What the fucking buggery is the EU doing in Cyrprus?

They\’ve just reneged on the government deposit insurance.

That\’s going to make dealing with the next bank run interesting, isn\’t it?

Facepalm.

32 thoughts on “What the fucking buggery is the EU doing in Cyrprus?”

  1. You mean, when some people set up a money lending business and lose all the money, the taxpayers won’t be forced to step in and pay it instead? You mean, the consequences of people’s unwise business choices will be borne by themselves?

    Awful, appalling, terrible, these free markets, aren’t they? Lawks. Dog eat dog world, iznit?

  2. Here’s a suggestion. If these “banks” want insurance against squandering their customers’ money on hookers and cocaine, maybe they should go to the free market insurers and ask for some.

    I suspect the premiums might be quite steep, mind. But that’s that ghastly free market for you. Awfully vicious, the free market. Dog eat dog. Lawks!

  3. Surreptitious Evil

    Oh, Ian. Take your hobby horse over Beacher’s Brook if you must but the point isn’t whether government deposit insurance is available, not available, mandatory or otherwise. Although, I’d note, that if participation in the specific scheme was mandated by the Cypriot government, it’s hardly “free market” is it?

    It is the EU changing the rules half way through the process.

  4. I haven’t seen those hordes of bankers beseiging parliaments demanding the abolition of deposit insurance. It must have been while I was looking somewhere else. Yes, that’ll be it. After all, those rugged free market types who insist on the State not interefering with their profits, and not imposing special taxes, because, you know, free markets and incentives and all that, they wouldn’t want some kind of massive fucking safety net from the State, now would they? Lawks, no!

    Hobby horse? Just being consistent.

    And; governments change the rules all the time. They’re rules changing bodies. They’re changing the rules on housing benefit at the moment, for instance. Haven’t noticed a massive heap of complaints about that. Everyone seems quite in favour of it, even though it inconveniences people whose lives and plans were based on the previous rules.

    So you know, like that. The rules have changed and if the banks have to move to a smaller house as a consequence well, you know, tough titties and all that. It’s for the common good!

  5. And I’m sure IanB you have exactly the same attitude towards the changes in T’s and C’s in the public sector?

  6. IanB, you haven’t noticed many people complaining about the housing benefit changes? You must not have been looking then, either.

    In other news, bankers want to protect their business and are hypocrites, and part-time porn cartoonist is a wanker.

    Film at 11, as I think they say next.

  7. “Part time”?

    Jesus christ, if you’re going to throw around arbitrary putdowns, at least get them right. I apologies if my memory is playing tricks, but wasn’t it you attempting to sneer down your nose at me last week for being “a plumber”? It may have been somebody else. Whatever.

    Anyway, it’s not about bankers being hypocrites. They’re selfish bastards, like everyone else playing the State game, which is everyone pretty much these days. The point is Tim alternating posts tagged “hands off our bankers” with posts tagged “the State must support our bankers to the last trillion” and apparently not noticing any contradiction. It’s no good taking the piss out of The Courageous State when you’re demanding it use every last ounce of its courage to keep the bonuses flowing in the banks. It just ends up looking silly.

    And in the general sense, it’s not about hypocrisy. It’s not a matter of morals. It’s a matter of this current financial system being a controlled flight into terrain. We can’t fucking afford it any more. It’s ruining us all. Aren’t you “interested” in that? No? Too busy calling people who do care “wankers” I suppose.

  8. I’ve scrolled down, Tim, but it seems that this Mac just can’t find your comments about the rugby. Do PCs do any better?

  9. Surely the deposit insurance issue could be got round to a degree by altering the rules about winding up banking businesses so all depositors get paid out as first preference creditors, and are paid out evenly till the money runs out.

    Say a bank has 5 depositors who_ have deposited £100, £100, £1000, £90,000, and £100,000. The bank fails, leaving assets of £100,000 out of the £191,200 deposiited.

    You would then pay out the despositors as follows:
    £100 and £1000 depositors in full.
    £90,000 and £100,000 depositors both get £49,400.

    Given that government deposit insurance usually is only valid up to about £80k at present, I suspect the ^^^^ scheme would probably provide a similar level of cover in practice.

    All this said – now really isn’t the moment to be fiddling about with this – maybe the EU want a Cypriot bank run or summat, because the abolition of deposit insurance right when things look really unstable sounds like a good way to get one…

  10. Hmm, so if I bank within the EU the commies (sorry, I meant Commissioners) can take up to 10% of my money unlawfully, but it’s not theft.

    And they want to introduce a Tobin tax as well?

    These jokers have never heard of the internet, right?

    All I have to do is convince some rich people to build a datacentrre in the Philipines and Neal Stephenson and I are billionaires and the investors multi-billionaires.

    We can all live where we want to ‘cos we don’t actually have to be in Threadneedle Street to cash a cheque, capisce?

  11. In Ireland and Spain the banks lost money lending to people building houses for people that didn’t exist.
    Stupid, but normal.
    In Germany banks are going to lose money lending to people building solar arrays and wind farms.
    Stupid, just look out the window stupid.
    (My brother in law has had 68 hours of sunshine since November.)
    But if the government encourages stupidity then it must underwrite it. Hence deposit insurance.

  12. So Much for Subtlety

    It might be nice if banks had to insure themselves on the open market. Although like nuclear power plants, it is likely that some are so large no one would be able to insure them. But that is not where we are. The question is how do we get somewhere better from here. Not where is the ideal place to start from.

