Cyprus president prepares for Brussels as parties debate 25pc deposit tax

More umimpressive commentaries from the self appointed fiscal and economically illiterate. Of the ten billion Euro in rescue funds Germany will provide twenty seven per cent and are fully entitled to have a viewpoint as it whether the plan to be agreed with Cyprus and the Troika has any chance of success.
The most lucid comment on the whole affair comes from an ordinary Cypriot housewife who told a journalist that the country has been living beyond its means for twenty five years and now the bills have to be paid. When reading the Postings on this site you would swear that this Cypriot behaviour over nearly a generation was encouraged by the early architects of the Euro who must have been Germans intent on longer term control of the region . I’m tired of the weird fantasists on this site who spend more time spouting rubbish than they probably spend with their families or on their employers time.

All they need now is their lapdog leader to go to Davos and proclaim that his people “went mad borrowing money”
just like Enda did.
The government protected, elite stock Jockeys, destroyed these countries and there is nothing stopping them doing it again.
It’s time to start addressing the root cause of these travesties and not the symptoms.

It’s time to start jailing some criminal elites in the banking world.
Let’s start with Goldman Sachs and work our way down from there.

@ Peter Daly, you conveniently ignore the ultimate cause of the banking crisis in Cyprus and in Ireland, you fail to address the fundamental flaws in the euro currency and you only look at the addressing of the immediate symptoms of the crisis.

@harry- you see the problem is, unlike so many on here my memory extends beyond the two years of this Government. I lived through the Celtic Tiger. I remember looking all around at people I knew to be on modest incomes building palatial homes, two BMW’s and going on three holidays a year and wondering how they could afford it. As it turns out, they couldn’t. Don’t tell me Ireland didn’t go a bit mad. To fail to recognise this is to invite repetition.

Peter Richardson: the ultimate cause is not the Euro – it’s giving out loans which can’t be repaid. It’s a banking system of 9 times GDP. It’s a government that wants to save the off shore banking industry by bailing in mms all depositors. These things can all occur without the Euro. Look at Iceland! They devalued savings along with the currency, it’s the same effect as a haircut!

@ Goban Saor, I was out of wifi contact. You confuse cause and effect. The effects was gross over lending as in Ireland, the cause was cheap euros with no prudential supervision of lending. There was no fractional reserving on lending.

In fairness the ordinary citizens, of whom I am one, had no idea that the CBI was not insisting on prudential supervision requirements such as fractional reserving. It is only after reading the recent Reports that we realise that the regulators instead of being watch dogs were lapdogs.

I personally lived through a lot more that the Celtic Tiger Kevin.
It’s not the neighbor with the BMW’s I’d be concerned about, in a lot of ways fair play to him/her.
People in western countries have been driving them and for years.
These type of pseudo wealthy people that bother you, were just a byproduct of the underlying problem, that will be allowed to reoccur if the real villains are not brought to task.

@ Harry, right on the nail.

Reckless lending, driven by bonus incentives and the Central Bank of Ireland being tamed by the Irish Bankers Federation, by means of lavish hospitality, was part of the picture.

I read Fingers recently, Anglo Irish Republic and two of the banking reports.

The response of some is to look only at individual cases of a few people living beyond their means instead of looking at the true cause of the crisis.

@harry- You mightn’t be concerned about them. But with 25% of Irish mortgages in distress it looks like I’m going to be helping them pay for their big houses through my taxes so I am. And I’m sick of listening people suggesting all our woes are down to a handful of bankers and a regulator. The whole country was drunk on credit and kept voting in a blatantly corrupt Government to keep the party going. So we’re all in it.

kevin please we have been through this many times
we still have those debts mind you we are struggling to pay them off
the only debts that were paid in this country were wild punts from the rich and elite of the anglo casino and
and before you start moaning about living 12 billion beyond our means i know we were but that is controllable debt not like the sheer madness and reckless behaviour of the banks in ireland. many countries in europe have current account deficits that is the nature of economics, your up for 10 years and your down for ten years
cyprus is a simple case of getting funds from the ESM and fixing the rotten banks. their economy while not great is not in the basket case greece was. do you not think it a bit funny that the banks create all this trouble and the solution to fixing the problem is to take from the people and give it back to the very people who caused the problem in the first place

Look at the statistics Kevin.
The Banks €64 Billion (and counting). contribute little and stopped paying.
850 NAMA developers €74 billion.contribute little stopped paying.
Senior Civil Servants????
Politicians????

