View Full Version : Is the Cyprus bank theft coming to the USA?
Have ya'll been following this? Wake-up Saturday and discover that your gov't. has taken 6.25% to 12% of your money in your bank accounts.To add insult to injury,can't even access your money the gov't. didn't take until atleast Tuesday maybe longer.Unbelievable!
How long before the US gov't. tries something similar? Think it could never happen here.Never say never.
http://photos-ak.sparkpeople.com/nw/9/8/l980286542.jpg
decemberlov
3-18-13, 3:41pm
Unreal (but not really...)
Sort of along the same lines I guess...I just noticed that the Dept. of Education has been with drawling $20.00 over the amount of my actual loan and then redepositing the extra $20 a few days later. I'm assuming they are day trading or whatever with my money and it really pisses me off. I consider it stealing. I'm guessing it would take a day off of work and 1,000 phone calls to get them to stop f*cking with my money.
Why, it's just a tax on wealth. Most folks around here have spent years trying to convince me that that's a good thing.
Of course the banks had to close in order to prevent people from moving their assets, otherwise there'd be nothing left to tax. Now, the banks may go under since no one in their right mind will store their money in such a convenient place for the government to simply take, but that's tomorrow's problem.
When it comes to this country, I suspect it will look a little different. I understand there's been talk in and around Congress of nationalizing retirement accounts and then allocating benefits to those the money was taken from. With any luck, the recepients will die early and the benefit would not be transferrable to heirs. Actually, I think it's more honest to simply take 10% extra from everyone and be done with it. It's still despicable, but better than other progressive alternatives.
Have ya'll been following this? Wake-up Saturday and discover that your gov't. has taken 6.25% to 12% of your money in your bank accounts.To add insult to injury,can't even access your money the gov't. didn't take until atleast Tuesday maybe longer.Unbelievable!
How long before the US gov't. tries something similar? Think it could never happen here.Never say never.
I thought it already did wrt the TBTF/TBTJ banks? The banks lost our money, so the gov't gave the banks a lot of money using a loan from the American people. We're paying our own kind of 6 - 12% on that money, just over a longer period of time. I think it was simply added to the National Debt :)
Unreal (but not really...)
Sort of along the same lines I guess...I just noticed that the Dept. of Education has been with drawling $20.00 over the amount of my actual loan and then redepositing the extra $20 a few days later. I'm assuming they are day trading or whatever with my money and it really pisses me off. I consider it stealing. I'm guessing it would take a day off of work and 1,000 phone calls to get them to stop f*cking with my money.
I'm still wrestling with what my new student loan serviced did to my loans. Almost 10 years of perfect payments were blown to smithereens by the new services illegal activities with my account.
Google your new servicer and see what problems have been popping up. You might be surprised. I may be nearing an end to my mess, maybe. I hope. I finally had to get in contact with the DoE Ombudsman to get some resolution. I'm not very satisfied with the DoE Ombudsman but they we're not completely useless.
I've kept sending information to them to let DoE know I'm ready to pay in full on my loan but the servicer is in Breach of Contract.
Good Luck :)
. . I understand there's been talk in and around Congress of nationalizing retirement accounts and then allocating benefits to those the money was taken from. .
Factcheck: http://www.factcheck.org/2012/12/no-government-401k-takeover/
Factcheck: http://www.factcheck.org/2012/12/no-government-401k-takeover/
The chatter about 401k takeovers has been coming from the political think-tanks,not from members of Congress.So technically,this factcheck is correct.What do you think would happen if Congress decided to have hearings on the pros and cons of 401k takeovers?Rioting in the streets perhaps?No government could afford to reveal such intentions before implementation.
I assume that if someone last week had conducted a factcheck regarding if Cyprus would confiscate 10% of their citizen's bank accounts,that factcheck would have come up empty,and anyone making such a claim would be labeled tin foil.
Disclaimer:This should not be construed as investment advice.I am the village idiot,don't pay me any mind.My hope is that each of you maintain full access to your 401k's that you have each worked so diligently to build.
gimmethesimplelife
3-18-13, 10:33pm
This topic has really made me think. As some of you here know, I am a supporter of systems with fairly high taxes and a large social safety net, including universal health care.
