Things in Cyprus have started to melt down, despite the relative calm the Cypriots appeared to have embraced early on in their recent banking crisis. The whole scenario is enough to give intelligent savers pause, as it sets the precedent that plain vanilla bank deposits are no longer sacred. To that end, folks in Spain and Italy have begun transferring deposits en masse, which explains the recent run-up in BitCoins.
But how seriously does the rest of the world need to take this? Dead seriously, according to legendary investor Jim Rogers.
"What more do you need to know? Please, you better hurry, you better run for the hills. I'm doing it anyway," Rogers said. "I want to make sure that I don't get trapped. Think of all the poor souls that just thought they had a simple bank account. Now they find out that they are making a 'contribution' to the stability of Cyprus. The gall of these politicians."
Depositors with more than €100,000 in the Bank of Cyprus are poised to lose up to 60% of their account value under the revised terms of the bailout. Those with money in Laiki Bank are in even worse shape; Laiki is probably going to be absorbed by Bank of Cyprus and their large depositors will lose almost everything.
This is troubling on a lot of different levels. Not because Cyprus is a lynchpin of the global economy. But because it serves as a test bed for politicians. If they can carry off this...well, let's call it what it is: theft...on a small scale in Cyprus, it's reasonable to assume that they might try it on a larger scale somewhere else. If that happens, no one is safe.
Rogers goes one step further and posits that it's already happening.
What do you guys think? Is your Christmas Club account down the street at Bumblefuck Savings no longer safe? Is Jim Rogers just being alarmist? Or are we seeing a whole new method of bank capitalization?
I think the biggest worry is the fact that this happened and you aren't seeing massive riots. The people of Cyprus should be revolting. Once you see that the people will accept being robbed you do it again. This is only the start in Europe (and I am sure eventually the USA).
It's not something they can "carry off"; it's not theft.
The banks are bankrupt. The money is gone. So what did you expect them to do, exactly?
Oh wait, I'm being trolled. You had me going there for a second.
This is cause for concern on two fronts. First, as TNA pointed out no one is truly revolting against the situation. Cypriots are letting it happen without much of a fight. I would like to think Americans would act differently, but as we have seen with the previous and current administration politicians have been able to execute most of their agenda without much of fight. Second, if people do begin to keep their money outside of banks say in physical gold/silver as Jim Rogers would advise, what would the long term effects be on the American/global economy? However, I would hope that most Americans would begin to look closer at the practices of not only our own government but in governments in general. Having a more informed populace might keep this sort thing from occurring.
The money is GONE. What are they going to fight for?
Personally, I would fight to overthrow the current government in this instance. Do I have a strategic plan on how to make this happen? No, but neither did those during their Arab Spring. Fighting for what you believe, to make a change is what counts. If you loose and end up worse, that is fine. If you laid down and accepted your fate, then what is the point of anything?
It's not comparable to the Arab Spring; Cyprus is a democracy. Cyprus citizens voted for their current leaders, and they can change them at the next election.
The initial plan of the government (apply a haircut to insured deposits) was stupid, but the new plan doesn't touch the insured deposits AFAIK.
I am aware it is not comparable to the Arab Spring, I mentioned that in context of those citizens fighting for what they believed in even though the end results were not the goal.
Just because a nation is democracy does not mean the citizens are unable to fight to overthrow the government. Is the probability lower that it will happen? Of course, but it is still an option we must not forget.
Considering their current leaders has little to no choice other than taking marching orders from Germany, the Troika, and the ECB, I very much doubt local elections will/would change anything. Unless you're suggesting Crypriots will be able to vote in German elections next time around.
Germany is bailing them out, for fuck's sake. They're not taking marching orders from them...
It's worth remembering that the biggest losers here are actually Russian and they are PISSED.
There was absolutely riots in the streets when the sub €100k proposal was on the table. Now you are realistically talking about a small minority of domestic Cypriots. Don't get me wrong, it's appalling, but it may explain the lack of big demos etc.
My point was that you make it sound like Cypriots has any control over their situation at all, or that magically an election cycle or changing of the leadership (if they so wished it) would have changed the outcome. Realistically, there were only two options for them; bend to the will of the EU for the bail out, or leave the EU. Looking at the sentiment a lot of Cypriots seem to be sharing, I think they would have been happier leaving.
Then again, it's not like American new agencies are covering the issue very well, so there is certainly a chance I may be mistaken.
The arab movements are/were mostly local ethnic groups that were vying for predominance over the other groups who they wanted to treat how they were treated under the other regime. They pretty much uniformly had no goals other than to hurt "the other guy." They didnt believe in anything other than sticking it to groups the way they had been stuck.
A recession when the price of gold declines, I suppose.
"Rogers said that he has started the process in several European countries to get his bank accounts under the insured amounts."
What a fucking genius.
What is gun ownership rates in Cyprus?
