# EU deal claims 10% of Deposits



## sags (May 15, 2010)

It would appear the troubles in Europe haven't really gone away.........just been asleep for awhile.

In a EU bailout deal, Cyprus agreed to seize 10% of depositors holdings.

I suppose the take away from the story is...........for those who think government's would never do something like this.........they just did.

http://news.nationalpost.com/2013/0...onal+Post+-+Top+Stories)&utm_content=My+Yahoo


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## Cal (Jun 17, 2009)

Not a fun time to be a politician there....


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## andrewf (Mar 1, 2010)

I think it's insane to confiscate deposits before defaulting on bonds. Bondholders (should) understand that they are taking risk. Depositors need to feel some safety, otherwise faith in the banking system breaks down. This seems like a mistake.


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## fatcat (Nov 11, 2009)

wow, what a story ...
would not want to be a bank teller in cyprus right now
i got the feeling that this is aimed at the russians and is a message about hiding cash in cyprus


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## GoldStone (Mar 6, 2011)

andrewf said:


> I think it's insane to confiscate deposits before defaulting on bonds. Bondholders (should) understand that they are taking risk. Depositors need to feel some safety, otherwise faith in the banking system breaks down. This seems like a mistake.


Read the statement by the president of Cyprus to understand the choices they faced. It's not as simple as you make it sound.

http://www.moi.gov.cy/moi/pio/pio.nsf/All/C7131DA40FCE0827C2257B30005411D5?Opendocument


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## Dave (Apr 5, 2009)

My grandparents are in Europe and they hold all their savings in cash at home. They do not trust the banks. I owe them an apology because I thought that they were crazy ... until now. The governement basically steals the savings of its citizens by a surpirse wealth tax. What a messed-up world. The European Union created one huge beaurocratic and financial hell.

From the article above, I found that this was an interesting quote regarding the alternative and massive $ withdrawals: ''The State would be obliged to compensate depositors in response to the *obligation regarding* *guaranteed deposits*. The capital required in such a case would amount to about 30 billion euros, which the State would be unable to pay.''

Another interesting tidbit as I keep reading: ''... we faced decisions that had already been taken (by the Eurogroup) and came across faits accomplis"


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## kcowan (Jul 1, 2010)

When income tax evasion is rampant, capital taxes and sales taxes are the only alternatives. Bonds are captured in the income tax system so are exempt.


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## rusty23 (Jan 25, 2012)

Dave said:


> My grandparents are in Europe and they hold all their savings in cash at home. They do not trust the banks. I owe them an apology because I thought that they were crazy ... until now. The governement basically steals the savings of its citizens by a surpirse wealth tax. What a messed-up world. The European Union created one huge beaurocratic and financial hell.
> 
> From the article above, I found that this was an interesting quote regarding the alternative and massive $ withdrawals: ''The State would be obliged to compensate depositors in response to the *obligation regarding* *guaranteed deposits*. The capital required in such a case would amount to about 30 billion euros, which the State would be unable to pay.''
> 
> Another interesting tidbit as I keep reading: ''... we faced decisions that had already been taken (by the Eurogroup) and came across faits accomplis"


same now i know why my grandpa hides his money around the house


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## sags (May 15, 2010)

The banks in Cyprus are shut down on Monday and all electronic banking is shut down already.

The Parliament put off the vote...........and it appears there may not be enough votes to pass the bailout.

They must fear a bank run on Tuesday, that could have larger implications than a default. (if that is possible)

One would suppose that people in Portugal, Spain, Greece, and Italy would be looking on in interest..........and may find heavy withdrawals on their own banks.

Once it starts........it is hard to put the genie back in the bottle.

This isn't a Cyprus only problem..........as the conditions are demanded by the EU central bank............and the demands may spread to other countries seeking bailouts.

This could be a big Black Swan event, affecting a lot of banks in a lot of countries.

Previous bailouts delayed the solution........but it looks like defaults in the EU are inevitable.

We will see how North American markets react to the news.


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## Flock of Loons (Jan 3, 2013)

GoldStone said:


> Read the statement by the president of Cyprus to understand the choices they faced. It's not as simple as you make it sound.
> 
> http://www.moi.gov.cy/moi/pio/pio.nsf/All/C7131DA40FCE0827C2257B30005411D5?Opendocument


Very interesting link. Critical details like these just do not make it to the mainstream press.

Looks like a smart move but it will never be adequately conveyed to the global public.


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## andrewf (Mar 1, 2010)

Goldstone: Have the equity or bondholders of these banks been wiped out? If not, how is it justified to confiscate the holdings of depositors?

At this point, all Cypriots would be well justified to move all their deposits off-shore or into non-Euro assets. Once the precedent of confiscating deposits is set, it becomes easier and easier to justify in future. You absolutely should not trust your deposits in Cypriot financial institutions. Same goes for the rest of Europe. If I were a Greek, Italian, Spanish, Portuguese, etc. depositor, I would be making arrangements as we speak to move my deposits out of the European banking system.


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## andrewf (Mar 1, 2010)

sags said:


> The banks in Cyprus are shut down on Monday and all electronic banking is shut down already.
> 
> The Parliament put off the vote...........and it appears there may not be enough votes to pass the bailout.
> 
> ...


Yes, this absolutely could trigger a bank run in Europe. This is insane.


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## cldellow (Feb 16, 2012)

I'm not a financier, but from what I've been reading, Laiki Bank pretty much has no shareholder's equity and no bondholders. Check out page 5 of their 3Q2012 financials (http://www.laikibankgroup.com/EN/In...ConsolidatedFinancialStatements20120930EN.pdf).

