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Alan, I always enjoy reading you, and whilst I dont always agree with you, you do at least illuminate your words with great analogy, I wonder though why having pointed out that rich guys will be hit in the latest Cypriot bailout, you have failed to notice the length of time its taking the Cypriots to implement legislation to prevent electronic transfers.
Now I could be a cynic.
But, two weeks ago I remember 4 things, 1) The Cypriot finance minister was in Russia, 2) this week Putin and his PM aren't upset any more, 3) Some of the Cypriot money was said to be Putins 4) the Cypriot president was tipping his cronies to get money out..and will possibly face investigation.
And of course the Cypriots dont know yet how much to clip the rich boys.....would you say that some Russian money is getting out and what's left might not cover the $7b required...I couldn't say that of course, but well maybe you could think about it and let us know thru insights extraordinaire.

Words are cheap..."whatever it takes" ...was a pledge....that seemed to keep the punters happy...but "whatever it takes" might end up being more than this lot can deliver.

Lets face the facts, the standard of living that many Europeans were enjoying were simply government benefits or salary from borrowed money. As a result, their standard of living will fall, no matter how they spin it, one way or another, that is the outcome. Harden up Europe!

Most of the big accounts got their money out of Cyprus while the EU fiddled, via branches in other locations. Only the locals and businesses are left to wear the meltdown. The Bank Board at the Bank of Cyprus is bailing out rather than wear the government backlash that the IMF and ECB will try to impose.

So the ECB plan is shown out for what it is, complete incompetence. Their best is clearly not good enough. Should the board of the ECB be replaced?

Cypriot banks should have been allowed to go under. They were not solvent. They are still not solvent. If they get the 10 billion euro bailout it will not make them solvent. 30B has already left. Its not coming back. The ECB have destroyed Cyprus's chance of an orderly recovery with their own currency. Now it must be disorderly.

Geoff..its Easter, or maybe you haven't got it yet, this weekend is a long weekend..banks are closed..for Easter holidays....the Cypriot banks will open and close on Thursday and not re open till the following week,,,,a strong possibility exists that Cyprus will pull the plug this weekend Greece will not be able to show the Troika that they have complied and may well go in sympathy with Cyprus...GET CASHED UP TODAY, BEFORE 2 PM.

Our banks are ready Tony. They have been busy reducing staff and cashing up.

Well said Alan,
“It brings home the obvious fact that if a country with too much debt simply tightens its belt, the loss of income means that the budget doesn’t actually improve very much and the citizens quickly get sick of it. ‘Austerity fatigue’ is now spreading through southern Europe, including France.”

That the sort of thing everyone in the street had guessed but not politicians, specially France with the left starting to govern by increasing taxes in a country where companies had already very high charges then discovering that these are now closing down faster and there is more unemployment!
The IMF warned against increasing taxes at any time, and tightening the belt too much too quickly all the time and I still remember your article with the quote from St Augustine give me chastity..., yes but just not yet.

The conclusion is right and confirm the dilema “There are only two possible futures for Europe: eurozone breakup, so devaluations can take place, or full fiscal and banking union....”

Chancellor Schmidt, president Giscard d'Estaing, premier Raymond Barre and probably Mario Monti, centre right politicians and all economists were going to implement the Ecu a saving device for Europe that would not have extinguished currencies and would have started by fiscal progress, but voters preferred heroes telling lies and they all became casualties, with the Ecu replaced by the Euro and implemented by the socialist left, we know the rest.

Well, you know what the Dutch say, Alan? "How fast can a windmill turn?".

In banking parlance, that would be, "How fast can a roulette wheel spin?".

Germany and the Netherlands have told, the Cypriot banks, no more money laundering! So, how can I show this to be correct? The depositors, that were hit were mostly Russian (and the Russians know that the state can steal from them at any time).

The rich Cypriots would not have had money, in Cypriot banks. The business people would not have had, 100,000 euros in the bank, if they did, then they don't know business.

So, why punish the banks? liquidity! The EU bosses are saying if you bring Russian crime into European banks then we are going to hammer you, besides that we have Swiss banks.

If you want to know what is going to happen in Cyprus, Alan, then just think of what will happen to Tasmania, if the libs. win.

Some comparing figures, the Cyprus economy is small, a bit like Tasmania, this is the situation in term of debt in the OECD as I collected figures a couple of years ago.

