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  • Cyprus - Tax on bank balances set to take place on Tuesday prompts run

    Government proposal to tax bank balances at 6.7-9.9% on Tuesday.

    Cyprus' savers bear brunt of unprecedented bailout

    Cyprus president says depositors had to pay to avoid bankruptcy
    Sat, Mar 16 2013


    By Annika Breidthardt and Robin Emmott and Michele Kambas
    BRUSSELS/NICOSIA | Sat Mar 16, 2013 7:52pm EDT
    (Reuters) - The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risk of a wider run on savings.

    more..


  • #2
    Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

    Bank deposits hit as EU/IMF bailout for Cyprus agreed · TheJournal.ie
    Snip
    "EUROZONE FINANCE MINISTERS have agreed on a €10 billion bailout package for bankruptcy-threatened Cyprus which will involve a near 10 per cent levy on all bank deposits over €100,000.

    People with less than €100,000 in their bank accounts will have to pay a one-off tax of 6.75 per cent while those with more will pay 9.9 per cent under a measure that will raise €5.8 billion in additional revenue.

    Cyprus will also be forced to sell off some €1.4 billion in State assets and raise its corporate tax rate from 10 per cent to 12.5 per cent, the rate currently levied by its fellow bailed-out eurozone nation, Ireland.

    BBC News quotes a European Central Bank official as saying that Cypriot authorities have already started to take action to ensure that the levy is collected before depositors can withdraw their funds to avoid it.

    Officials fear that there could be a run on the country’s banks when they reopen on Tuesday after the bank holiday weekend but pictures from the country already show people queuing at ATMs to withdraw funds.

    snip

    Last edited by sharon sanders; March 17, 2013, 11:41 AM. Reason: shortened

    Comment


    • #3
      Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

      Britain issues a travel notice on Cyprus about the impending bank garnishments.

      Cyprus

      Still current at: 17 March 2013
      Updated: 17 March 2013
      No restrictions in this travel advice Avoid all but essential travel to part(s) of country Avoid all but essential travel to whole country Avoid all travel to part(s) of country Avoid all travel to whole country

      This advice has been reviewed and reissued with amendments to the Travel Summary (new banking sector protection measures being introduced). The overall level of the advice has not changed; there are no travel restrictions in place in this travel advice for Cyprus.

      (see travel advice legal disclaimer)


      TRAVEL SUMMARY
      (back to top)
      The Cypriot Government is implementing measures to protect its banking sector. You should check with your bank for further information.


      We advise those travelling to Cyprus to take different forms of payment with you to ensure you have access to adequate funds (such as pounds, euros, credit/debit cards).


      British nationals receiving pensions payments in Cyprus can contact the International Pension Centre by phone, textphone or email: Phone: +44 191 21 87777, Textphone: +44 191 21 87280, email: TVP-IPC-Customer-Care@thepensionservice.gsi.gov.uk



      There is an underlying threat from terrorism. See Terrorism.

      Around a million British nationals visit Cyprus every year. Most visits are trouble-free. See Consular assistance statistics.

      If you need to contact the emergency services call 112.

      Cyprus has a strict zero tolerance towards drugs. See Local Laws and Customs.

      Driving standards are poor. You should drive with great care. See Road travel.

      Many British nationals have experienced serious problems with the purchase of property in Cyprus. See this guide on buying property in Cyprus.

      Take out comprehensive travel and medical insurance before you travel. The European Health Insurance Card (EHIC) is not valid in northern Cyprus.


      more...

      FCDO travel advice for Cyprus. Includes safety and security, insurance, entry requirements and legal differences.

      Comment


      • #4
        Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

        Cyprus works on last-minute deal to soften bank levy


        By Michele Kambas
        NICOSIA | Sun Mar 17, 2013 5:10pm EDT
        (Reuters) - Cyprus was working on a last-minute proposal to soften the impact on smaller savers of a bank deposit levy after a parliamentary vote on the measure central to a bailout was postponed until Monday, a source said.

        more....

        Comment


        • #5
          Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

          Well, I'm sure everyone is thinking it, so I might as well say it. This has got to be the worst economic idea anyone has thought of in years. I have read many articles on this, and I haven't heard from one person who thinks this is a good idea. Why is this so bad?

          - It destroys the euro as a store of value. The euro has dropped from $1.3076 to 1.2891 (http://stream.marketwatch.com/story/...-4/SS-4-25675/) pracitcally overnight, losing nearly 2% of its value. It wouldn't surprise me to see the euro fall much further. So now all of Europe, not just Cyprus, has lost big.