Total equity: $966M. Bondholder debt: $144M.

Contrast with customer deposits of $17.8B. The customers who take a haircut are getting equity in return, which will further dilute the people who already own shares.

Maybe they could have been more explicit about wiping out the bondholder and shareholders (and maybe they are - the reporting on this has been atrocious), but there's not much left to tap in that well at any rate.


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## sags (May 15, 2010)

The reporting on this has been rather mute.

Maybe it isn't as big a deal as it looks, or maybe because it is a weekend.

It must be pretty inconvenient to have all ATMs shut down and no access to cash.


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## OptsyEagle (Nov 29, 2009)

I suspect it is because it is only little Cyprus. The EU is probably using it as an experiment for possible use with bigger nations. In any event, I can't really see me wanting to keep my money on deposit in a Spanish or Italian bank, when you see this stuff.


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## dsaljurator (Jan 12, 2012)

OptsyEagle said:


> I suspect it is because it is only little Cyprus. The EU is probably using it as an experiment for possible use with bigger nations. In any event, I can't really see me wanting to keep my money on deposit in a Spanish or Italian bank, when you see this stuff.


It's that right there that makes me thing next week is going to be a disaster for european banks (at the very least). I'm pretty much expecting a wide spread run on banks in the EU.


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## GoldStone (Mar 6, 2011)

andrewf said:


> Goldstone: Have the equity or bondholders of these banks been wiped out? If not, how is it justified to confiscate the holdings of depositors?


A few articles I read reported that these banks relied exclusively on deposits to raise capital. There are virtually no bonds to speak of.

Also, they paid very high interest rates. One blogger mentioned 11% annually on a 5 year GIC or whatever it is called in Cyprus. Cyprus deposit insurance didn't impose any restrictions on the interest rates these banks could offer. Which is nuts. Especially considering that Cyprus cannot print its own money.


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## GoldStone (Mar 6, 2011)

sags said:


> The reporting on this has been rather mute.


I'm not sure what news sources are you talking about. TV?

Financial press and blogs provided tons of coverage.


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## fatcat (Nov 11, 2009)

GoldStone said:


> Read the statement by the president of Cyprus to understand the choices they faced. It's not as simple as you make it sound.
> 
> http://www.moi.gov.cy/moi/pio/pio.nsf/All/C7131DA40FCE0827C2257B30005411D5?Opendocument


 call me grumpy old man but i read that statement and i thought "here is yet another government official who holds highly priveleged and unverifiable infomation and is sounding the clarion call of doom (exactly as was done in 2008) in order to get exactly what he wants" ... some or all of it may well be true but i am tired of hearing these well-fed politicans and bankers in their $2000 dollar suits threatening all hell breaking loose if the people don't do what they say ... and we have no way of knowing the truth ...

it seems clear that their banking system is screwed up to the max ... maybe the people should agree to the bailout only if the people in charge allow themselves to be brought on charges of fraud and malfeasance


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## sags (May 15, 2010)

Right on Fatcat....................

I doubt those who hold high risk European bond debts, are simple folks trying to survive day to day, and put a little away for their retirement.

The bond holders are probably the banks, like JP Morgan who operate no more honestly or transparently today than they did 4 years ago, and the rich and powerful who demand they be protected from losses, regardless of the reckless nature of their investing.

Those who welcomed the Billions in profits from sketchy investments.....can't expect or demand insulation from the risk.

Perhaps it will take a country like Cyprus............to finally compel the financial system back to secure footing, by defaulting on their debt and rebuilding from the ashes.

Would they be able to borrow again? 

Why not..........without the constrains of the debt they owe, they can afford to borrow to begin anew.

It would be up to the lenders to ensure the borrowing is constrained by the ability to pay......or face the consequences.

And that is how it is supposed to be.


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## GoldStone (Mar 6, 2011)

sags said:


> I doubt those who hold high risk European bond debts, are simple folks trying to survive day to day, and put a little away for their retirement.
> 
> The bond holders are probably the banks, like JP Morgan who operate no more honestly or transparently today than they did 4 years ago, and the rich and powerful who demand they be protected from losses, regardless of the reckless nature of their investing.


Failed Cyprus banks have no outstanding bonds. They used deposits to raise capital.

In this particular case, punishing the bondholders was not an option.


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## cdnceo (Apr 3, 2012)

Gold chart worth watching today: http://www.kitco.com/charts/livegold.html


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## liquidfinance (Jan 28, 2011)

Interesting. 

I just came across this which the author posted June last year. 

http://www.naturaltherapycenter.com/blog/?p=291


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## Argonaut (Dec 7, 2010)

I think we're all not asking the most important question, which is how do we make money off of this?

I think it may be that time where the market runs out of steam and the downside can be played.


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## Jungle (Feb 17, 2010)

S&P futures down 23 points as of 230am.


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## Flock of Loons (Jan 3, 2013)

*Cyprus dismisses deposit haircut talk*

IFR 1973 *2 March to 8 March 2013* | By Michele Kambas

Cyprus’s new finance minister has ruled out a haircut, or imposed losses, on bank deposits to ease a financial bailout from international lenders, now stalled amid worries about debt sustainability.

http://www.ifre.com/cyprus-dismisses-deposit-haircut-talk/21071551.article


And, from Moody's:

*Sector Comment: Proposal for Deposit Haircuts Is Credit Negative for Cypriot Banks*
*14 February 2013*
Format
PDF
Issuer(s)
BANK OF CYPRUS PUBLIC COMPANY LIMITED; Cyprus Popular Bank Public Co Ltd; Cyprus, Government of; Hellenic Bank Public Company Ltd

And in Tunisia, a winning bank strategy?

http://www.amenbank.com.tn/


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## Flock of Loons (Jan 3, 2013)

Argonaut said:


> I think we're all not asking the most important question, which is how do we make money off of this?


