# Shock in Cyprus as savers face bailout levy (BBC)



## Lake Windsong

Article from BBC news ('bold' type added by me):
People in Cyprus have reacted with shock to news of a one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.
Savers could be seen queuing at cash machines amid resentment at the charge.
The deal reached with euro partners and the IMF marks a radical departure from previous international aid packages. 
President Nicos Anastasiades defended it as a "painful" step, taken to avoid a disorderly bankruptcy.
It had, he said in a statement, been a choice between the "catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis".
The Cypriot leader, who was elected last month on a promise to tackle the country's debt crisis, will address the nation on Sunday.
*Bailout levy
•	Depositors with under 100,000 euros deposited must pay 6.75%
•	Those with more than 100,000 in their accounts must pay 9.9%
•	Depositors will be compensated with the equivalent amount in shares in their banks 
•	The levy is a one-off measure*
Lenders are said to be gambling that the risk of a bigger banking crisis elsewhere in the eurozone has receded.
*While Cyprus may be one of the eurozone's tiniest economies - its third-smallest - there could be serious repercussions for other financially over-stretched economies, such as those of Spain and Italy, Robert Peston writes.
The point of the levy is to warn lenders to banks that they should take care where they place their funds, and avoid banks that overstretch themselves - as Cypriot banks did, he adds.*
Cyprus is the fifth country after Greece, the Republic of Ireland, Portugal and Spain to turn to the eurozone for financial help during the region's debt crisis.
The country has been in financial difficulties since the collapse of the Greek economy, where Cypriot banks had huge investments. 
It appears that the heavy presence of Russian money in Cypriot banks was a factor in imposing the levy.
People in Cyprus with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said. 
Those with greater sums will lose 9.9%.
Depositors will be compensated with the equivalent amount in shares in their banks.
Reports suggest that depositors will be able to access all of their money except the amount set by the levy.
*The levy itself will not take effect until Tuesday, following a public holiday, but action is being taken to control electronic money transfers over the weekend.
Co-operative banks, the only ones open in Cyprus on Saturday, closed after people started queuing to withdraw their money.
*At one bank in the Limassol district, a frustrated man parked his bulldozer outside and threatened to break in. 
Alan, a British expatriate saver in Cyprus, told BBC News: "This is robbery and we must get the EU to stop this. 
"We retire and bring our savings to a bank in Cyprus and they can just take our money away without permission and then say we have shares in a bankrupt bank."
Maria Zembyla, from Nicosia, said the levy would make a "big dent" in her family's savings and "erode the investor confidence".
"Russians that currently keep the economy afloat will leave the country along with their money," she added.
According to Reuters news agency, almost half of the depositors in Cyprus are believed to be non-resident Russians. 
There has also been speculation that Russia could help finance the bailout by extending a 2.5bn-euro loan already made to Cyprus. 
Cyprus Finance Minister Michael Sarris will travel to Moscow for meetings on Monday, reports say.
"My understanding is that the Russian government is ready to make a contribution with an extension of the loan and a reduction of the interest rate," said the EU's top economic official, Olli Rehn. 
*European regulators and politicians are convinced that a vast amount of cash in Cypriot banks belongs to Russian money launderers, our business editor writes.
Few German politicians would vote for a Cyprus rescue that simultaneously rescued these launderers so the only way to make the bailout palatable to the German parliament was to tax the launderers, too, he says.
*Russians reacted angrily to the news of the levy on social media.
"Russia agrees to help a troubled EU state, and the EU calls Russian investors money-launderers? This is totally unfair," Moscow-based blogger Igor Kim told the BBC News website. 
"Levying a 10% charge on investors is barbarian, interventionist and more Soviet than the Soviet Union!" 
In Berlin, German Finance Minister Wolfgang Schaeuble called the levy part of the "fair" distribution of the bailout's burden.
"Profit expectations and risk have to coincide again, this gap [between the two] was one of the grave mistakes of the financial bailout [in 2008], and we have learned the lesson," he said.


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## Bobbb

Punishing the savers so as to rescue the borrowers. Punishing the responsible in order to save the irresponsible.

With such bright thinkers amongst the policy elites, I'm sure that they didn't see that this would be an immensely unpopular decision.

Businesses fail every day, so what makes bank failures so awful that they have to be avoided?


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## Lake Windsong

Does any of this sound familiar? Another excerpt from BBC, quoting a local resident:

The joke is that our politicians up until 24 hours ago were assuring us that there is absolutely no possibility for any levy on our deposits. 
The feeling of disappointment is overwhelming at the moment.”
The whole thing looks like a plot. The previous government didn't take a decision, so as not to take the blame. The new government makes a decision and blames the previous government and will say "sorry people we had no room to negotiate, but it's not our fault" and everything is thrown upon us on the Friday night before a three-day weekend. 
It feels like the people have to pay for the mistakes of the politicians and the banks. We work hard and earn our money and are forced to make up for the mistakes of others.
The feeling within the Cypriot people is that the game is about who is going to get hold of the natural gas resources that have been found in the Cypriot sea bed.
At the end of the day, we as a small country do not have a say for our future, others decide for us. Whoever was in power didn't have any option really. The Cypriot president was given orders he had to follow. 
We will survive. Cyprus, with its entry in the EU, has safeguarded its future as a free country in the European political arena and if this is a price we have to pay then my opinion is that we have to do it - and pay. However the feeling of disappointment is overwhelming at the moment.


