Cyprus surprise - Cypriot depositors to take a 'haircut'

John_Pierpoint

To those that hath shall be given ?

There is some little satisfaction in seeing a borrower rather than a saver suffering.
There are a lot of borrowers here in the UK who were "clever" enough to get mortgages linked to base rate, they have been dining out on the result for 5 years.

Graham_Devon

wotsthat wrote: »

The hysterics continue.

The media will always find the 'special case'. He's lucky he's got 95% or so of the money for his daughters tuition - how much would he have if his bank went bankrupt and the Cypriot government couldn't afford to guarantee the deposits?

I can see that there's some excitement about the precedent being set but, really, what's the big deal. In the UK there's £1.2tn on deposit probably deflating around 2% each year - that's £24bn - can't see any queues at the cashpoint.

Aye, special case, or whatever. No one else like the bloke the media weeded out. It's all just hysterics.

Seems to me you get more upset over a potential borrower not getting a loan they can't really afford than you do outright theft and corruption.

I guess people differ, but your cries for more and more lending when this is the result on normal folk show your concerns. I guess if it was you hit by this, you'd feel much differently.

You are a long standing pro EU. So is Hamish. Maybe you are finding it harder to accept this than others, so want to see it written off as mere hysterics.

Sampong

Graham_Devon wrote: »

We can't get out of the EU quick enough......

Amen to that.

I have been saying it for a long while (as have you)

HAMISH_MCTAVISH

John_Pierpoint wrote: »

There are a lot of borrowers here in the UK who were "clever" enough to get mortgages linked to base rate, they have been dining out on the result for 5 years.

And that "dining out" has been stimulating the economy, exactly as the BOE intended, which is why rates were dropped to begin with.

ILW

Nasty horrible savers, deserve all they get.

wotsthat

Graham_Devon wrote: »

Aye, special case, or whatever. No one else like the bloke the media weeded out. It's all just hysterics.

Seems to me you get more upset over a potential borrower not getting a loan they can't really afford than you do outright theft and corruption.

I guess people differ, but your cries for more and more lending when this is the result on normal folk show your concerns. I guess if it was you hit by this, you'd feel much differently.

You are a long standing pro EU. So is Hamish. Maybe you are finding it harder to accept this than others, so want to see it written off as mere hysterics.

Have you considered breathing into a brown paper bag?

I have been hit by this. The UK government have decided that I need to pay this tax despite it being imposed by a foreign government and me having no deposits in Cyprus. Waffle about what I think about the EU or lending to house buyers just shows the hysterics are preventing you from discussing this rationally.

He who pays the piper picks the tune. If Cyprus don't like the tune they could always tell their Eurozone partners to swivel.

N1AK

Graham_Devon wrote: »

Scary stuff.

Wanted to get it straight as I'm wondering why this has only been imposed on Cyprus?

Why not Spain / Greece?

The bailout terms seem varied dependent on the country which seems a little unfair? Spain seemed to get away with the most.

The Germans are becoming increasingly less happy with taking on debts to bailout countries that they feel haven't done much to sort things out themselves. If a country is effectively bankrupt then expecting the people living there to spend 6-10% of savings to help get it on track isn't an overly unfair expectation if they are asking you to lend them billions.

The Germans are also adamant that Cyprus is used to stash masses of cash for Russian money launderers and they aren't exactly happy about bailing them out either.

Graham_Devon

wotsthat wrote: »

He who pays the piper picks the tune. If Cyprus don't like the tune they could always tell their Eurozone partners to swivel.

Let's hope they do.

Not that they have much of a voice in this you understand.

michaels

A quick question

I thought various lenders to a bank had a 'pecking' order in terms of who loses money if the bank is insolvent even before any consideration of state gaurentees.

And I thought that depositors basically were 'first in line' for any payout above bond holders and shareholders. And yet it appears that in Cyprus by calling it a 'tax' and not a bailout that bondholders (hedge funds, other banks etc) have been rescued at the expense of depositors. Surely this is very like Argentina, arbitarily tearing up contracts as suits.

The IMF and EU supervising such a deal implies that these organisations are happy to see contract law usurped if it suits them. where does that leave any other financial transaction under their supervision?

Graham_Devon

michaels wrote: »

A quick question

I thought various lenders to a bank had a 'pecking' order in terms of who loses money if the bank is insolvent even before any consideration of state gaurentees.

And I thought that depositors basically were 'first in line' for any payout above bond holders and shareholders. And yet it appears that in Cyprus by calling it a 'tax' and not a bailout that bondholders (hedge funds, other banks etc) have been rescued at the expense of depositors. Surely this is very like Argentina, arbitarily tearing up contracts as suits.

The IMF and EU supervising such a deal implies that these organisations are happy to see contract law usurped if it suits them. where does that leave any other financial transaction under their supervision?

Peston was on R5 this morning, and he has changed his tune considerably overnight.

He's got a new blog entry too, in which people are commenting on his change of stance.

Basically he's stated this morning on R5, after researching this further that it is what it is. Basically, every law that people thought they were covered by has been torn up. The law still exists, but there are new ways to circumvent them.

The cypriots were promised just a few days ago this would not happen under any circumstance. They now have been told it will, by the very same person who was supposed to be looking after their interests. The cypriots were told and guarenteed it wouldn't happen due to the fear from Germany etc that capital flight would take place. So basically they have been completely and utterly deceived.

The laws have been changed overnight and the laws which can't be changed (the fundemental EU laws which helped bring the EU together) have been dodged by calling it a tax levy. However, by all other definitions, it can't be called a tax (according to the beeb).

Peston appears to now be on the side of suggesting this is rather more a money grab done under circumstances which change everything we thought we knew. He said it could happen in the UK but it was extremely unlikely. However, our FCSC guarentees are worth just as much as the guarentees the Cypriots had. There is little difference. The only difference being we hold a better hand from the deck of cards.

Basically, what Peston was hinting at is that the EU rules over everything else. Therefore, things can change at the drop of a hat. He was concerned that they have targetted savers rather than thr traditional investros who accepted more risk at the start, especially those who accepted the risk knowing of the EU problems.