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Author Topic: EU to push for losses on big savers at failed banks: lawmaker  (Read 1132 times)
MaxCoins
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March 26, 2013, 03:28:54 PM
 #1

The people are now the EU's ATM.

http://www.reuters.com/article/2013/03/26/us-eu-savers-idUSBRE92P0NZ20130326
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cypherdoc
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March 26, 2013, 03:44:34 PM
 #2

that's a pretty disgusting strategy.  the banksters never cease to amaze me.
MaxCoins
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March 26, 2013, 03:49:27 PM
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As I posted on FB "Looks to me like the EU is committing economic suicide.". This is insane, IMO.
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March 26, 2013, 03:49:49 PM
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Any better explanations for this?

GDP grows approx. linearly, debt (=money) grows exponentially. Currently we're globally again (~70 years after WWII) at about the point where the interest on these debts will be bigger than GDPs.

The country that can delay this the longest will probably own the leading currency for the rest of this century. May the odds be ever in your favor!

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March 26, 2013, 03:50:26 PM
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The leading currency is bitcoin  Wink

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March 26, 2013, 04:27:50 PM
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Wow! We thought we had a rise in BTC prices? This is going to shoot straight through the roof now.
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March 26, 2013, 04:32:44 PM
 #7

I love this virtuous circle  Cheesy

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March 26, 2013, 04:36:01 PM
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March 26, 2013, 04:52:01 PM
 #9

I actually think that they are pushing it in the right direction.

All our lives we have come to think that banks are the safest place for our money, it was only safe because of Central Banks and it was not free, we have been paying with rampant inflation as the CBs keep printing year after year to enable the Fractional Reserve Ponzi going. The inflation cost was felt by all, regardless of how fail your bank was. So nobody cared if their bank was solvent and banks didnt care to be solvent because of the CB backstopping.
With this move, depositors are going to question their banks and banks are going to have to come up with evidence of their solvency and expose more transparency of their books to get deposits. Less money prining means higher interest rates and a stronger currency.

Regardless, its too late, Bitcoin makes the whole system obsolete.

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March 26, 2013, 05:04:34 PM
 #10

Yeah, given that large depositors will have warning that they're money is up for grabs, it's nowhere near as offensive as what happened in Cyprus.

If I were a large European depositor, I'd sure start looking for non-Europe ways to store my wealth, though. So regardless of the ethics, this should contribute to capital flight from Europe, which is obviously the last thing the regulators want. They make it sound like there are one or two bad banks, and by putting the risk-analysis back into depositors' hands (where it should be, honestly), capital will just move from the few bad Euro banks to one of the many good. But isn't the reality that the entirety of Europe's banking system is grossly overleveraged? Why would the money stay in Europe at all?

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
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March 26, 2013, 05:08:52 PM
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I actually think that they are pushing it in the right direction.

All our lives we have come to think that banks are the safest place for our money, it was only safe because of Central Banks and it was not free, we have been paying with rampant inflation as the CBs keep printing year after year to enable the Fractional Reserve Ponzi going. The inflation cost was felt by all, regardless of how fail your bank was. So nobody cared if their bank was solvent and banks didnt care to be solvent because of the CB backstopping.
With this move, depositors are going to question their banks and banks are going to have to come up with evidence of their solvency and expose more transparency of their books to get deposits. Less money prining means higher interest rates and a stronger currency.

Regardless, its too late, Bitcoin makes the whole system obsolete.

I sort of agree with the sentiment, but it still constitutes a massive breach of contract. One of the main reasons people keep their money in banks is an expectation of safety. Absent huge signs that read "Your Money May Not Be Safe Here", if they take it, it's fraud.
gendal
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March 26, 2013, 05:19:18 PM
 #12

I actually think that they are pushing it in the right direction.



Agreed.... surely this is exactly how things are supposed to work.

A bank, at the end of the day, is just a company.  It has liabilities (equity, bonds, deposits, etc.) and has assets (the loans it has made, the assets it has bought from others, etc, etc).

When you "deposit" money in a bank, you are *lending* that money to the bank.  Your deposit becomes a liability of the bank and the cash you paid is the matching asset....   and the bank quickly uses that cash to purchase other assets... assets that it hopes will yield more than the interest it is paying you on your deposit.

If the value of those assets shrinks (as has happened to the Cyprus banks thanks to the dodgy Greek government bonds they bought) then they have a problem:   somebody isn't going to get paid back!

We have a well-understood process for solving this problem with "normal" companies....  first the equity holders get hit....  once they're wiped out, the next layer of the capital structure (junior bondholders, perhaps) get hit....  if they're wiped out, the senior bondholders get hit and so on and so on until we're done.

Part of the problem with the financial crisis is that this process *wasn't* followed with bank bailouts.... bondholders were not wiped out e.g. in Ireland and Irish taxpayers were stung to pay out the bonds at par.... madness!

In Cyprus, it looks like the EU (albeit by accident!) have done the right thing... equity holders were wiped out... bondholders were wiped out and those who had lent large amounts of cash were also hit.

It would have been better to put the bank into resolution, hit *all* the depositors and then use deposit insurance to pay back the <€100k people... but as the Cypriot state was bankrupt that wouldn't have worked.... so the solution was fudged... but not as badly as it could have been.

Not pretty.... but it could have been even worse :-(



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June 05, 2013, 04:23:15 PM
 #13

that's a pretty disgusting strategy.  the banksters never cease to amaze me.

you can say that again.

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Raoul Duke
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June 05, 2013, 04:27:02 PM
 #14

Wow! We thought we had a rise in BTC prices? This is going to shoot straight through the roof now.

It's not the bitcoin price shooting trough the roof but fiat money becoming more worthless each day

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June 07, 2013, 11:50:48 PM
 #15

It's not the bitcoin price shooting trough the roof but fiat money becoming more worthless each day

+1

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June 08, 2013, 07:57:34 PM
 #16

Wow! We thought we had a rise in BTC prices? This is going to shoot straight through the roof now.

It's not the bitcoin price shooting trough the roof but fiat money becoming more worthless each day

exactly, all they can do is print more - that has only one outcome ----->devaluation of the currency!

things are NOT getting more expensive - the currency is LOSING purchasing power!

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