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## Padre

Bobbb said:


> Punishing the savers so as to rescue the borrowers. Punishing the responsible in order to save the irresponsible.
> 
> With such bright thinkers amongst the policy elites, I'm sure that they didn't see that this would be an immensely unpopular decision.
> 
> Businesses fail every day, so what makes bank failures so awful that they have to be avoided?


When the tax man comes a knocking you gotta pay up, and when you are broke there is only one way to get the money to pay: THEFT. And since most are up to their necks in debt there are only two potention victims of theft: the creditors or the savers. Cyprus gave up the ability to steal from their creditors and so now only have the option to steal from their citizens. And in a borrowing culture where exactly are you going to find money to steal, pensions and bank accounts.

Caveat Emptor - paper bull investors.


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## FrankW

Remember the money that is coming form EU is NOT free money it comes from the taxpayer in other countries
especially Germany

Why should only the Germans and Austrians siuffer tax losses because Cyprus couldn't take care of their business?

the 10% levy makes the burden suffered by taxpayers of countries who actually live within their means ever so slightly less.
As it should be.

The alternative is no money at all and all the savings are gone.

The Cypriots don't have the <right> to the Germans money.

So if the Cypriots don't wanna pay, **** 'em.
They can pay their mess themselves then with <all> their savings.

PS: Just today I ordered my second batch of 1 oz silver Eagles from our sponsor JM Bullion.


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## Padre

BlueZ said:


> The Cypriots don't have the <right> to the Germans money.
> 
> So if the Cypriots don't wanna pay, **** 'em.
> They can pay their mess themselves then with <all> their savings.


People have a RIGHT, which while expounded in our constitution, comes from God and is universally applicable, to life, liberty, and the pursuit of happiness. So as the 4th and 5th amendment note, and Locke theorizes, happiness is at least tangentially related to property, and people have a right to be secure in their persons and property and not deprived of it without due process of law, laws which to be valid, can not be arbitrary, capricious, or ex post facto.

The money being lent by Germany (which doesn't have to lend it) is being lent to pay off creditors. Offering credit is a RISK TAKING activity, and so the only one who should (morally) suffer are those who took the risk and those who owe the debt. The individual Cyprians who have money in the bank did not take the debt. The Cypriots as a whole WILL SUFFER, as all debetors suffer when they default. They will suffer in credit rating, in illiquidity, in austerity, and perhaps even repossessions of Government (the legal person who took the loan) properties, but what you are suggesting is that because A took a loan from B, and A can't repay B, C bails out A, taking Z's money as security. Z is not A, and so should morally be not even being a part of the equation.

So in the end who suffers? All Cypriots suffer, but Cypriots who weren't morons and saved suffer twice, a) through austerity and b) through outright theft.

Its true that Cypriots don't have the RIGHT to the money of German's but Cypriots are not claiming that right, they are being offered that money by Germany. By offering it, GERMANY is risk taking, and so if there is a default they deserve to suffer, but they do not deserve the money of responsible citizens of Cypress, while the irresponsible ignore all responsibility.


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## FrankW

The Cypriot gov't is strong applying for a bailout from the EU.
(ie Germany since they are the only big EU country with a well working economy left)

the EU is free to tie any condtions it sees fit to that bailout.

remember the US via the IMF made countries like Brasil and Argentina get rid of much of their social safety nets as a condition for bailout packages, their respective welfare classes were rioting in the streets and it caused some real hardship including people turned away form hospitals pensioners w/o money etc..

This is a very very mild condition attached ot this package as otherwise those saving would be worth nothing.

The EU will likely also take ahaircut on much of the bail out debts.. Why not have the locals take a haircut too?


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## mojo4

Well if you want to start a run on the banks this is a fantastic starting point!!


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## Immolatus

First, I'm out of town and not on my pc so forgive the formatting

http://www.zerohedge.com/news/2013-03-16/everyone-shocked-what-just-happened-and-why-just-beginning

A couple of thoughts first
this is a test run to see how people react, because this is what will happen elsewhere also if we let it
pms should go nuts, but they probably won't because the ptb can't let it happen
This is to punish the Russians that have their money in Cyprus, and they won't be happy about it
this should make everyone an incredibly simple fact that I bet very few understand. When you put your money in the bank, you are lending them your money and not giving it to them for safekeeping, which means you (the Cypriots) are making a risky investment by putting your money there

Bluez I have to disagree for a few reasons, but really only one. If the people had understood that they lent their money to the bank, and would be liable for the banks mismanagement of their money, the bank wouldn't exist in the first place. BAnks exist because people believe their money is protected. protected people thought this could happen they wouldn't put their money there. Now to my point. I would say that the bank bailout is necessary because of bank mismanagement, and if people understood (and their ignorance means that they are at least somewhat liable in support of your case) that this could happen they wouldn't have put their money there. The bank lost the people's money. If the bank was what people expected them to be, this couldn't have happened. The money they lost went to someone, somewhere, which means depositors were basically robbed, and I think we can be sure it wasn't all on the up and up. I think my point is that the depositors shouldn't be liable for bank mismanagement, and I'm not totally sure German taxpayers are footing the bill for this anyway. Also, if the Germans are the ones paying for this, then it should be a safe guess that they somehow benefited from the banks policies (losing depositors money)'. If they did not, then there at least should be a massive German discontent with all of the bailouts generally, if there is I don't see it.
Ugh this is painful writing this way, and its been a long st pattys day so I'm not being totally clear...

