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Mar252013

Cyprus Banks Steal Depositor's Money

REUTERS

If the European financial debacle wasn't bad enough, now a decision has been made to save Cyprus' economy by stealing the money of it's banks depositors.

Backed by euro zone finance ministers, the plan will wind down the largely state-owned Cyprus Popular Bank, known as Laiki, and shift deposits under 100,000 euros to the Bank of Cyprus to create a "good bank", leaving problems behind in, effectively, a "bad bank".

Deposits above 100,000 euros in both banks, which are not guaranteed by the state under EU law, will be frozen and used to resolve Laiki's debts and recapitalize the Bank of Cyprus, the island's biggest, through a deposit/equity conversion.

With the Obama administration's sweeping liberty depriving policies and America's deepening descent into debt and unprecendented social spending, how far are we behind them?

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Reader Comments (60)

Yep, another really great incentive for us to be more like Europe, just as Obama wants.

March 26, 2013 at 08:39 | Registered CommenterRedBeard

Now depositors in Italy, Spain and Portugal have been warned. Outright theft.

March 26, 2013 at 14:45 | Unregistered CommenterThomas Miller

Can't seem to figure this out. So people put their money in a bank, knowng full well that deposits are only guaranteeded up to 100k Euros. The bank fails and the governments of Cyprus and the European Union move to protect deposits under 100k Euros while those over 100k Euros take a loss.

Where does the stealing and theft part come in?

March 26, 2013 at 17:08 | Registered Commenterkwawk

"Where does the stealing and theft part come in?"

You're kidding, right?

March 26, 2013 at 18:51 | Registered CommenterRedBeard

You're kidding, right?

That's a rhetorical question, right?

March 26, 2013 at 20:04 | Registered CommenterMy Sharia Moor

Nope. Winston didn't let me borrow the Wingnut to English translator today and I'm completely stumped.

March 26, 2013 at 20:09 | Registered Commenterkwawk

So people put their money in a bank, knowng full well that deposits are only guaranteeded up to 100k Euros. The bank fails and the governments of Cyprus and the European Union move to protect deposits under 100k Euros while those over 100k Euros take a loss.

My reading of the linked article was that the deal with the EU was made in exchange for a bailout of the government's debts, not because the bank "failed", and the uninsured bank deposits are being 'appropriated' (a kinder word for theft) to help pay for that bailout.

March 26, 2013 at 23:46 | Registered CommenterMachiavelli

kwawk;

AS Mach said the banks didn't fail. The theft of depositors money was part of the deal. It's not April 1st and you were just kidding right????

March 27, 2013 at 06:28 | Unregistered CommenterThomas Miller

Speaking of stealing money, I see over-all medical bills are slated to rise 32% this year due to Obamacare. Again, thanks a lot Low-Information Voters. Really, can't say thank you enough......

March 27, 2013 at 06:57 | Unregistered CommenterThomas Miller

According to kwAwk's copy of the Leftist Lackey Manual, theft by government edict is to be called The People's Public Revenue Enhancement, and is to be cheered as a cornerstone of the coming Utopia.

March 27, 2013 at 07:36 | Registered CommenterRedBeard

I think you might be rading this situation backwards. The reason the one bank is being closed and rolled into the other is that both banks are failing. The government of Cyprus is failing in part because it is on the hook covering deposits for these banks.

March 27, 2013 at 09:17 | Registered Commenterkwawk

I think you might be rading this situation backwards. The reason the one bank is being closed and rolled into the other is that both banks are failing. The government of Cyprus is failing in part because it is on the hook covering deposits for these banks.

Kwawk, if the banks are failing, then how are they supposed to provide funds from the uninsured depositors to cover the insured deposits?

March 27, 2013 at 12:51 | Registered CommenterMachiavelli

Kwawk, if the banks are failing, then how are they supposed to provide funds from the uninsured depositors to cover the insured deposits?

Becasue they're taking the insured deposits out of one bank and leaving the bad debts behind and placing the deposits in the other bank thus shoring up the balance sheet.

March 27, 2013 at 14:42 | Registered Commenterkwawk

As to whether this will cause future bank runs, I can't say that I entirely disaagree with you, but isn't letting them fail exact logic you were advocating here during the banking crisis here?