    I guess there are two things to say about this – 1. Merkel presumably decided she could not sell a bailout of Russian gangsters and tax avoiders to the German public and 2. how are said Russian gangsters going to react? I would expect a rise in the number of fish feeding well off the coast of Cyprus myself. But also a collapse of confidence. I would say a bank run but presumably they have frozen the accounts.

    So is this the first step in fixing their problems or the last one? They will claim the latter, but a sensible person would assume the former. So what is step two? Any sane person will assume that if this is step one, step two is best seen from the Caribbean. There’s the problem. Solutions should be about making things better.

  13. Is there a legal reason why it’s impossible to save the Cypriot grannies while shafting the Russian gangsters? While the latter is a worthy goal, the former seems a bit gratuitous.

  14. @ john b
    There’s a presumption in your post favouring Cypriot grannies. You have obviously had little experience of the Cypriot community & are giving the soft cuddly русская мафия a very tough break.

  15. So Much for Subtlety

    I am all for f**king over ordinary Cypriots, grannies or not. They have voted for the Communists and played footsies with the Russian gangster community. They can take the consequences of their stupidity.

    The question is whether or not the people of Greece and Portugal and Spain and Italy are looking. If I were Portuguese I might be moving my money off shore first thing on Monday morning. Just in case. Presumably every sane Greek already has.

  16. So lets get this straight. Greece negotiates with creditors for a haircut, creditors lose out a little but Greece does OK out of that idea.
    Some of those creditors are banks elsewhere – such as Cyprus.

    Government in Cyprus trying to deal with banking issues such as lending and not getting much back from Greece decide to tax people.
    Not a popular decision – but are there lots of better options?

  17. They’ve just reneged on the government deposit insurance.
    ….
    But if the government encourages stupidity then it must underwrite it. Hence deposit insurance.

    The government isn’t providing deposit insurance, the taxpayers are. Can the taxpayers in Cyprus afford to pay out on the insurance on the deposits? It’s criminal that the bondholders escaped a haircut, but the true victims here are the taxpayers in the EU countries paying 10 billion Euro for the bailout.

    While deposit insurance may make individual banks safer in the short-medium term, it encourages everyone to underprice risk, and thus makes the entire banking system less safe in the medium-long term. Taxpayers incur extra tax liability for the privilege of getting less interest on their savings, despite the higher risk those savings face, plus we get more (or worse) asset bubbles thanks to the artificially cheap credit. Why do we want to have this?

  18. @”Ian B // Mar 16, 2013 at 4:46 pm

    You mean, when some people set up a money lending business and lose all the money, the taxpayers won

  19. >There’s a presumption in your post
    >favouring Cypriot grannies. You have
    >obviously had little experience of the
    >Cypriot community

    That’s my best laugh.

    If I had euro deposits, I think I might be putting them in German domiciled banks right now. Or possibly Singapore.

  20. “If I had euro deposits, I think I might be putting them in German domiciled banks right now. Or possibly Singapore.”

    Don’t you think they will seek ways of transferring their banked assets, in whatever denomination, into a form less easily accessed by their government? For example gold coins stuffed in the mattress? After all, the German finance minister was the one demanding not 9.9% of their savings, but 40%. So Cypriots would not be safeguarding their money by putting it in banks that the German government can lean on.

  21. It’s genius. Finally socialists have twigged that they don’t need to worry about all that ‘tax’ nonsense. When they need some money they just walk into your bank and help themselves.

    Simples.

    Tiny, tiny problem. No one ever trusts the banking system again. Hundreds of years of trust and civilisation gone in an instant. Welcome to the Congo.

    Ritchie would be proud, He’s probably reaching for that box of hankies right now at the very thought of such swingeing powers.

  22. Merkel and the ECB ‘socialists’? Presumably there is an exciting new definition of this term that means ‘anyone who does anything stupid, even if they’re explicitly right-wing in their social and economic policies’…

  23. Damn right, johnb. There’s not a single politician in Europe who is not a socialist.

    Margaret Thatcher made Ted Kennedy look like Attila the Hun.

  24. Michael, I wouldn’t bet on German banks being immune to this. They have among the worst exposure to the PIIGs’ doubtful debts and this German driven bail out is more for them than anyone. Oh wait, maybe I am wrong. Germany will continue put everyone else up against the economic wall to protect them, so maybe Germany **is** the place to go…

    However, once the gangsters in one government get away with something new, they all tend to want to wet their beaks.

  25. So Much For Subtlety

    Tom – “Germany will continue put everyone else up against the economic wall to protect them, so maybe Germany **is** the place to go…”

    I am not sure that is what Germany is doing. Rather they seem to think that fiscal prudence is a good thing. It is a Protestant thing the south of Europe just doesn-t seem to get.

    But the big advantage of putting your money in Germany is that when the Euro collapses and/or the Catholic South is pushed out, the German currency will rise by 30 odd percent. So even if they take 10% in a fiscal levy, you will still be better off.

    “However, once the gangsters in one government get away with something new, they all tend to want to wet their beaks.”

    Well Europe has been down this path before. They noticed that if they killed all their Jews, they did not have to repay their loans. On the other hand, once you have killed all your Jews, there is not a hell of a lot of people left willing to lend you money.

    This is the dumbest action ever by the EU. For a pidding sum of money they are risking Europe-wide contagion. Now admittedly I don’t see that happening, but if it did, it would cost a hell of a lot more than the 8 billion euros the levy will theoretically raise. For once I am with the Russian gangsters. I hope they get their revenge on the buffoons who thought this up.

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