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Post by Deleted on Mar 29, 2013 3:32:31 GMT -5
Euro finito
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Post by boxcar on Mar 29, 2013 10:03:18 GMT -5
If they can’t come up with 10 billion Euros and an adequate austerity plan for Cyprus how are they going to handle the problems in Spain and Italy?
Stealing depositors principal is not the best way to instill confidence in the Euro.
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Post by mcnoch on Mar 29, 2013 12:02:32 GMT -5
Cyprus had no budget problem pe se, the resuce of the banks was training all the money and then needed fresh money again. So without the resuce of the banks what would have happend? The people would have lost all their money, except those secured 100 000 € on normal banking accounts. Now they are saving with money from the tax payer and the ECZ and Worldbank the banks so that more money remaines, but the bigger accounts have to provide their share - else all would have been lost.
Italiy and Spain have different problems. Spain had a real-estate buble and the banks are sitting on a lot of credits who are not enough secured, very comparable to the loans on houses in the USA. At the moment the state is keep the banks alive, but this might change. Then the real-estates might become sold and the real-estate banks closed with they had accululated to much loses.
Italy was spening money under Berlousconi like mad, everything for everyone and why enforcing tax payments.
And to be honest. in the end the tax-payer is paying the bill, one way or the other. Sometimes the short, hard way might be better than years and years of problems.
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Post by boxcar on Mar 29, 2013 13:35:17 GMT -5
If the taxpayer is paying the bill, they don't need a bailout. End of problem. No deposit sealing required.
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Post by Sir John on Mar 29, 2013 15:25:58 GMT -5
Matthias,
I really do hope that you are right and I am wrong, VERY wrong. That will mean that the world will not suffer what I fully expect will be a world wide disaster that will seriously effect us all, some to such a degree that the consequences do not bear thinking about.
The world is swimming in an ocean of unpayable debt, and it matters not at all if that debt is the result of bad loans to other countries or bad loans to home buyers or bad loans to businesses, or simple sale of Bonds to cover deficits. In the case of Bonds BOTH sides of the transaction are at great risk.
Those debts will in due course destroy the lender!
And remember that a depositor in a bank is nothing more than a UNsecured lender to that bank. And NO government can guarantee the deposit balances of the bank, simply because they do not have the money to do it! They can only honour such a commitment by borrowing it or printing it!
Even the American FDIC has a paltry US$25 Billion to cover a couple of Trillion in liabilities. If the SHTF the US Treasury will have the same choice, borrow or print.
Lets us pray that I am wrong. Personally, I am 'acting' on the assumption that I am not. I am not willing to gamble my families welfare and indeed survival, on the result of the bet.
SJ
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Post by Deleted on Mar 29, 2013 15:45:19 GMT -5
One must not worry about what might happen as there is no garuntee that one will be around if something does go wrong , my man in Cyprus said that Cyprus will stay in the EU come what may and that alone shows confidenece and determination . The Americans of course worry about nothing as long as it is political correct .
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Post by Sir John on Mar 29, 2013 15:49:57 GMT -5
Staying in the EU does not make the problem go away.
The debts and so forth are still there, to be dealt with one way or the other.
SJ
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Post by Sir John on Mar 29, 2013 16:33:32 GMT -5
muleskinner,
"my man in Cyprus said that Cyprus will stay in the EU come what may and that alone shows confidenece and determination "
No, it shows that the Cyprus government has made a choice of what they think is the lessor of 2 evils. If any of the PIFIGGs leave the EU they (the Government and the banks) cannot pay the bonds and loans etc that are on the books. They MUST default, and that will drag down many of the leading banks in the world, including many American ones.
SJ
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Post by mcnoch on Mar 30, 2013 1:24:25 GMT -5
Leaving the Euro (and hence the EU) was an option only on the paper. The country would loose its legal framework that is nothing a modern state can accept. The problems in Cyprus have nothing to do with the Euro as a currency. The local politicians were bribed by the banks to look away and ignore the coming disaster even when the disaster was already clearly visible. Slovenia was starting to act in 2010 against its banking-sector and so the coming crisis there might be smaller. Malta has to start acting now; they have seen that the others will not pay to protect big investors or questionable reputation. With a bit of luck this high-risk money is leaving quickly enough to Singapore to prevent a big problem in Malta.
Spain has an unsolved real-estate problem that is putting a number of banks at risks. It is expected that something nasty will be done in the next months. Most likely the real-estate investors will not like it, but massive sequestration might be coming. The banks then really know what money is coming back and what not and can be fixed or closed. Many banks have no private or commercial accounts, just real-estate investments. Italy
Portugal, Ireland and Iceland show good success in their recovery and might be out of the biggest trouble within the next years.
The economic problems in Italy could be solved, it is the 3rd biggest EU economy, but it has a political problem, they always had as there is a big gap between the political dreams they are dreaming and the reality. The big advantage of having troubles to form a new government might be that at the moment the strict rules stay in place while no new government is around to change that and spend extra money.
The crash came to quickly to most poeple to adjust from "golden days" to "back in poverty". With the crisis going on since 5 years, they slowly have adjusted to this and start to act accordingly. The main problem in Europe is the unempolyment. In most Southern-European countries it is back to those level s before the introduction of the Euro and the influx of cheap credits. So in a way no real surprise, as those credits were slowly burned by new startups that couldn't survive on their own income.
The EU crisis is pushed and over-represented in the Anglo-American media to distract from the own domestic prolems.
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Post by boxcar on Mar 30, 2013 12:16:42 GMT -5
(The EU crisis is pushed and over-represented in the Anglo-American media to distract from the own domestic [prolems.])
(Reuters) - Big depositors in Cyprus's largest bank stand to lose far more than initially feared under a European Union rescue package to save the island from bankruptcy, a source with direct knowledge of the terms said on Friday.
Under conditions expected to be announced on Saturday, depositors in Bank of Cyprus will get shares in the bank worth 37.5 percent of their deposits over 100,000 euros, the source told Reuters, while the rest of their deposits may never be paid back.
(They really know how to screw the pooch.)
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Post by mcnoch on Mar 30, 2013 12:43:29 GMT -5
The much higher ratio is due to the fact that they took out 80 % of the bank accounts.
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Post by Deleted on Mar 30, 2013 13:13:06 GMT -5
I think the pooch is really screaming!
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Post by boxcar on Mar 30, 2013 15:29:50 GMT -5
Mac, was that 80% about the smart ones that got out before the SHTF?
Old saying…”He who hesitates is lost”.
Yes, Denny. And the European attitude seems to be, "lay back and enjoy it"
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Post by Sir John on Mar 30, 2013 16:16:02 GMT -5
Do not make the mistake of thinking "it can't happen here". That is what the Europeans keep saying.
I think your FDIC limit is US$250,000 and all they have to back up that guarantee is a lousy US$25 billion, which is probably not 1% of what would be needed.
If it comes to pass you will get a piece of paper called a US Treasury Bond, which will be worth SFA on the market with a zillion sellers and bugger all buyers. Your grandchildren will be very lucky to get face value.
SJ
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Post by Deleted on Mar 30, 2013 16:37:13 GMT -5
25 Billion is plenty , my grandchildern will just have to work for a living .
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