I don't know but this bright fellow mentions opportunities at the very bottom of his article (Update 6). Ireland next?

http://www.creditwritedowns.com/2013/03/the-cyprus-bank-deposit-bail-in.html


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## humble_pie (Jun 7, 2009)

ah, the austrian libertarian school of economics takes another flying pass at cmf forum ...


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## RBull (Jan 20, 2013)

This was unbelievable. 



liquidfinance said:


> Interesting.
> 
> I just came across this which the author posted June last year.
> 
> http://www.naturaltherapycenter.com/blog/?p=291


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## Compounding1 (May 13, 2012)

Argonaut said:


> I think we're all not asking the most important question, which is how do we make money off of this?
> 
> I think it may be that time where the market runs out of steam and the downside can be played.


Well I've been waiting for a bit of a pullback to put some money in my index ETF's so I'm thinking this will be the day 

On the quick trade I'm sure we'll see gold prices/stock jumping up a bit on this news too.


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## Celso (Jun 5, 2012)

fatcat said:


> call me grumpy old man but i read that statement and i thought "here is yet another government official who holds highly priveleged and unverifiable infomation and is sounding the clarion call of doom (exactly as was done in 2008) in order to get exactly what he wants" ... some or all of it may well be true but i am tired of hearing these well-fed politicans and bankers in their $2000 dollar suits threatening all hell breaking loose if the people don't do what they say ... and we have no way of knowing the truth ...
> 
> it seems clear that their banking system is screwed up to the max ... maybe the people should agree to the bailout only if the people in charge allow themselves to be brought on charges of fraud and malfeasance


fatcat, as someone who has lived in one of the affected southern regions of Europe and visits frequently, i can say that this is how it is. Politicians cry austerity, claiming they have no choice and blaming the public for the mess the country is in. All the while they vote themselves raises, travel in business class, and pass laws protecting themselves and their business interests from prosecution. 

Sad as it is, the groups who are responsible will never be face criminal proceedings. The general public is left footing the bill for government inefficiency, corruption and general incompetence.

I pray this never happens in Canada.


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## rikk (May 28, 2012)

Celso said:


> fatcat, as someone who has lived in one of the affected southern regions of Europe and visits frequently, i can say that this is how it is. Politicians cry austerity, claiming they have no choice and blaming the public for the mess the country is in. All the while they vote themselves raises, travel in business class, and pass laws protecting themselves and their business interests from prosecution.
> 
> Sad as it is, the groups who are responsible will never be face criminal proceedings. The general public is left footing the bill for government inefficiency, corruption and general incompetence.
> 
> I pray this never happens in Canada.


You pray this never happens in Canada? My wife is a teacher in Ontario ...


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## Rusty O'Toole (Feb 1, 2012)

Everyone needs to read this statement by President Anastasiades:



"Statement by the President of the Republic Mr Nicos Anastasiades
16/03/2013



It is well known that the deep economic crisis and the state of emergency in which the country has found itself did not come about in the last fortnight since we have undertaken the administration of the country.

The state of emergency and critical nature of the times do not allow me, as they do not allow anyone, to embark on a blame game.

In the extraordinary meeting of the Eurogroup, we faced decisions that had already been taken and came across faits accomplis through which we were faced with the following dilemmas:

On Tuesday, March 19 we would either choose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis, which would put a definitive end to the uncertainty and restart our economy."

Notice, this crisis and state of emergency did not come about all at once. So when did it start? After the third Greek bailout, which everyone knew solved nothing, only made the situation worse, but put off the day of reckoning for a few months? After the second bailout, the first? After ireland's financial crisis? After Iceland's?

Or could someone have seen this coming five, ten or twenty years ago when it became obvious that old fashioned conservative banking and government planning had been replaced by the slick trick, the quick fix and the gimmick?

What banking system, is today run on honest principles? What government has a balanced budget and refuses to saddle future generations with unpayable debt ?

What country isn't on the same road to ruin as Cyprus, Greece, Ireland and Iceland, soon to be followed by Spain, Portugal, Italy and eventually every other country in the world?

Would you trust Canada's politicians not to rob savers in this way? Remember they already took part in a similar "haircut" of GM bondholders and hundreds of other swindles every day.

Will they ever turn honest with the lure of fast easy money always before them? Will they have the smarts to pull back before the country is ruined? Once you go too far down that road it is impossible to turn back and the point of no return always comes up sooner than they expect.

It's not a question of whether Canada will get into a similar situation. It's only a question of when.


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## supperfly17 (Apr 18, 2012)

So i dont understand, they are going to keep the banks closed until Thursday. What if citizens need spending cash? Isnt that illegal?


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## liquidfinance (Jan 28, 2011)

supperfly17 said:


> So i dont understand, they are going to keep the banks closed until Thursday. What if citizens need spending cash? Isnt that illegal?


Isn't it illegal to steal depositors funds?
Not sure they would really care on the legality especially when there would be a run on the banks if they were to open.


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## andrewf (Mar 1, 2010)

Canada can print its currency--there is no need to ever confiscate depositors holdings. They always have the option of doing it by stealth through inflation/the printing press. Cyprus has fewer options because it does not control its currency.


So, respectfully, I disagree that Canada is at risk of the same thing happening here.


