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  1. #1
    Sovereign Oppressor Member TIE Fighter Shooter Champion, Turkey Shoot Champion, Juggler Champion Kralizec's Avatar
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    Default Re: The continuing battle against the inevitable Euro area default

    About the Cyprus situation...

    I can see why people say it's an unwise decision; setting a precedent that frightens deposit holders in other financially troubled countries and all that. But unfair? Without this deal the people who had deposits at Cypriot banks could very well have lost the bulk of their money. Even people with less than 100.000 E's would not be safe - look at Iceland; the only reason people got back any money at all was because the Icelandic government nationalised the parts which held accounts from natives and because the British and Dutch governments helped out their own citizens and were never compensated.

    In the deal that was voted down the other day, most deposit holders would pay about 6% of their assets - which is pretty close to the interest rate that these banks pay for one single year. Am I supposed to feel sorry for these people, who've parked tens or hundreds of thousands of euro's in a place that yields extremely high returns, which would never be offered by a sustainable bank which operates responsibly, and are asked for a contribution equal to one single year of interest for bailing out their sorry asses?

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    BrownWings: AirViceMarshall Senior Member Furunculus's Avatar
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    Default Re: The continuing battle against the inevitable Euro area default

    I have no problem with the concept of risk in a fractional reserve banking system, but it is risky to do so when the decisions are considered to have no legitimacy, because they are perceived to have been imposed by an 'outside' power.

    Are you my family?
    Furunculus Maneuver: Adopt a highly logical position on a controversial subject where you cannot disagree with the merits of the proposal, only disagree with an opinion based on fundamental values. - Beskar

  3. #3
    Sovereign Oppressor Member TIE Fighter Shooter Champion, Turkey Shoot Champion, Juggler Champion Kralizec's Avatar
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    Default Re: The continuing battle against the inevitable Euro area default

    I found out the other day that I have some Scottish ancestry. Then again, they're not your family either, are they?

    If the Cypriots think they're being screwed over by other European countries, they need to realise:
    1) at some point the assets of Cypriot banks equaled 7 times the size of their own GDP. The financial and economic policies of their government may not be the fault of the average Cypriot bloke, but it sure as hell isn't the fault of the Finnish, Dutch or French taxpayer
    2) if they weren't an Eurozone member, their government would probably have devalued its currency by now, which would have been far worse then a single, one-off 6% tax on their deposits.

    But regardless I'm sure that whatever I say, some people (not you) will find always find way to argue that Cyprus' woes are not in any way the responsibility of the country in question but rather an expression of German racism.
    Last edited by Kralizec; 03-26-2013 at 00:13.

  4. #4
    BrownWings: AirViceMarshall Senior Member Furunculus's Avatar
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    Default Re: The continuing battle against the inevitable Euro area default

    Quote Originally Posted by Kralizec View Post
    I found out the other day that I have some Scottish ancestry. Then again, they're not your family either, are they?

    But regardless I'm sure that whatever I say, some people (not you) will find always find way to argue that Cyprus' woes are not in any way the responsibility of the country in question but rather an expression of German racism.
    quite the opposite, i would be naturally inclined to sympathise with the german position, for why should they assume an unlimited liability for people with whom they do not consider to be their family, i.e. a shared social and cultural history from which springs a sufficiently harmonious set of aspirations and values that you can both assent to a shared destiny................. but,

    it isn't that simple, because germany is a democracy and they chose to enter a monetary union and assuming just such a liability is implicit, it is called ever closer union for a reason. they made their bed and they must lie in it.

    i say this as someone with enormous empathy for their predicament, and no little understanding for the weight of history that stands behind their decision to abandon the beloved deutchmark, but they are adults of legally sound mind and must therefore take responsibility for their actions.

    Germany should leave unless it can accommodate itself to transferring up to 5% of GDP (Edward Chancellor says 3.6%), to its poorer 'family' year-on-year, in perpetuity.

    Federal US taxation is ~25% of GDP and the variation in spending levels between rich and poor states is ~5% of GDP, so a variation of roughly 20% of federal spending.

    How big a budget would the EU need to be able to slosh around 5% of combined GDP into the poor regions (bearing in mind the current budget is only 1% (and heavily constrained by CAP payments)?

    The other point is that americans accept this, they are all american, whereas we are rapidly finding out just how german the germans are, and finnish the finns are, when it comes to firehosing cash at nations they consider to be essentially delinquent!
    In the UK this 'sloshing' occurs in the form of:

    national pay-bargaining which benefits poorer regions (teachers, nurses, etc)
    national social benefits more generous than poorer regions could afford alone (eg.housing benefit in glasgow)
    targeted regional development grants/discounts to encourage business growth (objective 1 EU/WEFO funds)
    additional infrastructure spending to support the local economy (the mainland-skye bridge)
    operating national services hubs from depressed regions to boost wages (DVLA in swansea, etc)

    Unless Germany recognises the 'familial' relationship, and the obligation that goes along with that, then it needs to leave for the good of its neighbours.
    Last edited by Furunculus; 03-26-2013 at 01:03.
    Furunculus Maneuver: Adopt a highly logical position on a controversial subject where you cannot disagree with the merits of the proposal, only disagree with an opinion based on fundamental values. - Beskar

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