How to cause a run on the banks

[Doggy Styles]

Wrong, its what the neoliberal troika of the IMF, EU and ECB wanted to do. As you will see in each of those acronyms, 2 have the first word of Europe and one has International which means that is what the rest of Europe and the world wanted to do to Cyprus.

Whoosh!

By rushing to the defence of your fatherland, you've ignored (or don't actually understand) the whole point of the post.

Which is that this is a tax on deposits, very different to low interest rates or a tax on interest earned.

[darmstadt]

That's irrelevant to what Germany wanted to do in Cyprus.

Whoosh!

By rushing to the defence of your fatherland, you've ignored (or don't actually understand) the whole point of the post.

Which is that this is a tax on deposits, very different to low interest rates or a tax on interest earned.

And I'll Whoosh! you too. All I tried to point out, instead of playing the blame game, i.e. if the Daily Blah says it, its true, is that the Troika is 3 different organisations made up of persons from many countries which means that no one country or person has the ultimate say. Its decided by many people, for all anyone knows this could have been someone from France or Holland who pushed for this decision.

BTW, my fatherland still has troops there who will probably have to be withdrawn once Cyprus becomes a Russian satellite state...

[DodgyAgent]

And I'll Whoosh! you too. All I tried to point out, instead of playing the blame game, i.e. if the Daily Blah says it, its true, is that the Troika is 3 different organisations made up of persons from many countries which means that no one country or person has the ultimate say. Its decided by many people, for all anyone knows this could have been someone from France or Holland who pushed for this decision.

BTW, my fatherland still has troops there who will probably have to be withdrawn once Cyprus becomes a Russian satellite state...

The IMF and the EU have no democratic authority. Just because they are made up of people from many countries does not give them any democratic integrity.
You are also completely missing the point of this thread which is that by imposing a levy on bank deposits in this way it unleashes unpredictability in the markets. If the EU has the power to do this to Cyprus and justify it by making a moral judgement (you seem to have swallowed this one) on the legitimacy of the deposits, means that they can apply this to any banking deposits anywhere. They can spin it by convincing useful idiots that the money held in these deposits is dodgy. We are not all as gullible as these useful idiots.

[doodab]

The IMF and the EU have no democratic authority. Just because they are made up of people from many countries does not give them any democratic integrity.
You are also completely missing the point of this thread which is that by imposing a levy on bank deposits in this way it unleashes unpredictability in the markets. If the EU has the power to do this to Cyprus and justify it by making a moral judgement (you seem to have swallowed this one) on the legitimacy of the deposits, means that they can apply this to any banking deposits anywhere. They can spin it by convincing useful idiots that the money held in these deposits is dodgy. We are not all as gullible as these useful idiots.

The point you seem to miss is that they don't have the power to do this to Cyprus, as their government has rejected the deal.

What power they do have in this context comes from being the only people dumb enough to lend the cypriot government money, and that respect they have no more power to dictate terms than any other lender. The russians are likely to want a good deal on their natural resources which is arguably ripping the people of cyprus off more.

[darmstadt]

Does that mean the account holders are to blame?

Nope but they're taking the brunt sadly whereas it should be the banks, the banking regulators, the government, etc.

A quick overview here

As people have implied, that Cyprus is some sort of tax haven then surely this should come as no surprise either as the EU already has a form of savings taxation which may, or may not, have been ignored or just doesn't work...

The IMF and the EU have no democratic authority. Just because they are made up of people from many countries does not give them any democratic integrity.
You are also completely missing the point of this thread which is that by imposing a levy on bank deposits in this way it unleashes unpredictability in the markets. If the EU has the power to do this to Cyprus and justify it by making a moral judgement (you seem to have swallowed this one) on the legitimacy of the deposits, means that they can apply this to any banking deposits anywhere. They can spin it by convincing useful idiots that the money held in these deposits is dodgy. We are not all as gullible as these useful idiots.

Really? I personally think its wrong, and downright dangerous, in what they tried to do but I also think that its wrong for people to put their money into an offshore account so they don't have to pay tax on it in their own country. As has been shown the EU does not have the power to do this as the Cyprus government voted against it, what they did along with the IMF and ECB (and not forgetting that the Cyprus finance head honchos were in on it) is to provide a recommendation. There will be more recommendations to come from all sides and hopefully it will be one that doesn't affect the honest burghers of Cyprus.

