Cyprus govt to seize 6.75% of all bank accounts as of Sat morning

One can not help to wonder if it is at all possible for Cypriot politicians that were in the know on Friday (you know that there were some. Had to be) took advantage of the situation and made arrangements to transfer all/most of their loot.
 
Thanks for link to the Salmon piece.

Is there anything actionable in all this for US investors? Will US Treasuries get a small pop? Will int'l funds drop by 1% since the Euro is off by 1%? Anything else?
 
jebmke said:
On the business side I was pretty heavily into the situation in Argentina when they un-pegged. In some ways this was the equivalent of seizing about 75% of the bank deposits in local currencies. Those were interesting times. The locals who didn't have USD accounts offshore were not happy campers.

Our dealings in Venezuela were almost exclusively with PDVSA so we dealt strictly in USD and all transactions occurred through a bank outside of VEN.
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I was a local hire and paid in Bs. Some rough moments and sleepless nights. I remember friends and coworkers in Brazil, Argentina, Mexico and Peru who also went through tough currency and banking situations. I imagine lots of folks in Cyprus are worried right now. Those that can afford it the least will be hurt.

Nothing about the US financial situation even remotely compares, especially the fear factor.
 
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Monday might be an interesting day in some European countries... Good thing there is no chance of a reenactment of the impact of certain events in Sarajevo almost exactly a century ago.
 
MichaelB said:
I've lived through worse than that. Twice, in fact (Venezuela). Nothing to do with the US, not even sure it has any impact on us.
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I would like to agree, but things like this have a way of spiraling beyond expectations. If this situation in Cyrpus is viewed by enough Eurozone citizens as a precedent it could start a major run on bank deposits across the Eurozone, and possible precipitate another financial crisis before the world economy has fully recovered from the last one.

Why today’s Cyprus bailout could be the start of the next financial crisis
 
Eh, we are overdue for a correction and I have lots of cash to invest. Sell-off, ho!
 
brewer12345 said:
Eh, we are overdue for a correction and I have lots of cash to invest. Sell-off, ho!
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Yes, and to make it better I just bought some SPY puts. Here's hoping for some filthy lucre, my second favorite thing.

Ha
 
It could be argued, I think, that in the US we are also paying a tax on our deposits when real interest rates are kept negative.
 
Cyprus is a pimple on the ass of Europe, so realistically this should be nothing.
 
Koolau said:
Truly, the law of unintended consequences will kick in in Cyprus. It will be a cold day in Paradise before most folks put any more money into their accounts there. Fool me once., etc.... YMMV
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This is what I was thinking...

Also, if some of that money is Russian mob.... I bet they will not take less than what they put in.... or else...
 
If the results of the Monday decision cause EU instability or the beginnings of worry in the US markets, you may want to revisit this link (previously posted on this thread). "Collateral Damage - Back to Mesopotamia"
http://www.bcg.com/documents/file87307.pdf

Not only does it cover the kind of resolution proposed by Cyprus government, but it shows the inter dependability of world wide banks, and offers some unpleasant solutions, as well looking forward in the event solutions are not begun.
Interesting, if only as a framework to view events as they unfold, and possibly to help in developing a personal plan of action, in the event that things do go downhill... ie, where to keep assets safe.
On of the parts of a proposed solution was to tax corporations on non producing liquid assets, to encourage R & D.
The charts that cover the relative financial strength of the US and EU countries is quite revealing, covering Household Debt, Corporate Debt and National Debt... as well as the relative differences in personal wealth between the countries.
The article is from September 2011, but as far as I can see, very true to today's circumstances, albeit the debt was substantially less then.
 
Hawkeye is correct. This is an action by a country with no other options. Since it cannot monetize its deficits, it has to resort to unorthodox measures.

I realize I'm speculating, but the euro only has a few years left in its current form. It will survive, but without the south, most likely.
 
brewer12345 said:
Cyprus is a pimple on the ass of Europe, so realistically this should be nothing.
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Glad you feel that way, but that news had set off quite a large sell off in the Asian Markets now, and very surely will hit European markets and the US market later in the day. Hope there will not be bank runs in some European countries like Greece, Portugal, Spain and Italy.:(
 
HawkeyeNFO said:
Apparently about half the $$$ in these banks is sent from Russians ...
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The fact (?) that deposits are held by foreigners should not be used as an excuse for a cash-grab; at least, not by any government that wants to encourage future foreign investment.

HawkeyeNFO said:
... a substantial amount of that is from shady/illegal activities.
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If the money is suspected to be the proceeds of crime, then steps should be taken to prove that in court. But arbitrarily seizing (only) part of it without due process has nothing to do with its alleged dodgy origins.
 
It appears that the Cyprus government is being forced by the EU and the IMF to collect the tax in return for bailout money. More of a far reaching problem in Europe IMO.

"Investors got a shock from weekend news that the European Union and International Monetary Fund have demanded that all bank customers in Cyprus pay a levy in return for a €10 billion ($12.9 billion) bank bailout. What the Cyprus levy is all about"

What will Cyprus do to Wall Street
 
Yeah, its not the effect in Cyprus that would be my big worry. If the EU makes it clear that your money is not safe in a bank, I see the potential for bank runs in all of the marginal countries.

There are few worse things economically than a bank run.

This is a BAD idea.

Koolau said:
Truly, the law of unintended consequences will kick in in Cyprus. It will be a cold day in Paradise before most folks put any more money into their accounts there. Fool me once., etc.... YMMV
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Oz bank deposit

Sparkie67 said:
Meanwhile here in Oz, as of 31 May this year, any bank account that has not had a deposit or withdrawal into or from it in the previous 3 years will be taxed at 100% by the government. All banks will be required by law to deliver the money to the tax office.

Apparently you can apply to have it returned, but really.
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Thanks heaps for this update. I've left some money at Westpac due to high interest, so I'll be sure to make a withdrawal. Wonder how gov't will calc interest on 'taxed' funds?
 
rbmrtn said:
Wouldn't your interest earnings deposit cover the activity requirement ?
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That doesn't even work in US banks.

When I first got into internet banking I was nervous about mailing checks to California as my internet bank has no physical presence. I kept a savings account at a bricks and mortar bank to deposit checks, but as I became more confident in mailing checks I only used my local bank for depositing my annual bonus check. I was surprised to discover one day that they had closed the account for too little activity (I couldn't access it on-line and had to go in to find out why, where they gave me a check for the balance, which was over $3k).
 
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