Sovereign debt bubble thread

[Iormlund]

I'll agree that bonds should be junior yo uninsured deposits, however that scenario is unlikely. Grandma and Grandpa won't have €200k in deposits. Unless Cyprus is exceptional within Club Med the lion share of their savings - if they have any - will be in real estate.

[PJL]

Looks like the shit is already hitting the fan in the Asian markets. Euro is down 1.5 cents on the dollar. Next few days are definitely going to be interesting.

[mongers]

Looks like the shit is already hitting the fan in the Asian markets. Euro is down 1.5 cents on the dollar. Next few days are definitely going to be interesting.

I for one will be withdrawing all of my savings, first thing Monday; I'll need a substantial small wallet to take them away in. 

[MadImmortalMan]

I'm in the nearest Swiss Francs ETF as soon as the market opens.

[dps]

What a terrible way to do things...apparently Cyprus depositors were insured up to 100k. If you are going to allocate losses to the depositors, they should first go to the uninsured, and then (if needed) to the insured.

Agree with this part.  It sounds to me like breech of contract by the government. 

It's breech of the public trust more than breech of contract, I'd say, at least in legal terms.

Though it does show just what a government's word on something is worth. 

[Richard Hakluyt]

Throughout the EU there is a government guarantee for small deposits. Typically about 100k Euro. Most people assumed that this meant that their deposits were safe. But the deposit guarantee does not cover a tax on deposits.

According to this article http://www.bbc.co.uk/news/world-europe-21825981 Germany and the IMF wanted to respect ".....the deposit guarantee for accounts up to 100,000" but were overruled by the other players.

[Tamas]

Yeah it seems terribly stupid. If this fact sinks in for the EU public, some serious bank runs can commence.

[Legbiter]

Why risk a systemic contagion over the relative pittance it costs to backstop the Cyptriot banks? Plus why not torch the bondholders or unsecured deposits over the minimal guarantee instead of ripping off the small fry? The Russian oligarch money will flee Cyprus ASAP regardless of which way they choose so better burn them good now.

[Tamas]

Why risk a systemic contagion over the relative pittance it costs to backstop the Cyptriot banks? Plus why not torch the bondholders or unsecured deposits over the minimal guarantee instead of ripping off the small fry? The Russian oligarch money will flee Cyprus ASAP regardless of which way they choose so better burn them good now.

because the "state is in the economy to protect the citizens" is the biggest scam of this last two centuries. They are there to protect the interests of whoever can influence the politicans. And that's not Average Cypriot Joe with his tiny deposit.

[Grey Fox]

Unless the biggest influence is a couple millions of average joe.

[Tamas]

Unless the biggest influence is a couple millions of average joe.

yeah. Then you get what WE have, and what  Chavez did.

[Iormlund]

Unless the biggest influence is a couple millions of average joe.

Not the case here. Most of the deposits are over the €100k mark, and most of those from Russia. That's likely why they stupidly tried to spread the pain to the little guy.

[mongers]

because the "state is in the economy to protect the citizens" is the biggest scam of this last two centuries. They are there to protect the interests of whoever can influence the politicans. And that's not Average Cypriot Joe with his tiny deposit.

Unless the biggest influence is a couple millions of average joe.

yeah. Then you get what WE have, and what  Chavez did.

Tamas you can't have it both ways.

[Zanza]

According to this article http://www.bbc.co.uk/news/world-europe-21825981 Germany and the IMF wanted to respect ".....the deposit guarantee for accounts up to 100,000" but were overruled by the other players.

Wait, I thought we are behind every bad move of the Eurozone?

[dps]

Throughout the EU there is a government guarantee for small deposits. Typically about 100k Euro. Most people assumed that this meant that their deposits were safe. But the deposit guarantee does not cover a tax on deposits.

That almost makes it worse.  Instead of just saying, "Hey, we're not going to completely honor those guarantees" it amounts to saying, "Well, technically, we're honoring the guarantees, but we're going to screw you over anyway. Nah-nah-nah-nah-nah".