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## supperfly17 (Apr 18, 2012)

liquidfinance said:


> Isn't it illegal to steal depositors funds?
> Not sure they would really care on the legality especially when there would be a run on the banks if they were to open.


So why arent we seeing the citizens riot and rebel?


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## liquidfinance (Jan 28, 2011)

andrewf said:


> Canada can print its currency--there is no need to ever confiscate depositors holdings. They always have the option of doing it by stealth through inflation/the printing press. Cyprus has fewer options because it does not control its currency.
> 
> 
> So, respectfully, I disagree that Canada is at risk of the same thing happening here.


I don't see how the Euro can continue as a single currency if things like this keep going on. Surely these countries would all be in a better position if they could print / devalue. To me the Euro dream is flawed. Unless the countries agree to a federal government which in this case would seemingly be Germany and all other eurozone countries become "provinces" Not that I can see that happening. 



Supperfly

I have no idea why they are not on the streets. It wouldn't get them the money and it wouldn't help the situation though.


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## none (Jan 15, 2013)

In some ways this is pretty much what happened in the US with the banking crisis there - the money just wasn't funneled through taxes. This actually seems a bit more transparent.

Anyway, I think the voter alienation versus money derived from non-voters is pretty good.


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## andrewf (Mar 1, 2010)

Depositors were not taxed by the US. Not sure what you mean...


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## none (Jan 15, 2013)

andrewf said:


> Depositors were not taxed by the US. Not sure what you mean...


I more meant that depositors (and others) simply had the money added to their future tax bills. 

I wouldn't have such a huge problem with it all if:
1) There were actually some criminal prosecutions against those that caused it
2) The banks were broken up so that the banking/investment sides were separate so it couldn't happen again


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## m3s (Apr 3, 2010)

Haha people are calling it human rights abuse

Nobody complains when money is printed though :untroubled:


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## liquidfinance (Jan 28, 2011)

none said:


> I more meant that depositors (and others) simply had the money added to their future tax bills.
> 
> I wouldn't have such a huge problem with it all if:
> 1) There were actually some criminal prosecutions against those that caused it
> 2) The banks were broken up so that the banking/investment sides were separate so it couldn't happen again


No 2 is what the UK government is trying to achieve. This makes a lot of sense. The public must be protected form this. 

http://www.cnbc.com/id/100430610


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## rikk (May 28, 2012)

andrewf said:


> Canada can print its currency--there is no need to ever confiscate depositors holdings. They always have the option of doing it by stealth through inflation/the printing press. Cyprus has fewer options because it does not control its currency.
> 
> 
> So, respectfully, I disagree that Canada is at risk of the same thing happening here.


Well ... in order to "support the economy", interest rates are low ... so instead of the ~3.5 % I was getting on my savings account a few years ago, I now get ~1.35 % ... I'd say I'm out about 2% for about what ... the past 5 years (?) ... it's already happened.

Thought: And the low rate is there to encourage me to borrow, so say I am enticed by that low rate and borrow (when otherwise I wouldn't (have had to)) at say 3% (?) ... now I'm down 5% ... and over 5 years ... hmmm ... exceeds that 6.75% one time Cyprus cash grab I think.


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## avrex (Nov 14, 2010)

The USA (and Canada) will hit a 'tipping point' at some time this decade. We don't know when it will happen, but it will happen.

At that time, we'll see interest rates rise, inflation, maybe even hyper-inflation.
Any cash that you hold will be rapidly devalued. 

I'm not sure what investors can do to protect themselves.


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## liquidfinance (Jan 28, 2011)

Cypriot banks are now apparently closed until Thursday.


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## rikk (May 28, 2012)

avrex said:


> The USA (and Canada) will hit a 'tipping point' at some time this decade. We don't know when it will happen, but it will happen.
> 
> At that time, we'll see interest rates rise, inflation, maybe even hyper-inflation.
> Any cash that you hold will be rapidly devalued.
> ...


Well at least this time I'll be able to pick up some of those GICs at 18% (?), not like back in the 70s when I was taking on my first mortgage ... and the ex father in law was picking up said GICs. 
OT: About paying down that first house? Likely the ex will get it so take your time ...


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## Lephturn (Aug 31, 2009)

supperfly17 said:


> So why arent we seeing the citizens riot and rebel?


Because they were only going to take from those with over $ 100k in the bank - and that means they essentially take the money from the bank accounts of outsiders and the very wealthy. The vast majority of Cypriots would not be paying this fee so they are unlikely to riot.

Wouldn't the vast majority of the $ come from wealthy people outside of Cyprus who are sheltering money in Cypriot banks? Sounds like a pretty decent solution to me.


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## fatcat (Nov 11, 2009)

Lephturn said:


> Because they were only going to take from those with over $ 100k in the bank - and that means they essentially take the money from the bank accounts of outsiders and the very wealthy. The vast majority of Cypriots would not be paying this fee so they are unlikely to riot.
> 
> Wouldn't the vast majority of the $ come from wealthy people outside of Cyprus who are sheltering money in Cypriot banks? Sounds like a pretty decent solution to me.


what i read says that deposits under 100K are being "taxed" at 6.75% ... and yes, this is squarely aimed at wealthy russians who are stashing vast amounts of cash in cypriot banks (i wonder how many bank managers are going to be sleeping with the fish in then next year or two ?)

even if it is resolved by lowering or eliminating the tax on small depositors, it will have a ripple effect that will be felt all across europe and even north america (as this forum is demonstrating)

when _mr. wealthy banker_ just reaches into your account and takes some for himself, it is not easily forgotten


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## GoldStone (Mar 6, 2011)

mode3sour said:


> Haha people are calling it human rights abuse
> 
> Nobody complains when money is printed though :untroubled:


Exactly.