[Mich the Tester]

Really? I personally think its wrong, and downright dangerous, in what they tried to do but I also think that its wrong for people to put their money into an offshore account so they don't have to pay tax on it in their own country. As has been shown the EU does not have the power to do this as the Cyprus government voted against it, what they did along with the IMF and ECB (and not forgetting that the Cyprus finance head honchos were in on it) is to provide a recommendation. There will be more recommendations to come from all sides and hopefully it will be one that doesn't affect the honest burghers of Cyprus.

That's another debate. Here in NL we have 52% tax on earnings above about 40,000 euros, we have a fictitious returns tax on investments over 18,000 euros, which taxes interest at your highest rate of income tax (52% for me) based on the entirely arbitrary figure of 4% interest. Pension schemes are fooked and you don't get anywhere near 4% on savings, in fact you actually lose money by saving once inflation and tax are taken away. The government decided in november to introduce a new rule stating that businesspeople who had used the entirely legal one year extension rule for tax returns twice in the last three years (entirely legal arrangement that the tax office liked because it led to more correct returns) won't be allowed to do that this year, meaning that people like myself who have always paid their taxes according to the law are suddenly having to pay two years of income tax in one go. They doubled insurance tax, which clobbers small businesses. Once I've paid all these enormous sums of money I don't even have any reason to believe that the government will actually manage the money competently and next year they'll dream up new ways of taking even more. All the while, I have to try and find a way of providing for my retirement. And we have a supposedly right-winged business friendly finance secretary. We had a right wing coalition for two years that got into power on a platform of cutting taxes and red tape, but of course none of that happened. So democracy isn't working as a means to help people.

You know what? I'm inclined to agree with tax evaders. We have governments in Europe that are so bloated, greedy and in fact kleptomaniac that it's becoming damn near impossible to actually save and invest in your own future. If some citizens have the means to protect their savings (saved from money that's already earned and taxed) against thieving governments that refuse to get their bloody act together and live within their means, then good luck to them.

I am absolutely sick to the back teeth of governments from both sides of the political spectrum continually failing to do their job with the money the taxpayer is able to provide, and that is actually at the heart of Europe's problems. Perhaps the only real solution is if we all stop handing our money over so easily, but for now, the Cyprus banks need a proper bail out instead of this pile of tulip that's going to cost even more than doing the job properly.

[Ignis Fatuus]

...
You know what? I'm inclined to agree with tax evaders. We have governments in Europe that are so bloated, greedy and in fact kleptomaniac that it's becoming damn near impossible to actually save and invest in your own future. If some citizens have the means to protect their savings (saved from money that's already earned and taxed) against thieving governments that refuse to get their bloody act together and live within their means, then good luck to them.

I am absolutely sick to the back teeth of governments from both sides of the political spectrum continually failing to do their job with the money the taxpayer is able to provide, and that is actually at the heart of Europe's problems. Perhaps the only real solution is if we all stop handing our money over so easily, but for now, the Cyprus banks need a proper bail out instead of this pile of tulip that's going to cost even more than doing the job properly.

I am far from being a rabid libertarian, in fact I think I'm pretty left-wing by CUK standards, but I agree with that. I have an increasing feeling that most governments think that, or at least act as if, "all your money is belong to us". They are playing some kind of video game with our money. I see no sign of a realisation that our savings represent a huge chunk of our past lives, and a large part of our futures.

I don't mind taxes. Taxes are the price we pay for a civilised society (we've paid them, now please give us one). But we need to be able to plan what to do about our savings, and we can't. For a start, taxing notional income that you can't actually achieve is wrong (your NL returns tax). Actually taxing "income" that is only part-way towards covering inflation is wrong (tax on interest). Vertiginous cliff-edges are wrong (e.g. stamp duty). Taxing money that you may not have is wrong (council tax: if you have a small income but you have in the past managed to buy a house, why should you have to sell it because you can't afford council tax? Yes I know if you're on benefits you get off council tax, but that's a cliff-edge again, it's all or nothing). Oh and IMHO QE to give banks free money so that they don't need to pay depositors any interest to get money, their raw material, is also wrong - it makes us pay for the banks' losses just as surely as the Cyprus grab would have made Cypriots pay for their banks' losses.

And changing the rules that formed part of the basis for your saving decisions is definitely wrong. As is changing the rules so that those who chose not to save are given what those who did save have as a result of their savings. (Example: my partner saved in SERPS, I ill-advisedly contracted out. Now I will get brought up to £144/w for free, then get my contracted-out pension. She will get brought up to £144/w by her own 2nd pension, then get only the remainder of her 2nd pension over that. So she has saved all her life for something that I will get for free).