No news there. What made me think about this is the government passing this off as a "tax" - I personally find this problematic, very much so. I don't mind taxes being high but once I've paid taxes and whatever sum of money I have managed to save gets to the bank (or in my case, credit union) in my name - LEAVE IT ALONE! This may sound like a 180 for me but......like I said, once I have paid whatever taxes on the money, I totally believe it should be exempt from further taxation......at least such as this type. I can see paying taxes on interest and dividends and capital gains - but this is not that, this is a haircut of saved money against the will of a large percentage of citizens of Cyprus. I don't like this, not one bit. There is a cynical part of me that wonders if this will indeed spread to Spain and Greece and Italy and other challenged Eurozone nations. Rob
What made me think about this is the government passing this off as a "tax" - I personally find this problematic, very much so.
Rob,it's not being passed off as a tax.It's a "security levy". No one in the Cyprus gov't. is calling it a tax.
So there,I hope this helps.:)
flowerseverywhere
3-18-13, 11:07pm
I don't care what it is called, tax or security levy. I find it downright frightening for most normal folk to wake up to a smaller bank account when they thought they were doing everything right by saving. Tomorrow is the vote on this, and the banks are closed to prevent a run on the money (no kidding). I just can't imagine what this feels like to ordinary people.
ApatheticNoMore
3-19-13, 1:16am
I don't care what it is called, tax or security levy. I find it downright frightening for most normal folk to wake up to a smaller bank account when they thought they were doing everything right by saving. Tomorrow is the vote on this, and the banks are closed to prevent a run on the money (no kidding). I just can't imagine what this feels like to ordinary people.
Well consider this: "By the way, if you’re wondering why investors left so much money in troubled Cypriot banks, here’s a trivia question: Would you have been better off leaving your money in a bank in the United States or in Cyprus over the last five years?
The answer: You would have been better off in Cyprus, even after the bailout, when your money was “confiscated.” If you had 100,000 euros in a Cypriot bank account over the last five years, where the interest rate has averaged about 5 percent, you would have about 127,600 euros today. Even after the bailout, which would require you to give up 10 percent of your deposit — 12,760 euros — you would be left with 114,840 euros. The American bank? The $100,000 you deposited at Bank of America five years ago is about $105,100, at the going rate of about 1 percent interest a year." (that's from a New York times article)
So hmm ... the actual math is more tricky than this with Euro/U.S. conversions, inflation, currency fluctuations etc.. but it is quite likely that U.S. ZIRP has "confiscated" far more than this has (yes ZIRP itself is a bank bailout among other things). That is this in context, that's good investment thinking, the loss in context of overall comparative gains. In the stockmarket a 6-10% loss would be a minor blip. Yielding a steady 5% is a pretty sweet deal these days. How I tend to think about money: I don't believe that investing in *anything* is remotely risk free in the world we live in now. That's really how I see it. Now I could look at this with moralistic rather than investment eyes, and decry the sudden levy. But the whole thing is almost too complex for me to have an opinion on. As a general principle I do not favor taking from the average citizen to bail out the banks! But the international finance world gets complex enough, that things like "just nationalize the banks" don't work in every situation (though they probably would have in the U.S.!), nor does "just let them go bankrupt", and so it's enough to throw up your hands. Maybe bank bondholders could have took the hit instead.
This topic has really made me think. As some of you here know, I am a supporter of systems with fairly high taxes and a large social safety net, including universal health care.
No news there. What made me think about this is the government passing this off as a "tax" - I personally find this problematic, very much so.
It really has very little to do with social safety nets and healthcare, my understanding is the bankruptcy in Cyprus is not primarily of the government (a fiscally insolvent state, ok some may exist in Europe), but primarily of the banks in Cyprus. We know where the money is coming from (depositors large and small, law-abiding and criminals, a levy on ANY and ALL despositors who happened to have money in those banks), but where is the money going and why? My best understanding is that it is going to to the EU or some of the wealthier countries in it (or perhaps it might be better to say their banks) in order by pay off bad Cyprus bank debt?
What do you think would happen if Congress decided to have hearings on the pros and cons of 401k takeovers?Rioting in the streets perhaps?No government could afford to reveal such intentions before implementation.
The last thing I would expect in the U.S. is rioting in the streets, if rioting in the streets hasn't happened yet, I don't think it's going to. And the middle class with it's 401ks are also the last people in the world I'd ever peg or stake a revolution on, because it's an extremely docile class. In short, if they were to confiscate 401ks, I don't see why they wouldn't do it out in the open, although congresspeople might get, not rioting in the streets, but a lot of angrily worded letters ...