Sorry!


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## goshengirl

It's getting harder and harder for people to hold on to what's theirs, and that's just wrong.

Makes me want to make a run on the bank here...


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## Marcus

"Depositors will be compensated with the equivalent amount in shares in their banks."

Seems like TP sales will be taking a dive in Cyprus.


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## DKRinAK

*Why?*

Banks pay less than 1% interest and charge fees in excess of that - why bother with a bank?

My daughter gave up on banks long ago. They keep a small pre-loaded credit card and pay the rest by money order. She has a small account in a credit union that charges very low fees. We haven't used a bank since 1980.

As for the Cyprus 'tax'--
How soon so many forget "The S&L crisis" -- it was less of a crisis due to a short term bailout. As of December 31, 1995, RTC estimated that the total cost for resolving the 747 failed institutions was $87.9 billion." The remainder of the bailout was paid for by charges on saving and loan accounts. SO everyone using a S&L institution took a haircut.

The_ why_ of the failures can be laid right at the feet of the Fed - big surprise.

I did check to see what this has done to the price of silver and gold., Both PMs are on the same,_ steady drop _they have been all year.

I do have to wonder if this will trigger a bank run in the rest of the EU - for the few still using banks 
and

How will the market take this? Bank stocks still propped up?


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## CulexPipiens

We too are in a CU, DRKinAK, but the concern or question, if something like that was tried here, would it only be banks? or any finanical institution? It's going to be interested to see how the test case plays out over there.


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## Hooch

another great example oh why people shouldnt use banks... as much as possible of course. They are a rip off...n then they rip you off.


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## Tweto

No one has mentioned the obvious. If there is a run on the banks in Europe because of what has happened in Cyprus. where will the money go that is pulled out of the banks? This could cause a run on Gold or on the stock market. I don't think that Europeans will feel secure with their money in any European financial institute after this.


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## Roebears

There's nothing that keeps it from spreading all over once it gets started !!!


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## haley4217

Tweto said:


> No one has mentioned the obvious. If there is a run on the banks in Europe because of what has happened in Cyprus. where will the money go that is pulled out of the banks? This could cause a run on Gold or on the stock market. I don't think that Europeans will feel secure with their money in any European financial institute after this.


Well you called it right. Gold has been wobbling around up a little down a little never really making a breakout. Just looked at the market and Europe must be mailing a move, Gold is up over $10 per ounce biggest gain in some time and finally healthly broke out above $1600. Wish I had bought more last week.


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## Foreverautumn

Lake Windsong said:


> Does any of this sound familiar? Another excerpt from BBC, quoting a local resident:
> 
> The joke is that our politicians up until 24 hours ago were assuring us that there is absolutely no possibility for any levy on our deposits.
> The feeling of disappointment is overwhelming at the moment."
> The whole thing looks like a plot. The previous government didn't take a decision, so as not to take the blame. The new government makes a decision and blames the previous government and will say "sorry people we had no room to negotiate, but it's not our fault" and everything is thrown upon us on the Friday night before a three-day weekend.
> It feels like the people have to pay for the mistakes of the politicians and the banks. We work hard and earn our money and are forced to make up for the mistakes of others.
> The feeling within the Cypriot people is that the game is about who is going to get hold of the natural gas resources that have been found in the Cypriot sea bed.
> At the end of the day, we as a small country do not have a say for our future, others decide for us. Whoever was in power didn't have any option really. The Cypriot president was given orders he had to follow.
> We will survive. Cyprus, with its entry in the EU, has safeguarded its future as a free country in the European political arena and if this is a price we have to pay then my opinion is that we have to do it - and pay. However the feeling of disappointment is overwhelming at the moment.


Unfortunately, this sounds almost like it was right out of Atlas Shrugged. I swear to God, that chick had a crystal ball.


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## Foreverautumn

Padre said:


> When the tax man comes a knocking you gotta pay up, and when you are broke there is only one way to get the money to pay: THEFT. And since most are up to their necks in debt there are only two potention victims of theft: the creditors or the savers. Cyprus gave up the ability to steal from their creditors and so now only have the option to steal from their citizens. And in a borrowing culture where exactly are you going to find money to steal, pensions and bank accounts.
> 
> Caveat Emptor - paper bull investors.


<LIBTARD MODE ON> But...but...but Padre, they have ALL THAT MONEY, and we don't have NO MONEY, and everyone KNOWS that Russians are ALL a bunch of mob bosses. Everyone who has a dime more than us GOTS TA BE! And they've got enough money, and it's JUST THIS OOOOONCE!:lolsmash::rofl: THEY'LL NEVER MISS IT! No, we're not punishing achievement AT ALL! <LIBTARD MODE OFF>


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## hiwall

A run on banks in Europe seems a very likely possibility if this measure passes. This might prove to be a very interesting week.


