European Union is robbing its citizens' bank accounts. 9.9% to be confiscated.

[wachtwoord]

AH then the country won't be physically trashed. Everyone worth anything will probably leave however. Good luck with a big poor underclass Cyprus.

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[Vladimir]

contagion is spreading already in unexpected ways

https://bitcointalk.org/index.php?topic=154518

OKpay thinks that they are as insane/powerful as the politburo.

[opticbit]

keep your coins in your wallets, only put small amounts in the exchanges.

[Jobe7]

No sign of something like this in Hungary

Yet ...

[justusranvier]

keep your coins in your wallets, only put small amounts in the exchanges.

Especially now:

https://bitcointalk.org/index.php?topic=154672

[johnyj]

In the US, they would just print 11.1% more money. Same effect, but people don't realize.

Not exactly, printed money is added debt, so eventually it will backfire and hit government with even more interest burden later

[Vladimir]

keep your coins in your wallets, only put small amounts in the exchanges.

Especially now:

https://bitcointalk.org/index.php?topic=154672

No I do not think this is relevant. Nothing new in that ruling.

However, the advise is sound, especially now. Make sure that you keep as much of your Bitcoins in a walllet controlled by you only. Consider converting fiat you may have with various exchanges into Bitcoin and withdrawing it into secure wallets where no element of trust to any 3rd party is involved.  You never know if some exchange or merchant will pull OKpay on you.

You never know which exchange or merchant is exposed to the Cyprus contagion or possible EU wide bank run fallout. Retreat  to  safety of properly secured Bitcoin wallet until the shit storm is over.

[Jobe7]

I do not think that there was another real option for cyprus. The whole bank system in cyprus would crash and then all the money would be lost. Now are "only" 9.9% affected.

Cyprus cannot just print more money so what else should they do?

You ever heard of Iceland? It's this little country.. on this planet ..

I actually asked someone this the other day, and they thought I meant the supermarket (there's an 'Iceland supermarket chain in the UK) ... stupid people make my brain hurt

[CurbsideProphet]

These southern-tier countries were serial defaulters.  By constantly devaluing their currency and multiple sovereign defaults, interest rates in these countries were very high.  The Euro provided them with a stable currency and lower interest rates.  While this allowed the formerly-poor to achieve a much higher lifestyle, the fact is for the better part of the last 20 years these countries have lived well above their means.  Looks like it might be time to pay the piper and it will not be pretty.

Even just for oil consumption the same applies to all the western world, we've all been living way beyond our means.

I agree.  Some will just be able to kick the can down the road a little longer than others.  Cyprus accounts for less than half of one percent of the 17-nation euro economy so they don't hold much clout.  The precedent it sets is large but they themselves are miniscule in terms of the global economy.

[caveden]

This is, probably, the first precedence of legal stealing from whole population's bank accounts,

I'm pretty sure Argentina confiscated savings a few years ago.

And the Brazilian government did it years before (~1991).

This is definitely not a first. As hyperinflation, confiscations like this have happened multiple times in different places. Humanity has a hard time learning from its past mistakes.

[caveden]

I do not think that there was another real option for cyprus. The whole bank system in cyprus would crash and then all the money would be lost. Now are "only" 9.9% affected.

This is not true. That are much better ways to liquidate a bank than to cut money from deposits. Listen to Jesus: http://foundationsofecon.blogspot.fr/2012/07/fraud-cause-of-great-recession.html

Basically, you remove all ownership from current owners. Then you start taking cuts from the most risky investments clients of that bank had on it. Bank deposits are supposed to be the last ones, since they're hardly considered an "investment". Once you take the necessary amount of resources to save the bank, you redistribute the new ownership among all those who payed for its bailout, proportionally. See the documentary I linked above, Jesus explains it in more detail.

This is a much more honest/fair way to let a bank break. The most important is that the current stock holders lose everything, and those who pay for the bailout earn something in exchange (the bank itself). But, of course, politicians aren't going to let that happen, since their wealthy friends wouldn't be very happy with them if they did.

Cyprus cannot just print more money so what else should they do?

Let the damn banks break.

[JoelKatz]

In the US, they would just print 11.1% more money. Same effect, but people don't realize.

