Not an exaggeration as I see it - Cartoon about the predicament of Cyprus.

[Mira]

[pampango]

1. With the understanding that it is and has been greedy Cypriot bankers eating the country,

I agree. Local bankers took over the economy long ago and transformed it into a banking haven for rich foreigners.

The same thing happened in Iceland and Ireland before. Their countries had to be ripped from the jaws of greedy bankers.

[xtraxritical]

37. Russian Oligarchs got burned! Good news.

[CrispyQ]

2. It should be holding the globe, cuz that's what they want.

They want it all.

[dixiegrrrrl]

3. Something very Bolshevik-ian about that pic.

I approve...

[Cleita]

10. Maybe it was done by a Russian.

I understand that many Russians kept their money in Cyprus banks and they will get taxed.

[BrotherIvan]

36. It's Goya "Saturn Devouring His Son"

http://en.wikipedia.org/wiki/Saturn_Devouring_His_Son

[santamargarita]

4. They're stealing peoples savings accounts...

How long before our greedy banksters try that here.

[tsuki]

5. Not long. Remember that they did that with MFG. nt

[santamargarita]

6. I'm sorry, what's MFG?

[KamaAina]

13. MF Global (Corzine)?

[tsuki]

35. Absolutely. nt

[tsuki]

34. MF Global. Where 1.6 billion dollars of segragated deposit accounts

vaporized over the Atlantic Ocean on there way to JP Morgan Chase in the UK.

[pampango]

7. I don't have a problem with them taxing large bank accounts and leaving small one alone.

I don't consider taxing the bank accounts of the rich in order to prevent a collapse to be 'stealing'.

If our banksters come up with a tax on accounts over $125,000 (100,000 euros is the Cyprus limit), it won't affect me. It would have a much greater effect on the 1%, which means, of course, that it's not going to happen.

[Cleita]

8. That would be double taxation wouldn't it?

Theoretically, the money has been taxed before going into the bank. I do think the tax rates on wealth should be bigger, but for some reason or other I draw the line at savings. I would rather go after investments like stocks, bonds and real estate.

[pampango]

14. That may be, but as long as it applies to large accounts only it is acceptable to me.

Why large savings and checking accounts should be treated differently than large investment accounts or real estate holdings isn't apparent to me.

[Cleita]

16. The difference is that the investment account taxation would be only on

transactions, not money that is sitting in an account. Even doing that like a few pennies for a transaction on Wall Street would bring in oodles of money according to some in the money business. I could see taxing the interest on a savings account when it's earned, but money thats already in the account, no. Those big savings account would be withdrawn and the banks wouldn't have any money to lend and that's traditionally how they make their money.

[pampango]

22. I agree with a financial transactions tax and wish the US would adopt one as many EU countries have

recently done.

When I compared a tax on savings/checking accounts and investment accounts, I meant a tax on the balances, as is being proposed in Cyprus, not on transactions. There are already taxes on interest on bank and investment accounts.

You're right that the banks are going to lose a lot of their funds. Unfortunately, according to Krugman, the financial sector had taken over Cyprus' economy just as happened in Iceland. He thinks that the retrenchment of the financial sector in Cyprus is inevitable and that they should embrace it as the people in Iceland did.

Iceland, at peak, had banks with assets that were 980 percent of GDP, more than 10 times the US number. ... Cyprus, at around 800 percent, was closer to Iceland in this respect.

... it seems clear that one big problem is that Cyprus, unlike Iceland, isn’t willing to put its banking excesses behind it; they’re still trying to hold on to the RMML (Russian mobster money laundering) business, which means less taxation of the RMs and more taxation of locals.

Krugman seems to think that Cyprus is trying to hang on to the "role of the island as a tax, regulation, and law enforcement haven" rather than putting the banking sector in its place and moving forward with a more balanced economy, like Iceland did.

[dkf]

26. Someone posted it is 40% of their GDP.

Would you voluntarily shrink your economy that much?

In any case it's probably too late. Why would anyone keep their funds there now?

[pampango]

32. I think that is correct. Their economy is destined to shrink when the banking sector shrinks.

That's what Krugman has posted:

Iceland, at peak, had banks with assets that were 980 percent of GDP, more than 10 times the US number. ... Cyprus, at around 800 percent, was closer to Iceland in this respect.