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## Davarm

Marcus said:


> "Depositors will be compensated with the equivalent amount in shares in their banks."


Would the shareholders then share liability with the banks for losses?

I'm not an economist and stay away from banks as much as I can now so does anyone have an answer to that?


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## invision

A buddy just sent me the NY Times article... Even setting a limit on ATM transactions of only $400 euros, most ATMs were out of money... Sounds like the ammo run here.

Here is the NYT article. http://www.nytimes.com/2013/03/17/b...-to-get-cash-out-of-banks.html?pagewanted=all

Personal opinion, I think Greece will have a major run on banks, I think conservative individuals in the EU will start to pull some money out, but the majority of the sheeple will be a oh we are fine attitude in those countries that are financially more stable - Germany, England. May see some in Spain, Italy, and France make a run on the banks... Also, I think markets are going to be terrible -

holy shit, I just checked Bloomberg TV it's 12:42 EST 
gold up 6.5
dow futures down 137
S&P fut down 21
Nikki down 238 
hang sent down 476
Euro vs usd down 
Usd vs yen up

So it looks like a shift to PMs, and USD,...

My question, if this is the start of the fall of the euro - could this also be the trigger that starts US? I thought it would be opposite.


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## db2469

Russia is pissed....this could be very messy!


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## invision

Well now we get to see how the "bank holiday" will work for them as they delay voting on the 10% tax for another day...


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## Elinor0987

The government of Argentina seized the pension funds of its citizens and not too long afterwards there were stories circulating about the possibility of it happening here. There's going to be some kind of fallout from this debacle in Cyprus and it's going to get ugly. Most likely it will happen in more places and as others have said, could even happen here in the U.S. Stories like these make me glad that this year I decided to deliberately keep a minimum balance in my checking account to cover my bills. The rest of my money is going to tangible goods that will serve a useful purpose after our economy collapses. If our economy ever does recover then I'll worry about saving money. There are too many examples of government and banking institutions confiscating their citizens money to have any kind of confidence at all in our banks. To illustrate an example of what already happened here in the U.S.- MF Global used customers accounts to cover their capital requirements and pulled money from their accounts to cover trading losses. Millions of dollars were lost because of this. It could easily happen again with any of the other banks because they are all extremely leveraged and so is our government.


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## Woody

goshengirl said:


> It's getting harder and harder for people to hold on to what's theirs, and that's just wrong.
> 
> Makes me want to make a run on the bank here...


I have been doing that for a few years now. I have direct deposit and auto pay some bills so need to keep a certain amount in the bank to cover them. Every Friday I go and take out the rest and spend it, not actually all of it there is an emergency fund in there also. First it was LTS food stores. Then goods and sundries that I feel will not be available and that have an unlimited shelf life. Once I had accumulated enough to make me feel comfortable it has been silver eagles. I also built up a little sum of cash at home for the just in case situation.

So, make small runs on the bank regularly so you are not taking out a huge chunk at one time. Or, looking at it the other way, not leaving a ton of cash in there for them to take from you. You know it is coming but they will sneak it in on us. Look at SS, they traded one worthless piece of paper for another one on us, for our own good.

If you do not hold it, you do not own it!


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## hiwall

I don't think the Cyprus money grab will happen. But now the banks have showed their hand on what they will do. Whether it happens or not the trust of having your money in the bank is gone for all of Europe. This is just the start. Buy more food.


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## Lake Windsong

hiwall said:


> I don't think the Cyprus money grab will happen. But now the banks have showed their hand on what they will do. Whether it happens or not the trust of having your money in the bank is gone for all of Europe. This is just the start. Buy more food.


This reminds me of the articles that circulated in 2009, maybe earlier, of a Russian oligarch named German Sterligov. The article I remember told of how he left a life of luxury in Moscow because wealthy Russian entrepreneurs and their families were on constant vigil against kidnap for ransom, murder, etc, and moved his family into a rural area, basically becoming peasants. The article ended with his advice for everyone --'buy flour, salt, and sugar. You will need them. All of you.'
A bit ominous now that Russian wealth in Cypriot banks is being targeted by EU officials. I saved that article somewhere, but right now I am extremely sleep-deprived. I'm sure a google search will turn up more, if you are interested. He ran against Putin once, and has been on air discussing bartering systems since their lifestyle change.


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## BillS

I agree that it's an outrageous tax but so many other taxes are much more outrageous. It's just that collecting it is so much more obvious when they take it out of your bank account instead of your paycheck. There are so many dumb people who were more outraged over their bank's ATM fees than in their city's 12% increase in their property tax bill or the fact that their property tax bill will be over $5,000 this year.


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## invision

hiwall said:


> I don't think the Cyprus money grab will happen. But now the banks have showed their hand on what they will do. Whether it happens or not the trust of having your money in the bank is gone for all of Europe. This is just the start. Buy more food.