March 27, 2013 at 14:44 | Registered Commenterkwawk

The result of U.S. bank failures where deposits over a certain limit are lost due to the private failure of the bank. Deposits in Cyprus over a $100k Euros are being taken by the government. Total theft.

March 27, 2013 at 15:30 | Unregistered CommenterThomas Miller

The bank being liquidated is a government owned bank. The government is taking the losses is more like it.

That would be a big reason for why the government of Cyprus needs a bail out in the first place.

March 27, 2013 at 16:19 | Registered Commenterkwawk

Shakes head is disbelief.......

March 27, 2013 at 18:26 | Unregistered CommenterThomas Miller

I'd wager kwAwk would be whistling a different tune if the confiscated funds were his own. But forgetting that a moment, let's ponder instead what will happen to banks if individuals and businesses no longer trust banks enough to let them hold their money. The reason funds were insured in the first place was to build that trust so that depositors would deposit those funds. If doing so is no longer safe, where does the money go? And my goodness! How will the IRS track it and then tax it? Without banks, there will obviously be fewer paper trails...

March 27, 2013 at 18:45 | Registered CommenterZoy Clem

What is the great mystery here? If you put money in a bank knowing that if you have more than 100k Euros in the bank it's not insured and the bank goes belly up and you have more than 100k Euros in the bank, you lose your money. There's no great mystery to it.

If it were my money, boy would I be pissed, but I'd be pissed at the assholes who ran the bank into the ground, not the government types that tried to save the bank.

You know what is fun about this and what I think has you guys all itchy in the nether regions? Cyprus is basically a country about twice the size of Rhode Island. It's a tax shelter for wealthy Russians. So a lot of people have been hiding their money there to avoid paying taxes in their homeland, but now their great wonderful tax shelter has failed, and there ain't nobody there to bail them out, because, you know, they didn't pay taxes to a government big enough to save them.

hahahahahaha

March 27, 2013 at 20:08 | Registered Commenterkwawk

KwAwk the Leftist is out there. He can't be bargained with, he can't be reasoned with. He doesn't feel pity, or remorse, or fear, or reason, or rational thought, and he absolutely will not stop. Ever. Until freedom is dead.

March 28, 2013 at 07:10 | Registered CommenterRedBeard

kwAwk,

It seems to me you would be angry with yourself for making a bad decision, or at least that was my impression after reading your first paragraph. Of course, it's easier to blame someone else for a bad decision--like say, those in charge of the bank.

March 28, 2013 at 07:50 | Registered CommenterZoy Clem

Kwawk;

THE BANK DIDN"T TAKE THE MONEY AND LOSE IT, THE GOVERNMENT OF CYPRUS TOOK IT TO MEET EU DEMANDS FOR A BAILOUT!!! I

If your you can prove to me that in the fine print of Cypriot banks savings account agreements that the government of Cyprus has the power based on EU agreements to take all deposits over $100k euros without the depositors ok I will agree with you and correct my statements. Otherwise this is pure theft by the Cypriot government of depositor’s money. That's it. There is no other way to spin it.

March 28, 2013 at 08:00 | Unregistered CommenterThomas Miller

Zoy. - That is reasonable. If you make a bad investment and you lose money then you have yourself to blame. Though I also think it's rational to be angry with the people you invested the money with if they didn't conduct business appropriately.

March 28, 2013 at 08:52 | Registered Commenterkwawk

TM- That is how banking insurance works. The government guarantees deposits up to a certain amount. If the bank fails it is nationalized with the government then making the decisions on how the bank will be restructured.

March 28, 2013 at 08:55 | Registered Commenterkwawk

"TM- That is how banking insurance works. The government guarantees deposits up to a certain amount. If the bank fails it is nationalized with the government then making the decisions on how the bank will be restructured"

WRONG. The deposits are guaranteed up to a certain amount, a new buyer is ether found to buy the bank or it is closed and the accounts are moved to another bank. Nowhere does the U.S. government takeover a bank, strip it of its private name and call it the Bank of the United States AND keep the money over the guaranteed amount.

I'm through with this discussion.

March 28, 2013 at 09:33 | Unregistered CommenterThomas Miller

Bottom line: If anyone wants to see our future under leftist "leadership," just look to Cyprus, Spain, and the rest of that leftist cluster**** known as the EU.

