The Cyprus Situation

Jegersmart

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?

There are several issues with what you have posted:

1. Our savings are not "insured" per se in terms of a premuim paid and all is covered. The Government has put in place a guarantee for taxpayers' deposits which is in turn funded by taxpayers who are the Governments only source of income. That is to say that we have in effect guaranteed our own money with our own deposits. (So who do you think "pays"?)

2. Our society is based on labour, and the taxes that are paid on wages. This is why debt is necessary to keep the system going, because the system depends on our labour and we are legally obliged to pay our debts. It is acceptable in this current paradigm to get massively in to debt in order to secure basic shelter, most will pay that debt over 25-30 years thus ensuring that labour is necessary to service that debt. If everyone paid off their debts, what do you think would happen?

3. The problem with the Government guarantee, is that there is no money to pay for it as such. The UK goverment is already in debt to the tune of around 1.4 trillion GBP or 90% of GDP. In order to backstop even 35 million accounts at 85k each is an exposure of around 3 trillion pounds or approximately double the total current GDP, or around 6 times the total current tax revenue. And that is just to provide a back stop for savings alone.

4. Point 3 above is the main reason why the banking system is exempt from free market forces - in terms of letting them fail and so on - because if they did fail then the guarantees would come into play which no government could realistically afford. If you think about this point in particular, you will see the thread that runs through our monetary system from labour, to scarcity, to debt.

4. Point 4 above is why I have been saying for a long time, and in a few threads on here that almost all "money" in existence is debt, it is owed by someone to someone else and our wealth is stolen from us through the application of interest. Interest payments almost invariably end up going to a bank, who cannot be allowed to fail (if of a decent size) because this would cause ripples due to the fact that everyone is holding someone's debt in some form or another, if someone is unable to pay and is large enough......well you get the picture.

5. If even 25% of taxpayers globally decided to get together and not work and not pay taxes, how long do you think the system would last?

6. Do you know why the protection was increased from £50K to £85K? It is because this is purely a confidence game, no developed-country government could afford to cover £50K let alone £85K. (except maybe Norway).


J

JohnRo

Jegersmart wrote: »

http://www.heritage.org/federalbudget/top10-percent-income-earners

It looks very divisive and slanted to me. It needs to define all income earned, I assume what it really means is declared taxable income and that's where the flaw lies because the uber wealthy have a vast range of tax avoidance schemes at their disposal.

What it does appear to show clearly is how the working population are increasingly being sucked into the basic subsistence level of income considered enough to live on, and so (not) being taxed accordingly.

innovate

JohnRo wrote: »

.....don't forget it's the unelected troika gangsters dictating terms to the Cyprus government. .

Christine Lagarde was elected, and she never struck me as a gangster. http://www.guardian.co.uk/business/2011/may/19/how-election-new-imf-managing-director-works

EU representatives are elected by thee and me (if we bother to vote), and yes, perhaps one or two could perhaps be considered gangsters. I happened to come across a particularly nasty and slimey gentleman a couple of years ago, representing Malta in Brussels.

The ECB guys are probably appointed, a bit like Mark Carney. Not sure I would bestow the title 'gangster' onto any of them myself.

Talking of gangsters: perhaps some of the depositors could be named in this context?

innovate

Jegersmart wrote: »

1. Our savings are not "insured" per se in terms of a premuim paid and all is covered. The Government has put in place a guarantee for taxpayers' deposits which is in turn funded by taxpayers who are the Governments only source of income. That is to say that we have in effect guaranteed our own money with our own deposits. (So who do you think "pays"?)

If you are talking about the FSCS guarantee: that is not a taxpayer-funded scheme, not directly, anyway. It is an industry-funded organisation, independent from the government. The organisation must exist by law, but that does not mean it is government funded.
The fact that the FSCS can call on the Government for a loan is neither here nor there.

The_Green_Man_2

innovate wrote: »

If you are talking about the FSCS guarantee: that is not a taxpayer-funded scheme, not directly, anyway. It is an industry-funded organisation, independent from the government. The organisation must exist by law, but that does not mean it is government funded.
The fact that the FSCS can call on the Government for a loan is neither here nor there.

Each financial transaction has a small levy to go towards the FSCS guarantee. Very much like an insurance policy. I won't bother addressing the other points in Jegersmart's comment as, at a glance, they appear to be reliant on his flawed first point.

Except point 6. - This was increased so that the guarantee lined up with what already exisited in the rest of the EU, namely an EU100k guarantee (£85k = EU100k).