Actually it looks like they are preventing a run, bank holiday has been extended until Thursday, AND vote pushed until Tuesday.... If they vote no, then they are screwed... If they vote yes, then they have 1 day to prepare for a run....ATM still operating, but with max 400 limit withdraw... I wonder if they will limit face-to-face withdraws on Thursday to prevent potential cash on hand issues at the banks...

Also, No one has mentioned EFTs - I would think that those with 100,000 or more would transfer the money elsewhere...

BTW - I think it is interesting that Bloomberg TV and Fox Business are commenting on how this could happen in other places including US, - I wonder what MSNBC and CNN are saying - oh yeah "nothing to see here, everything is fine, more on little sheep move on"


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## HoppeEL4

It feels like this is a window into things to come here in the U.S. . You have to honestly say that if the EU is willing to do this to people who have already paid taxes on that money, and tax them again because they saved it in the bank, then what's stopping them from continuing to do this, and of course, here we have to wonder if some Fed is seeing this thinking "hmmm..now there is something we need to try".

Makes me glad we pretty much never have any money in the bank, can't squeeze blood out of a turnip. I take anything we do have and invest it into my "pantry" .


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## cnsper

I'll bet that England is glad they decided to keep the dollar instead of the Euro about now. I do not blame them at all for wanting to keep their sovereignty. Goes to show you that one global government can and will not work and this is only with one continent. Just think of the mess there would be if it was global.

This is the same argument against my federal tax dollars going to help people in NY or CA etc. Why do we need federal dollars to repair highways? The feds were to build the highways and then the states maintain them. I would gladly pay a higher state gas tax if the feds would remove theirs. Why should we have to pay the salaries on the federal level just to have them turn the money around(or what is left) and send it back to the states for road building. I would be happy if all the roads around here were gravel, keep the commiefornians from moving in... LOL

The closer you get to the source, the more efficient the money works for you.


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## cnsper

You must be the turnip. If you keep your money in cash then they don't know about it. Who says it is safer in a bank than a mason jar?


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## Lake Windsong

cnsper said:


> You must be the turnip. If you keep your money in cash then they don't know about it. Who says it is safer in a bank than a mason jar?


Ok, so now I need OCH to chime in to let us know if we need to use a vaccuum sealer to dry can money. Or just dry pack the bills and waterbath for 10 minutes? Thinking if we dry can with the vaccuum sealer, oxygen absorbers aren't necessary, since 'shelf life' of fiat currencies isn't that high...


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## Elinor0987

BillS said:


> It's just that collecting it is so much more obvious when they take it out of your bank account instead of your paycheck.


That's true, but the difference between the two is that with a tax they usually announce it in advance and it gives people time to prepare. When they decide whether to pull the money out of their bank accounts it will be done abruptly and the people have minimal opportunities to prepare for it with the bank holiday and limits on atm withdrawals and wire transfers. Some of those people that have very little disposable income are going to have to do without buying groceries and medicines, paying bills, putting gas in their car to get back and forth, etc., because of this.



Lake Windsong said:


> Ok, so now I need OCH to chime in to let us know if we need to use a vaccuum sealer to dry can money. Or just dry pack the bills and waterbath for 10 minutes? Thinking if we dry can with the vaccuum sealer, oxygen absorbers aren't necessary, since 'shelf life' of fiat currencies isn't that high...


Ha Ha Ha! Good one!


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## invision

Lake Windsong said:


> Ok, so now I need OCH to chime in to let us know if we need to use a vaccuum sealer to dry can money. Or just dry pack the bills and waterbath for 10 minutes? Thinking if we dry can with the vaccuum sealer, oxygen absorbers aren't necessary, since 'shelf life' of fiat currencies isn't that high...


Stop making me almost drop my iPad!!!! That there was funny!


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## Marcus

Foreverautumn said:


> Unfortunately, this sounds almost like it was right out of Atlas Shrugged. I swear to God, that chick had a crystal ball.


No, she just lived in Russia during the revolution. I suggest Anthem if you really want to know what living under socialism is like.



Davarm said:


> Would the shareholders then share liability with the banks for losses?


I would imagine so since they shared the liability for losses when they weren't even shareholders.


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## Marcus

Lake Windsong said:


> Ok, so now I need OCH to chime in to let us know if we need to use a vaccuum sealer to dry can money. Or just dry pack the bills and waterbath for 10 minutes? Thinking if we dry can with the vaccuum sealer, oxygen absorbers aren't necessary, since 'shelf life' of fiat currencies isn't that high...


You want to be careful using a vacuum sealer on money or you'll suck all of the value out of it. Oh wait, the Fed's already done that.


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## DJgang

Vacuum sealing should be just fine, no need to water bath. 

Of course, OCH would know better than me....

Funny!!!!


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## invision

HoppeEL4 said:


> It feels like this is a window into things to come here in the U.S. . You have to honestly say that if the EU is willing to do this to people who have already paid taxes on that money, and tax them again because they saved it in the bank, then what's stopping them from continuing to do this, and of course, here we have to wonder if some Fed is seeing this thinking "hmmm..now there is something we need to try".
> 
> Makes me glad we pretty much never have any money in the bank, can't squeeze blood out of a turnip. I take anything we do have and invest it into my "pantry" .