... it seems clear that one big problem is that Cyprus, unlike Iceland, isn’t willing to put its banking excesses behind it; they’re still trying to hold on to the RMML (Russian mobster money laundering) business, which means less taxation of the RMs and more taxation of locals.

http://krugman.blogs.nytimes.com/2013/03/20/round-trips-to-cyprus/

He has written that Cyprus will undergo the transition that Iceland went through. Their banking sector will shrink which is not a bad thing in the long run since it had grown to dominate the economy in both countries.

[dkf]

33. I posted this from Krugman...hair cutting deposits is only the beginning of their problems.

http://www.democraticunderground.com/10022561025

[Lucky Luciano]

12. It doesn't affect you so you don't care. very nice nt

[pampango]

17. That it does not affect poor and middle class Cypriots matters much more than

whether it affects me or not. If many of the poor and middle class in Cyprus have accounts in excess of $100,000 euros, the kudos to Cyprus for having an extremely prosperous country.

Obviously which bank accounts are taxed or not taxed in Cyprus does not affect me directly. I just happen to fall into the category of people who do not have a huge bank account. I suspect that most Cypriots fall into the same category. Most of the large account holders are undoubtedly rich Cypriots and foreigners.

[dixiegrrrrl]

27. you are missing the point, I think.

which is that a government can, with no warning, seize your money in a bank, THEN write a law giving them persmission to do it, post seizure.

And THAT affects every account holder. No matter what size account.
Arguing about the different sized accounts evades the key issue:

Imagine you wake up on Sat., the first day of a 3 day holiday
and the news tells you that the US Gov't has declared that all money you have in the bank is going to be unavailable
and "big" accoutns will be "tithed" to the government at some % starting the day the banks re-open,
but the day they open gets further and further away.
PLUS
all electronic banking is shut down effective Sat. and you cannot withdraw or transfer any money for any reason
for at least 4 days
PLUS
you are being told this on Sat but the laws that make it legal have not yet been passed.
AND
today, Sunday, you hear on the news that unless the law is passed in Congress
the banks will remain closed past Tuesday.

and sure enough, the banks stay closed for over 10 days
and then you are told you can only withdraw 100.00 a day
and your house payment is due.
And then the gov't decides to make a law about the capital controls, (see OP)
and you STILL cannot access your living expenses
and NO deposits can be made to your account.

Even IF the gov't changes its mind mid-stream about small accounts being taxed, all the capital controls still apply to all accounts.

What would you do while the banks are closed for 7, or 10, or more days?
What would you do the minute the banks open?
and how much would trust your banks and your gov't ever again?
Would you trust the gov't to never again close the bank and take even your modest account, down the road?

[pampango]

28. You seem to be arguing that we have to protect the rich in Cyprus and rich foreign depositors

in order to prevent the government from seizing part or all of our small bank accounts in the future.

It is the government of Cyprus that was pushing the idea of 'taxing' even small accounts in order to lessen the 'tax' applied to larger accounts. It was the European negotiators who have pushed them to abandon any kind of 'tax' on accounts under 100,000 euros and apply the 'tax' only to accounts with more than that amount.

That is quite the same as was done in Iceland during their banking crisis. Depositors, mostly foreign but including some rich Icelanders, with large accounts paid a significant tax. It was quite painful and the financial sector not longer dominates the economy in Iceland.

You have a valid concern that governments will move from 'taxing' the accounts of rich depositors to those of ordinary people like you and me. (By the same token, I suppose that increasing taxes on the rich means that they can increase taxes on the rest of us too.)

Unless everyone is going to allow the banks in Cyprus to completely collapse, some type of 'bailout' (perhaps 'rescue' is a less loaded term) has to be undertaken. I expect that taxpayers in Europe are going to pay a huge amount, but those with large bank accounts in Cyprus should also contribute to saving the banks which, if they fail, will take their money with them.

Cypriots may never trust their banks again in any case. Whether there is no 'rescue' and banks collapse taking their deposits with them or there is a painful 'rescue', there will be cause for Cypriots to distrust their banks. It would be nice if the errors of the Cypriot government in allowing the banking sector to take over their economy, could be resolved with the only pain being endured by someone somewhere else, but I don't see that in the cards.