Homeowners/neighbors/friends/family contributed everything and are still paying what they can and probably more that they truly can afford.

@ Kevin Shaw, you are obsessed with the idea of owners of big houses and your supporting of their repayments. The problem is that the damage is done. The Banks made a cumulative set of mistakes in their lending policies, I will not go over these again since they are well known, and the Central Bank of Ireland not only turned a blind eye but, on occasions, encouraged what was happening.

The over borrowers who were induced to respond to the over lending were not the experts. They were encouraged and advised by politicians, property advisers, property professionals, mortgage brokers, accountants, solicitors extensive bank advertising and letters from the banks.

But even if you blame the borrowers, that gets you no closer to a solution. The problem is that inability to repay is just a reality and repossessing of homes will only realise a fraction of he original security value as well as exposing banks to property taxes, service charges, maintenance, security and deterioration of empty housing stock as well as further driving down residential property values.

The milk is spilled and the second shock wave of the insolvency consequences to the banks of the mortgage impairments are on the way.

You are right there Peter. The truth is that Europe can well afford to let Cyprus hang on a noose of its own making. German can let Cyprus go. And they may well yet.

kevin
why are banks running countries and not governments?

a perfect example is irelands situation
we owed 30 billion which we have been repaying over the last 6 years, paying for it with crippling austerity and in turn destroying our domestic economy.
the ECB say it must be so because they have to take this money out of the economy because it didnt exist in the first place and it would have an inflationary effect on the euro. it was a loan from them to bail out private banks and when they recieve it it will be destroyed. meanwhile the ECB have pumped over a Trillion euros of money they have just printed out of nowhere and thats not going to effect inflation of the euro. its a scam kevin, caused by the banks and purpetrated by the banks.

Kevin …….your there moaning about having to pay taxes towards helping people whom have fallen into arrears , yet you don,t seem to have a problem paying taxes to cover the enormoys debts left by developers , gamblers etc.

Lets just go back to the celtic tiger for a mo , all those people whom borrowed fir fancy houses and cars etc , the majority of these where paying and meeting their monthly repayments ………………..
However , we had developers, etc whom borrowed billions and billions and brazingly didn,t bother paying back a penny ,
Thus bring down the economy thus forcing thousands of people in the countey making their repayments , out of job , force paycuts , cuts in hours…………as a result they now cannot meet their repayments.
.
You ,ll pay the property developers tax ( yes they owe local authorities 750,000,000eur) ,
Why aren,t FG taking tough measures to foce these to pau back there loans ? Instead of paying them €100k + pa ,).

@peter- you remain obsessed with obfuscating personal responsibility. Your bank manager is not your mommy. It is your responsibility and your responsibility alone to ensure that you can repay a loan you take out. A gun wasn’t put to anyone’s head. A lot of it was old fashioned greed.

@sean- I’ve a huge problem with having to pay for the indiscretions of the banks & developers but that’s out of our hands now. It’s done & dusted. I don’t disagree re: developers wages

Are you suggesting for the government to starve families to pay for the corrupt/criminal acts of bankers Kevin?
I didn’t seem to see any starving bankers/developers/government members lately?
Should the bankers/developers not be starved first?
Since they were mostly to blame?
Did the bankers personally loose all their money, before they put their hand out for a taxpayer bailout Kevin?
The bankers/developers and their friends in government stopped paying and hid their cash at the first sign of trouble.
Tell me Kevin, why should the mortgage holder/taxpayer not follow suit??
Before their children are sentenced to a life of suffering??

I don’t see anyone in government going door to door making sure that the children of Ireland have sufficient heat and food.
You hear plenty of “Get rid of your elusive Big Sky Packages and 2nd Cars” from Noonan and Co. as he harbours and rewards the criminal elites.

What are you trying to say Kevin?
Its O.K for a few criminal elites (with the support of our government) to steal our country from us and turn our children into debt slaves,
as long as our chicken sh** government gets tooled up and attacks your neighbor (who used to lease 2 BMWs) ???
How will that help the situation Kevin??

