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Post by Deleted on Mar 21, 2013 2:42:19 GMT -5
Muleskinner it will happen, I have read about it for over a decade now.
So it will happen one day.
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Post by Sir John on Mar 21, 2013 13:08:03 GMT -5
"the money printers still work , what is the problem ? " That IS the problem. There has never been an economy or society where printing money without real limit has NOT caused out of control inflation. If it did not, ALL Governments would be doing it ALL the time. Adding money to the pockets of the people eventually debases that money, and prices rise out of control. printing and buying Bonds hands money to the Government, and they 'spend' it, and that feeds directly into society. In Germany 1923, Zimbabwe 2000+, and over 30 other occasions in the past 100 years, the presses have been set on MAX and that has always been the end result. In Germany in a little over 18 months, prices went from one Mark to a trillion Marks for an item. It does not happen overnight it starts off slow and then goes to Warp Speed 10. In Germany workers were paid twice a day. They took the money at lunch time and bought food, then at 5PM they did the same thing again. That is what they call the "Velocity of Money". And Gold went from 100 Marks in May 1920 to 100 Trlilion marks an ounce in November 1923. Of the major 20 nations, the G20, most of them are drowning in red ink, and are printing money to get the bills paid, and that includes, INdirectly, the EU. The member States there are mostly in uncontrollable debt! en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_RepublicSJ
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Post by Deleted on Mar 21, 2013 18:40:10 GMT -5
What happen to Germany in most of their history is they managed to make war and get their ass kick all in the same motion , goes back to Roman times , though the huns did get thier licks in , Germany is a pariha in Europe , Germany starts out strong gathers up allies then boom unraveles , while the Empire could always fall back on the backs of the American .
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Post by boxcar on Mar 21, 2013 20:57:33 GMT -5
You had much the same situation in Greece last year as you have in Cyprus today. The Greek bonds were heavily discounted, and the bond holders lost drastically. The only difference I can see is that the bonds were held mostly by foreign banks, whereas the bank deposits are owned by the general public.
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Post by mcnoch on Mar 21, 2013 23:05:14 GMT -5
The problem in Cyprus is not that the government was spending too much; it is that it has a totally out-of-proportion banking-sector which was/is heavily invested into Greek bonds. With the Greek bonds in crisis the banks are in crisis. As the banks make 25% of the GDP of Cyprus, the government has taken over the banks to save them as otherwise they would have been bankrupt and all the private investments lost. They were doing this not only to protect their own people, but mainly to protect the foreign investments by super-rich and tax-evaders from Russia and the UK and their image as safe haven for all kind of black and white money with low taxes and high returns on cash-investments. All the money Cyprus tries to lend from ECB, World Bank and Russia is not needed to pay for their normal debts, but to safe the banks and their business-model. So Cyprus is more like Spain, Iceland or Ireland than Greek, only that those countries' banks were invested heavily into local real estate projects.
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Post by boxcar on Mar 21, 2013 23:24:49 GMT -5
Maybe they should sell the island to Turkey and leave the bank depositors alone.
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Post by Swampy on Mar 24, 2013 11:10:01 GMT -5
Those deposits above E 100,000 could be wiped out. Uh oh.
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Post by mcnoch on Mar 24, 2013 12:02:25 GMT -5
The Cyprus crisis is a very interesting development. Last week Cyprus got the offer “The EU brings 10 bio€, Cyprus brings 5 bio€”. This money would have been completely used to safe the struggling bank-sector that is responsible for 25 % of the GDP of Cyprus. Banks had promised their customers interest rates from 4.5 % up to 8 % in a time when the rest of bank in Europe offered maybe 1 %; possible only by high-risk investments into Greek bonds. And they asked no questions where the money comes from. So they had very big investments from Russia and the UK. Still nobody knows the exact volume, something between 70 and 150 bio€. To protect the foreign investments the government of Cyprus wanted to extend the special tax not only to those foreign bank accounts, but also the domestic ones, including the small one. The EU didn’t asked for that! When this backfired in Cyprus public, the EU and Germany (which wanted the small accounts excluded) was blamed for that. The offer was voted down with not one vote in support. They thought Russia would help them, but Russia had no interest, why should Russia help their tax-evaders? The idea of a special fond, which included 1 bio€ from the retirement pension institution and the local church was not big enough and against the rules in Europe. So now the bank tax is back on the table. They need a solution until Monday when the ECB stops the transfer of money to the broke banks of Cyprus, which had received 15 bio€ in support so far. So if the banks would default, the foreign investments would be in grave danger of losing 40 to 80% and be blocked for years until the liquidation process is completed. Now the government in Cyprus tries to revive the old deal, but has restructured its own contribution. If they split at least the two most problematic banks into a good and a bad bank, they can reduce their own share by 2 bio€. Those accounts involved into the high-risk business, would be losing 60-100%. That is fair, they invested into a class 5 (extreme high risk) investment. The other big accounts above 100 000 € would pay a 20 % bank tax, some only 4 % when they are from banks dealing only with normal, domestic persons and institutions. The first 100 000 in all accounts wouldn’t be affected, as there is a European-wide guarantee up to this level. The only thing that is new now is the implementation of capital control which the government in Cyprus wants to use to prevent a complete withdraw of the foreign money from Cyprus, which in the future will no longer be able to offer such dream interest-rates. So the overblown banking-sector of Cyprus is dead anyhow. It just might take a bit longer.
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Post by Sir John on Mar 24, 2013 14:48:40 GMT -5
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Post by boxcar on Mar 24, 2013 21:45:29 GMT -5
Mc>They thought Russia would help them, but Russia had no interest, why should Russia help their tax-evaders?,
Because Gazprom, a state owned gas company, had 31 billion on deposit there
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Post by Sir John on Mar 24, 2013 22:12:07 GMT -5
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Post by Swampy on Mar 24, 2013 22:25:12 GMT -5
We are going to see LOTS of very pissed off Russians very soon. The key word in the world of banking is CONFIDENCE. That is now gone. There's also the snowball effect.
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Post by Sir John on Mar 24, 2013 22:27:38 GMT -5
PS,
If you happen to be a substantial investor in the EU with bank account(s) over E100,000 I strongly suggest you close them and get out of the EU.
JMO
SJ
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Post by Swampy on Mar 24, 2013 22:42:54 GMT -5
I'd close ANY bank account with Euros.
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Post by mcnoch on Mar 25, 2013 2:21:26 GMT -5
They do with the two biggest banks of Cyprus what they would have done with the banks in USA, UK and other European banks too, so where is the problem. When the accounts in the UK for the bankrupt banks were closed, was there a panic? No, that is business.
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