Osborne is not Brown, but he is still guilty of much of this.

[DodgyAgent]

Really? I personally think its wrong, and downright dangerous, in what they tried to do but I also think that its wrong for people to put their money into an offshore account so they don't have to pay tax on it in their own country. As has been shown the EU does not have the power to do this as the Cyprus government voted against it, what they did along with the IMF and ECB (and not forgetting that the Cyprus finance head honchos were in on it) is to provide a recommendation. There will be more recommendations to come from all sides and hopefully it will be one that doesn't affect the honest burghers of Cyprus.

There are seperate powers to deal with tax avoidance. the EU and IMF (or you for that matter) have no business making up rules to suit them. What happens for instance to the legitimate funds that sit in Cypriot banks? to UK pensioners who have retired there? are they collateral damage?

Let the markets do their work:

http://www.nytimes.com/2013/03/20/bu...anted=all&_r=0

[Mich the Tester]

I am far from being a rabid libertarian, in fact I think I'm pretty left-wing by CUK standards, but I agree with that. I have an increasing feeling that most governments think that, or at least act as if, "all your money is belong to us".

Yep. Yesterday I heard a radio interview on Dutch radio with a man who's now absolutely desperate. He lived in a rented house and had a small business that went bust last summer after a major customer went bust without paying him, and had to move into council (housing corporation) accomodation as he couldn't continue paying the rent. He isn't eligible for unemployment benefit because he was self employed. Now he's got a 6 month contract for the council house, but after that he has nowhere to live unless the council find him another house. He can't rent privately because he has too little money for a deposit, he lives on income support and child benefit for his one child. If he loses his council house then the child welfare people have told him they will take his children away from him. Now basically, what this guy needs is a job or perhaps a helping hand to get his business running again, and until then he needs a basic income and the security of a long term contract in his council house. He spends his time all week dealing with the following government and council departments;
- social security
- council income support department
- child welfare department
- employment office
- housing corporation
- tax office
None of those departments cooperate with each other, all make him fill in long forms every time he visits, and so he really doesn't have time to put into getting a job or restarting his business, and now he is obviously terrified of losing his child. He said he spends more time doing admin and arguing with civil servants than he ever had to do when running a business and he's stuck in this Kafkan system. We all pay a lot of money into the system to prevent this kind of thing happening in the event of some unforseen misfortune but the system isn't working for people; it's working for the thousands of government departments filled up with hundreds of thousands of pen-pushers and coffee drinkers who have the most secure employment rights and pensions of the whole labour market. What makes me angry is not that this man needs a bit of help from me and other taxpayers; what happened to him could happen to any of us. What really pisses me off is that the government departments we pay to help people in need have become parasitic 'profit centres' for people who have neither the skills nor the inclination to work hard for a real business producing real value or a charity doing good work that's useful for society. It's sucking blood from people who are already bleeding to death and it's disgusting. No, I'm not a rabid libertarian either, but what we call democracy has become a kleptocracy. We can't afford our huge parasitic governments any more, and that's at the heart of Europe's economic problems.

What kind of spending cuts have we seen in NL? Oh, they've cut off funding to a couple of orchestras and stopped giving grants to startup artists. Other than that, nothing; just tax rises and rises in healthcare insurance. have any government penpushers been sent home? No, not one, but some soldiers who came back from Afghanistan were made redundant, and some factories that were subsidized to employ mentally and physically handicapped people were closed. Oh, and they're going to force some small schools to merge with others, because of course everything that's big is so much more efficient in the tiny little minds of people who studied politics. Big and efficient enough for some useless underskilled office occupant to sign a form authorizing the removal of somebody's children before sipping on his skinny latte from the smart new Jura machine in the council office.

[Doggy Styles]

And I'll Whoosh! you too. All I tried to point out, instead of playing the blame game, i.e. if the Daily Blah says it, its true, is that the Troika is 3 different organisations made up of persons from many countries which means that no one country or person has the ultimate say. Its decided by many people, for all anyone knows this could have been someone from France or Holland who pushed for this decision.

BTW, my fatherland still has troops there who will probably have to be withdrawn once Cyprus becomes a Russian satellite state...

I'm not playing the blame game - if it makes you feel better, and it obviously would, substitute whatever you like for Germany, it's not important. You are using semantics to escape the point of the post.