@ Kevin Shaw, you are thinking emotively and resentfully. You blame the inexpert borrowers and you exculpate the banks and the CBI. Many if most private consumer borrowers are over borrowed through no fault of their own but you collectively blame all citizens. Most people in Cyprus behaved prudently and responsibly, unlike their banks and regulator. You are displacing the blame for some reason and it would appear that you must have an agenda for so doing. It’s a pity that you did not engage with the substance of my arguments and explanations. For that reason, it was not possible to develop these issues.

Stay focused on the big houses and leased BMWs if you wish but you will distract yourself from cause and solution in so doing.

From the Financial Times.
After days of anger and worry about the safety of their savings, hundreds of Cypriot protesters gathered outside the parliament in Nicosia on Tuesday. They waved Russian flags and shouted “out with the troika” – a reference to the European Commission, International Monetary Fund and European Central Bank, the reviled threesome responsible for negotiating eurozone bailouts.
The EU leaders who had spent all night in talks to produce Cyprus’s ill-fated bailout plan – a plan that would have been paid for in part by a levy on ordinary citizens’ bank deposits – had seen much worse. In Athens, there had been riots and tear gas.

Yet despite three years of battling one crisis after another, the officials had still managed to misread the situation. They were wrong about Cyprus and its brand of politics.They thought the island had elected another Antonis Samaras, the centre-right prime minister of Greece who became a champion of his country’s tough austerity-laden bailout when he was elected last June. But this was no Greece.

Instead, they were dealing with Nicos Anastasiades, a lawyer and career politician who had assumed the country’s presidency just two weeks earlier. Like many in Cyprus, he has ties to Russian interests – his family law practice has two Russian billionaires on its books. And other members of the Cypriot governing class felt pressure to protect the country’s banking sector, which counts Russians among its most important customers.
Failing to grasp the depth of such ties would prove a fatal blind spot. “The discussion in Cyprus was not about small savers,” says a senior German official. “It was about people who fly in Lear jets.”

@ Leslie – b*gger off. You’re insulting members of my family with tosh such as this.

Survivors of the holocaust would be truly disgusted to hear you comparing a tax hike and being able to afford to a few less pints on a friday night to what they went through… I can only hope you’re completely oblivious to what the holocaust actually entailed

So Les,
it’s the Jews now is it…?

@ Goban – Don’t bother. Some people just don’t read or check facts before commenting.

You can’t have a reasoned debate with someone who defines the truth as “what I want to be true.

@ Goban, I am aware that was the original and silly proposal. I advocated on other articles in the Journal having a high threshold of exemption and a sliding scale above that. It was a stupid move from the Greek Government and unfortunately was not advised against by the EU which had sight of the proposal prior to announcement.

Nikolas
my daughter has a german exchange student staying with us this week and it has been a great chance for me to find out what things are really like and what you say is true.
you made a very valid point last night about german workers just as hard up and unhappy as every one else and that got me thinking,
who really is doing well out of all this when there is such misery in europe
is this really the europe we signed up for
the people seem to have been forgotton

@ John – I’m actually in Germany at the minute on family business, so a bit more touchy about the anti-German, “jackboots and a new Reich” themed comments, given I can look up from the tablet and see people I know who don’t fit that description in any way.

The difference between the German situation and the Irish one, for the average person in the street, is that there’s no sense of crisis every few weeks, with people claiming economic apocalypse. It’s more a slow steady sinking, with prices gradually creeping upwards and incomes becoming less certain. The young and newly qualified professionals are leaving, as there’s far better opportunities at their career level than other countries. Ironically, one of those countries is Ireland, as Germany produces lots of engineers, and multi-lingual engineering jobs are one if the areas hit by the Irish skills shortage.

It’s really not that different for most people, Irish or German, beyond the cultural gap where Germans are brutally direct while the Irish never give a straight answer. But money is right all over. And in Germany many feel, I think, that it’ll get worse, not better.

Ask your exchange student about internships in Germany ( prakticum ). It’s identical to the jobbridge scheme, it’s been there for donkey’s years, and it is abused by employers for cheap labour just as people fear the jobbridge scheme Is. Property prices are overheating in the cities too, so not only are Germans just people, they also make the same mistakes

Who’s benefiting? I don’t know. I could say the rich, and Yes, I do believe the rich in Europe are proportionally hurting less than the standard-middle and working class. But I think they’re only benefiting in the short-term, and their major fear is not wealth creation, but how not to lose what they have.

