Comments on: The Cyprus precedent http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Christofurio http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46324 Tue, 19 Mar 2013 19:33:25 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46324 Steve,

Thanks. Now I get it!

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By: Leo_oeL http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46308 Tue, 19 Mar 2013 06:24:29 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46308 Money, money,money!

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By: Leo_oeL http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46307 Tue, 19 Mar 2013 06:22:46 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46307 Money, money, money!

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By: Strych09 http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46304 Mon, 18 Mar 2013 21:52:21 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46304 Unsympathetic, that might all be “correct”, but in point of fact, a parliamentary vote in Cyrpus against the plan would kick off the mother of all bank runs. I hope legislators there understand pragmatism.

An ill-planned exit from the EuroZone would result in a lot more suffering for ordinary Cypriots than the planned savings account hair cut would. And the Russian kleptocrats who are using Cyprus to launder their money won’t suffer at all because they’ll have their money out and they’ll be gone before the switchover to any new currency.

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By: Unsympathetic http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46303 Mon, 18 Mar 2013 20:50:12 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46303 Funny: One of the big selling points for ECB membership when it was invented was deposit insurance. And, the laws already on the books in Cyprus can deal with Russian mob money more than adequately.

Rather, what happened here is [i suspect] ECB and other central banks are the holders of the bonds, and rather than take the haircut they deserve due to their deliberate evasion of risk laws.. they’ve chosen this method to ensure bankers stay whole while the country rots.

Cyprus is correct to vote against the ECB action, correct to force bondholders to take the haircut rather than depositors, and correct to leave the Eurozone.

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By: dWj http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46301 Mon, 18 Mar 2013 17:35:08 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46301 It would seem to me that asserting that this doesn’t constitute a default is at best a matter of high semantics.

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By: SteveHamlin http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46300 Mon, 18 Mar 2013 15:50:05 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46300 @Chistofurio – yes, but it’s counterintuitive when dealing with bank balance sheets.

For a bank, “on the left, nothing’s right” means their assets, often loans to borrowers, are impaired and worth less that everyone thinks.

And “on the right, nothing’s left” means their liabilities – for a bank, that is their funding sources, not A/P or normal trade payables – is normally funds owed to depositors and bonds issued, (+ retained capital), and those fundings sources are disappearing.

So, fewer assets than thought + no liquidity = bank run, leading to bank death.

That’s why your debit card is called such – the bank carries your checking account as a credit liability on its books (it owes you the balance in your account; when you deposit money they debit cash, credit ‘Deposit Liability due to Christofurio’), and when you swipe your debit card, you are instructing your bank to send money to the merchant and post a debit to your account, lessening the credit balance on their books and decreasing the amount they owe you.

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By: jsalsman http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46299 Mon, 18 Mar 2013 11:43:36 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46299 “a last-resort desperation move, born of an unholy combination of procrastination, blackmail, and sleep-deprived gamesmanship”

Donald Trump proposed a 14% wealth tax on assets over $10 million back in 1999. That considerably more progressive. What happened was they started with something like that, and then the big banks watered it down so that it would be more squarely on the backs of the poor.

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By: ElenaS http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46298 Mon, 18 Mar 2013 02:38:39 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46298 So the russian mobs are going to lose $4 billion just like that. I don’t want to be in Merkel’s proximity for a while.

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By: Christofurio http://blogs.reuters.com/felix-salmon/2013/03/16/the-cyprus-precedent/comment-page-1/#comment-46297 Sun, 17 Mar 2013 22:38:25 +0000 https://blogs.reuters.com/felix-salmon/?p=20931#comment-46297 Since assets are traditionally listed on the left-hand side of the balance sheet, and liabilities to the right, shouldn’t the pinch be described the other way around?

On the right, nothing’s right; on the left, nothing’s left.

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