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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

by aristus 14y ago

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 14y ago
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-levy-uk-compensate http://www.guardian.co.uk/world/2013/mar/17/cyprus-savings-l...
Lazare 14y ago
When a bank goes under, normally losses would hit the bond holders first, and only after that would depositors start to lose funds on amounts over €100k. Any amounts under €100k would be perfectly safe due to deposit insurance which is ultimately backstopped by the central bank via its ability to print money. Cyprus banks are short about €16B that the Cyprus government does not have. They went to the EU/IMF and got €10B, leaving a €6B hole. In the normal course of events, the bondholders would lose everything (not significant for Cyprus banks; they're financed by deposits), accounts with over €100k would lose around 30% of the amount over €100k, and all other depositors would lose nothing. Instead, the bond holders lose nothing, the depositors with over €100k lose only 9.9%, and the retirees and Cypriots with less than €100k in their accounts lose 6.75%. In other words, ordinary savers are having their life savings confiscated in order to protect bondholders and Russian mobsters. And, again, these savers are citizens of a EU country and Eurozone member who have been promised deposit insurance by their national government with the implicit promise that this would be backstopped by the EU, IMF, ECB. But their interests, it seems, are less important than the interests of the Russian oligarchs; after all we can't have them losing a significant amount of their uninsured deposits....

by aristus 14y ago

bitcartel 14y ago

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

Lazare 14y ago

When a bank goes under, normally losses would hit the bond holders first, and only after that would depositors start to lose funds on amounts over €100k. Any amounts under €100k would be perfectly safe due to deposit insurance which is ultimately backstopped by the central bank via its ability to print money. Cyprus banks are short about €16B that the Cyprus government does not have. They went to the EU/IMF and got €10B, leaving a €6B hole. In the normal course of events, the bondholders would lose everything (not significant for Cyprus banks; they're financed by deposits), accounts with over €100k would lose around 30% of the amount over €100k, and all other depositors would lose nothing. Instead, the bond holders lose nothing, the depositors with over €100k lose only 9.9%, and the retirees and Cypriots with less than €100k in their accounts lose 6.75%. In other words, ordinary savers are having their life savings confiscated in order to protect bondholders and Russian mobsters. And, again, these savers are citizens of a EU country and Eurozone member who have been promised deposit insurance by their national government with the implicit promise that this would be backstopped by the EU, IMF, ECB. But their interests, it seems, are less important than the interests of the Russian oligarchs; after all we can't have them losing a significant amount of their uninsured deposits....