Skip to comments.EU: Cyprus bail-out: savers will be raided to save euro in future crises, says eurozone chief
Posted on 03/26/2013 12:59:01 AM PDT by bruinbirdman
Savings accounts in Spain, Italy and other European countries will be raided if needed to preserve Europe's single currency by propping up failing banks, a senior eurozone official has announced.
The new policy will alarm hundreds of thousands of British expatriates who live and have transferred their savings, proceeds from house sales and other assets to eurozone bank accounts in countries such as France, Spain and Italy.
The euro fell on global markets after Jeroen Dijsselbloem, the Dutch chairman of the eurozone, announced that the heavy losses inflicted on depositors in Cyprus would be the template for future banking crises across Europe.
"If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'," he said.
"If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders."
Ditching a three-year-old policy of protecting senior bondholders and large depositors, over 100,000, in banks, Mr Dijsselbloem argued that the lack of market contagion surrounding Cyprus showed that private investors could now be hit to pay for bad banking debts.
"If we want to have a healthy, sound financial sector, the only way is to say, 'Look, there where you take on the risks, you must deal with them, and if you can't deal with them, then you shouldn't have taken them on,'" he said.
"The consequences may be that it's the end of story, and that is an approach that I think, now that we are out of the heat of the crisis, we should take."
The announcement is highly significant as it signals the mothballing of the euro's 700bn bailout fund,
(Excerpt) Read more at telegraph.co.uk ...
I’d hate to be a Cypriot, who inherits a large sum of money, right now.
There’s a madness to their method.
Only to point out the obvious. European banks work like US banks....there’s 100k limit for bank insurance protection with each single account. What US investors have done for years....was walk into bank A....open a CD account for something less than $250k (the amount that FDIC would pay). Then they go to bank bank B....just a mile down the road, and open another account for another amount less than $250k. It might take an entire morning to carefully open a couple of accounts but you’ve basically saved a million dollars easily by this method. The Europeans will figure the same scheme and do it the same way.
What the public needs to do...is simply ask some stupid questions. How exactly are the banks giving out their bonds or loans? Have they reached a point where they have idiots running the banks and just giving money to government bond programs with no hope of ever getting the money back?
I suspect that there will be an increase in home safe sales over the next year. Lots of people will start to believe in just keeping their money in some flower pot within their apartment or home.
What if they close all the banks? How much in losses can the bank insurance cover before it fails? And what if they take money calling it a tax? Is tax covered?
The elites are willing to destroy the credit market to save, not it, but their elite status.
Coming soon to your bank and 401K.
You would have to assume in this case that all banks perform the same screw-up and lose investment bonds/funding in the same fashion. The odds? One in a million. What helped the case in Cyprus is that you only have a few national banks. Every single bank president knows his other associates on a personal level, and probably knows the national political apparatus on a first-name basis. Whoever dreamed up the idea of buying Greek bonds at the worst possible time, and then convinced almost all of the banks in Cyprus to do the same thing....deserves fifty years in prison (my humble opinion).
All bank insurance situations are geared to help the little guy only. You can’t find any country in the world which puts out a million dollar limit on FDIC-like insurance.
As for the term “tax”? The journalists have attached themselves to the term, but I doubt that the official paperwork to each “loser” will say the word tax.
It wouldn’t have to be every bank just say the top 5 or 6 and we pretty much had that when this whole can of worms started. And it isn’t just the journalists using the term tax. The FDIC has been all but broke a number of times. With the exposure to European derivatives that the biggest US banks are exposed to if Europe folds many a large bank is going to take huge hits wounding them most like beyond saving.
I believe that basically explains the actions of the European bureaucrats. It was my basic understanding that the elites took a real bath on the financial markets during the years 2005-2008, and they want their money back.
And the Free Trade Communists will still insist “Free Trade works”....as their fellow Free Traders....the EU...force more taxes on Cypriots to bail out the bad loans.
The real story here is that we will still have dumb as f... Free Trader Commies pushing their failed economics
Wonder what the Russians will do to screw the EU over this
By the way calling it a tax maybe the only way they could save the bank insurance fund with out a massive bailout of it.
Probably very true.
a fake currency (like the USD, yes) and issued by a non-country...
and now the geniuses are stealing it right out of the peoples’ bank accounts!?
no smarts at all.
if they want to steal their peoples’ money, they could just steal its purchasing value by printing more and more and more and more (just like in USA, any fool can see it works quite well here....)
or they could just raise taxes and steal their peoples’ money that way ...(do they also call it the Great Obama Depression?)....
but to just grab it ... such common thievery (thuggery) ... shows no class ... no class at all....
I thought Europe was supposed to be, er, “cultured?”
but no, the pigs have their snouts firmly in the trough and their just slurping it up like ...well.... pigs....
kiss Europe bye=bye
Please don’t blurt out contradictory gibberish like ‘free-trade communists’ on this forum.
First: Communism is the antithesis of free trade. Communism relies on financial repression.
Free Trade (on the other hand) is economic freedom of association - you buy from and sell to whomever you wish.
Second: The EU does not subscribe to Free Trade. The EU is a customs and tariff union.
Its members face heavy barriers to trading outside of the EU. Internally they havge to deal with formidable Government intervention in the form of subsidies and vendor-financing to protected industries.
The Euro in particular is a statist strait-jacket designed to remove competition and economic freedom. Countries in the Eurozone cannot deprice their currency to make themselves competitive - and currency is half of every transaction.
Hope you find this useful.
You are implicitly assuming bank failures are independent. When you get a run on the weakest bank, some savers at the second weakest will panic and withdraw their money, which can bring that bank down . . .
They are Global Fascists.
We are witnessing the convergence of the Left (yes they still exist), the Muzzies and the Global Fascists (who despise competition) against the Christians and the Jews.
Yes, I know there are those who still blame all of this on the Jewish Bankers. Prior to WWII it might have been so to some extent. Today? No.
We are facing some major upheavals. Only God knows the outcome. Pray for the United States and her people.
If you have money in any EU bank, you might want to think about moving to some other country.
It’s also that banks tend to lend out multiples of what they actually have in deposits that contribute to the problem.
Take the Euros and give each one DM100 in exchange.
In six months, they’ll be thankful.
I think this will be very good for the Swiss Banks.
Want to read some real insanity? Click the link above. The northern EU is issuing negative yield bonds. People are paying the government to hold their money. I read where banks here had bought negative yield paper from the US as well. This may indicate that the banks, because of politics and their charters, may have no choice but to “invest” their depositor’s money in these bonds. The EU is on its death bed. Private depositors are crazy to leave their money in banks. Note that it says deposits have been declining in EU banks for some time.
um... no they wont... because now everyone will simply not put their money in the bank!
are these people REALLY that dumb?
Obama already thought of that and forced the Swiss a year or so ago (along with every other similar place in the world) to divulge the information on accounts.
They have been planning this for years. The final blow is about to drop.
If a massive national bank failure occurs, such as in Cyprus or during the Depression, the gov’t may not have the money to cover deposit insurance claims, or may decide the money is best spent elsewhere.
Does ANYONE, under the above circumstances, expect our US government to begin sending out $100,000 checks to millions of people? Even if they did, where would you cash/deposit it?
Suggestion for future bank bailouts: The assets of the officers & directors will immediately be taxed at 100%.
Lending reasonable multiples is not a problem so long as it is a reasonable multiple. It’s when the leverage gets too high that a bank run can kill the bank. Banks globally have gone way too far in leveraging.