Domestic depositors in Iceland didn't lose anything in nominal terms after 2008 crisis. OTOH, Icelandic krona dropped from 80/euro to 180/euro. More than 50% loss of value.

Cyprus 6.75% "tax" pales in comparison.


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## emperor (Jul 24, 2011)

Another 10K put in silver and gold for me. I wish a good deal on land would come up. I have way too much cash, I need more assets.


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## lonewolf (Jun 12, 2012)

I never view money that is put in a bank is put there for safe keeping. I view any money that is deposited in a bank as money that is lent to a bank. If Iam going to lend money to anyone I wont lend it to them if I dont think I will get the money back with interest. Banks have to be viewed the same way.

I once asked @ a canadian bank who would get payed first the bond holders or the depositors & I could not get an answer.

My guess the voters could give the depositors the upper hand.


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## Miser (Apr 24, 2011)

PM's looking sweeter!


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## kcowan (Jul 1, 2010)

Anyone with $150K in a Cypriot bank was getting 10% PA on 5 years GICs. Why do you suppose they were getting such a great rate?

A 10% tax just removes the return for one year. And future GICs will probably offer higher rates. (And apparently tax free too.)

In some ways, this is a more honest approach than devaluing currencies through the printing presses.


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## Flock of Loons (Jan 3, 2013)

kcowan said:


> Anyone with $150K in a Cypriot bank was getting 10% PA on 5 years GICs. Why do you suppose they were getting such a great rate?
> 
> A 10% tax just removes the return for one year. And future GICs will probably offer higher rates. (And apparently tax free too.)
> 
> In some ways, this is a more honest approach than devaluing currencies through the printing presses.


And less costly, quicker, and better for the economy as a whole. Particularly as they are now looking to cancel the swap for small account holders.

Will hurt a few but, hey, it's gonna hurt one way or another. Less pain this way, though there will be losers.


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## andrewf (Mar 1, 2010)

I could see merit for deposits above $100k. These are not insured at all in Canada.


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## rikk (May 28, 2012)

emperor said:


> Another 10K put in silver and gold for me. I wish a good deal on land would come up. I have way too much cash, I need more assets.


OT: just quickly, perhaps there's a thread, if not maybe start one (?) on silver/gold speculation ... coins (e.g. silver maple leaf), bullion, certificates (and banks just not redeeming them but charging for storage), ... Questions ... emperor ... how do you invest in silver/gold? why is silver down at present ... link to info would be good, thanks. As mentioned, OT.


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## emperor (Jul 24, 2011)

I buy Perth or Candian Mint coins (Gold/Silver/Plat) I have a safety deposit box. 

Reason I buy is to protect myself. It helps protect vs inflation, fall of fiat or if the Canadian dollar drops. I had all my money in Canadian dollars sitting in the bank, I viewed this as a little risky.

As for making lots of money from gold and silver it's possible, it's also possible you could loose, I don't follow speculation. All I know is if gold and silver drop to nothing I have fiat currency and if fiat currency drops to nothing I have gold and silver.

What I really want to find is a cheap piece of land with oil or water revenue.


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## sags (May 15, 2010)

Cheap land with oil revenue...............try Saskatchewan farmland on kijijji, or the farm real estate websites that Google will bring up.

Saskatchewan farmland is very productive and cheap, compared to other places.

Ontario...............20,000 an acre.........Saskatchewan...............1500 an acre.


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## rikk (May 28, 2012)

emperor said:


> I buy Perth or Candian Mint coins (Gold/Silver/Plat) I have a safety deposit box.
> 
> Reason I buy is to protect myself. It helps protect vs inflation, fall of fiat or if the Canadian dollar drops. I had all my money in Canadian dollars sitting in the bank, I viewed this as a little risky.
> 
> ...


Thanks ... yours is I think a reasonable approach/philosophy ... I don't think there's money to be made (gold/silver) by me anyway, a simple investor/trader ... thanks again :encouragement:


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## gibor365 (Apr 1, 2011)

kcowan said:


> Anyone with $150K in a Cypriot bank was getting 10% PA on 5 years GICs. Why do you suppose they were getting such a great rate?
> 
> A 10% tax just removes the return for one year. And future GICs will probably offer higher rates. (And apparently tax free too.)
> 
> In some ways, this is a more honest approach than devaluing currencies through the printing presses.


In any case it's better than what happens in USSR in 1991-92 when government decided to change money from old rubl to new one. Evreyone who was keeping cash under the matress , lost huge $$$ and with cash there was limitation of how much every person can change....


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## SpIcEz (Jan 8, 2013)

gibor said:


> In any case it's better than what happens in USSR in 1991-92 when government decided to change money from old rubl to new one. Evreyone who was keeping cash under the matress , lost huge $$$ and with cash there was limitation of how much every person can change....


Wasnt the Russian government trying to stave off MASSIVE inflation in part due to ex-bloc countries issuing huge amounts of money in the form of credit? Its what led to the demise of the ruble zone. It still took till 1998 I think for the whole thing to come crashing down and requiring IMF bailouts.

