Cyprus Officially Passes Capital Controls Into Law

[phantom_opera]

and they will vote whether to agree to EU's demand on tax on saving accounts in exchange of a bailout

[buttercarp]

Aiyo, I tot Russia is going to bail them out.
So they still deciding what to do.

[radha08]

Aiyo, I tot Russia is going to bail them out.
So they still deciding what to do.

maybe they will decide to launch BTO...wahahahahha

[phantom_opera]

good read .. but in Chinese

【晴報專訊】我一向是歐洲經濟的大淡友，認為歐債危機會時隱時現，因為它的根本問題根本未解決。
歐洲的問題是甚麼？27個國家加入了歐元區後，等於入了一個貨幣同盟，從此各自喪失貨幣、利息與匯率政策的控制權，大家等於都統一在同一個國家中。但怪就怪在這些國家又都原則上保持有獨立的財政政策。換言之，有些國家可以是「大花筒」，入不敷支後，只能靠借債度日，不能靠印鈔票支持債務，也不能靠貨幣貶值增加出口。更要命的是，有些國家可以欠下巨債也毫不在乎，因為它們知道別的國家一定要「割肉餵鷹」去打救它們，否則它們一旦離開歐元區，歐元可能被衝擊得支離破碎，釀出巨禍。為了防止此等道德風險，德國等歐元區大國惟有強迫所有國家謹守財政紀律，否則出事時不肯出錢救亡。

債務危機與存戶無關

塞浦路斯去年中已向歐盟、歐洲央行及國際貨幣基金這三頭馬車提出救援要求。上周末，「三頭馬車」答應借出100億歐元，但條件是塞浦路斯要向銀行存戶徵收存款稅。塞國政府最初打算向存有10萬歐元以上的存戶徵收9.9％的稅，10萬以下的6.7％，立時引起軒然大波，方案經修改後仍被國會否決，最後結果如何不得而知。
銀行存款是存戶的財富資產，早已完了稅。向利息徵稅並不罕見，但針對存款抽稅，卻是「明」火打劫的行為。有人也許可為這政策開脫，說塞國人民坐享福利這麼久，用存款稅懲戒這些「大花筒」也無不可。但這回卻是有些冤枉他們了。
沒錯，塞浦路斯政府近三、四年出現過赤字，部分原因是福利開支增加了。這是因為2008至今年二月的政府由相信共產主義的「工人進步黨」領導，搞了好些福利政策，但按歐盟標準，用度不算太離譜。把塞國經濟搞垮的是希臘債務危機。塞浦路斯是一個人口只有110萬，GDP不及香港十分一的細小經濟體，十分倚賴金融服務業。它十間主要銀行中，有兩間買了太多希臘債券，後者年前要剃頭減低欠款額，塞國的銀行首當其衝，傷亡慘重。但這與其銀行存戶又有甚麼關係？存戶不是造成塞國債務危機的元兇或幫兇，卻要承擔損失，十分無辜。

歐盟大國欺小國

若說有誰最有資格評論塞浦路斯今天的經濟局面，當世無人能及皮薩里德斯（Chris Pissarides）。他是塞國人，亦是2010年經濟學諾貝爾獎得主，他與其夫人魏莉華教授長期在英國LSE任教，今年初二人加盟科大。魏莉華是我系1996年畢業生，所以我們戲稱皮兄是「科大經濟系女婿」。他們二人正在成都訪問，但卻被國際傳媒找到。理所當然地，皮薩里德斯狠批存款稅的荒謬，認為這是歐盟的大國欺凌小國的作為，而前者更應該做的，是在歐盟中的小國受外圍衝擊出現困境時幫助它們。至於有傳聞說塞浦路斯來自國外的存款主要是俄羅斯的黑錢，皮氏指出，雖經多月調查，至今找不到絲毫證據支持。
塞浦路斯的危機如何收科？也許三頭馬車在別無選擇下還是會提供一些緊急信貸，也許它們不願再花錢救援塞國，讓它離開歐元區。但存款稅這笨招，不但打散了塞浦路斯的銀行業，也替歐元區的穩定性帶來新的變數。以前誰會想到把錢存在銀行，部分存款會被人充公。此等招數既出現了一次，誰敢擔保歐盟將來不會重施故技！

i=> beware of hot money flowing out from Europe into Asia !!!

[phantom_opera]

In return for the bailout, Cyprus must drastically shrink its outsized banking sector, cut its budget, implement structural reforms and privatize state assets, he said. The country's second-largest bank will be shut down immediately, with all bond holders and people with more than 100,000 euros in their bank accounts there facing significant losses. The measures are likely to deepen the recession in Cyprus and lead to more job losses.

=> travel to Cyprus cheap cheap anyone

[DC33_2008]

Got to be careful in future when you migrate to a country in europe. A lot of british who has migrated to Cyprus must be really "P..." now

In return for the bailout, Cyprus must drastically shrink its outsized banking sector, cut its budget, implement structural reforms and privatize state assets, he said. The country's second-largest bank will be shut down immediately, with all bond holders and people with more than 100,000 euros in their bank accounts there facing significant losses. The measures are likely to deepen the recession in Cyprus and lead to more job losses.