I had a scare that somewhat resembled this a couple of weeks ago, when I heard on the news that China was changing its tax system to introduce a capital gains tax on property sales. Would have meant a significant loss to us, on paper at least, because our apartment has appreciated significantly since we bought it. But after a few minutes of panic, decided it wasn't worth worrying about -- what can you do? We take our risks living and investing here, and in the end we might lose the whole shebang if our N. Korean neighbors get wacky and start lobbing ICBMs around randomly, so no need to get my knickers in a twist about it.
Soon after all the dramatic news the Chinese government issued reassurances that the capital gains tax would apply only to sales within the first five years of ownership. There is a sales tax assessed on those kind of sales already, so keeping our current property a minimum of five years was always in the plan. So, no financial roadkill to ogle at. At least not for now.
Call me crazy, but personally I've never liked how tinfoil looks on me, so we'll just continue to diversify our investments and plan as well as we can for the future and hope for the best. getting all riled up about what MIGHT happen just doesn't seem worth the mental energy and stress. YMMV.
gimmethesimplelife
3-19-13, 1:50am
I had a scare that somewhat resembled this a couple of weeks ago, when I heard on the news that China was changing its tax system to introduce a capital gains tax on property sales. Would have meant a significant loss to us, on paper at least, because our apartment has appreciated significantly since we bought it. But after a few minutes of panic, decided it wasn't worth worrying about -- what can you do? We take our risks living and investing here, and in the end we might lose the whole shebang if our N. Korean neighbors get wacky and start lobbing ICBMs around randomly, so no need to get my knickers in a twist about it.
Soon after all the dramatic news the Chinese government issued reassurances that the capital gains tax would apply only to sales within the first five years of ownership. There is a sales tax assessed on those kind of sales already, so keeping our current property a minimum of five years was always in the plan. So, no financial roadkill to ogle at. At least not for now.
Call me crazy, but personally I've never liked how tinfoil looks on me, so we'll just continue to diversify our investments and plan as well as we can for the future and hope for the best. getting all riled up about what MIGHT happen just doesn't seem worth the mental energy and stress. YMMV.Hi Lhamo!
I have been reading a great many panicky and reactionary responses online regarding what is going on in Cyprus. It really seems to strike at the heart of an age old question - is any of our labor worth anything at all or is it totally meaningless? I am viewing this from the lens of someone who has done some struggling in their lifetime - not someone who has over some limit of euros in their account and will be subjected to the higher tax or levy or whatchucallit. It seems that there are many questioning if any retirement account, stock portfolio, or savings account anywhere in the world is safe now.
That being said, I like how you handled the scare about your potential tax in China. You just dealt with it and motored on and everything turned out OK. Makes me think that while I can read and read and read all this rhetoric online, in the end, how much control over any of these events do I really have? Better to remain some level of calm and rational and deal with things as they arise. Rob
ApatheticNoMore
3-19-13, 2:16am
Call me crazy, but personally I've never liked how tinfoil looks on me
haha bae's picture in this thread is hilarious
so we'll just continue to diversify our investments and plan as well as we can for the future and hope for the best. getting all riled up about what MIGHT happen just doesn't seem worth the mental energy and stress. YMMV.
+1 yea, a lot of things *might* happen. I see no strong analogy between Cyprus or even the European economic situation in general and the U.S., but if someone wants to make the case for a parallel ... If I were to try to argue that I'd start with: the banks are all messed up nearly everywhere (definitely there and here), the global economic situation is complex (derivatives and so on), finances in general are becoming more messed in general (mostly due to what is being done to bail out banks! Qualitative easing noone knows how to wind down, FDIC going into debt etc. Major landmines). But those are pretty big generalities that betray no in depth knowledge, it's not exactly making a concrete case for any type of parallel. So if someone wants to help me out ...
No investments are absolutely safe. In the best possible world for most of us: diversify, research if you have time, maybe hedge. What else is there? Form of a survivalism commune I guess ;)
I have been reading a great many panicky and reactionary responses online regarding what is going on in Cyprus.
tried to counter above with some math, I get people don't like the precedent though
It really seems to strike at the heart of an age old question - is any of our labor worth anything at all or is it totally meaningless?
haha, that's a different question, you're really just asking if stored savings are worth anything :)
I am viewing this from the lens of someone who has done some struggling in their lifetime - not someone who has over some limit of euros in their account and will be subjected to the higher tax or levy or whatchucallit. It seems that there are many questioning if any retirement account, stock portfolio, or savings account anywhere in the world is safe now.