As I said earlier, Obama and the rest of his Cloward/Piven motivated allies WANT us to be reduced to European status. And they're succeeding quite nicely.

March 28, 2013 at 10:29 | Registered CommenterRedBeard

TM - The government of Cyprus apparently made the decision that it couldn't afford to have both of the coutries two largest banks fail at the exact same time, and the coutries of the European Union agreed with them apparently.

And do you really believe that they didn't think of the whole, lets sell the bank thing? You really think there is a hot market out there for buying failing Cyprot banks who have their capital tied up in that economic paradise of Greece?

And really, the whole point of governments offering banking insurance is for the government to be able to best provide economic security to the country in times of crisis. Governments are going to use that power to do just that.

March 28, 2013 at 10:38 | Registered Commenterkwawk

I had to post this from MSN Business. Now I know no one takes MSN Business seriously but some buy names Jason Motte is trying to say that with higher taxes spending AND savings have not changed. Government stats say income is static and the likelihood the rich are borrowing to spend & pay taxes is crazy, so what's missing?? How can the government take more taxes, have spending stay the same and investment or savings not change all on a fixed monetary amount?? It can’t. But the lib quoted study says it is. LOL. Sometime libs try so hard they just make themselves even look more stupid.

http://money.msn.com/now/post.aspx?post=b7cee953-0cd4-4d3c-a108-0086f2ba22a0

March 28, 2013 at 18:02 | Unregistered CommenterThomas Miller

I'm still trying to figure out exactly what it is that kwAwk is trying to defend, and more importantly, why.

Looks to me like he's fully on board with statism and centralized control, and any criticism of such an abominable and corrupt system gets him all riled up.

March 29, 2013 at 08:13 | Registered CommenterRedBeard

If you're saying that I'd rather live in country that is controlled by a democratically elected government or live in a quasi-anarchy, survival of the fittest and/or most brutal system run by unelected and unaccountable plutocrats who only have their own self-interests in mind?

I'd say guillty as charged.

I'm not stupid enough to think that I have any chance of competing economically with the Koch brothers if there isn't a government strong enough to protect my rights. Cause you know, all my hard work is no match for their inherited money.

March 29, 2013 at 11:44 | Registered Commenterkwawk

Oh, please. Not the tired old canard about the Koch Brothers. Open the door; reality is knocking.

Ever hear of Warren Buffett? George Soros?

How about Jay Snyder, who stuffed a half-million into Obama's back pocket?

Or Azita Raji, who bundled $3,000,000.00 for The One?

Anna Wintour, who bought favor by throwing another 3 mil at The Lightbringer?

Or most of Hollywood, contributing untold multi-millions to leftist "advancement?"

Yes, those Koch Brothers are WAY too influential. Not like the Dems. [snort]

March 29, 2013 at 13:48 | Registered CommenterRedBeard

I know a guy who knows a guy that for a $500k to OFA can make a lot problems go away through WH connections. Now it’s on the QT because "The Guy" likes to bull shit his eunuchs that he's clean as the pure driven snow but in reality he's just another money grubbing leftist. Let me know.

March 29, 2013 at 14:01 | Unregistered CommenterThomas Miller

It's not about who has what influence over what political party, it about economic survival in a capitalistic economy where money equals power.

If there were no regulations or government activity in a capitalist system companies could easily force workers to work 7 days a week 12 hours a day moving asbestos around in open containers for a flat rate of $30 a week. Most people in this country and others don't have enough economic clout to resist such coersion.

March 29, 2013 at 15:08 | Registered Commenterkwawk

If there were no regulations or government activity in a capitalist system companies could easily force workers to work 7 days a week 12 hours a day moving asbestos around in open containers for a flat rate of $30 a week. Most people in this country and others don't have enough economic clout to resist such coersion.

Clearly you haven't fully thought out how a "capitalist system" with "no regulations or government activity" would function, because no form of capitalism, not even Laissez-faire, works in a state of anarchy.

March 29, 2013 at 17:28 | Registered CommenterMachiavelli

I like the last line of the first paragraph from your link. The one where it saya that most scholars agree that a true laissez faire free market has never existed.