=> travel to Cyprus cheap cheap anyone

[phantom_opera]

Got to be careful in future when you migrate to a country in europe. A lot of british who has migrated to Cyprus must be really "P..." now

Brits and Russians

[indomie]

Becareful of the contagion effect. They may declare only 1 bank insolvent and freeze the accounts above 100k euro. What do u think people will do with other "healthy banks"? They will rushed them too. What do u think the central bank will do? Of course print more money to bail out.

Smart people are busily buying assets right now. We are now at a very important point in time. Banking system won't be let collapsed, the price is too high. The only option right now is to let dollar value destruction, therefore higher inflation.

[phantom_opera]

Becareful of the contagion effect. They may declare only 1 bank insolvent and freeze the accounts above 100k euro. What do u think people will do with other "healthy banks"? They will rushed them too. What do u think the central bank will do? Of course print more money to bail out.

Smart people are busily buying assets right now. We are now at a very important point in time. Banking system won't be let collapsed, the price is too high. The only option right now is to let dollar value destruction, therefore higher inflation.

1997 Asian currency crisis ... but the scale is X10

Where is Soros?? He only dared to short Thai Bat / Rupiah but this time is ECB/US Fed/Japan ... too big to stomach lol

But again, this time debt is issued in local currency so can print print print

[eng81157]

Becareful of the contagion effect. They may declare only 1 bank insolvent and freeze the accounts above 100k euro. What do u think people will do with other "healthy banks"? They will rushed them too. What do u think the central bank will do? Of course print more money to bail out.

Smart people are busily buying assets right now. We are now at a very important point in time. Banking system won't be let collapsed, the price is too high. The only option right now is to let dollar value destruction, therefore higher inflation.

argentina did that, thailand did that. but now we are talking about a common currency - euros. net-import member states won't let the euros devaluate

[phantom_opera]

Cyprus is already DEAD MEAT, bailout or not ... now our Thar-man and Kenobi-wan will be more careful with CMs, taking cues from Cyprus's overnight collapse

Quote from FT:

While it remains to be seen how Cyprus’s many Russian businessmen will be affected by the proposed bailout and what comes after, most appear to have one foot out the door already. They are now considering to which jurisdiction they will move their businesses and how.
“The Cypriots killed their country in one day,” says Mr Mikhin, referring to Friday March 15, when President Nicos Anastasides accepted the EU’s proposal to seize €5.8bn in emergency funds from Cyprus’s local and foreign depositors.
What concerns Mr Mikhin, the owner of an international shipping business, is not the levy itself. It will not touch his foreign bank accounts. But he is worried about the destruction of trust in Cyprus’s financial system, a move he says has spooked Russians and Russian business.
“The locals should understand: as soon as the money leaves, the people who go to restaurants, buy cars and buy property leave too. The Cypriots’ means of living will disappear,” he says.
“They are saying we laundered all the money, but they lived on that money for 10 years and forgot about it.”
The impending exodus has become a source of worry and anger for the thousands of lawyers, secretaries and auditors who serve Russian clients and may soon lose their jobs along with employees from the country’s two biggest lenders, Laiki Bank and Bank of Cyprus.
“[The Russians] are calling us, they are worried. But what can we say? We can’t force them to stay,” says Andreas Neocleous, a Limassol-based lawyer for some of eastern Europe’s richest men.

[hopeful]

just fyi, NZ also have this "open bank resolution policy".
they can shave depositors' money without informing depositors or even informing parliament since the act already in place.

http://www.rbnz.govt.nz/finstab/banking/4368385.html
Why should depositors bail-out banks?

The OBR policy is designed to ensure that first losses are borne by the bank’s existing shareholders. In addition, a portion of depositors’ and other unsecured creditors’ funds will be frozen to bear any remaining losses. To the extent that these funds are not required to cover losses as more detailed assessment of the position of the bank is completed, these funds will be released to depositors. At a high level, this outcome replicates the outcome that would apply in the event that a failed bank was liquidated. The primary advantage of the OBR scheme, however, is that depositors would have access to a large proportion of their balances throughout the process. This contrasts with what would happen under a normal liquidation, where depositors might not have access to any of their funds for a significant period.


how come secured bondholders safe from haircut?
i thought depositors always last to be haircut?

who wants to put money in banks in NZ anymore....

[wt_know]

is it fair to tax people who merely put their money in the bank and not even participate in any of the "hedge" or "risky" fund

a. cypriot who work hard, thrifty and keep their money in the bank > $100K

b. brits and russian who migrated to cyprus and keep their money in the bank > $100k

it's fair and square why the rich brits and russian transfer their money to cyprus because it is a tax haven. everyone knows about it. now, suddenly because got $100K in the bank account, kena tax and it's not their fault. the fault is due to the ceo and hedge fund manager that betting risking people money and loosing billions of dollars making the bank collapse

and hearsay, all the richies connected to cyprus president already transfer their money out of cyprus ...

