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Cyprus surprise - Cypriot depositors to take a 'haircut'
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Graham_Devon wrote: »It's been done behind the scenes, after closing hours, over a bank holiday weekend.
Cypriots have been given absolutely no time to prepare. No information to vote on. No ability to make an informed choice. No opportunity to protest.
Of course no time has been given to prepare. Apart from a bank run the tax take would be zero if depositors had been given two weeks notice.Graham_Devon wrote: »I very much doubt you and Hamish would be best pleased if your bank account was raided and you could do absolutely nothing about it, weren't warned, and it was done over a period of a bank holiday meaning they have more time to arrange the undertaking over removing the money from your accounts.
I'm already a long way from being best pleased. My bank account, indirectly, is raided on a routine basis by a government that is determined I should fund their gross overspending. There's pretty much nothing I can do about it other than make sure I spread the risk.Graham_Devon wrote: »Treating savings like investments is a nonsense. This line comes purely from your distaste for savers. If were going to suggest savers should be treated like investors, perhaps we should to suggest investors should have their assets removed?
Most of the problems we have now are due to a misunderstanding of risk. Put cash under a mattress and there's a risk that it will be stolen, burnt etc. Put cash in a bank and there's a risk they'll go bust. It's not a distaste for savers - there really is no such thing as a free lunch - ask the shareholders.0 -
If I was a Spanish or even Italian saver my money would already be with HSBC.:) But I know what you mean; there is the risk of contagion. Expect reassuring words issuing from the mouths of sundry Euro-politicians along the lines of 'it won't happen here'.
If you were in the position of having savings in banks in those countries that are most infected with problems, would reassuring words from Euro politicians be enough to prevent you moving your money out of the banks?[FONT="]“I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” ~ Maya Angelou[/FONT][FONT="][/FONT]0 -
Put cash under a mattress and there's a risk that it will be stolen, burnt etc. Put cash in a bank and there's a risk they'll go bust.
Leave cash in any one country, and there's a risk of a tax raid.It's not a distaste for savers - there really is no such thing as a free lunch - ask the shareholders.
Quite.
In order for there to be zero risk, there needs to be zero return.
When you expect more than zero returns, you have to accept more than zero risk.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Most of the problems we have now are due to a misunderstanding of risk. Put cash under a mattress and there's a risk that it will be stolen, burnt etc. Put cash in a bank and there's a risk they'll go bust. It's not a distaste for savers - there really is no such thing as a free lunch - ask the shareholders.
I do wish you would stop trying to confuse investors and normal people with some money in the bank.
It does you an injustice.
You and hamsih have both stated before now your distaste towards savers, so it's no real surprise to see you happy to see them shafted, pretending that having some savings in the bank is the same as investing.0 -
HAMISH_MCTAVISH wrote: »Leave cash in any one country, and there's a risk of a tax raid.
Quite.
In order for there to be zero risk, there needs to be zero return.
When you expect more than zero returns, you have to accept more than zero risk.
Where does it say that?0 -
Graham_Devon wrote: »It's not like anyone could have even conceived it.
This has happened before,and in Cyprus (heck, even in England)
I can see where Hamish is going with this, but the problem is that people consider bank deposits as zero risk. Now, suddenly, throughout the EU bank deposits have been shown not to be zero risk. This implies either a greater risk premium or reallocation of resources to other investment strategies.In other words, Cyprus, and many other high risk european countries are going to have the mother of all bank runs.“The ideas of debtor and creditor as to what constitutes a good time never coincide.”
― P.G. Wodehouse, Love Among the Chickens0 -
Graham_Devon wrote: »I do wish you would stop trying to confuse investors and normal people with some money in the bank.
It does you an injustice.
Why are you confused?
If I put £1000 in a Lloyds bank deposit account then there's a risk I won't see it again. If I put £1000 in Lloyds share then there's a risk I won't see it again. 'Normal' people can do both.
In both cases there's a risk involved as Cypriot depositors are finding out.0 -
Statement from the President of the Republic here...
http://www.moi.gov.cy/moi/pio/pio.nsf/All/C7131DA40FCE0827C2257B30005411D5?Opendocument0 -
Why are you confused?
If I put £1000 in a Lloyds bank deposit account then there's a risk I won't see it again. If I put £1000 in Lloyds share then there's a risk I won't see it again. 'Normal' people can do both.
In both cases there's a risk involved as Cypriot depositors are finding out.
If you put £1,000 into a Lloyds savings account, it would be covered by the FSCS.
You are talking about people not understanding things, but people are led to believe that they are covered. If they are not, or cover is removed, that's a different scenario.
People in this country often realise the risk of savings accounts and split their savings with several banks.
Cypriots had €100,000 covered. Overnight that's been thrown out of the window with absolutely no opportunity to do anything about it or re-evaluate the risk.
It's not like shares. The risk is different.
My point to you (and you always do this - prime example being "people should buy if they dont want to pay high rents) is that you assume that everyone has thousands, making it worth actually investing in shares. People don't. Many many people simply have a small amount of savings. Hence why savings and investments can never be the same thing.0 -
I can see where Hamish is going with this, but the problem is that people consider bank deposits as zero risk. Now, suddenly, throughout the EU bank deposits have been shown not to be zero risk. This implies either a greater risk premium or reallocation of resources to other investment strategies.In other words, Cyprus, and many other high risk european countries are going to have the mother of all bank runs.
According to Peston the EU are gambling that the worst of the crisis is over and that Spanish banks in particular can cope with an increased demand for withdrawals.
Not sure what the outcome will be - won't be boring though!0
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