Comment by OGinparadise | Hacker News Reader

Comment by OGinparadise | Hacker News Reader

(c) The banks are almost 100% deposit funded (something that regulators across the world have been encouraging because deposits tend to be sticky if you take care of them).

Uh... if you pay 1% or less a year in interest as they in USA. Many Cyprus banks were paying north of 5% a year so they'd have to make maybe 7%-10% a year to break even after expenses and taxes.

8. You never, ever, ever, hit insured depositors.

Great point, expect that no one is touching them. Deposits over EUR 100K are being hit /frozen, those up to EUR 100K are not touched, which just happened to be the insured amount. The banks could have bought private insurance and threatened to take down the next AIG with them (Now that's leverage), but they apparently didn't.

The real fault lies with the banks and Cyprus gov (or the people, indirectly). They could have cracked down on these shady deals and limited the bank's exposures to Greek debt. They didn't and Germans /N Europeans don't want to ask their taxpayers to bail another country. Someone has to pay, it clearly can't be the taxpayers given the ratio to GDP so it's the depositors and bank owners. To summarize:

There is no money.

No one wants to give them more money.

Banks are broke and as usual you can lose all the money that is not insured. It says so, or it should say so on the tiny print.

You are forgetting where and why the financial crisis started. Although in the US the financial institutions were saved by printing money in the rest of Europe the ECB controls the presses.

Doesn't matter at all where it started, Cyprus and it's people benefited a lot from the financial bubble (and from EU,) until it collapsed. No country has it better now, taxes are going up and spending is being cut down even in richer countries. Everyone was living in a bubble

We forget how bank operate: they ask you to trust them with your cash and in return they promise to safeguard your capital and even give you interest a year. Well, what if their investments lose most of the money and the government cannot bail them out? They go kaput!

"You are forgetting where and why the financial crisis started."

I don't think it is accurate to say that the 2008 financial crisis had a single cause. If you think it was the boom in sub-prime mortgage lending in the US and the resulting popularity of CDOs and CDSs how did that cause the Irish problem (insane property speculation), Iceland (asset speculation in other countries used borrowed cash), Greece (fiscal irresponsility) etc.

Greece had very little to do with the ‘global’ sub-prime bubble, it was merely the following recession that exposed the fiscal irresponsibility, originally resulting from low interest rates due to Euro membership. When people realised that Euro membership does not imply northern European standards, Greek interest rates soared and since Greece couldn’t print money as in the good old days, there was no way to fulfil these interest rates.

To be fair to the Cypriot people - they did the same as everyone else in the UK, Ireland, Iceland etc. did and allowed the finance sector to become far too large relative to the rest of the economy assuming that there were no possible downsides.

Who would ever vote for a politician who tries to constrain the growth of a financial sector that appears to be able to generate money out of thin air?

Great point, expect that no one is touching them. Deposits over EUR 100K are being hit /frozen, those up to EUR 100K are not touched

Yes, that's the current decision. The linked article was written at the time the Parliament was about to ratify haircut of the insured depositors along with the rest.

(There's no timestamp on the page, but I saw this text around 21th of March.)

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