Eurozone will collapse...

[Osem]

I can't see the Germans wanting to leave the Euro just yet - it's a lot weaker than the DM would be and this makes their exports cheaper. Who's to say what's around the corner though - I just hope it isn't chaos. The long this uncertainty goes on however the bigger the crisis when it happens. It's a bit like Brown's 'boom & bust', he didn't break the cycle he just prolonged them.

[Sirius]

Originally Posted by Osem

I can't see the Germans wanting to leave the Euro just yet - it's a lot weaker than the DM would be and this makes their exports cheaper. Who's to say what's around the corner though - I just hope it isn't chaos. The long this uncertainty goes on however the bigger the crisis when it happens. It's a bit like Brown's 'boom & bust', he didn't break the cycle he just prolonged them.

http://www.telegraph.co.uk/finance/f...Saxo-bank.html

From the link above this worries me, it shows just what the Euro elite will do to save the Euro Wreck

Savers in the Bank of Cyprus took a hit at the end of April as 37.5pc of their uninsured deposits were converted to equity as part of the island's €10bn (£8.4bn) rescue deal.

“Cyprus was a template,” he said. “Expect not only bail-ins, which if defined clearly ahead of time could be part of the solution, but also outright confiscatory wealth taxes, disguised as solidarity payments.”

Again in the Cyprus case the money wasn't there. If the bailout hadn't had happened the banks would have collapsed and the uninsured deposits would have been wiped out, everything above €100,000 would have gone. It's being portrayed as the EU, mostly Germany, stealing money but instead it was the EU, mostly Germany, only giving so much for the bailout and thus not fulling backing up the uninsured deposits. Their reasoning for this is that it was suspected that it was mostly Russian tax-dodgers whose deposits were being saved and this was politically untenable.

Politically untenable in Germany, that is. That is where the real fault-line lies in all this. Sooner or later the logic of a single currency (that it requires single fiscal and monetary policy, and therefore single political control) will become irresistible, at which point there will be a backlash either from the German people, who will wonder why they are expected to underwrite the whole thing, or the German constitutional court, which will rightly point out that the whole exercise violates the country's constitution.

[Sirius]

Originally Posted by Damien

Again in the Cyprus case the money wasn't there. If the bailout hadn't had happened the banks would have collapsed and the uninsured deposits would have been wiped out, everything above €100,000 would have gone. It's being portrayed as the EU, mostly Germany, stealing money but instead it was the EU, mostly Germany, only giving so much for the bailout and thus not fulling backing up the uninsured deposits. Their reasoning for this is that it was suspected that it was mostly Russian tax-dodgers whose deposits were being saved and this was politically untenable.

But the point is that it has now set a precedence and it seems they intend to do it again next time a bailout is needed.

---------- Post added at 17:23 ---------- Previous post was at 17:19 ----------

Originally Posted by Damien

Again in the Cyprus case the money wasn't there. If the bailout hadn't had happened the banks would have collapsed and the uninsured deposits would have been wiped out, everything above €100,000 would have gone. It's being portrayed as the EU, mostly Germany, stealing money but instead it was the EU, mostly Germany, only giving so much for the bailout and thus not fulling backing up the uninsured deposits. Their reasoning for this is that it was suspected that it was mostly Russian tax-dodgers whose deposits were being saved and this was politically untenable.

But the point is that it has now set a precedence and it seems they intend to do it again next time a bailout is needed.

“Cyprus was a template,” he said. “Expect not only bail-ins, which if defined clearly ahead of time could be part of the solution, but also outright confiscatory wealth taxes, disguised as solidarity payments.”

Mr Christensen said bank runs could start “instantaneously” as “normal” depositors that had worked hard to save up for their family viewed their mattress as a safer place for their money than their bank.

So god help the next country that needs help from Berlin

Originally Posted by Sirius

But the point is that it has now set a precedence and it seems they intend to do it again next time a bailout is needed.

Yes but I think this point has been overplayed. This is no different to any other bank runs, including here with Northern Rock. If your bank is in trouble you're going to want to take your money out. There is a precedent for bail-ins now but the EU have never promised that more than the first €100,000 would be protected. The initial mistake was appearing to apply the bail-in to people with less than that, breaking the promise, but they backtracked on that.

The situation is the same as before. If a bank collapses you may not get all your money back. The problem with Cyprus is that it's being portrayed as a raid on the banks to bailout the Government rather than a bailout of the banks themselves. It's important to remember it was the banks, and therefore their customers' money, that were about to fall.

What people are asking for when they complain about the bail-ins and precedents is not that the EU intervened but that they didn't intervene enough. They wanted Germany/EU to increase the bailout money.

[danielf]

Originally Posted by Damien

The situation is the same as before. If a bank collapses you may not get all your money back. The problem with Cyprus is that it's being portrayed as a raid on the banks to bailout the Government rather than a bailout of the banks themselves. It's important to remember it was the banks, and therefore their customers' money, that were about to fall. *

What people are asking for when they complain about the bail-ins and precedents is not that the EU intervened but that they didn't intervene enough. They wanted Germany/EU to increase the bailout money.

Can you stop bringing facts into the discussion please?

Originally Posted by Damien

What people are asking for when they complain about the bail-ins and precedents is not that the EU intervened but that they didn't intervene enough. They wanted Germany/EU to increase the bailout money.

Actually, what people are asking for is equal treatment. The EU bureaucracy *tried* to expropriate savings below the guarantee threshold and only the intransigence of the Cypriot parliament prevented them doing it. As it is, what was arranged for Cyprus was not on the same terms as had been applied elsewhere, such as in Ireland, and completely failed to acknowledge that the banking collapse in Cyprus was in no small measure brought about by the debt haircuts imposed on Greece's creditors by that same EU bureaucracy - Cyprus being a major creditor, seriously exposed to the disaster in Greece.