The major difference though is with the EU a country like Cypress or Greece, Spain, Italy, etc - they are stuck with the limited funding if the euro - it takes their central bank and all the countries to agree to print more euros. Where as with the US & Fed, we can take Keynesian economics and just apply it when ever we feel like it... aka just print more money.

But, I also agree, I can see some people in Congress watching and waiting to see how other country's citizens and our own will view this move IF it happens...


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## FatTire

how long can we just print more money though? my (limited) understanding is that each new dollar printed decreases the value of each dollar already out there, which makes sense to me, and seems to mean that at some point if we just keep printing, the dollars we have will be worthless.


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## hiwall

invision, I'm sure you know that Europe is also printing new Euros at a fast pace.

Rumor has New Zealand looking at a similar "tax" as the Cyprus one.


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## Woody

They can go on printing forever if they wish, it is a fiat currency. And yes, each one is worth less, look at what prices for groceries, lumber or anything have been doing lately. Yes again, at some point it all goes down the tubes. How long they can keep it up *IS* the question of the century.

A big problem, I think anyway, is that no one really knows how much fiat currency they are really creating. The FED is not responsible for reporting to anyone so can do as they please. Remember back, we kept hearing about deals they made to bailout different banks and countries? I bet there are plenty more no one knows about still. We know about $85 BILLION a month, but how much more is being created in the shadows???


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## invision

you all want to see something that is crazy - go out to http://www.federalreserve.gov/pubs/feds/2012/201256/index.html

This is the Federal Reserve 2012 balance sheet - first chart - look at the difference between 2006 and 2012... WOW...

Got to print this out and read it to fully understand what they are saying, but WOW what a jump in numbers! And to think according to Ben B, QE 1, 2, and 3 are not on their balance sheets yet... DAMN


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## hiwall

The Fed often does "currency exchanges". Those could be for any amount and with any country. Again no over sight.


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## haley4217

Now that Cyprus has rejected the terms of the bailout, is this good, bad or indifferent? Would the world economy be worse off if the bailout had taken place with the levy on savings? Would the expected run on banks and the possible Russian problems triggered a slide that would have reached our fragile economy here?

In a Bloomberg article today, the discuss the levy and the Russian deposits. 

"Cypriot Finance Minister Michael Sarris missed the ballot as he flew to Moscow to hold talks about financial assistance. Russian companies and individuals have $31 billion of deposits in Cyprus, according to Moody&rsquo;s. Russian President Vladimir Putin called the tax &ldquo;unfair, unprofessional and dangerous,&rdquo; according to a statement posted on the Kremlin website."

What does this rebuke of the ECB and the Eurozone mean to Germany's future participation. 

"European policy makers would consider ramping up pressure on Cyprus in the event of a breakdown over the deposit tax, a European official who asked not to be named said earlier today. Among the potential measures is cutting off funds to the nation&rsquo;s banks through the European Central Bank&rsquo;s Emergency Liquidity Assistance program."

"German coalition lawmakers said that Cyprus can expect no aid without meeting the bailout terms laid down."

&ldquo;Cyprus has rebuffed the outstretched hand&rdquo; of its partners, Hans Michelbach, a German lawmaker from Chancellor Angela Merkel&rsquo;s Christian Democratic bloc and its ranking member on parliament&rsquo;s finance committee, said in an e-mailed statement. The vote is &ldquo;an act of collective unreason&rdquo; and &ldquo;the people of Cyprus must now pay a high price.&rdquo;

That all being said, what do you see over the next 45 or 90 days in Europe, the Eurozone and the US economy? Does the possible weakness in the Euro keep the dollar high and conceal the US economic slide to the edge of the cliff? Can the price of gold be kept in check (fixed low) or will this trigger a move of the 31 billion in Russian dollars into PM?

More important to me, those who see the US collapse at more than 3 years in the future, does this change your outlook!


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## db2469

Can't really know how it'll all play out, but it can't end well. I can't imagine that Germany is going to continue to bail out those economies...my guess is some will be forced to default and revert back to their previous currencies. How those defaults will effect us is beyond me...


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## invision

You ask some good questions - without trying to write a book, here are my thoughts...

As for the vote, yes I think it was good that they said No, for 1 reason - they have a potential "Out" - meaning they could easily get Russia to "buy" the rights to drill oil off their coasts. A smart negotiator would also not only charge them a 1 time fee equal to their current debt, but also a royalty fee paid yearly while Russia drills - if Russia buys it, then EU is going to freak. However, this could be good for Cypress. IF Russia - which they won't IMO - refuses to buy the rights to drill - then Cypress is basically screwed. A default will happen - how bad will it hurt us? No clue, it will be the first of many to come though...

Now, the bank run I think would have happened if the vote was yes. I also think this could easily spill over to some of the other EU nations - why? because in any country you do have smart individuals that can see something like this tax hitting their country - it might take longer to ramp up, but the smart money would pull out early. I know I would.

