“So you trusted a small tax haven island with your money. The plan failed. Your next step: trusting even smaller tax haven island with your money. Pure logic.”
Yeah...funny thing is blaming the EU. The banks were lending out the money on what turned out to be bad assets, not sure there's any cure for that where deposits don't get wrecked.
Iceland before, Cyprus now, not sure what they think will happen to Carribean banks in the long run. Bitcoin might be an ok solution for people who don't care about earning interest, but if you still want the interest you have to deal with a lending institution.
Not only because the interest rates they offer for savings and checking accounts no where near is able to keep up with real inflation (which means you lose money by saving, from the get-go), but they charge as many service fees as they feel they can get away with.
even funnier thing is thinking that these haircuts are gonna do much…
the template according to troika is to do more of the same :D
granted the only future i see in bitcoins is in actual business transactions and not earnings interests,which with typical fiat are subject to the whims of ZIRP and central m̶a̶n̶i̶p̶u̶l̶a̶t̶i̶o̶n̶ planning :D (which [number of business transactions with bitcoins for goods or services] has gone up these couple of years if you look beyond the hype)
and the fact that it would be pretty hard for .gov reallocate funds in a .dat :P
You would lend out your bitcoins at interest, just like you do with any other currency. Unless you want to be a direct lender, you'd still use a bank.
Maybe the EU's policies led to the propagation of all the bad assets, but Cypriot banks were offering a higher interest to attract deposits. You can't get that higher interest without investing in somewhat riskier assets. Even assuming the EU policy is terrible (I am no expert on the EU and want no part of that argument, btw), the problem with the Cyprus banks was poor controls and risk management, which was by design to attract deposits.
Pretty simple, unless you had a very good reason (tax avoidance, money laundering, interest rate), parking money in the Cyprus banking system was a very bad idea. So either the person with 700k was avoiding taxes, laundering money, enjoying a higher than normal interest rate, or being foolish with their money. I have no idea which it was, but if I personally had to oversee such a sum, I wouldn't be parking it in such a risky place.
Lending is one thing, storing your wealth in a currency under ZIRP is another. I'm lucky that I at least get dividends on my savings being with a local credit union.
And only half of their banking system consisted of foreign deposits (not to mention most of those deposits were able to leave the country via loopholes). Where does that leave the individuals and small business native to cyprus? Is it such a horrid idea of storing your money in your own country?
And since the ECB is calling cyprus the template, where does this leave the next country that needs to be bailed out (which will happen again[1 bailout in 2010,1 bailout in 2011, 2 bailouts in 2012, 1 so far in 2013; this is starting to look like Fibonacci's work :P]) will banking in portugal, italy, ireland, greece, and spain be a very bad idea for people who live there, or are they all banking in their home country for tax avoidance,money laundering and for ZIRP to negative interest rates on their savings?
If you ever read The Wealth of Nations, it has a long history of the value of silver(commonly used for money at the time), and the effect new mines had on the value (overnight 1/3 value loss not unheard of). There is essentially nothing in the world guaranteed to hold or increase in value that we use or have ever used as money.
If you are lucky enough to have money over the limit, at least in the US, you can open accounts at different banks to try and have more insurance. For the native Cypriot running a legit business, yes, it's unfortunate, but that's what has led to a central banking system. If you look back a hundred years, bank runs were much more common, but people still had to use banks.
I don't offer financial advice, but it certainly would seem that maintaining bank accounts above the insured limit in any of the countries you listed is very high risk at the moment.
>I don't offer financial advice, but it certainly would seem that maintaining bank accounts above the insured limit in any of the countries you listed is very high risk at the moment.
I'd agree, but i'd like to add that one would have to be fooling themselves if this high risk is anything but contained to the PIIGS or the EU.
I guess in any case, having any bank account over "insurance" limits in any country isn't sound (as we've seen that even those limits can be changed [usually changed or able to be removed at any time like what the FDIC announced in December]). But then again, people don't usually act in a logical manner (which I guess in a weird sense they shouldn't since any currency is ultimately built upon trust or belief which is not directly connected to logic).
I guess it's just better to stick to the basics (food,water,shelter) and let the bankers worry about when their fellow citizens or russian oligarchs will come for their heads which according to history, eventually happens :P
Some big banks in the US seem immune at the moment, but the recent revelations about Chase losing billions while trying not to reveal it to regulators is just par for the course.
I personally trust the US government to back my small deposits far more than any bank. It's not because the US government is so good, it's because the banks are so bad.
To me, it appears that without IMF prodding and EU intervention, Cypress would eventually have had a banking collapse that would have wiped out 100% of all depositors. The general operation of banks when losing money seems to increase leverage to try and make up for the losses, instead of acknowledging losses.
There hasn't been a lot of evidence for the idea that having no fiscal policy is better than having a bad or moderate one.
Finance can deal with inflation and deflation. Economies can't usually deal well with either, but deflation seems to be worse, and constant value is impossible and probably not better than inflation.
People are more than their bank statements. They breath their money through their life style and even survival. That is why money shouldn't stay still.
The OP seems to imply later in the thread that the company is based in Cyprus:
"I've already sold a part of my bitcoins to cover emergency needs. But I don't plan to recover my business in Cyprus. Instead, I'm moving to another country outside EU."
In several comments he talks about Russians being victimized. He also states he'll be moving his company to a small Caribbean country, while he describes it as a “European medium size IT business”. So his company may be registered in Cyprus (and in the future, somewhere in the Caribbean), it's likely that that's not where the activity happens. (How large do you think the market for IT services is on Cyprus or on Caribbean islands? And if you had a medium size IT business, would you suddenly move all your employees to the other side of the globe, where you have no clients?)
So you seem to imply that all companies which are based on Silicon Valley have their clients in Valley?? Their are IT companies based in Cyprus which have clients all over Europe, and also Globally.
Many companies in Silicon Valley are registered in Delaware or Nevada, but its offices and employees are somewhere near San Jose. I'm implying this medium sized IT company is registered in Cyprus, but it has its offices or employees elsewhere. How else can OP speak so casually about moving his company to the other side of the globe?
No, He might not be Cypriot but he has his company based in Cyprus, that is why he is saying he will have to let go all his Cypriot employees..
When all your assets are taken away you don't have a choice but to run from that place and start somewhere else in hope it won't happen again. Like him many people have lost trust on EURO ZONE, and many businesses are trying to move out of the Euro Zone.
“So you trusted a small tax haven island with your money. The plan failed. Your next step: trusting even smaller tax haven island with your money. Pure logic.”