(simplified I know... there was much more to it all)


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## thompsg4416 (Aug 18, 2010)

I'm surprised there hasn't been alot more talk of russians in this thread. As someone did say this haircut was aimed squarely at the Russians who up until now had quite good relations with Cyprus(I believe Cyprus was the 2nd biggest source of FDI in Russia). Even Medvedev and Putin have come out swinging at this one. 1/3 of all deposits in Cyprus banks are Russian. Apparently Russia was ready to issue a 2.5 billion dollar loan with generous terms but will likely rethink the terms. They may also rethink the terms of a previous 5billion dollar loan which Cyprus has asked to refinance. 

Lastly from a business point of view, this looks like a short term gain and a big long term loss for Cyprus. Sure they'll get their 10% cut off the top, but long term Russians will definitely be looking else where to stash their money.

Interesting to see how this one plays out over the next couple days.


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## lonewolf (Jun 12, 2012)

bitcoin has rallied strongly this month


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## gibor365 (Apr 1, 2011)

Cyprus was for many years financial heaven for Russian $$$, for long time it was the only western country where Russians didn't need visa to travel. I visited Cyprus in 1995 (actually got married there ), and remember seeing on every corner advertisments in Russian language about "land for sale".... Families of many very rich Russians (usually who was dealing with not so legal business ) lived in Cyprus in huge villages.
Not only Russian....when I lived in Israel 1990-99, I ream several articles that Israeli companies were opening hi-tech branches in Cyprus , bringing Indian programmers who was working for very low wages (it was very difficult to bring such guys into Israel)....
Now, Cyprus paying for his very "flexible" rules...


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## gibor365 (Apr 1, 2011)

SpIcEz said:


> Wasnt the Russian government trying to stave off MASSIVE inflation in part due to ex-bloc countries issuing huge amounts of money in the form of credit? Its what led to the demise of the ruble zone. It still took till 1998 I think for the whole thing to come crashing down and requiring IMF bailouts.
> 
> (simplified I know... there was much more to it all)


Actually than was not Russian, but USSR goverment.
I couldn't find article about it in English, so translated part of it with google translator. I believe this was one of most ridiculous money reform. I immigrated from USSR in 1990, but my father in law lost 30,000 rubl on this reform (average salary then was abot 180 rubl/month).
_The reform was designed to get rid of excess money that was in the cash circulation, and at least partially solve the problem of shortage of the commodity market of the USSR. [1] The formal reason for the reform was declared the fight against counterfeit rubles allegedly imported into the USSR from abroad. [2]
[Edit] Terms of reform

January 22, 1991 Soviet President Mikhail Gorbachev signed a decree on retirement and sharing the 50 - and 100-ruble notes sample, 1961. [3] The signing of the Decree, it was reported on television in 21 hours Moscow time on the same day, with virtually all financial institutions and shops were closed. The most resourceful people in the next few hours after that were able to exchange had their 50 - and 100-ruble banknotes in vaults underground, railway stations and taxi drivers (many cashiers and taxi drivers, busy, did not know about the announcement of the Decree). Some were able to send large remittances to the post office at stations, working up to 24 hours. Very quirky bought for 50 - and 100-ruble banknotes in vaults railway stations and airports tickets for long distances for several days, and then after the exchange of donated these tickets and get the money. The reform envisages that the 50 - and 100-ruble banknotes sample 1961 are redeemable at a small sample of the same bill in 1961, and notes 50 and 100 rubles of 1991.
Followed by an exchange of notes seized significant limitations:
*Deadlines exchange - three days from 23 to 25 January (Wednesday to Friday).
No more than 1,000 rubles per person - the ability to exchange other bills considered in the special commissions to the end of March 1991.*
At the same time was limited to the amount of cash available for withdrawal at the Savings Bank of the USSR - no more than 500 rubles a month per depositor. Because people could deposits in several savings banks, including those in different cities, in the last pages of the passport savings bank employees made note of withdrawal from the deposit amounts._
http://ru.wikipedia.org/wiki/Денежная_реформа_в_СССР_(1991)

P.S. USSR had another "dirty" law that I think was taken as an example from Nazi Germany. Everyone who immigrated with Israeli visa should've return Soviet citizenship and pay to government 600 rubl (more than 3 monthly salaries) , considering that from 1990 to 93 immigrated about 750,000 people it's coming to 450000000 rubl!
btw, those times official exchange rate was 1 US $ = 0.6 rubl and unofficial (black market) 1 US$ = 3-6 rubl (depends on year/month, city etc).
Also, every person was allowed to take out of USSR maximum $160 US and this was all my household asset


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## gibor365 (Apr 1, 2011)

When we're reading about what happens in Cyprus , we're looking at it from , lets say, our Canadian perspective.... but we don't know how their financial/tax system is working...
As an example I can tell that in Israel until late 90s there weren't any tax on income (doesn't matter non-registered account or not) and on profits from stock market... and when government introduced it , many were yelling that goverment is robbing people


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## SpIcEz (Jan 8, 2013)

@gibor

Interesting information, that I didint have. However I think we are talking about different events, though very close to each other.

If your talking about the USSR bank to Russian bank notes exchange in 1991, that was the Russian government after the fall, however it probably was still in transition... you probably have a different take on as you where there.

I was talking about the events in 1993. And I did a little digging and possibly there was no exchange of notes for the events I mentioned (my mistake), its when Russia decided the Russian ruble was only good for Russia and not the other Ruble zone countries, in effect dissolving the Ruble zone. They realized that without strong economic incentives and political relations and will, there was no way to maintain a central monetary system as the other countries where just issuing huge amounts of credit to have more money, in effect creating massive inflation.


About your other post (income tax in Israel), I agree, its all a mater of perception. 