[dixiegrrrrl]

29. "You seem to be arguing that we have to protect the rich in Cyprus and rich foreign depositors"

befuddles my thinking how anyone could read that into any of the posts I have made about the Cyprus situation.

you said that I "have a valid concern that governments will move from 'taxing' the accounts of rich depositors to those of ordinary people like you and me. "
That is opposite of what happened, when I voiced my original concerns last week.

My concern was, and is, and will be, that a government closed all banks and initially proposed to make ALL depositors pay, and did it with no warning, indeed, with no law backing it up.
Let me repeat that: initially Cyprus gov annouonced ALL depositors would have some of their bank funds taken from them.
All depositors or ANY depositors, it makes no difference.

I do not give a rat's ass about the size of the account, or who the depositor's are...
I DO care that violating the trust in the banking deposit system is now upon us.

Does Not Matter whose accounts get ripped off..that is NOT the point.

EOM

[pampango]

31. I do "give a rat's ass" about the size of the account. That's where we differ.

Iceland punished large account holders (foreign and domestic) and they have emerged with a sound economy. Trust in their banks does not seem to have suffered irreparable damage there. Iceland reigned in their banks which had grown to dominate their economy, just as they have in Cyrus.

"initially Cyprus gov annouonced ALL depositors would have some of their bank funds taken from them." - I agree. The Cypriot government wanted to tax all accounts regardless of size, because they wanted to protect their banks relationship with the rich investors. The Europeans negotiators have apparently forced the government to accept the principle that small accounts will not be affected and larger accounts will pay a higher 'tax' as a result.

If you believe that Cyprus' banks should be totally bailed out in a manner that no depositors (including the rich) suffer any consequences, you are entitled to your opinion. That would preserve the "the trust in the banking deposit system" but I don't think Cyprus has the money to do this. Since they allowed the banking sector to grow all out of proportion to the rest of the economy, the economy cannot provide the funds that the financial sector needs for a bailout.

[abelenkpe]

23. At least he's honest

Feeling that is better to penalize the wealthy who would not suffer than workers who are already living on the edge vs the well to do who favor things like cutting social programs and further burdening the working class over taxing themselves a bit more.

You might not think it's nice but one of those positions holds more honor than the other

[JDPriestly]

11. They are here. Have you looked at the interest rates paid on savings

accounts recently?

Here, they are cheating savers. They charge super-high interest rates from borrowers, pay almost nothing in salaries and costs thanks to the internet processing of deposits, debits and other transactions and then pay just barely above 0% in interest. They are using the money from people who pinched and saved and did without to have something for the future -- maybe a college education or retirement or a rainy day -- earning lots of interest on it and keeping the interest way beyond their costs for themselves.

So, the greedy banksters are trying that here -- and succeeding.

And the policies of the Congress, the Obama administration, Ben Bernanke and the IMF are helping them do it.

[abelenkpe]

24. +1000

[dixiegrrrrl]

30. Pleased that we see eye to eye on this issue..

Even more pleased that many saw this coming and could take steps to protect themselves.

Now, after this week, even more people, no matter where they live, will see.

[rucky]

9. ...eating this child

yep

[KamaAina]

15. There seem to be a lot of British depositors looking for high interest rates

by banking in a small country.

Sound familiar? Anyone? Iceland?

[bossy22]

18. don't blame the bankers completely

The real fault lies with the Euro system itself. It allows these type of capital flights to happen- especially to small countries like cyprus and Greece.

Cyprus is financial system is living on essentially a foreign currency- and this is one of the risks you take when you use a currency that you do not control. This is especially the case for very small countries- where international finance can pull all their capital out of a country without really causing much more than a "hiccup".

The Euro needs to end now to ease the suffering of all those involved

[Cleita]

19. I think the IMF and other banks needs to clean their house.

The austerity bankers in charge like Christine Lagarde are screwing up Europe.

[bossy22]

20. The Austerians needs to go

but that still doesn't fix the inherent flaws in the euro system. Either they have to integrate more- to the point that national budgets are no longer set by individual nations- or they have to break up. If they want to keep the euro system intact, they will need to become the United States of Europe rather than a loose union of independent countries.

[Cleita]

21. Seems like it's a failed experiment all right. n/t

[bossy22]

25. exactly

It's also quite sad to see all the suffering that is endured in the name of Austerity.