So much for €100,000 protection - Cyprus bailout

cepheus

Glen_Clark wrote: »

AFAIK nobody did when the Icelandic banks failed.
They just bailed out ordinary depositors.
Which cost a lot less than the British way of bailing out everybody.
Which could yet bankrupt the country, not just the banks.

Yes this seemed to work for Iceland. It's a shame we couldn't have done something similar within compensation limit schemes for depositors. It would have left defaults throughout the financial sector, but at least the public would have been spared paying the bill.

Iceland seemed to be able to Nationalise these banks without taking on the corporate debts. I know British Local Authorities were hit by this. Too bad.

NBI hf. (also known as Nýi Landsbanki, Icelandic for ‘new national bank’) is a state-run bank which operates in Iceland. The organisation was created in October 2008 after the government took control of the insolvent Landsbanki,

As part of the urgently passed emergency law on 6 October, the path forward for the receivership held banks was dictated to be a secretion of all domestic assets into new surviving public owned domestic versions of the banks, while leaving the foreign remainings of the banks into receivership and liquidation. This move worked as a protecting hand for the Icelandic economy, as it meant that the domestic residents would not suffer any losses from the systemic bank failure.

RetiredInThailand

atush wrote: »

the IOM is considerably closer to having a balanced budget than the UK is. And they aren't bust. Their economy is growing and has done the last 5 years.

So that would be growing from microscopic to only minute? Take away the bank deposits and they have nothing.

The problem with all these little countries and islands (CI, IOM, Cyprus, Iceland etc) is that they are tiny and have no significant resources or income apart from a huge banking sector that completely dwarfs the rest of the economy. So when that collapses everything goes with it.

mark55man

RetiredInThailand wrote: »

So that would be growing from microscopic to only minute? Take away the bank deposits and they have nothing.

The problem with all these little countries and islands (CI, IOM, Cyprus, Iceland etc) is that they are tiny and have no significant resources or income apart from a huge banking sector that completely dwarfs the rest of the economy. So when that collapses everything goes with it.

so a bit like the island of mainland Britain - who I presume you included in the ... etc

your description is astonishingly accurate

cepheus

26 percent of GDP in Cyprus is the result of "economic activities and the income derived thereof that circumvent or avoid government regulation or taxation." That's quite a bit. Not only does it show why there's no political appetite for a bailout of Cypriot banks in Germany, but also how much Cyprus stands to lose if its status as a tax haven is jeopardized, which seems to be the direction this whole saga is headed.

Thrugelmir

mark88man wrote: »

so a bit like the island of mainland Britain - who I presume you included in the ... etc

your description is astonishingly accurate

The City of London despite what the press might portray has far to its financial services sector than a dozen major banks.

cepheus

Wow 25%, a few people will be very angry but it is beyond the limit.

Cyprus says 'significant progress' in debt crisis talks

Cypriot Finance Minister Michael Sarris says there has been "significant progress" in talks with the EU and IMF aimed at securing a bailout.

Mr Sarris was also quoted by Reuters as saying Cyprus was considering a 25% levy on deposits of more than 100,000 euros (£85,000) in its biggest bank.

Cyprus has to raise 5.8bn euros (£4.9bn; $7.5bn) before Monday to secure a 10bn-euro loan.

Thrugelmir

cepheus wrote: »

Wow 25%, a few people will be very angry but it is beyond the limit.

I'm sure that the Russian tax authorities are looking on in interest as well.

cepheus

Iceland holds some key lessons for nations trying to survive bailouts after the island’s approach to its rescue led to a “surprisingly” strong recovery, the International Monetary Fund’s mission chief to the country said.

Iceland’s commitment to its program, a decision to push losses on to bondholders instead of taxpayers and the safeguarding of a welfare system that shielded the unemployed from penury helped propel the nation from collapse toward recovery, according to the Washington-based fund.

Iceland refused to protect creditors in its banks, which failed in 2008 after their debts bloated to 10 times the size of the economy. The island’s subsequent decision to shield itself from a capital outflow by restricting currency movements allowed the government to ward off a speculative attack, cauterizing the economy’s hemorrhaging. That helped the authorities focus on supporting households and businesses.

http://www.businessweek.com/news/2012-08-12/imf-says-bailouts-iceland-style-hold-lessons-for-crisis-nations

atush

RetiredInThailand wrote: »

So that would be growing from microscopic to only minute? Take away the bank deposits and they have nothing.

The problem with all these little countries and islands (CI, IOM, Cyprus, Iceland etc) is that they are tiny and have no significant resources or income apart from a huge banking sector that completely dwarfs the rest of the economy. So when that collapses everything goes with it.

It may be small, but the economy is growing and not reliant on any one sector (unlike Cyprus). It is far more balanced than the CI for instance.

Cyprus was particularly unbalanced, with banking sector 7x GDP.

In any case, the UK is over reliant on the finance sector, hence the too big to fail bailout.

socrates

The who’s who of the great March bank run



http://www.cyprus-mail.com/opinions/insight-who-s-who-great-march-bank-run/20130516