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I believe the decision was based on German unwillingliness to bail out Russian "hot money" , which they believe is the majority of Cypriot bank cash deposits. T

by cft 14y ago

I believe the decision was based on German unwillingliness to bail out Russian "hot money" , which they believe is the majority of Cypriot bank cash deposits. They grossly miscalculated the public reaction however.

eurleif 14y ago
Is anyone of any importance seriously clueless enough that they can't predict the consequences of taking money out of everyones' bank accounts? And if so, what is wrong with the system that allows morons of that magnitude to gain power?
- etherael 14y ago
  It sounds unbelievable enough that I really can't help but wonder if they're doing it on purpose. But assuming that were true, what have they to gain from doing so?
  - deleted 14y ago
    [deleted]
- tptacek 14y ago
  I don't understand this question. What was the alternative? As people keep pointing out, Cypriot banks are overwhelmingly funded by their depositors. You can't just go after the bondholders in this case. And "do nothing" would have been worse, possibly by an order of magnitude, for depositors.
  - loumf 14y ago
    There are alternatives that amount to basically the same thing and are also disruptive, but perhaps differently. For example, they could leave the Euro, print money to bailout, let inflation rise, let their new currency devaluate, etc. It's also very risky and results in savers losing money. It's also less progressive than what they are proposing as it's strictly just a flat percentage of assets.
witek 14y ago
Agreed. Cyprus is often used as a tax haven for money of dubious origin.
bitcartel 14y ago
Given the inevitable public backlash, looks like they're already back-peddling, or worse, just making things up as they go along. "The Cypriot government on Sunday discussed with lenders the possibility of changing the levy to 3.0 percent for deposits below 100,000 euros, and to 12.5 percent for above that sum, a source close to the consultations told Reuters on condition of anonymity." "According to a draft copy of legislation, failing to pay up would be a criminal offence liable to three years in jail or a 50,000 euro fine." http://www.reuters.com/article/2013/03/17/us-cyprus-parliament-idUSBRE92G03I20130317 http://www.reuters.com/article/2013/03/17/us-cyprus-parliame...

by cft 14y ago

eurleif 14y ago

Is anyone of any importance seriously clueless enough that they can't predict the consequences of taking money out of everyones' bank accounts? And if so, what is wrong with the system that allows morons of that magnitude to gain power?

etherael 14y ago
It sounds unbelievable enough that I really can't help but wonder if they're doing it on purpose. But assuming that were true, what have they to gain from doing so?
- deleted 14y ago
  [deleted]
tptacek 14y ago
I don't understand this question. What was the alternative? As people keep pointing out, Cypriot banks are overwhelmingly funded by their depositors. You can't just go after the bondholders in this case. And "do nothing" would have been worse, possibly by an order of magnitude, for depositors.
- loumf 14y ago
  There are alternatives that amount to basically the same thing and are also disruptive, but perhaps differently. For example, they could leave the Euro, print money to bailout, let inflation rise, let their new currency devaluate, etc. It's also very risky and results in savers losing money. It's also less progressive than what they are proposing as it's strictly just a flat percentage of assets.

witek 14y ago

Agreed. Cyprus is often used as a tax haven for money of dubious origin.

bitcartel 14y ago

Given the inevitable public backlash, looks like they're already back-peddling, or worse, just making things up as they go along. "The Cypriot government on Sunday discussed with lenders the possibility of changing the levy to 3.0 percent for deposits below 100,000 euros, and to 12.5 percent for above that sum, a source close to the consultations told Reuters on condition of anonymity." "According to a draft copy of legislation, failing to pay up would be a criminal offence liable to three years in jail or a 50,000 euro fine." http://www.reuters.com/article/2013/03/17/us-cyprus-parliament-idUSBRE92G03I20130317 http://www.reuters.com/article/2013/03/17/us-cyprus-parliame...