The welfare-class ( long term unemployed and the terminally unmotivated ) has benefited, as the crisis has legitimized their existence, in that it is not possible for the members if that class to leave that class. I don’t mean to sneer at unemployed people, but the welfare class is different. It’s a very unhealthy thing to have. Unemployment shouldn’t be seen as a class, an identifiable group of people, it should been seen as a temporary situation. Once people identify with being employed, then a country is in trouble.

So, the welfare class benefits in the short-term also, but that’s bad of a country, and everyone in that country, in the long term.

So, to be honest, I don’t think anyone is significantly benefiting. Instability is bad for Europe and everyone in it. It’s a clusterf**k, pure and simple, and the bigger countries are not getting pushy and rigid because of greed, but are getting pushy and rigid because of fear for themselves.

Maybe, in the end, it’s the BRIC nations who benefit, and this is just the inevitable shift of power from the old world imperial powers to the new world powers that we used to patronizingly called “developing” or “third world”.

SIOBHAN legal challenges ,they appoint the judges give you two guesses to who will win you will need only one

Marx was right.

correct Seamus the Dragon is eating its tail !

Peter
Could you suffer just a little and truthfully tell us what would happen in your opinion if the Cypriot Parliament decides to reject the rescue loans from the Troika that the open market won’t lend them when Monday morning comes. Overspending for twenty five years by the Cypriots and you think it doesn’t have to stop.

If I may peter ; those who have gambled on the cypriot debt will loose and the people will then construct an open and free society based on the wealth of their Gas ! Just like what’s going to happen in Ireland soon; we just have to wait for Mr. Sarckozy to emulate Carl’s singing !

Well said Kevin, the financial illiterates on this site fail to say where the money needed to bail out the Cypriot banks should come from. A really poor reflection on the Irish education system all round.

They talk a great game about Merkel forcing the Cypriots to do this and that, their banks are bankrupt and the Cypriot leaders decided to bail in the little guys to help the big guys.

Maybe we should rely on the expertise of the Icelandic president,
when it comes to the issue of, who should be bailing out corrupt, private, banking organisations?
http://www.youtube.com/v/51-Jfh6ADH0

@ Peter Daly, the loans must be accepted and Cyprus must surrender. It was not excessive personal expenditure by Cypriots over the last 25 years which caused this crisis. The crisis is a euro crisis caused by the defective design and implementation of the single euro crisis without a single real EU Central Bank, fiscal integration and economic policy alignment. As a neo Keynesian, I can recognise that the adoption by all EU member states of frugal and austere German economic policies would have great depressed consumer domestic demand throughout Europe and brought about a much earlier recession.

Germany’s economic policies work well for Germany but not for the rest of Europe. Our current market economy depends on consumer demand. Someone had to buy German exports. Domestic consumer demand in Germany is depressed by a combination of ingrained frugality and highly deflationary policies because of fear of inflation.

The euro crisis is showing itself first in the banking crisis. There was an egregious failure to regulate the Banks, more egregiously so in Ireland than in Cyprus, but sadly Ireland has lost all economic autonomy and despite going back to the markets, we will remain dependent. Keep an eye on the looming mortgage impairment crisis. The second and vastly worse shock wave is on the way.

The problems are well past domestic solution capacity and due to irresponsible indecisiveness in 2008 and 2010, the scale of the crisis is now almost beyond a European solution because of the German political situation.

I could write a monograph on this but the current crisis is an economic, political and legal crisis and it is fast developing into a social crisis. The problem is not one of excessive consumer expenditure unless you include home mortgage and buy to let mortgage borrowing in the picture.

Read the German economist Bofinger. Read William Keegan. Read Martin Wolf. Read Paul Krugman. You have to look beyond the superficial.

It is Cyprus now. There is a 30 per cent probability that Ireland will be next and a larger than 50 per cent probability that it will be one of the next three to face this scale of crisis. I have taken personal precautionary measures but nothing can immunise against a major sovereign collapse.

We will need much more IMF support in the times to come and hopefully the politics and economics of appeasement will buy us some modest help.

Peter Richardson : you want taxpayers to bail out banks, do you? Where is the money going to come from? You talk a great game but you’re a bluffer who declines to outline precisely how the bankrupt Cypriot banks can pay all the depositors when they’ve lost their depositors money already (many of whom are dodgy Russians).

Instead of just down voting, a two-liner explaining where the money should come from would be great. Thanks.

