Cyprus surprise - Cypriot depositors to take a 'haircut'

The_Green_Man_2

I don't see why there is such outrage at this. In the UK our savings are insured up to £85k or £170k in joint accounts. Prior to the credit crunch it was insured up to £50k. Perhaps if we had stuck to these insurance policies when Northern Rock and especially when the icelandic banks went under, the UK taxpayer would not be laden with all this debt.

UK savers should follow the advice that Martin Lewis has been giving since the start of the financial crisis and keep your savings in each financial institution below these limits.

People should be responsible for their own finances. If they choose to put their life savings into a bank that is offering 120% mortgages, an overseas bank offering 'too good to be true' interest rates or try to hide their money in tax havens, then that's the risk they took. Why should the rest of us bail them out?

antrobus

The_Green_Man wrote: »

.. Perhaps if we had stuck to these insurance policies when Northern Rock and especially when the icelandic banks went under, the UK taxpayer would not be laden with all this debt...

But the failure of the Northern Rock didn't involve any call on these "insurance policies" and we've already got back some 90% of what it cost when Landsbanki went pop. So where is the debt?

wotsthat

BlondeHeadOn wrote: »

What I can't understand is that most Cypriots I've seen interviewed stil say they want to stay in the euro.

If someone is repeatably willing to lend me money knowing full well I'm not going to pay it back I'd be pretty compliant too.

BlondeHeadOn wrote: »

At least if they had their own currency again they could devalue and set own interest rates etc., and boost tourism by having a cheap exchange rate etc.

Maybe when the free money stops...

The_Green_Man_2

antrobus wrote: »

But the failure of the Northern Rock didn't involve any call on these "insurance policies" and we've already got back some 90% of what it cost when Landsbanki went pop. So where is the debt?

My point was that northern rock's failure should have called on the FSA insurance policies and deposits over this amount should have been used to pay off some of the bank's debt. The bank would then have gone into liquidation and the remaining debt would have been left with investors, not with the tax payer.

Are you saying that there is no government debt as a result of the bank bailouts?

antrobus

The_Green_Man wrote: »

My point was that northern rock's failure should have called on the FSA insurance policies and deposits over this amount should have been used to pay off some of the bank's debt. The bank would then have gone into liquidation and the debt would have been left with investors, not with the tax payer....

Orderly liquidations generally produce a better result than disorderly ones. The UKFI run down of NRAM will likely result in a profit to the UK taxpayer, notwithstanding the apparent skeletons in the Northern Rock cupboard.

The_Green_Man wrote: »

Are you saying that there is no government debt as a result of the bank bailouts?

Yes, but it's chump change compared to the amount of government debt being amassed as a result of persistently running annual deficits of +£100bn.

CLAPTON

The_Green_Man wrote: »

I don't see why there is such outrage at this. In the UK our savings are insured up to £85k or £170k in joint accounts. Prior to the credit crunch it was insured up to £50k. Perhaps if we had stuck to these insurance policies when Northern Rock and especially when the icelandic banks went under, the UK taxpayer would not be laden with all this debt.

UK savers should follow the advice that Martin Lewis has been giving since the start of the financial crisis and keep your savings in each financial institution below these limits.

People should be responsible for their own finances. If they choose to put their life savings into a bank that is offering 120% mortgages, an overseas bank offering 'too good to be true' interest rates or try to hide their money in tax havens, then that's the risk they took. Why should the rest of us bail them out?

Do bear in mind that the insurance only covers personal accounts.

Business a/cs aren't covered; while this may seem unimportant, if the UK had allowed the banks to fail many of UK businessess would have failed and so unemployment etc would have rocketed and GDP collapsed.

In many ways a lot worse than same people simply lossing their savings.

wotsthat

The_Green_Man wrote: »

My point was that northern rock's failure should have called on the FSA insurance policies and deposits over this amount should have been used to pay off some of the bank's debt. The bank would then have gone into liquidation and the remaining debt would have been left with investors, not with the tax payer.

At the time of the Northern Rock failure I was vaguely mystified that a regional, former building society was a systemic risk to the UK banking system but broadly welcomed the government's actions.

However, with hindsight I do wonder if it would have just been better to make a gesture towards depositors (say double the amount of protection available) and then let capitalism take it's natural course. I heard Alistair Darling on the radio talking about Cyprus - he still thinks the response was commensurate with the risks.

antrobus

wotsthat wrote: »

At the time of the Northern Rock failure I was vaguely mystified that a regional, former building society was a systemic risk to the UK banking system but broadly welcomed the government's actions....

It was based in Newcastle. There's an awful lot of Labour constituencies in that part of the country.:)

wotsthat wrote: »

...However, with hindsight I do wonder if it would have just been better to make a gesture towards depositors (say double the amount of protection available) and then let capitalism take it's natural course. I heard Alistair Darling on the radio talking about Cyprus - he still thinks the response was commensurate with the risks.

Bear in mind that a lot of the holders of senior debt in Northern Rock did indeed lose out. One of the reasons why NRAM has been booking profits of late is that is has been buying back that debt at a discount.

antrobus

CLAPTON wrote: »

...In many ways a lot worse than same people simply lossing their savings.

I wonder, in the context of Cyprus, how many businesses will be effected by the 'deep haircuts' on 100k euros +, and what the fallout will be?

John_Pierpoint

No capital controls though ?!

As the saying goes:
"Fool me once, shame on you
Fool me twice, shame on me".

Why should anyone have more than 100,000 Euro in Cyprus?

It is as recently as the latter half of the 1970's, that some idiot of a customs man tried to pick a fight with me at Southend Airport, because I was boarding a plane to Holland with £20 in my wallet.
I was torn between laughing at him and getting really annoyed and launching into a tirade about if the fog prevented the 30 year old plane from returning to Southend, £20 would not buy a taxi back from Heathrow.
Thee Dutch customs at the Rotterdam end, were a lot more human, when they discovered I had bought three half bottles of whisky, from the stewardess.