          - It violates the private property rights of the Cypriot people. In the United States last year, a group of Porgressive (Democratic) representatives proposed a budget with a 0.25% wealth tax (and a $10 million exemption), and the response of the country was shock. Representative Allen West (R-Fla.) began yelling that this was evidence of Communists in the Deomcratic party. Even though such a tax would have only affected perhaps the richest 0.1% of Americans, there was a deep revulsion at this idea. But the Cypriot tax will affect everyone (and is much larger).

          - It permanently destroys the Cypriot banks, as well as possibly those elsewhere in Europe. Banks aren't paying interest anymore, so the only reason people would put moeny in a bank is security and convenience. If the government or the banks can do this, it's safer to put your money in a mattress. Gold has risen sharply in the past couple days, but I don't see how gold would be a store of value in a situation like this, as a government could simply confiscate that as well. Let us not forget the general rule that when you tax an activity, you get less of it in society. In this case, that activity is putting money in a bank.

          - It actually cripples the Cypriot economy. No one is able to make financial transactions in Cyprus right now because the banks are frozen. The loss to Cyprus as a whole due to this period of economic inactivity (not counting the other effects) is likely to be considerable.

          - It is actually reverse Robin Hood, robbing the poor to bailout the rich and the bankers. Bank balances account for only a tiny fraction of the wealth of the wealthy (who may own real estate, stocks, bonds, etc.) but are the primary asset of the working class. We see how much opposition there is to redistribution of wealth, even when the goal is to make everyone more equal. This is redistribution to make everyone LESS equal. And let us not forget that, like any redistribution of wealth, it actually makes the pie smaller, because people will not generate as much income or wealth if it will be confiscated from them.

          - It has also been pointed out elsewhere that the people who might be the worst off here are small business owners, who have large amount of money in the bank that is not really "theirs". They can have revenue in thier bank accounts that is needed to pay off expenses. Imagine a business that incurs $1,000,000 worth of expenses to raise $1,010,000 in revenue, resulting in $10,000 in profit. Now the "tax" gets applied to their entire bank balance, and the result is nearly a $100,000 loss. Since most industries have quite low profit margins, this example is not that far off.

          - It potentially could cause an intentional incident. It has been pointed out that many of the largest depositors in Cypriot banks are Russian or Ukrainian. How will those countries react to the theft of their citizens' money by this tax? What would stop Russia or Ukraine from making its citizens whole again by simply confiscating an equal amount of European assets in Russia or Ukraine?

          Hang on tight. I think the global financial markets are in for a serious shock. It boggles my mind to think that someone in Brussels actually thought this was a good idea. They might be the only person in the world who believes this. I cannot help but notice that the last four letters of "Cypriot" are "riot"...

          Comment


          • #6
            Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

            An editorial from a Cypriot newspaper:



            Our View: The ?rescue package? designed to destroy the economy
            Published on March 17, 2013

            EVEN though the haircut of bank deposits had been on the agenda of the EU for more than a month now, featuring in Commission memos and being openly discussed by European politicians, most of whom, refused to rule it out, few people thought the Eurogroup would go ahead with it. It was an idle threat, to force Cyprus privatise SGOs and increase the corporate tax, was the prevailing view.

            And after all, President Anastasiades had emphatically declared in his inauguration speech that ?absolutely no reference to a haircut on public debt or deposits will be tolerated,? adding that ?such an issue isn?t even up for discussion.? Finance Minister Michalis Sarris made similarly reassuring statements, arguing that it would be lunacy for the EU to impose such a measure because it would threaten the euro system.

            Germany and the leaders of the Eurogroup opted for this lunacy, calculating that Cyprus is too small and inconsequential for the haircut on its bank deposits to cause contagion in the eurozone. Of course, the markets could view the decision differently, perhaps not when they open on Monday, but a few weeks later as it becomes apparent that not even deposits in European banks are safe from raids by the Eurogroup.

            It is obvious from the statements made that Anastasiades was blackmailed into accepting this euphemistically called ?solidarity levy?. If he did not accept it, the European Central Bank would not provide Emergency Liquidity Assistance to the Cypriot banks, after the March 21 deadline (it had been extended by two months in January) and the banks would have collapsed on the same day, with people losing much bigger parts of their deposits than the seven to 10 per cent that would be taken now.