Do I think it would cause a bank run in the US? Nope, something else has to happen. Yet, let me say - if the tax was a yes, and a bank run started in Cypress, and built momentum in the EU - and poured outside of the 4-5 countries that have zero hope of getting out of debt, say into a safe place like Germany - then I think EU would crash and burn AND I would think we would start to see a bank run here start up slowly. The reasoning is my opinion on the world economy, which is we can relate the world economy to a 3 leg bar stool. One leg is US, one leg is EU/Great Britain, and one leg is China/Japan - if one leg falls, we all fall. They are so tied together now, that even though there isn't 1 world currency, there basically is since we react to both legs in regards to market reaction and they both do as well in regards to us. 

I am one of those that are the 4-6 years until USD collapses... I think all this mess we are now hearing about can be related to an earthquake. Prior to an earthquake occurring there are seismic tremors aka indicators that give warning signals - sometimes they are seconds before an earthquake happens, but sometimes they are far enough out that your know that there is a fault and it is shifting, and over an amount of undetermined time these shifts become greater - warning bells go off, and the area is declared active or a hot spot or whatever geologist call them... This is what I think we are seeing right now in the global economy - little tremors that should be seen as warning bells that serious trouble is about to be upon all of us globally... I think if some researcher on here like Bobbb had the time, I am sure he could trace back over the last 20 years individual little seismic activity in the global economy that we all should have been more aware of - and not let us just keep building up the issue.

Ok, so I wrote a book... but these are the thoughts that I am thinking...


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## Foreverautumn

Marcus said:


> No, she just lived in Russia during the revolution. I suggest Anthem if you really want to know what living under socialism is like.


I've already read Anthem. In my humble opinion, Stalinist Russia was more functional than the "Civilization" in Anthem was.


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## Woody

Voting no was the right thing to do. Perhaps many politicians there feared a little for their lives if they did otherwise?

The thing that scares me the most is that the EU even thought of this as a plan much less went public with it! It is one thing to be joking in a back room going ‘hey, we can just go take money from their bank accounts!’ and everyone laughs. But to seriously put it on the table is another thing. To me it shows desperation. We, the public, had nothing to do with how all this went down yet they are EXTORTING money from us to pay for it. In Cyprus the PTB showed us they are not above actual STEALING from us to pay for it.

That really worries me, what will they try next.


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## invision

Woody said:


> Voting no was the right thing to do. Perhaps many politicians there feared a little for their lives if they did otherwise?
> 
> The thing that scares me the most is that the EU even thought of this as a plan much less went public with it! It is one thing to be joking in a back room going 'hey, we can just go take money from their bank accounts!' and everyone laughs. But to seriously put it on the table is another thing.


Your right there - but what it should do is wake everyone that has a bank account in the 4-5 other nations in the EU that are in financial ruins and have needed bailout money... The mere fact that they are now wanting to proceed this way to extend loans to a member nation - just proves that those other countries are going to be in a boat load of trouble the next time they need more bailout money... Cypress is lucky having a little oil reserve off their coasts right now IMO...


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## Marcus

Foreverautumn said:


> I've already read Anthem. In my humble opinion, Stalinist Russia was more functional than the "Civilization" in Anthem was.


My bad. I got my Ayn Rand books mixed up. I meant to recommend "We the Living" as the example of life under socialism.


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## Woody

invision said:


> Your right there - but what it should do is wake everyone that has a bank account in the 4-5 other nations in the EU that are in financial ruins and have needed bailout money... The mere fact that they are now wanting to proceed this way to extend loans to a member nation - just proves that those other countries are going to be in a boat load of trouble the next time they need more bailout money... Cypress is lucky having a little oil reserve off their coasts right now IMO...


I'd be very surprised if plans for this were not already in motion here or at least in the planning stages, just in case. I'm doing what I can to stimulate the economy right here! Going to the post office this afternoon to sign for a little package. Also spent a few fiat pieces of paper on some more fruit trees.


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## NaeKid

http://www.theglobeandmail.com/repo...-plan-b-as-bank-worries-mount/article9981314/