This is true ofcourse because a market without government to enforce the rules of fair play and help maintain a balance of power between supply and demand quickly degrades to oligarchy or monopoly.

March 29, 2013 at 17:52 | Registered Commenterkwawk

I like the last line of the first paragraph from your link. The one where it saya that most scholars agree that a true laissez faire free market has never existed.

Ayn Rand said as much when she published a collection essays on the subject, titled Capitalism: The Unknown Ideal The closest we came was during the 19th Century.

This is true ofcourse because a market without government to enforce the rules of fair play and help maintain a balance of power between supply and demand quickly degrades to oligarchy or monopoly.

If you bothered to read the laissez faire article I linked, then you would know that a true free market cannot function without a government to enforce laws against the use of force or fraud in dealings between individuals, as well as courts of justice so individuals can peaceably resolve disputes.

As for maintaining a "balance of power between supply and demand", a free market does that on it's own.

March 29, 2013 at 19:15 | Registered CommenterMachiavelli

As for maintaining a "balance of power between supply and demand", a free market does that on it's own.

It all sounds good, but the problem you have is that the perfect free market you describe is imaginary. Free Market economic theory describes life in a perfect world. This one isn't perfect.

March 29, 2013 at 21:11 | Registered Commenterkwawk

Free Market economic theory describes life in a perfect world.

No, it describes life where government restricts itself to where it has a proper and legitimate role. That doesn't require perfection.

March 29, 2013 at 22:06 | Registered CommenterMachiavelli

Mach - Think of it this way...

When you get a chance take out your cell phone contract. When you signed your contract did you read the whole thing? Probably not as it's more than likely dozens if not hundreds of pages. It is that long because your cell phone company has at it's disposal many many lawyers making gonzo money whose job it is to review that contract line by line to ensure every word in that contract works to the cell phone providers advantage.

You, if you're like most people, didn't even read the contract because you don't have a law degree and don't have the time to read every single document you receive for a service that is going to cost you a small portion of your income. On top of that even if you were to have the knowledge of the wording of the contract the cell phone provider would not negotiate the language with you anyways. Which would be fine if you had a plethora of other cell phone providers to choose from, but you don't. In reality you may only have about four options, and none of the others will negotiate with you either.

This isn't a market that is operating in a manner of a theoretical free market. It is a market where there is a power disparity between the supplier and the demander, and it is not one created by use of force or fraud, it's created by an imbalance in information and economic power.

Perfect information on both sides is part the definition of what a free market it, so yes it does require perfection. But this is not possible in the case of cell phones because the average person can not possibly take four or five cell phone contracts at 80 pages each and spend weeks doing a cross comparison to figure out what the real price of each plan is. They just have to look at the upfront price and hope the rest of the contract doesn't come into play.

Ofcourse there is solution to this. We can all chip in 10 cents a year and form a government agency that in charge of setting standards for these contracts that ensures that there is no unfair language in the contract. For 10 cents a year I get access to my own team of high powered lawyers that ensure that when I go into get a cell phone I can rest assured that I'm not signing away my first born child when I sign the agreement.

March 30, 2013 at 00:37 | Registered Commenterkwawk

Oh, and Mach the following language in the US Constitution proves that the founding fathers didn't believe in the invisible hand which guides the economy was all powerful....

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

The founders believed that the government had to limit the free market to make it more effective. That is what patents and copyrights are! Limits on the free market.

Otherwise I could buy a piece of land, open a restaurant, start making Big Macs and call it McDonalds.

March 30, 2013 at 00:56 | Registered Commenterkwawk

KwAwk, I know you don't understand, but in your last post you validated exactly what Mach stated earlier, in his post at 19:15.

Your seeming inability to comprehend what others have posted makes discussion of an issue quite difficult.

March 30, 2013 at 05:57 | Registered CommenterRedBeard

The founders believed that the government had to limit the free market to make it more effective. That is what patents and copyrights are! Limits on the free market.

The protection of individual rights, including intellectual property rights, are not a limitation on the free market, but are necessary to it's function as the social application of man's freedom. The Founders recognized the supreme importance of government's role in protecting that freedom by securing the individual rights of citizens.

