What to do about Greece

[Cowperson]

Originally Posted by temple5

How can a country that small need so much bailout money.
n.

"Never trust the future of a small island that has pretensions to be a dominant international money centre." - a line heard on a business news show yesterday.

Cowperson

[chemgear]

Originally Posted by temple5

How can a country that small need so much bailout money.

I dont know enough about Cypris (I wasnt really sure where it was before all this - I thought it was closer to Greece (thanks google maps) to really make an informed comment about this.

Canada actually has had (and continues to have) a strong peacekeeping force in Cyprus for what it is worth. Greeks and Turks butting heads for years.

http://www.forbes.com/sites/abrambro...ancial-crisis/

And here’s the larger picture. Cyprus is badly indebted. Its debt-to-GDP ratio pushed to 127% in the third quarter of 2012, the latest period tabulated by European Union officials. Such high debt reflects Cyprus’ ill financial health. Only Greece (at 153%) has a higher level. The bailout would begin to reduce its debt, sending it back below 100% of GDP within the year.

Cyprus is in a particularly bad position because much of its economy is tied to neighboring Greece, the host of its own monetary problems. Making it worse, Cyprus was a major Greek bondholder, so when the second Greek bailout package went through last year, it caused a 4.5 billion euro ($5.9 billion) hole in the Cypriot budget.

[FlamesAddiction]

Slovenia in another one that has been in an economic crisis with labour unrest for almost a year now (plus other political problems), but it hardly ever gets mentioned in the news.

They were always promoted as the shining example of a post-communist country making a quick and successful integration in the capitalism and the EU, but as it turns out, it was all a house of cards built on aid and loans. The EU has been pretty good about protecting their image there though.

I honestly don't think the EU will survive in the long run. Most of the smaller economies just can't adjust.

[chemgear]

Your move Cyprus:

http://business.financialpost.com/20...t-ecb-funding/

The European Central Bank is prepared to cut off funding to Cyprus and let the Mediterranean island succumb to financial meltdown if it has to, confident it has unlimited firepower to protect the rest of the eurozone.

[FlamesAddiction]

Reading this makes me sympathize with the citizens a little more though:

http://www.cbc.ca/news/world/story/2...k-bailout.html

In previous European bailouts, the actual money being bandied about was more of a theoretical construct. Citizens were likely hit with higher taxes down the line, and almost certainly saw a cutback in services and their quality of life once governments were forced to live up to the terms they had agreed to. That's what happened in Ireland, and that's what's happened in Greece. But people there weren't seeing their cash flow decimated in the dead of night.

When Iceland defaulted on its loans in 2008, bondholders and investment bankers lost billions, but the government made sure that individual Icelandic savers got their money. (The British government stepped in to ensure that British citizens with deposits in Icelandic banks got the same.)
Under the terms of the Cypriot proposal that emerged Friday evening, however, any bank account with less than €100,000 in assets would see 6.75 per cent withdrawn as part of the one-time levy. Anything over that level would get an even larger haircut — 9.9 per cent.

Lawmakers voted against that proposal on Tuesday, throwing the future of any bailout in doubt. But under the terms of the original plan, a savings account with $10,000 in it on Friday would have only $9,325 in it after government reached in.

That would suck. It's also a good way to make sure people clean out their bank accounts beforehand.

[Flame Of Liberty]

Cyprus was a money laundering machine in the middle of the sea for the Russian mafia, nothing more nothing less. Of course the Russians got the wind of the accounts freeze and moved their money elsewhere, so the little Cypriot guy with around $100k in his bank account was the only one left holding the bag. Funny thing that French IMF boss Stali...I mean Lagarde originally wanted 40% haircut on savings accounts. Truly hilarious.

[FlamesAddiction]

Originally Posted by Flame Of Liberty

Cyprus was a money laundering machine in the middle of the sea for the Russian mafia, nothing more nothing less. Of course the Russians got the wind of the accounts freeze and moved their money elsewhere, so the little Cypriot guy with around $100k in his bank account was the only one left holding the bag. Funny thing that French IMF boss Stali...I mean Lagarde originally wanted 40% haircut on savings accounts. Truly hilarious.

I know I am entering Mickey territory, but I am starting the think that there is little difference between the EU, IMF and the mafia. Ok, that might be overstating it, but there are similarities.

The fact they can sieze private property of citizens because of the activities and losses from corrupt bankers, politicians and businessmen sounds like quite the racket.

[chemgear]

Well the EU, is bailing them out to prevent an economic collapse of the country. They have to get terms that they think will be viable in the long run and that they can "sell" to taxpayers back home in their respective countries.

Similar to the Greek situation, how the heck do you spin a bailout of a money laundering case like Cyprus. Heck, whilst the Greeks were begging for a bailout and whining about austerity they were legally legitimizing pedophilia as an actual "disability" so that you could get paid benefits for it. How the hell are you going to spin that to tax payers fronting up the money without imposing massive austerity on the Greeks?

Frankly they're probably all up a creek in any case - just delaying the inevitable.

[Mr.Coffee]

Cyprus got in trouble because they were trying to help Greece, so they started purchasing bonds that ended up being virtually worthless. Half of Cyprus is greek, the other half Turkish, it is one of the small examples of true United Nations successful military interventions in United Nations history (another would be Suez canal).

