Sovereign debt bubble thread

[CountDeMoney]

I like this approach.  We should adopt it here.  Should really put a dent in that deficit.

[Ed Anger]

I like this approach.  We should adopt it here.  Should really put a dent in that deficit.

HEY NOW

[CountDeMoney]

You 1%ers can afford to give up 1%.  Eat shit.

[Iormlund]

And there's another beautiful side-effect of people foregoing deposits for cash: tax collection is much easier with electronic transactions. So a nice boost for the submerged economy in those countries that need to decrease it the most.

Jesus, you'd think these guys can't get any dumber ... but apparently they can.

[Ed Anger]

 

[Iormlund]

You 1%ers can afford to give up 1%.  Eat shit.

The 1% doesn't have that much money in deposits. They'll have it in stock, real estate, commodities and so on.

The ones paying this tax will be salaried workers, pensioners and such.

[CountDeMoney]

You 1%ers can afford to give up 1%.  Eat shit.

The 1% doesn't have that much money in deposits. They'll have it in stock, real estate, commodities and so on.

Those are electronic transactions as well.  Easy peasy, melon squeezy.

[Iormlund]

It's not a tax on transactions. It's a tax on whatever money you had on your normal bank account earlier this week.

[alfred russel]

And there's another beautiful side-effect of people foregoing deposits for cash: tax collection is much easier with electronic transactions. So a nice boost for the submerged economy in those countries that need to decrease it the most.

Jesus, you'd think these guys can't get any dumber ... but apparently they can.

It really prompts one to think in terms of conspiracy theories...Is Germany trying to push some countries into dropping out of the eurozone? Did Cyprus push to screw ordinary people to try to stay a viable tax haven for the wealthy?

[Admiral Yi]

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. 

But then isn't the point of the bailouts to keep these countries from collapsing? Allocating losses to depositors is going to contribute to bank runs (not that those runs haven't been going on for years). If there isn't the money to stand behind Spain or Italy--that might make sense. But to go through years of the bailout/austerity cycle and have this happen in a country like Cyprus? Seems penny wise and pound foolish. It almost seems like the design is to kill of banking in the eurozone periphery.

Less so with this part.  The logic for holders of bank liabilities to take a hair cut is the same as for bond holders of any other entity's bonds.  And bank runs don't only come from small depositors withdrawing their funds; you get the same affect if large depositors withdraw funds or the bank is unable to roll over maturing bonds.

[Tamas]

You 1%ers can afford to give up 1%.  Eat shit.

The 1% doesn't have that much money in deposits. They'll have it in stock, real estate, commodities and so on.

Those are electronic transactions as well.  Easy peasy, melon squeezy.

ok, Ide.

[CountDeMoney]

You 1%ers can afford to give up 1%.  Eat shit.

The 1% doesn't have that much money in deposits. They'll have it in stock, real estate, commodities and so on.

Those are electronic transactions as well.  Easy peasy, melon squeezy.

ok, Ide.

Don't worry, your vegetables are safe.

BRING IT ON DOWN TO BEETVILLE

[alfred russel]

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. 

But then isn't the point of the bailouts to keep these countries from collapsing? Allocating losses to depositors is going to contribute to bank runs (not that those runs haven't been going on for years). If there isn't the money to stand behind Spain or Italy--that might make sense. But to go through years of the bailout/austerity cycle and have this happen in a country like Cyprus? Seems penny wise and pound foolish. It almost seems like the design is to kill of banking in the eurozone periphery.

Less so with this part.  The logic for holders of bank liabilities to take a hair cut is the same as for bond holders of any other entity's bonds.  And bank runs don't only come from small depositors withdrawing their funds; you get the same affect if large depositors withdraw funds or the bank is unable to roll over maturing bonds.

Yi, the point I was getting at in the second paragraph was (not very clearly I admit) disconnected from the first paragraph. What I was trying to say was that if you are effectively backing up the financial systems of Greece, Spain, Portugal, and Italy, it really isn't in your interests to contribute to bank runs in those countries. Also, if you are trying to push an unpopular agenda in those countries, it probably doesn't help to announce that their citizens wealth will be at risk.

Cyprus is a very small country, and not particularly wealthy. I have to think that the incremental cost of completely bailing out the depositors (including the wealthy) will be less than the risk of trouble in other parts of the eurozone.

[Richard Hakluyt]

That would be my concern as well, Monday morning dawns with queues of anxious Spanish and Italian savers outside their banks........

We shall see soon enough.

[Admiral Yi]

Yi, the point I was getting at in the second paragraph was (not very clearly I admit) disconnected from the first paragraph. What I was trying to say was that if you are effectively backing up the financial systems of Greece, Spain, Portugal, and Italy, it really isn't in your interests to contribute to bank runs in those countries. Also, if you are trying to push an unpopular agenda in those countries, it probably doesn't help to announce that their citizens wealth will be at risk.

Cyprus is a very small country, and not particularly wealthy. I have to think that the incremental cost of completely bailing out the depositors (including the wealthy) will be less than the risk of trouble in other parts of the eurozone.

I got that Fredo.  What I was trying to rebut (in a manner perhaps even less clear than your horribly botched attempt  ) was that it's not a black and white issue.  Yes, any time lenders get penalized it will deter future lending.  On the other hand it's more natural and just for for the beneficiaries of a bank's reckless lending (such as bond holders and owners) to take the hit than it is for Syt and Zanza to do so.  This is true when the borrower is a bank, a sovereign, a corporation, an individual, anyone.

(Speaking of owners, anyone know what happened to Cypriot bank shareholders? I hope they were wiped out.)