            Was there an alternative for Anastasiades? It is difficult to say, given the pressure for a political agreement by last Friday. All indications are that our EU partners had taken their decision before then and this was why they scheduled the Eurogroup meeting that would discuss the bailout on a Friday night. The Cypriot banks would be closed for three days during which all the steps for bailing in deposits could be taken, and the banks could re-open normally on Tuesday.

            If only things were so simple. It is highly unlikely it will be business as usual at the banks on Tuesday as thousands of people will likely turn up to withdraw their money. Big depositors would give instructions for the transfer of money abroad and never again place it in a Cypriot bank. What would be the capital needs of the banks faced with a mass exodus of deposits, brought on by the Eurogroup decision? Would the EU order another ?solidarity levy? in such a case or would it declare Cyprus bankrupt, having dealt a fatal blow to its financial services sector that is by far the biggest contributor to GDP, and kick it out of the eurozone?

            [snip]

            Comment


            • #7
              Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

              This is so unwise.

              Cyprus Delays Vote on Bailout Plan

              Petros Karadjias/Associated Press
              A protestor outside Parliament in Nicosia, Cyprus, on Monday.
              By LIZ ALDERMAN and DAVID JOLLY
              Published: March 18, 2013

              snip

              Jeroen Dijsselbloem, the president of the group of euro area ministers, declined Saturday to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.

              Comment


              • #8
                Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

                What are the public health implications of economic problems?

                Americans' suicide rates up since economic crisis began

                LONDON | Sun Nov 4, 2012 7:01pm EST
                Nov 5 (Reuters) - Suicide rates in the United States have risen sharply since the economic crisis took hold in 2007 and political leaders should do more to protect Americans' mental health during tough times, researchers said on Monday.

                In a letter to The Lancet medical journal, scientists from Britain, Hong Kong and United States said an analysis of data from the U.S. Centers for Disease Control and Prevention showed that while suicide rates rose slowly between 1999 and 2007, the rate of increase more than quadrupled from 2008 to 2010.


                ----------------------------------


                Greece: Economy Triggers Suicide Epidemic
                Can a fiscal meltdown trigger a suicide epidemic?
                Published on November 29, 2012 by Dale Archer, M.D. in Reading Between The (Head)Lines

                snip

                Businesses are closing down by the thousands, and many cannot get medical help because they don't have the money, and doctors are overwhelmed giving out free care. Incomes are down, fuel prices are up and the living conditions in Greece are crumbling. As a result, desperation rules.

                Greece, has always had a historically low suicide rate, but no more. She is now experiencing an outright suicide epidemic. Whether done in private or in the town square during rush hour, people (mostly men) are giving up and taking what they consider a dignified exit. In June, there were 350 suicide attempts, and 50 deaths in Athens alone. Many were middle class and most were carried out IN PUBLIC, to make a statement. Consider the sobering fact that since 2010 more than 2,500 people have committed suicide in Greece. Ta Nea, the Greek newspaper, states the whole country is "on the verge of a nervous breakdown."

                ----------------------------

                Increasingly in Europe, Suicides ‘by Economic Crisis’

                Eoin O’Conaill for The International Herald Tribune
                George Mordaunt of Clonmel, Ireland, considered suicide when his car business hit hard times.
                By ELISABETTA POVOLEDO and DOREEN CARVAJAL
                Published: April 14, 2012

                snip

                The economic downturn that has shaken Europe for the last three years has also swept away the foundations of once-sturdy lives, leading to an alarming spike in suicide rates. Especially in the most fragile nations like Greece, Ireland and Italy, small-business owners and entrepreneurs are increasingly taking their own lives in a phenomenon some European newspapers have started calling “suicide by economic crisis.”

                Comment


                • #9
                  Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

                  Thanks, alert. Your comments are spot on.

                  Originally posted by alert View Post
                  Well, I'm sure everyone is thinking it, so I might as well say it. This has got to be the worst economic idea anyone has thought of in years. I have read many articles on this, and I haven't heard from one person who thinks this is a good idea. Why is this so bad?

                  - It destroys the euro as a store of value. The euro has dropped from $1.3076 to 1.2891 (http://stream.marketwatch.com/story/...-4/SS-4-25675/) pracitcally overnight, losing nearly 2% of its value. It wouldn't surprise me to see the euro fall much further. So now all of Europe, not just Cyprus, has lost big.