An Goban Saor, that is a reasonable question. It is reprehensible and unfair that the tax payer should bail out the Banks. I truly hate that. Furthermore, there is a lot of nonsense spouted about excessive consumer spending. I don’t know if you have read my long comment above but the facts is that what ought to happen and what has to happen are two different things.

Cyprus needs to get its banks opened and the only way that it now has a chance, not a guarantee, to secure this is to go to the pockets of the ordinary citizens, who were not as depicted spendthrift and manic consumers. That is what the EU, led by Germany, demands.

There is no longer any fairness, there is no justice, there is no security of savings and investments, there is no question of those who were responsible being held responsible. There is now only survival and making the best out of a really serious crisis.

The sad outcome of this is that there is a substantial risk that no one, local or non local, will ever feel confidence in the Cypriot Banks again. That is the reason for all the restrictions. The Irish Banks are greatly exposed. I shudder to think what will happen when the second shock wave comes.

Peter- how in 4 paragraphs did you still not answer his question?

@ Kevin Shaw, you need to read the reply and the question together.

@ Gatheringyourmoney, I fully endorse what you say. The mutual nature of the credit unions and the lack of greed produced a more sustainable model. The volunteers were and are high calibre. Any mistakes made were made under the pressures you identify. I would like to see the credit unions exempt from any raids on deposits but I don’t see the Government resisting that temptation.

The governmet can’t raid the Credit Unions because it would be Financial suicide ; it is the one thing that they don’t want – a large connected local -based movement built on community (credit unions) and secrets (banks)..
Think about it ; when I bank no-one knows where I bank and I can withdraw in Dublin, Cork or wherever; when I have lodged money in the Credit Union I meet my neighbours everytime !
Furthermore the Government have access to your information to your bank accounts through the State -Owned banks any snooping in Credit Unions is a direct contravention of privacy and property rights !

@ Dermot, well I must say that make a very persuasive case and I really hope that you are right. I admire Credit Unions, they do extraordinary work and it would be a smart move to leave Credit Unions untouched. They are the people’s banks and they now have huge potential. I am going to put a few bob in my local credit union. I would not dare risk it in a bank, I am not enough of a gambler, but at least in a credit union items does real good and is looked after by people of real quality.

Thank you.

I hope I am too; but ireland is an island – I last used the euro outside the Sate in 2009, I’ve been to England once since and had to go to a bureau de change ;
The function of money is that it is a commonly recognised symbol for fair recognition of time / work. the Euro is spread across so many different societies and cost of living bases that it cannot work !
The sovereign nations hold the debt but the E.C.B. hold the licence to print ! It’s madness!
Furthermore some people get money in this State for not doing work and others have to spend a load of it (fuel costs or bus ticket) to work to feed their families it’s mental !
With regard putting money inthe credit union ; all the eggs in one basket …spread it out !
The best logic I havve ever heard for running an economy was on “Lamb watch ” on the B.B.C. ; The farmer said the following ;
All I want to do is make a living and put a little aside for a rainy day ! – Perfect !
I’m a farmer and I have zero savings but I inherited a sheep and heifer rearing farm ; these were the exact two aspects of farming that were ignored in the last Cap;
My father reared 6 of us and now I can’t rear three ! ; I don’t mind the kids are fed every day and they want for nothing , when I say I can’t rear three I mean that I cannot afford to invest in my farm , admittedly some fo the reason is my own stupid fault ; debt , but I’m trying to pay it off , but the point I’m getting to with Cap is this ; Money that is too centrally controlled is a device for social engineering – nothing else ;
Eastern Europeans can come here and live on the dole because they rent ! Mortgages are crippling us both the Irish and the eastern europeans who bought here during the boom !
I see how things work macro-economically and we are a fish in a small pond with the euro; these bailouts are nothing ore than an excuse to pay the E.C.B. for the right to print a certain coloured paper that is why I am promoting indigenous outlook ; and the credit unions, are the Irish solution to the irish problem !
If the banks fail and all the credit union money lodged in them fails then we as a nation will just get around to printing oney that suits us , we will introduce a voucher system for the unemployed for food that is produced nationally and we will trade our resources for what we want and need! A common currency only suits the traders who can source cheaply in a poor country and sell it in a rich country !
Ireland is going to leave the Euro; not because it wants to, not because we don’t trust Europeans , but because we simply must ! Needs must !