The collapse in value of these bonds created major problems for Cypriot banks, which yes held a lot of Russian dollars that were being held in Cypriot banks by Russians looking to avoid taxes, as Cyprus and Russia have a tax treaty. Germany sorry the EU (but, really Germany at this point) went to Cyprus, a financially troubled country that was seeking EU support and basically said that they'd help Cyprus, but only if the Cypriot banks agreed to claw back 50% (pretty sure it was 50?) of existing accounts. Cyprus went to Russia and asked for them to help instead, who in turn essentially replied that Cyprus owed them several hundreds of millions of Euros of hidden Russian money in Cypriot banks, and that any help would be conditional on the return of these funds to Russia. This didn't go over well so... some time passed and now Cypriots were faced with this vote for a reduction in 10% of their bank accounts or complete financial meltdown. The vote went in, and the EU told warned the country that if they didn't pass this through parliament, there'd be no EU support.

What is so interesting about this, is how this will now resonate with the rest of Europe, and the rest of these debt laden countries like Spain, Italy, etc. Will these countries face the same types of demands from the EU?

Lived in Cyprus for a few years, really great place actually.

edit:
Obviously my story is a bit all over the place, so I apologize, but the above is generally my horrible understanding of what's going on. I also wanted to just note that there are Canadian companies that may be impacted, as Canada and Cyprus have a tax treaty as well. I am aware of a couple Albertan, large, energy focused companies that are at risk of losing multiple millions of dollars by this 10% cut. The company I am aware of will lose $40 million, and that was one example of many... luckily a couple people I know there got their money out before the hammer came.

Correction time in Europe?

[CaptainCrunch]

Peanut butter is a great underground currency in Cyprus.

[chemgear]

No money for you . . . unless we get your offshore gas fields!

http://business.financialpost.com/20...minister-says/


Russia rebuffed Cyprus’s request for a bailout loan as the euro-area nation sought to salvage talks in Moscow by wooing investment in its energy reserves.
Cyprus asked Russia for a loan of about 5 billion euros ($6.5 billion), according to three Russian officials. The island nation offered energy and other assets in return, said one of the three officials, who all declined to be identified because the negotiations in Moscow that started yesterday are confidential. The assets are offshore natural-gas fields, said a second official. Cypriot government spokesman Christos Stylianides didn’t immediately answer calls to his mobile phone.

[bizaro86]

Man, we occupied Cyprus for decades, we should get the gas fields.

[Street Pharmacist]

CNN was reporting that the big windfall for Moscow may be opening of the banks to Moscow as Cyprus is Russia's biggest money laundering state. Apparently, all of the Russian mafia buy fancy houses and avoid the tax man in Cypriot banks

[temple5]

I did hear that Putin had a house in Cyprus

[FlamesAddiction]

Originally Posted by Mr.Coffee

Lived in Cyprus for a few years, really great place actually.

Were you a peace keeper or diplomat in Cyprus?

The thing that concerns me is that a complete economic meltdown in Cyprus could lead to a destablization. I agree that the UN mission there has been successful, but when you lived there, did you get the sense that there were still deep rooted problems beneath the surface?

Typically, when countries do well economically, people put aside their differences... but when a true competition for resources occurs, things can change and old woulds resurface. Another conflict in Cyprus could easily draw Greece and Turkey in, plus Russa and even the EU/NATO given their economic interests there. It's a scary thing to think of. I've always been a worrier about these things though.

[chemgear]

http://business.financialpost.com/20...-bailout-plan/

Euro-area finance chiefs, pressuring Cyprus to shrink its banking system as the condition for a bailout, are reviving demands they jettisoned last week as too extreme, four European officials said.

Insured deposits — below the European Union ceiling of 100,000 euros ($129,000) — would go into a so-called good bank and not sustain any losses, while uninsured deposits would go into the bad bank and be frozen until assets could be sold, said the four officials.

Losses to unsecured creditors, including uninsured depositors, could reach 40% under the plan, which has support from the International Monetary Fund and the European Central Bank.

[Bend it like Bourgeois]

Talking to a friend who has family there, they are wiped out.

Pension, savings, job... all gone.

The cant get at their money, and no one can get money in to them.

Maybe it will get sorted in time, or at least get better, but man what a scary scenario.

[Cowperson]

Originally Posted by chemgear

http://business.financialpost.com/20...-bailout-plan/

Euro-area finance chiefs, pressuring Cyprus to shrink its banking system as the condition for a bailout, are reviving demands they jettisoned last week as too extreme, four European officials said.

Insured deposits — below the European Union ceiling of 100,000 euros ($129,000) — would go into a so-called good bank and not sustain any losses, while uninsured deposits would go into the bad bank and be frozen until assets could be sold, said the four officials.

Losses to unsecured creditors, including uninsured depositors, could reach 40% under the plan, which has support from the International Monetary Fund and the European Central Bank.

As far as the meaning of secured and unsecured goes, that is fair and not too abnormal. Markets would like that better.

Cowperson

[SeeBass]

Look for Russia to bail them out and we have a new Russian naval yard to replace the one the have/had in Syria.

[chemgear]

http://www.cbc.ca/news/world/story/2...s-bailout.html

Tense talks between Cyprus and its international creditors on how the country can secure a 10 billion euro ($13.28 Cdn) bailout were stuck Sunday due to disagreements over how to shrink the bloated Cypriot banking sector, an official said.

In an illustration of the depth of the fear of a banking collapse, Cyprus' central bank on Sunday imposed a daily withdrawal limit of 100 euros ($130 Cdn) from ATMs of the country's two largest banks to prevent a bank run by depositors worried about their savings.