                  - It violates the private property rights of the Cypriot people. In the United States last year, a group of Porgressive (Democratic) representatives proposed a budget with a 0.25% wealth tax (and a $10 million exemption), and the response of the country was shock. Representative Allen West (R-Fla.) began yelling that this was evidence of Communists in the Deomcratic party. Even though such a tax would have only affected perhaps the richest 0.1% of Americans, there was a deep revulsion at this idea. But the Cypriot tax will affect everyone (and is much larger).

                  - It permanently destroys the Cypriot banks, as well as possibly those elsewhere in Europe. Banks aren't paying interest anymore, so the only reason people would put moeny in a bank is security and convenience. If the government or the banks can do this, it's safer to put your money in a mattress. Gold has risen sharply in the past couple days, but I don't see how gold would be a store of value in a situation like this, as a government could simply confiscate that as well. Let us not forget the general rule that when you tax an activity, you get less of it in society. In this case, that activity is putting money in a bank.

                  - It actually cripples the Cypriot economy. No one is able to make financial transactions in Cyprus right now because the banks are frozen. The loss to Cyprus as a whole due to this period of economic inactivity (not counting the other effects) is likely to be considerable.

                  - It is actually reverse Robin Hood, robbing the poor to bailout the rich and the bankers. Bank balances account for only a tiny fraction of the wealth of the wealthy (who may own real estate, stocks, bonds, etc.) but are the primary asset of the working class. We see how much opposition there is to redistribution of wealth, even when the goal is to make everyone more equal. This is redistribution to make everyone LESS equal. And let us not forget that, like any redistribution of wealth, it actually makes the pie smaller, because people will not generate as much income or wealth if it will be confiscated from them.

                  - It has also been pointed out elsewhere that the people who might be the worst off here are small business owners, who have large amount of money in the bank that is not really "theirs". They can have revenue in thier bank accounts that is needed to pay off expenses. Imagine a business that incurs $1,000,000 worth of expenses to raise $1,010,000 in revenue, resulting in $10,000 in profit. Now the "tax" gets applied to their entire bank balance, and the result is nearly a $100,000 loss. Since most industries have quite low profit margins, this example is not that far off.

                  - It potentially could cause an intentional incident. It has been pointed out that many of the largest depositors in Cypriot banks are Russian or Ukrainian. How will those countries react to the theft of their citizens' money by this tax? What would stop Russia or Ukraine from making its citizens whole again by simply confiscating an equal amount of European assets in Russia or Ukraine?

                  Hang on tight. I think the global financial markets are in for a serious shock. It boggles my mind to think that someone in Brussels actually thought this was a good idea. They might be the only person in the world who believes this. I cannot help but notice that the last four letters of "Cypriot" are "riot"...
                  http://novel-infectious-diseases.blogspot.com/

                  Comment


                  • #10
                    Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

                    Cyprus Set to Reject Bailout, Citing Tax on Bank Deposits

                    Petros Karadjias/Associated Press
                    A Russian Commercial Bank branch in Nicosia on Tuesday. Cypriot banks were expected to be closed through Wednesday.
                    By LIZ ALDERMAN
                    Published: March 19, 2013


                    ?I estimate that the Parliament will turn down the package,? he said on state television as he headed into a series of meetings. (edit - Mr. Anastasiades said )

                    A government spokesman, Christos Stylianides, echoed that opinion, telling state radio, ?It looks like it won?t pass.?

                    The managing director of the International Monetary Fund, Christine Lagarde, said Tuesday she was in favor of modifying the agreement to put a lower burden on ordinary depositors.

                    more...

                    Comment


                    • #11
                      Re: Cyprus - Tax on bank balances set to take place on Tuesday prompts run

                      If this is true, it should cause some blood to boil:


                      ...
                      But Russian oligarchs and big investors emptied accounts in the days beforehand, prompting claims they were tipped off by bank insiders. A source told The Sun: ?It leaked out. Bankers warned their best clients. Government officials warned their friends and relatives.

                      ?Billions disappeared from accounts in days, most from accounts held by Russians.?

                      Russians are by far the biggest overseas investors in Cyprus, with a stake estimated at 20billion euros. There are accusations criminals use the island for money-laundering. Russian president Vladimir Putin yesterday called the tax ?unfair and dangerous?.
                      ...
                      The salvage of human life ought to be placed above barter and exchange ~ Louis Harris, 1918

                      Comment

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