Some people in the world (who might not pay attention to what goes on across the pond) would literary fall off their chairs if the found out how much taxes are paid in Canada (especially where I am in Montreal) Income taxes, Sales, Municipal, school, tax because I own a car on the island of Montreal (50$) etc.. etc.. At the end of the day we do have services, I wish they better managed our money and that there where no corruption, but that's another story. 
However just on the face of it, more than 50% of our income disappears (standard middle class) I think some citizens of some other countries just cant fathom that.

Of course, we aren't alone... Scandinavian countries, France, and all the other European countries with strong social programs are in the same boat.


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## lonewolf (Jun 12, 2012)

Gibor or anyone

What are you thoughts on jubelee bonds from israel ? Was thinking of buying


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## gibor365 (Apr 1, 2011)

SpIcEz said:


> @gibor
> 
> Of course, we aren't alone... Scandinavian countries, France, and all the other European countries with strong social programs are in the same boat.


Again, this is when you look on one side of the coin, but on other side, they have such huge social benefits.... my brother lived many years in Finland and when he told me what benefits they have, I almost fell from the chair 

Another example about tax filing... no one in Europe or israel filing taxes (if they don't own business), no need, as every Revenue Agency in the world knows exactly how many kids you have, what your contributions in registered account, what your interest and so on... The question is why we need to pay from our taxes to CRA army who has excellent wages and government benefits?!


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## gibor365 (Apr 1, 2011)

lonewolf said:


> Gibor or anyone
> 
> What are you thoughts on jubelee bonds from israel ? Was thinking of buying


I've heard this advert. a lot on radio....was planning to research, but never did it.... Give some info (or better open new thread) you gathered....


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## Spudd (Oct 11, 2011)

Gibor, that's not true for all of Europe. My husband is Swedish and I know they definitely need to file their tax returns there.


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## Toronto.gal (Jan 8, 2010)

thompsg4416 said:


> long term Russians will definitely be looking else where to stash their money.


It won't be so easy, especially for those looking for not just political stability, but also discretion. According to Transparency International, in the 2012's Corruptions Perception Index, Russia ranked 133rd [151st in 2008/out of 176]; same ranking given to their close friend Iran, LOL (Canada sits at #9].

*"There were many Russians in Cyprus because they weren't asked many questions about the origins of the money.
"Other countries are more careful..".*

http://www.bbc.co.uk/news/business-21831943

Seems that Mr. Putin has also forgotten the 1998 'Ruble Crisis'. 'Putin said such a decision by Cyprus, if taken, would be unjust, unprofessional and dangerous'. Hypocrisy indeed.

*'A 10 percent haircut would be mild compared with the 51 percent Russia took from investors after it defaulted on its domestic bonds back in 1998 and the even larger losses suffered by depositors in some Russian banks.'*

What is certain, is that Russia, with all their money, will exploit the current chaos in Cyprus to their advantage!

*Gibor:* where did you get married, in "Limassolgrad"?


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## Ethan (Aug 8, 2010)

I don't understand how Cyprus is broke in the first place. The country is surrounded by untapped natural gas resources. Instead of begging for bailout packages and contemplating stealing deposits from their banks, why aren't they looking to actually do something productive, like drill for natural gas, to pay their bills? Sell drilling permits to the Russians, and charge them royalties on the gas they extract. Seems like a simple method for generating significant government revenues.


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## gibor365 (Apr 1, 2011)

Spudd said:


> Gibor, that's not true for all of Europe. My husband is Swedish and I know they definitely need to file their tax returns there.


Maybe in some countries you need, I lived 10 years in Israel, no one I know weren't filing taxes, same in Finland and some other countries.


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## gibor365 (Apr 1, 2011)

Toronto.gal said:


> *Gibor:* where did you get married, in "Limassolgrad"?


No, in Larnaka_burg_ 

btw, don't know now, but back in 90s Cyprus got a lot of money fron Israelis who didn't want (or couldn't) get married in Israel. There is only religious marrige in Israel with many restrictions. And for ling time Cyprus was the only country where you can get married and it was recognized by Israeli officials


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## liquidfinance (Jan 28, 2011)

Just been reading this. 

http://www.reuters.com/article/2013/03/21/us-cyprus-parliament-idUSBRE92G03I20130321

If they get kicked out of Euro and have there only currency surely the subsequent devaluation will cause a lot more damage for savers than the 10% tax.


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## Toronto.gal (Jan 8, 2010)

gibor said:


> There is only religious marriage in Israel.


I understood why you married in Cyprus.


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## fatcat (Nov 11, 2009)

> The Parliament put off until later this weekend a vote on a crucial new proposal that would confiscate 22 to 25 percent of uninsured deposits above 100,000 euros through a new tax on account holders in one of the nation’s most troubled banks.


we'll see if this passes but i think they (the legislators) should be required to publicly display every penny they have in cypriot banks as well as account for any withdrawals over the last 6 months


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## SpIcEz (Jan 8, 2013)

How is the country functioning in the meantime, when all accounts are frozen??


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## liquidfinance (Jan 28, 2011)

SpIcEz said:


> How is the country functioning in the meantime, when all accounts are frozen??


It doesn't sound like it is functioning.

http://www.telegraph.co.uk/news/wor...streets-of-a-country-closed-for-business.html


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## OhGreatGuru (May 24, 2009)

According to reports, until recently the 2 Cypriot banks were paying 5-6% on term deposits - more than you get in Canada for a long time.
Cyprus Bank web site still advertises 3.25-3.5% on "savings accounts" for any funds held in an account for a year. They really treat savings deposits as 12-mo. term deposits. If you withdraw early you only get about 0.75% on the part you withdraw. But anyway 3.25-3.5% is more than any of our high interest savings accounts or 1-yr term deposits have been paying for a while.