Not exactly, printed money is added debt, so eventually it will backfire and hit government with even more interest burden later

Yes, but it will backfire less than this will. First, printing more money won't shake confidence in the banking system. Second, printing more money hits people more equally. (For example, consider two people equally situated who were both saving to pay off a car loan, one paid the loan off Thursday, the other planned to pay it off Tuesday.) And lastly, this shakes the very foundation of the entire modern fiat economy -- that investors and shareholders take the risks, not consumers and savers.

That said, there's a very seductive argument that these kinds of things *should* backfire.

[Vladimir]

I would guess the fact that they went after deposits is an indication that things behind the curtains are getting much more desperate by now. Diminishing returns of QE's are getting more and more diminishing sic and banksters are transitioning onto the next stage of their plan which involves more direct ways of "dealing" with population.

[johnyj]

In the US, they would just print 11.1% more money. Same effect, but people don't realize.

Not exactly, printed money is added debt, so eventually it will backfire and hit government with even more interest burden later

Yes, but it will backfire less than this will. First, printing more money won't shake confidence in the banking system. Second, printing more money hits people more equally. (For example, consider two people equally situated who were both saving to pay off a car loan, one paid the loan off Thursday, the other planned to pay it off Tuesday.) And lastly, this shakes the very foundation of the entire modern fiat economy -- that investors and shareholders take the risks, not consumers and savers.

That said, there's a very seductive argument that these kinds of things *should* backfire.

Fast and short term pain VS slow and long term pain 

Actually if they never adopted the debt based fiat system from the beginning, there won't be such pain now. Fiat money is like drugs, you eat a little bit everyday and after 30 years most part of your body is poisoned while you still get enjoyment at certain degree

[darkmule]

You people do realise that the x% they're deducting will be paid back in shares in the bank that your deposit is in?

What is the value of a share in a business so corrupt and incompetent that it has to steal from its customers (including me) to stay afloat?

[caveden]

You people do realise that the x% they're deducting will be paid back in shares in the bank that your deposit is in?

Really?

But what's the deal? Are the current stock holders losing their shares?
If they're just equating the previous market values of these shares and distributing according to the amount cut this is not fair.

The correct way of doing this would be:

• Remove all shares from current share holders
• Do the necessary cuts - but here, I think risky or more "long-term" investors should be cut before checking account holders.
• Distribute the new shares proportionally to the amount you contributed in the rescue. Say, if your cut contributed to 0.1% of the total amount levied, then you'll own 0.1% of the bank. Previous owners lose everything.

That's the fairest possible way of dealing with a bank failure I'm aware of.

What is the value of a share in a business so corrupt and incompetent that it has to steal from its customers (including me) to stay afloat?

Can you think of a fairest way to deal with a bank failure than what I describe above?
At least in this scheme, the current owners lose everything, and the clients that lose something become the new owners, in proportion to what they lost. In other words, those who definitely must be "punished" do lose all, and those who are "punished" simply for having chosen a bad bank at least get something in exchange for it.

[zeroday]

Cyprus has sensationally rejected the terms of its bailout, with 36 MPs voting against the plan, and 19 government MPs abstaining (source).

They literally said "fu*ck off" to the proposals of nazi-chancellor-bitch.

[darkmule]

Can you think of a fairest way to deal with a bank failure than what I describe above?

Yes.  The way every civilized country does it.  Honor the value of insured accounts, and if the bank can't, the government honors the insurance policy on them.  In none of these other nations are insured deposit accounts plundered.

[wachtwoord]

Don't insure accounts, if the bank can't pay, it goes bankrupt and the debt is void

FYP

[JoelKatz]

Yes.  The way every civilized country does it.  Honor the value of insured accounts, and if the bank can't, the government honors the insurance policy on them.  In none of these other nations are insured deposit accounts plundered.

Exactly. The issue is that the government promised to make depositors whole in the event of a bank failure by providing them with deposit insurance and then reneged on that obligation. Worse, rather than simply failing to pay them, it reneged by seizing bank balances and pretending that it's a tax. And this is not some backwater, dictatorship hellhole, this is an EU Democracy using a "tax" to evade a sovereign obligation.

This would be equivalent to the United States postponing its social security problem by declaring a 10% tax on social security payments and implementing the tax by reducing those payments. And actually that's not even as bad because at least the United States has made clear that social security is not a contract and is not insurance. Deposit insurance is supposed to be insurance.