March 30, 2013 at 10:47 | Registered CommenterMachiavelli

Red - It is you who isn't understanding. Mach basically said that the government should only be involved in the market in cases of force or fraud, but I detailed for him a situation the didn't involve force or fraud.

Mach - Patents and copyrights are an artificial limit on competition and they are an encouragement for creativity and investment and allow the holders to charge a higher price for their good than they would be allowed to charge if they had to face competition.

It maybe very true about it's social application of man's freedom, but it is an impediment to the free market.

March 30, 2013 at 11:59 | Registered Commenterkwawk

Mach basically said that the government should only be involved in the market in cases of force or fraud...

That is not what I said. If you're unwilling to accurately characterize my arguments, then please make use of direct quotes.

...but I detailed for him a situation the didn't involve force or fraud.

I was responding to your example, which I quoted. Since you seem to have already forgotten it, I'll quote it for you again (emphasis mine):

If there were no regulations or government activity in a capitalist system companies could easily force workers to work 7 days a week 12 hours a day moving asbestos around in open containers for a flat rate of $30 a week. Most people in this country and others don't have enough economic clout to resist such coercion.

Laissez Faire, or Free Market, Capitalism is entirely based on the principle of individuals dealing with each other freely, to each other's own benefit. Government is needed to provide enforcement of laws to prevent force and fraud from entering that exchange of goods and services.

March 30, 2013 at 14:23 | Registered CommenterMachiavelli

Patents and copyrights are an artificial limit on competition...

You mean competition in the form of theft of another's intellectual property, which has no place in a Free Market. As I've already explained, protecting individual rights (including property rights), is the purpose of government. In fact, it's government's ONLY purpose.

March 30, 2013 at 14:34 | Registered CommenterMachiavelli

If you bothered to read the laissez faire article I linked, then you would know that a true free market cannot function without a government to enforce laws against the use of force or fraud in dealings between individuals, as well as courts of justice so individuals can peaceably resolve disputes.

I thought you'd remembered what you said so I didn't blockquote it before.

In any case 'intellectual property' is a legal concept designed to prevent competition. If I own a cow everybody understands that you can't just take my cow because you're denying with my use of my cow., but my starting a restaurant and calling it McDonalds in no way prevents someone else from having a restaurant and calling it McDonalds. We would just be competing McDonalds.

The idea of 'intellectual property' limits my ability to compete with you. It is not a case of me denying you your property, we simply recognize 'intellectual property' as a matter of fairness and incentives for invention, not as a matter of property dispute. We limit the free market for the purposes of fairness.

March 30, 2013 at 15:13 | Registered Commenterkwawk

Intellectual property is a way to prevent competition? In what alternate universe is protection from theft a way to keep others from competing?

If Frederick Forsyth writes a book, do you think it would be fair for you to copy it and sell it as your own? That is not competition; it's theft. If you want to compete with Forsyth, write your own damned book.

Good grief.

March 30, 2013 at 15:29 | Registered CommenterRedBeard

Red - There is no money in writing a book, the money only comes for publishing and selling the book. And the only way to make real money from publishing and selling the book is if there a way to guarantee some form of exclusivity in the content of the book and that is where copyrights come in. Copyrights give you for a limited time the right to exclusively publish your content, otherwise you're simply competing on price.

And what you you need to know about Free Market Economics is that a lot of it is assumed that producers will compete based upon price, but the truth really is that most producers will do anything and everything they can to not compete on price because you can only make premium profits when you're not competing on price.

For that reason companies enact trademakers, patents, copyrights and branding. Branding in itself is a means of setting your product apart from the competition in order to grab a premium price. It may be rational tangible differences such as a patented formula for a soda, or an irrational intangible difference such as product packaging and cool advertising.

For pharmaceuticals they use their patents and limited period of exclusivity to charge $2-$3 per pill for the drugs you need, but as soon as those patents expire they don't even manufacture those drugs anymore as the generic firms come in and give you the same medication for 10 cents a pill. That is unless they can discover a new use for the product they've been selling for 10 years and extend the patent life.

March 30, 2013 at 23:47 | Registered Commenterkwawk

Triple post.

March 30, 2013 at 23:48 | Registered Commenterkwawk

Double post.

March 30, 2013 at 23:51 | Registered Commenterkwawk

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