Reading between the lines of the President's statement, it appears the banks were able to pay these interest rates by investing heavily in the bonds of governments with bad credit ratings, like Greece. (Either that, or they were running a ponzi scheme.) And that they were certainly over concentrated in Greek bonds. This is not the action of a "prudent investor." 

The Cyprus government allowed them to do it, in spite of the risk to government finances due to the deposit insurance, which the government now finds it cannot cover. 

It will be hard on the citizens in the short term, but one can understand why the Germans are tired of picking up the bills.


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## sags (May 15, 2010)

The last I head on BBC news, was that they were going to vote on a 20% " one time tax" on everything over 100,000 Euros.

They will also introduce capital withdrawal rules in an attempt to curb mass withdraws from the remaining banks.

They have to open the banks soon...........as businesses are only accepting cash and it is in short supply.


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## liquidfinance (Jan 28, 2011)

OUCH!

40% of deposits over €100,000 to be seized.

http://www.bloomberg.com/news/2013-...entative-deal-to-avert-default-euro-exit.html


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## none (Jan 15, 2013)

liquidfinance said:


> OUCH!
> 
> 40% of deposits over €100,000 to be seized.
> 
> http://www.bloomberg.com/news/2013-...entative-deal-to-avert-default-euro-exit.html


as crappy as this is it makes a lot more sense than what they proposed previously. These accounts are likely the ones that benefited from the outrageously high (in comparison) interest rates prior to the collapse. At least this will leave the less well to do alone and they can at least still buy food and pay their rent.


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## sags (May 15, 2010)

Money stuffed in offshore accounts to avoid taxes in their own country, while squeezing out higher than normal interest rates...........it is hard to feel sorry for the greedy.

Maybe portends of the future?


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## sags (May 15, 2010)

"Deposits below the EU deposit-guarantee ceiling of 100,000 euros will be protected, and a loss of no more than 40 percent will be imposed on uninsured depositors at the Bank of Cyprus, two EU officials said. *Uninsured depositors at Cyprus Popular would largely be wiped out, two other officials said*."


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## gibor365 (Apr 1, 2011)

The funny point  Was watching today news on 1sr Russian (official) channel. They said that the only reason of Cyprus story is to damage Russia as a lot of Russian government $$ in Cyprus's banks... also they comapared thi step with Nazi Germany law that non-German cannot have bank accounts in Germany....


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## Toronto.gal (Jan 8, 2010)

gibor said:


> 1. They said that the only reason of Cyprus story is to *damage Russia.*.....
> 2. also they compared this step with *Nazi Germany law* that non-German cannot have bank accounts in Germany....


*1.* Their constant paranoia is nothing new; it's the Russian way to forever [often falsely] accuse others of meddling in Russia's politics. Following Putin's last election for example, he said in his presidential speech, that 'Russia had overcome unidentified enemies aiming to destroy Russia's statehood and usurp power'. He had, in fact, been accusing the US [specifically Hillary Clinton] of having coordinated the election protests there, via some 'signals'. :rolleyes2:

When it comes to just about any foreign policy, especially those that don't benefit Russia in some way, they are the first to use 'The Principle of Non-Interference' as an excuse to do nothing and/or support evil. When it comes to criticizing others, and often in undiplomatic ways, Russia is the first in line to offer criticism and little else.

Do you remember the spiteful law Putin approved back in Dec.2012, that of banning Americans from adopting Russian children? It was because of Obama's 'Magnitsky Act', which has a Cyprus connection.

*"Magnitsky Act" — an act that proposed severe restrictions on Russian national suspected of involvement in the tax corruption case and others involved in human rights abuses — the Russian government swiftly retaliated with a law banning the adoption of Russian orphans by US families'*

http://www.businessinsider.com/russia-cyprus-and-sergei-magnitsky-2013-3

Morally & politically, they often fail to see themselves in the mirror.

*2.* Did he forget about Stalin's laws? Or how about Ivan the Terrible? :rolleyes2:


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## kcowan (Jul 1, 2010)

This should serve as a wake-up call for investors looking for high rates. Beware putting large amounts in an offshore bank. Stay within guaranteed deposit limits.


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## gibor365 (Apr 1, 2011)

> *2.* Did he forget about Stalin's laws? Or how about Ivan the Terrible? :rolleyes2:


T.gal, you are going too far  just recall money reforms in 90's (I mentioned about it in this thread).

To tell you the truth, even though I have 70+ channels on Russian streming TV , I never watch their news (mostly watch movies and sport), but when by chance I turned it on yesterday, it reminded me TV propaganda of USSR; it was SO anti-German, anti-US, anti-IMF and so on. The only good comments were toward China and ... Syria.


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## Toronto.gal (Jan 8, 2010)

gibor said:


> The only good comments *were* toward China and ... Syria.


Were?! How about in 2013? You can add Iran/N. Korea, and given you're CMF's Russian [born] expert, I'll let you complete the list of their best friends & *enemies*, too, if you like. 

And you say I'm going too far....pfffffffffffftttttttttttttttt. :rolleyes2:


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## gibor365 (Apr 1, 2011)

Toronto.gal said:


> And you say I'm going too far....pfffffffffffftttttttttttttttt. :rolleyes2:


I meant that there are enough much later examples of "fabulous" Soviet/Russian politics


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## Toronto.gal (Jan 8, 2010)

Indeed!

The fabulously calm & peaceful [перестройка] perestroika. :biggrin:


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