Jegersmart

innovate wrote: »

Christine Lagarde was elected, and she never struck me as a gangster. http://www.guardian.co.uk/business/2011/may/19/how-election-new-imf-managing-director-works

EU representatives are elected by thee and me (if we bother to vote), and yes, perhaps one or two could perhaps be considered gangsters. I happened to come across a particularly nasty and slimey gentleman a couple of years ago, representing Malta in Brussels.

The ECB guys are probably appointed, a bit like Mark Carney. Not sure I would bestow the title 'gangster' onto any of them myself.

Talking of gangsters: perhaps some of the depositors could be named in this context?

haha.....check this:

http://business.financialpost.com/2013/03/20/imf-chiefs-paris-home-searched-by-police-in-probe-of-400m-arbitration-deal/

One doesn't come by the IMF post without having acted inappropriately, but at least this incarnation may be less inclined to physically and sexually abuse women repeatedly (and get away with it).

imho
J

Jegersmart

The_Green_Man wrote: »

Each financial transaction has a small levy to go towards the FSCS guarantee. Very much like an insurance policy. I won't bother addressing the other points in Jegersmart's comment as, at a glance, they appear to be reliant on his flawed first point.

Except point 6. - This was increased so that the guarantee lined up with what already exisited in the rest of the EU, namely an EU100k guarantee (£85k = EU100k).

Hi

Sometimes you have to a) step back in order to see the wood for the trees, and b) engage without hostility and a closed mind. Where do the funds to pay the levy come from ultimately? If this is too obtuse, how big is the FSCS fund now? In 2008, the FSCS needed and was given a loan by BOE to even guarantee the funds of customers of a small outfit called Bradford and Bingley. Who funds the BOE or are responsible for their loans (and payment of interest?).

In terms of point 6, you seem to have believed the statement by the FSCS literally. To refresh your mind, my point of debate is that the Government (or FSCS) could never guarantee 20k let alone 85k per institution in outright terms....so my point is that it is purely a confidence game, because if the gurantee does not stack up in any financial sense, what is the point of having one? The answer is "confidence".....

Look forward to hearing from you.

J

kidmugsy

innovate wrote: »

If you are talking about the FSCS guarantee: that is not a taxpayer-funded scheme, not directly, anyway. It is an industry-funded organisation, independent from the government. The organisation must exist by law, but that does not mean it is government funded.
The fact that the FSCS can call on the Government for a loan is neither here nor there.

True: but if one of the big banks goes bust at the Cyprus scale the FSCS will then become government-funded, I predict, because it will have no practical way of raising the funds required without recourse to the taxpayer.

Something similar may be true of the pension rescue fund (the name of which escapes me): if one of the big, private sector, final salary schemes bites the dust - say USS - will there really be a chance of the other private sector final salary schemes paying for its rescue without their being ruined too? A hae ma doots.

JohnRo

Christine Lagarde was elected, and she never struck me as a gangster. http://www.guardian.co.uk/business/2...director-works

EU representatives are elected by thee and me (if we bother to vote), and yes, perhaps one or two could perhaps be considered gangsters. I happened to come across a particularly nasty and slimey gentleman a couple of years ago, representing Malta in Brussels.

The ECB guys are probably appointed, a bit like Mark Carney. Not sure I would bestow the title 'gangster' onto any of them myself.

Talking of gangsters: perhaps some of the depositors could be named in this context?

The EU commission is independent of the states that constitute the EU and it runs Europe, the president is elected by the MEP representatives. The president then selects his Eurocrat commissioners to serve the EU interest.

Central banks are private, for profit cartels, given government licence to control monopoly money. No one seems to understand exactly who controls them or how they operate. There is a vast shadow banking, derivatives and securities market conducted off the balance sheet that cannot be scrutinised by anyone not directly involved.

You say they aren't gangsters, I'm not professing any great knowledge - just look back through all of recorded history at what has happened to any economy using fiat currency and any leader who's tried to stop the rot by tackling those who control it.

In more recent times look at the corruption and capture of regulators and governments etc., the links between international banking cartels, corruption and organised crime are no secret.

Fiat currencies have thus far always failed, eventually, there's no shortage of examples. Always at the expense of the economy and people using it, but the wealth transferred resurfaces in a new form of usury controlled by the dynasties who inherit the profits from their collapse.

jimjames

Capital controls announced, supposedly only to run for 7 days. Yet the controls refer to amount of money that can be spent abroad or transferred abroad per month. Looks like they have a long haul in mind.

Maybe shows the future of what can be done to restrict individuals even in a democracy in the west and without any parliamentary vote.

So it shows it could happen here even if our banks are apparently safe - if they want to stop a run on them they can impose controls at will and with no debate.