Country 2010/11___Germany___Italy___France____UK_____USA___Australia___Japan

Rev to Govt Debt___53.85%__39.51%__70.45%__73.17%__14.62%_134.62%*___13.30%
_______________________________________including States around 110%
Revenue to Debt___19.15%_20.60%__19.20%____8.81%___7.41%__24.48%*___11.25%
Nb of Years to refund debt 5 _____5______5_______11______14________4________9

At 33% of GDP(**)_15.05%__14.74%__10.89%___7.48%__16.88%__28.81%__12.48%
______________________7 ______7 ______9_______13______6_______3________8
65 plus to Working Age
in 2015_____________20.9%_21.90%__19.10%___17.90%__14.30%__16.40%__26.30%

** The level of taxation varies greatly between these countries in some it hovered around 40% for France Germany Italy other such as USA are closer to 15% the above lines assumed they are all at 33%
* Australian figures at mid 2011 prior to the june $192b govt borrowings do not include
States debt and liabilities but do not include either States Revenue and can be a bit misleading.

The current Australian debt including States debt is around 0.45t to 0.50t may be 0,55t
as I speak or above 80% of Commonwealth +States Revenue but under 90%,
when it gets close to 100% is when rating agencies will start to look at the ratings,
the States debt started to climb during and after P Costello, the Commonwealth
debt accumulated during the recent labor yearswhile the States one increased too.
The debt of the States is close to 100% or just under in most large States some have
already been downgraded.
Unlike downunder the US Fed is not liable for the US States Debt.

Source ABS OECD IMF 2010-11 there are two observations from the lines above, the debt is far more private and banks are the problem more than governments, the second is that most countries above have been downgraded, but then has Colin Barnett pointed out recently, “many of us go to holidays with a five years mortgage without worries”....as long as you have a job.

According to an article from the assistant treasuere "The Government is reducing debt: Bradbury" 30 minutes ago the current commonwealth debt is below 0.2t adding the States debt to it will probably make the total States + Commonwealth debt closer to 0.4t 0.45t of the first assumption, see Mon, 2013-03-25 22:45, in Toying with the limits of Europe's trust Jessica Irvine25 Mar, 8:16 AM.

Hope people keeps in mind the clever manipulation started during Peter Costello years with the GST and starving the States with strings attached, the buck has passed to the States don't be naive, the Commonwealt IS LIABLE for the States debt in our constitution it is just part of the overall game of revolving chairs and smoke and mirrors.

Tony, Orthodox Easter doesn't occur until May this year and Cyprus is mostly Greek Orthodox so banks won't close for Catholic Easter.

What will stop the average Cypriot from taking their cash out of the banks as they will wonder whether the next stage will be to "tax" their deposits - particularly if the Russians have already done the Russian retreat - that is take their money and "Pissanovski"

To understand this problem, it is good to read the book called, Escape from Russia by Is'ee Nickinoff.

Australian banks will offer refugee status for all sovereign currencies.

I wonder where the statements from Gillard and Abbott are categorically ruling out expropriation of deposits ever - and re-confirming the $250,000 deposit guarantee?

Just asking

David.

manager Stephen Leeb said: "Cyprus is truly a disaster for the West. It basically says to every citizen of the West, if your country runs into trouble the governments can come along and just take your money.What worries me is if you have an individual who is retired with let’s say 300,000 or 400,000 euros in the bank, and they suddenly find they have had some of their money or a great deal of their money stolen by governments. Let’s say they are not retired and just run a small business and need to make a payroll. What happens in that situation?
The funds are frozen and then part of it is stolen. This is outrageous
People think this can’t happen here in the United States, well, I beg to differ. What would happen if we all woke up tomorrow morning and some disaster has happened and the Suadi oil fields were out of commission? What’s to say that the US government and the Federal Reserve can’t do the same thing that the ECB, EU, and the IMF just did to Cyprus? They could end up freezing and seizing our deposits
What if instead of JP Morgan making a $6 billion bad derivative bet, they make $600 billion in bad derivative bets? Has anybody asked that question? All of the sudden there would be no JP Morgan. Again, what’s to say that they won’t steal our money here in the United States?"

He added: "This latest series of events in Cyprus just shows how desperate Western central planners have become. They are not letting the markets trade freely because they would reveal the horror of what has just taken place. But gold will have its day and so will silver. Just make sure you have physical gold and silver and not paper."

Check Bloomberg. "Cyprus capital control could last years" !!!!!
Yes they control foreigners money if money not out yet. But, and that's huge but, they can not push foreigners any more to bring money in !!!!! We can cross out Cyprus from economical map !!!!!
WHO IS NEXT ?! Will rich ppl foolishly keep their money in europian banks ?

So what's the big deal about "full fiscal and banking union, with the taxpayers of Germany, the Netherlands, Finland and Belgium on the hook for the rest"? In every other country taxpayers are on the hook for whatever disaster politicians manage to get us into next, so why should the 'other' Europe be any different? And don't give the old 'bankers' got into this mess; please: bad regulation and incompetent governance did, which is squarely in the hands of the, mostly idiots we elect to govern us.