The bail-outs in each case are a political smash and grab, each one more difficult to pull off than the last, as the ultimate victims get wiser and harder to fleece with each passing job. It's no way to run a currency, and is why the Euro will fail. The only question here is just how much money they are prepared to pour down the drain attempting to shore up their vanity project in the meantime. On current evidence they may stretch out the end-game another five years. But the end will come, and the longer they delay, the worse it will be.

[Sirius]

Originally Posted by Chris

Actually, what people are asking for is equal treatment. The EU bureaucracy *tried* to expropriate savings below the guarantee threshold and only the intransigence of the Cypriot parliament prevented them doing it. As it is, what was arranged for Cyprus was not on the same terms as had been applied elsewhere, such as in Ireland, and completely failed to acknowledge that the banking collapse in Cyprus was in no small measure brought about by the debt haircuts imposed on Greece's creditors by that same EU bureaucracy - Cyprus being a major creditor, seriously exposed to the disaster in Greece.

The bail-outs in each case are a political smash and grab, each one more difficult to pull off than the last, as the ultimate victims get wiser and harder to fleece with each passing job. It's no way to run a currency, and is why the Euro will fail. The only question here is just how much money they are prepared to pour down the drain attempting to shore up their vanity project in the meantime. On current evidence they may stretch out the end-game another five years. But the end will come, and the longer they delay, the worse it will be.

They should nip it in the bud now. The longer it takes before they kill it the harder it will be to recover.

Originally Posted by Chris

Actually, what people are asking for is equal treatment. The EU bureaucracy *tried* to expropriate savings below the guarantee threshold and only the intransigence of the Cypriot parliament prevented them doing it. As it is, what was arranged for Cyprus was not on the same terms as had been applied elsewhere, such as in Ireland, and completely failed to acknowledge that the banking collapse in Cyprus was in no small measure brought about by the debt haircuts imposed on Greece's creditors by that same EU bureaucracy - Cyprus being a major creditor, seriously exposed to the disaster in Greece.

I am not 100% convinced it was the EU who demanded that people have savings under €100,000 were liable, it seems unclear on if they simply gave the Cypriot Government the amount they should raise and it was they who decided where from. Either way that was a stupid move and it's good it didn't happen in the end.

I don't disagree with anything else you've said. It was unfair. It's the nature of the beast the the timing of the collapse. The EU were less bothered about Cyprus because them leaving the Euro wouldn't have been as damaging as some of the other countries. Additionally other Eurozone nations were less exposed to Cypriot debt. Combine that with the impending German elections, bailout fatigue amongst the German people, the amount of Russian money in the country along with their weak position in negotiations and you have what happened.

One of the telling incidents during the whole affair was Russia angrily protesting about the EU and then deciding not to help Cyprus either. If the Russian Government does want to be seen to be helping Russian tax-dodgers, as it would be spun, then Germany certainly isn't.

My only problem is when people simultaneously have a pop at Germany for getting involved and issuing the bailout whilst condemning them for taking, by which they actually mean not giving, the money from people's bank accounts. What miracle solution was there that would have allowed all deposits to be protected without intervention from the EU?

That's less common. What is common is the complaint that a precedent has been set. That next time a country/bank is in trouble people will run to take their money out because it may not be protected. As if prior to this the rumoured, let alone imminent, collapse of a bank would not have been greeted by an army of panicked depositors trying to take all their money out.

The EU have never promised to back all deposits. Their only consideration was always going to be about how much it damages the rest of them. If you go into that with a weak hand then you're screwed.

[Osem]

The government of Slovenia has announced a package of measures it hopes will help avoid an EU bailout.

The measures include a tax increase, a major restructuring of Slovenia's ailing banking sector, and a programme of mass privatisation.

Slovenia's mostly state-owned banking sector is suffering from mounting bad debts and the government has struggled to borrow money.

http://www.bbc.co.uk/news/business-22462604

Interesting to learn that a mostly state owned banking system appears to have suffered just like the rest.

Spain is officially insolvent. Get your money out while you still can.

I'd not noticed this until someone drew my attention to it, but the latest IMF Fiscal Monitor, published last month, comes about as close to declaring Spain insolvent as you are ever likely to see in official analysis of this sort. Of course, it doesn't actually say this outright. The IMF is far too diplomatic for such language. But that's the plain meaning of its latest forecasts, which at last have an air of realism about them, rather than being the usual dose of wishful thinking.

[Sirius]

Originally Posted by Chris

Spain is officially insolvent. Get your money out while you still can.

Lets see what precedents are made with this one

[Osem]

What is it going to take to make the Eurocrats admit their grand experiment is over? Their collective denial is as bizarre as it is dangerous.

---------- Post added at 12:16 ---------- Previous post was at 12:13 ----------

Originally Posted by Sirius

Lets see what precedents are made with this one

The Eurocrats will invoke their fundamental principle which is to ignore what they don't like and move the goalposts whenever and by however much they wish.

[Sirius]

Breaking News

http://news.sky.com/story/1090503/ca...eferendum-bill

Cameron To Publish In-Out EU Referendum Bill

David Cameron is to publish a draft bill that will guarantee the British public an in-out EU referendum by 2017.

The Prime Minister is to seize the initiative amid internecine squabbling within the Conservative party and propose laws that will pave the way for a vote on whether Britain should remain in the EU.

A senior Conservative source said the party would "examine all opportunities" to bring the legislation before Parliament - including using the vehicle of a private member's Bill.

Excellent news

He also need to make sure that that whoever gets in power next cannot weasel out of it because if Labour or the Libs get in they will crap on us and cancel it.