[wt_know]

another reason why so many richies want to buy property
it's no longer safe to keep money in the bank

just fyi, NZ also have this "open bank resolution policy".
they can shave depositors' money without informing depositors or even informing parliament since the act already in place.

http://www.rbnz.govt.nz/finstab/banking/4368385.html
Why should depositors bail-out banks?

The OBR policy is designed to ensure that first losses are borne by the bank’s existing shareholders. In addition, a portion of depositors’ and other unsecured creditors’ funds will be frozen to bear any remaining losses. To the extent that these funds are not required to cover losses as more detailed assessment of the position of the bank is completed, these funds will be released to depositors. At a high level, this outcome replicates the outcome that would apply in the event that a failed bank was liquidated. The primary advantage of the OBR scheme, however, is that depositors would have access to a large proportion of their balances throughout the process. This contrasts with what would happen under a normal liquidation, where depositors might not have access to any of their funds for a significant period.


how come secured bondholders safe from haircut?
i thought depositors always last to be haircut?

who wants to put money in banks in NZ anymore....

[hopeful]

another reason why so many richies want to buy property
it's no longer safe to keep money in the bank

as mentioned before quite a few times in Zerohedge, governments are increasing property taxes as sources of funds.
A notable example is singapore, which just recently increases property tax on richies

[phantom_opera]

as mentioned before quite a few times in Zerohedge, governments are increasing property taxes as sources of funds.
A notable example is singapore, which just recently increases property tax on richies

true, but you can see for yourself that property tax increase is peanut and only affect prime landed but reduce for HDB/OCR condos ... so our garmen is very nice still to property investors lah

the conservative ppl always say put in the bank very safe .. now they should have 2nd thought

btw, main problem why Cyprus bank default is because they go buy Greek bonds .. may be on leverage

[indomie]

true, but you can see for yourself that property tax increase is peanut and only affect prime landed but reduce for HDB/OCR condos ... so our garmen is very nice still to property investors lah

the conservative ppl always say put in the bank very safe .. now they should have 2nd thought

btw, main problem why Cyprus bank default is because they go buy Greek bonds .. may be on leverage

Now depositors have to pay for the greed of bankers. This is unprecedented, it will send a wrong signal for the whole european banking industry. Maybe its just a matter of time before london banking fall too. Berlin now in control many euro countries fiscal policy, its begining to look like WWII all over again.

[hopeful]

....

btw, main problem why Cyprus bank default is because they go buy Greek bonds .. may be on leverage

main problem, according to some posters in zh, is they accept haircuts on greek bonds and got tricked into not declaring credit event.

[hopeful]

in case anybody forget, once you put money in a bank, you effective become one of the bank's creditor.
the money is no longer yours, it belongs to the bank, the bank will issue you an IOU in exchange.

in case the bank bankrupt, you wait in line to collect on your IOU.

This is why if I have $1million FD and $1million mortgage and bank becomes bankrupt, I will lose the $1million FD and I still owe the bank $1million.
The $1million FD cannot be used to offset the $1million mortgage.
Because the $1million FD is not actually yours, it is just a claim on the bank.

Please notice the difference between banking and vaulting services.
1) putting money in a bank (money is not yours anymore).
2) putting money in a vault (money is still yours, and in physical note form, albeit still in paper form).

[phantom_opera]

in case anybody forget, once you put money in a bank, you effective become one of the bank's creditor.
the money is no longer yours, it belongs to the bank, the bank will issue you an IOU in exchange.

in case the bank bankrupt, you wait in line to collect on your IOU.

This is why if I have $1million FD and $1million mortgage and bank becomes bankrupt, I will lose the $1million FD and I still owe the bank $1million.
The $1million FD cannot be used to offset the $1million mortgage.
Because the $1million FD is not actually yours, it is just a claim on the bank.

Please notice the difference between banking and vaulting services.
1) putting money in a bank (money is not yours anymore).
2) putting money in a vault (money is still yours, and in physical note form, albeit still in paper form).

SG has 50k guarantee?? So split your 500k into 10 banks lol, it is a good problem to have

[Werther]

SG has 50k guarantee?? So split your 500k into 10 banks lol, it is a good problem to have

Hi phantom

Yr suggestion can faint arh.... Haha.

Can I ask for yr advise thru pm?

[hopeful]

Hi phantom

Yr suggestion can faint arh.... Haha.

Can I ask for yr advise thru pm?

just withdraw your money in $10,000 notes and put in SDB, should be safe.
you are not losing much in interest anyway, so why leave money in the bank?

[phantom_opera]

looks like rich Russians may be unhurt, it is those locals with >100k deposits will be hurt the most


Reuters:

While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.

No one knows exactly how much money has left Cyprus' banks, or where it has gone. The two banks at the centre of the crisis - Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus - have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks' largest depositors.

[phantom_opera]

All these PIIGS + Cyprus stories will make you appreciate LKY's HARD TRUTH more