago
      "borrowing to pay back in a 'reasonable fashion' later" is exactly how all this started in the first place.
- deleted 14y ago
  [deleted]
- srid68 14y ago
  It is camouflaged stealing. When senior bond holders of banks who are foreign banks are protected at the expense of ordinary people(s) deposits. The money is lent to Cyprus so that the Senior Bond holders of the banks don't lose any money.
justincormack 14y ago
It seems that a tax of (apparently) just under 20% on over EUR 100k was seen as too high, and would destroy Cyprus as an offshore banking centre, while under 10% as "ok". Apparently the rest of the EU was happy with it all going on large amounts but Cyprus was not. But this may all be hearsay.

by gruseom 14y ago

benjiweber 14y ago

We had ~5% inflation for a while (in the UK). Our savings lost a similar amount due to government policies, yet there wasn't such an outcry.

OGinparadise 14y ago

They're stealing 6.75% of ordinary people's savings. That's shockingly unfair and shockingly stupid. Who is stealing? Certainly not EU. It sucks for the people involved but the country has no money. So instead of having an extra tax on real estate or income they added a tax on this and they can collect it in a minute. Others would have complained about an extra tax on their income, electricity, property etc as well. At least here outsiders pay too, otherwise the Cypriots would have paid a larger share.

droopyEyelids 14y ago
Isn't that a question of semantics? Sure, when the government does this, it is called a tax. However, this was a surprise tax levied on unaware people, leaving them with no chance to plan or prepare themselves, by people who they didn't vote for (from how I understand it). To me, it doesn't seem too far off the mark to call it theft.
- waitwhat 14y ago
  This tax works because it was a surprise. What do you think would have happened if, say, they gave 48 hours notice?
gruseom 14y ago
To me the word "tax" includes some expectation that the funds be used (however imperfectly) for the public good. But the bailout-and-austerity regimen seems to be about protecting financial institutions at common people's expense. For example, it wasn't the Greek people being bailed out, but rather the banks who lent to Greece. Yet we don't hear about that, we hear about irresponsible Greek bus drivers and the like. (As a side point, such fanning of nationalistic flames has served its diversionary purpose well in this case, but is really playing with fire.) It seems to me the bottom line is clearly: are the bondholders of insolvent institutions expected to take a hit as well? If the answer is no, as it mostly has been throughout this crisis, that's "heads I win tails you lose" — rotten both morally and from a market point of view. The bondholders in this latest case are not touched at all, according to http://yanisvaroufakis.eu/2013/03/17/cyprus-stability-levy-another-sad-euphemism/ http://yanisvaroufakis.eu/2013/03/17/cyprus-stability-levy-a.... (You make a good point that this surprise tax isn't the worst way they could do it, but that's what makes it so puzzling politically. The way they're doing it is so naked, so brazen, that it's bound to cause a larger backlash. Everyone can understand someone reaching into their bank account and taking a fistful; that's political poison. Why didn't they find a worse way (if need be) to do it, cloak it in complexity, and exempt the poorest citizens to mitigate criticism? Something along those lines would be standard political practice, and it's puzzling why they didn't do it in this case. Is it simply that Cyprus doesn't matter? Edit: I now see that the Economist is asking the same question.)
- TillE 14y ago
  > The way they're doing it is so naked, so brazen, that it's bound to cause a larger backlash. Quite right. The more I think about it, the more I believe there's an extreme risk that this could be the first domino in a catastrophic chain reaction. All because of a few lousy billion dollars that surely could have been borrowed and paid back in a more reasonable fashion. I don't get it. I don't understand how the people involved here could be so enormously stupid. Just as it looked like the Euro crisis was ebbing, they're set to reignite it in a whole new way.
  - vacri 14y ago
    "borrowing to pay back in a 'reasonable fashion' later" is exactly how all this started in the first place.
deleted 14y ago
[deleted]
srid68 14y ago
It is camouflaged stealing. When senior bond holders of banks who are foreign banks are protected at the expense of ordinary people(s) deposits. The money is lent to Cyprus so that the Senior Bond holders of the banks don't lose any money.

justincormack 14y ago

It seems that a tax of (apparently) just under 20% on over EUR 100k was seen as too high, and would destroy Cyprus as an offshore banking centre, while under 10% as "ok". Apparently the rest of the EU was happy with it all going on large amounts but Cyprus was not. But this may all be hearsay.