News like this usually sends the price rocketting.
Yep,real 'to da moon' stuff. That's what makes me wonder if someone's willing to throw away a lot of coins to make the charts look bad for anyone looking for a route to safety. Even I know 'sell low' isn't how its usually done, at least not in the short term, but that's what seems to be happening on the lows. That should cause spikes if it wants to go down but the spikes are upwards, hard to be sure though because there's also a lot of negative slippage in both directions.
News like this usually sends the price rocketting.
A Bail-In means Banks will confiscate depositors accounts right? (As Gerald Celente and Max Keiser have been predicting) That will just make Crypto-Currencies that more attractive no?
Yes but its not planned for implementation until 2016. That figure doesn't mean a whole lot, if it passes there's little to stop it being brought forward, but its a nice comfortable looking 'long way away' figure for the media.
Bail in, what a stupid set of words. It is really the forced bailout of the insolvent bank by the depositors.
How should it be done in an ideal world, if a bank goes titsup?
First, the share holders should lose. The equity is the money that is set at risk. It is the shareholders that gets the profit if it goes well, and they should lose first.
Then the bondholders, the depositors and other creditors should share the rest of the loss, just what happens in a bankruptcy in any firm. If there is nothing left, the bank disappears from the scene.
There is no fundamental difference between bond holders and depositors. Both are loans to the bank, there are just some differences in the interest and the payback conditions. Mainly, the difference is that the depositors can ask for payback on demand, while bonds are paid back at a specific time in the future.
The workers at the bank, including management should all lose their jobs and a part of their not yet paid salary just like any creditor. Only if some private investors decide to recapitalize the bank, the bank could continue operating, and the old workers could continue in their jobs if and only if the new owners want them to. In case of top management, they should almost always have to go, as they obviously did a measly job.
Wait - the depositor guarantee. That should obviously be honored to the extent that the guarantee fund is sufficiently large, it is part of the deposit deal - you give the money to the bank in exchange for a claim on the bank
plus an insurance.
The problem is the government guarantee in addition to the fund, and the fact that they prioritize the bondholders to avoid spreading to the bondholders of other banks, and of course the government bailout (this is what they want to avoid with the new plans).
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