The good folks on zerohedge had the same question:
Cyprus has strict gun control. Private citizens are completely forbidden from owning handguns and rifles in any calber, even .22 rimfire. Only shotguns are allowed, and these require a license. Shotguns are limited to two rounds. The only shotguns typically sold in stores are double-barreled side-by-sides or over-unders. Pump actions and semiautomatics are prohibited. A private citizen can own a total of ten different shotguns. A citizen is not required to specify a reason for ownership to obtain a license, but most own their guns for hunting. Licenses are issued by provincial police. A gun license is required to buy ammunition, and ammunition sales are recorded. A shotgun owner may purchase up to 250 shells at one time. Cyprus also controls airguns, and airgun owners require a license. http://www.zerohedge.com/news/2013-03-30/cyprus-firearms-laws
But I'm sure the efforts of Obama et al. are purely motivated by the desire to prevent future Newtowns...
Can't tell if you're trolling.
I'm not a gun control guy, I only back background checks on gun purchases. But, the typical response from the right when someone argues for a gun ban is either:
1.) If you ban guns, bad guys will still have them
2.) Without guns, people can still make homemade bombs and use other weapons to do violent acts, so banning guns is meaningless
The current President of Cyprus was elected with a comfortable majority less than 2 months ago, so overthrowing the government would be a bit excessive, don't you think?
Aside from his take on physical commodities, Jim Rogers tends to feed off of whatever drama is trending. Realistically, he's in the Meredith Whitney camp: they got one big call right but everything since then is chicken little crap. Cyprus is fascinating from a theoretical perspective, but the troubles of a nation where 10BB causes this kind of irrational policy making is hardly representative of the larger system.
Honestly, I started laughing because as soon as I read this, all I heard in my head was Iron Maiden "Run for the hills, run for your liiiiiiiife".
Please, Jim Rodgers has been making great calls for over 40 years and made 4200% over 10 years while at Quantum. He is not a one trick pony like Meredith Whitney, but he does trade with fundamentals and a long term view point.
While I am angry at the government seizing deposits and would be outraged if the government closed all the banks to stop me from getting my money out, I also think that people have forgotten one of the risk of a bank is that it may go bankrupt and you could lose deposits. It might be easier to see when interests rates were higher, but a bank takes money from depositors by paying them an interest rate and promising them that when they need money the bank will provide it, the bank then takes that money and issues loans or other investments at a higher interest rate--all of which have the potential for loss.
People seem to have forgotten that a banks deposits are open for loss should the bank go bankrupt--which is what happened in the Great Depression and is why the 250K depositors insurance was put in place in addition to additional capital controls. We complain about too big to fail, and yet, here we are screaming to the rooftops about how outrageous it is that depositors are losing money---which by all rights "was at risk" when they put it in the banks. If anything this is an argument for better capital controls, more transparency, that all "rich" people should keep accounts less than 100K, and keep money in multiple banks. And let's not forget that this crisis was partially caused by the banks investing in lots of Greek debt.....
Can't believe that woman still gets interviews and has a following.
Theoretically, what are your options if deposits at banks aren't safe? What can you do with your cash, where can you park it?
Your deposit at a bank that exceeds the insured maximum was never safe to begin with. Anyone who thought otherwise was delusional in the first place and deserves whatever happens. There's a good reason why deposit insurance covers only deposits up to a certain amount and no further. The amount covered is well-known and published widely, so there's no excuse for ignorance.
This isn't to say that that there aren't aspects of the Cyprus story that were just plain outrageous. However, in the end, there was nothing about the actual implementation of the Cypriot "bail-in" that was unusual or shocking. Jim Rogers is just panic-mongering here.
As to where you put your money, diversification, as always, is the answer. Spread it across different accounts and asset types. Buy some short-dated govt bonds or something, etc.
Let's not go overboard and think this is cause for a Libyan scale revolution. The people did after all elect a communist leader who ruined fiscal policy and now they are paying for it. The real block into any real Cypriot uprising is the fact that the money in these banks is mostly foreign so who should really be revolting?
The true culprit of this financial crime against sovereignty is the EU and Germany from what I've read so far. It appears to me that they may in fact (as was previously stated) be using this as a test for just how far out of line they can go to exert control over their constituents. It is a sign that the EU is clearly becoming a fascist despotism.
Military wouldn't do shit to help citizens. This is what happens when you have a volunteer force.
Major cities would be held by government forces, but outside that it wouldn't be feasible or economical to control.
There have been splits before - civil war etc. Presumably places like Utah/Texas would be more prone to this. Do you think its impossible?
@UFO, no. The proper response is,
"RUUUUUN TOOOOO THEEE HIIIIIIILLLLLSSSS!!!!!!......RUUUN FOOOR YOOOUUUURRR LIIIIIIVEEESSSS!!!!!!!!"
Reiciendis repellendus ducimus dignissimos aut hic id libero. Ut ut nisi qui occaecati. In omnis quia qui et deleniti est. Saepe consequuntur quas veniam ex. Aspernatur tempore omnis ipsa magnam nobis qui nulla.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Hic architecto ratione consequatur nihil. Minima quos rem in nihil molestiae corporis qui. Error ab consectetur in quis.