> The Cypriot government is scrambling to find bailout "Plan B" as anxieties rise about the timing of the reopening of the banks.
> 
> Cypriot banks remained closed again Wednesday and the government's self-imposed deadline to reopen them by Thursday seems unlikely to be met. While some ATMs still have cash, businesses fear they will soon get crippled unless they can resume normal banking activities, such as making payments to foreign suppliers.
> 
> The Cypriot government was locked in meetings Wednesday in Nicosia to try to create a new bailout plan that would be acceptable to the Euro group - the finance ministers of the 17 euro zone countries.
> 
> Cyprus's finance minister, Michael Sarris, was in Moscow Wednesday to seek financial assistance from the Russian government as Russia emerged as a potential saviour. Cypriot president Nicos Anastasiades used a half-hour phone call with his Russian counterpart, Vladimir Putin, to ramp up the save-Cyprus pressure.
> 
> Russia has already come to the rescue once. It loaned Cyprus $3.3-billion (U.S.) in 2011 as the Cypriot economy and banking system began to fall apart. Nicosia was rife with rumours that Russia might be prepared to increase or extend the loan in exchange for natural gas rights - Cyprus has substantial offshore gas discoveries that have yet to be developed - or access to a port for its Mediterranean warships.
> 
> Another idea would see Russian investors take control of Popular Bank of Cyprus, the second largest lender, which is close to collapse. It was largely nationalized last year. There was no confirmation Wednesday that Russia was prepared to move on any of these fronts.
> 
> Cyprus is trying to find about €5.8-billion ($7.5-billion U.S.) to contribute to the bailout. If it comes up with that amount, the Euro group will approve a €10-billion rescue loan designed to keep the country's fragile banking system afloat.
> 
> The €5.8-billion contribution was supposed to come from a tax on bank deposits. But a parliamentary vote to approve the tax failed Tuesday night, sending lawmakers searching for what they called "Plan B." Whether the plan would be revealed Wednesday or later in the week was not known. Raiding the pension funds was said to be one option under consideration.
> 
> In an interview, Michael Papapetrou, a lawyer who represents foreign clients, many of them Russians with billions of euros of exposure to the Cypriot banks, said all bank depositors were nervous about bank reopenings. "I still think the situation is manageable, but if the banks reopen [without a bailout plan], they would collapse within an hour," he said. "If the banks do not open by Tuesday, the whole thing will collapse."
> 
> But he thinks foreign funds will flow out of Cyprus even if a bailout is approved in the next few days. "I think that foreign funds will move," he said. "It will take some time to rebuild confidence [in the banking system]."
> 
> Russians have enormous exposure to Cypriot banks. Moody's, the ratings agency, estimated that Russian bank deposits in Cyprus total almost €25-billion.
> 
> "The entire wealth of the Church is at the disposal of the country ... so that we can stand on our own two feet and not on those of foreigners," Archbishop Chrysostomos said after meeting Anastasiades early on Wednesday. The Church of Cyprus is a major shareholder in Cyprus's third-largest domestic lender, Hellenic Bank. Leaders of the currency union said the bailout offer still stood, provided the conditions were met.
> 
> The ECB had threatened to end emergency lending assistance for teetering Cypriot banks, crippled by their exposure to the financial crisis in neighbouring Greece.
> 
> Euro zone paymaster Germany, facing an election this year and increasingly frustrated with the mounting cost of bailing out its southern partners, said Cyprus had no one to blame but itself.
> 
> "For an aid program we need a calculable way for Cyprus to be able to return to the financial markets. For that, Cyprus's debts are too high," said Germany's finance minister, Wolfgang Schaeuble.
> 
> With Sarris and Energy Minister George Lakkotrypis in Moscow, there was mounting speculation that Russian oil and gas giant OAO Gazprom had mooted its own assistance plan in exchange for exploration rights to Cyprus's offshore gas deposits.
> 
> Noble Energy reported a natural gas recovery of 5 to 8 trillion cubic feet of gas south of Cyprus in late 2011, in the island's first foray to tap offshore resources.
> 
> Russian authorities have denied the Kremlin plans to offer more money.
> 
> A senior source in the "troika" said dealing with Cyprus was even more frustrating than protracted wrangling with Greece.
> 
> "The Greeks wanted to cheat on you all the time, but they knew what they wanted. The Cypriots are leaving us really confused," the source said.


And on a slightly related note: http://www.theglobeandmail.com/repo...data-weigh-on-canadian-dollar/article9940113/



> The Canadian dollar moved lower Tuesday, weighed down by the debt troubles in Cyprus and underwhelming Canadian economic data.
> 
> The loonie was down 0.45 of a cent to end the day at 97.37 cents (U.S.).
> 
> Lawmakers on the Mediterranean island rejected a draft bill that would have seized part of residents' bank deposits in order for the country to qualify for an international bailout.
> 
> European officials have said that without a bailout, the country's main banks will collapse and the country could end up having to leave Europe's joint currency. Banks in Cyprus will stay shut until Thursday to prevent a bank run before parliament has backed the plan to seize a percentage of bank deposits.
> 
> The uncertainty impacted confidence for euro zone oil demand, and the April crude contract on the New York Mercantile Exchange slipped $1.58 to settle at $92.16 a barrel.
> 
> Gold stocks were ahead with April bullion moving up $6.70 to $1,611.30 an ounce, while May copper fell 2.3 cents to $3.406 a pound.
> 
> Meanwhile, Statistics Canada said manufacturing sales edged down 0.2 per cent in January to $48-billion (Canadian) - the fourth decline in five months - affected by weakness in automotive as well as the petroleum and coal product industry.
> 
> Wholesale sales rose by 0.3 per cent in January to $49-billion, mainly due to higher sales in computer and communications equipment and supplies.
> 
> In volume terms, wholesale sales were up 0.5 per cent for the month.


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## HoppeEL4

What I meant is, we are those people with little disposable income. We usually have little in the bank and so my investment has been my bargain shopping to pad my "pantry" (not keeping it in a mason jar). I am thinking about buying junk silver to just have a currency should our financial system collapse, but we're not the kind that has enough for gold.

I figure with a padded pantry, plenty of seeds, chickens for eggs (and other chickens), and some junk silver, we might be ok.

It is little investment, but overall for us the smartest thing we could do.


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## invision

Well as I said in another post...

They just screwed everyone with over 100,000

Wow, can you say bank run guaranteed?!?

http://www.reuters.com/article/2013/03/25/us-cyprus-parliament-idUSBRE92G03I20130325


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