Maybe I'm already there, or I have always seen saving for retirement as a wing and a prayer. Because I've brooded boatloads on it, the difficulty of saving up for and assuring our old age against the world we are dealing with, but then I first started investing in anything other than a savings accounts when I strongly suspected we were in a bubble (I was right, but hey but I didn't come up with the idea myself, and it didn't exactly take a genius to see that everything wasn't ok in the build up to 08). This modern crazy investment world is all I know.
ApatheticNoMore
3-19-13, 3:51am
It really seems to strike at the heart of an age old question - is any of our labor worth anything at all or is it totally meaningless?
I think people really labor for today, so that they can eat, and have shelter and blah blah blah the basics today (sometimes their work is also meaningful itself). But they might have some surplus that they can save for the future and so on, through pinching pennies, through a high income, a combination, whatever? Yea, but one works primarily to eat and have shelter today and would even if it produced no savings. That's just primary, saving is nice, but even if you save half your income, it's still a secondary reason why you work (of course if you are dual income and saving 100% this might not apply). So I really think we labor for today (or the near future anyway). But we could just live on whatever money we have stored up? Yea you could until it's used up, and then work again, it's anyones guess whether it is better to save it longer term or not. The fact that the long term worth of savings is uncertain is not equivalent to saying our savings are certainly worthless long term though, I don't think anyone knows that. But savings should be respected if they come from labor out of respect for labor, or they should be respected in general (afterall we'd respect the bankster money (well some of us would :)) why don't they respect ours?). Yea but I don't expect anything like that. Isn't it all just about power politics and what can be made to happen in the end?
I think it helps to actually have talked to relatives who lived through absolute historical/financial horrors. My inlaws, for example. FIL was targeted as an enemy of the party because he taught math and statistics in Mongolian. A job he took at the behest of the government. Years of really horrible stuff ensued, and it is a miracle the whole family survived. DH worked in a factory doing some really yucky stuff before the revived the college entrance exams. Then he used his smarts to get into one of the top national foreign language universities, and the rest is pretty much history with a positive spin! Now we live a very nice life in a high rise in a fancy upscale development in Beijing. And we can bring FIL here for surgery when he needs it and not have to worry about what it costs.
The stories on my US side of the family are not so dramatic, but still impressive -- depression survival with large families, and a great grandmother who had the courage to leave her deadbeat drunk, gambling-debt encumbered spouse in a jail in Vermont and move across the country to an unknown future. Can you imagine the courage that took? Not to mention the courage our even more remote ancestors had to get on a boat that just might sink and move to an entirely different continent.
We've got it good and if we lose a bit of it we'll be ok.
If I were living closer to the edge maybe I'd feel differently, but we're pretty close to the apex of the global wealth pyramid and can afford to lose some of it.
[QUOTE=ApatheticNoMore;134373]The answer: You would have been better off in Cyprus, even after the bailout, when your money was “confiscated.” ....
Now I could look at this with moralistic rather than investment eyes, and decry the sudden levy. But the whole thing is almost too complex for me to have an opinion on.[QUOTE]
It's one thing to voluntarily put your money in a bank at artificially low interest rates(like here in the US).But to have your money literally stolen overnight(like in Cyprus) is a different situation all together.
It's not "too complex" of a situation for the citizens of Cyprus to figure out.They've been punk'd.
[QUOTE=ApatheticNoMore;134373]The answer: You would have been better off in Cyprus, even after the bailout, when your money was “confiscated.” ....
Now I could look at this with moralistic rather than investment eyes, and decry the sudden levy. But the whole thing is almost too complex for me to have an opinion on.[QUOTE]
It's one thing to voluntarily put your money in a bank at artificially low interest rates(like here in the US).But to have your money literally stolen overnight(like in Cyprus) is a different situation all together.
It's not "too complex" of a situation for the citizens of Cyprus to figure out.They've been punk'd.
The ones taking the big hit are the Russians who have been "offshoring" their money there.
As far as who to fault - blame Cyprus for making policies that made people money that were not sustainable. Now the remaining players are being called in pay for it. Just another example of socializing losses.
I don't care what it is called, tax or security levy. I find it downright frightening for most normal folk to wake up to a smaller bank account when they thought they were doing everything right by saving.
Doesn't that happen every day, as inflation punishes savers and reward borrowers?
ApatheticNoMore
3-19-13, 11:04am
Really saying it's too complex has nothing to do with "Russians be bad" or anything, yea maybe but whatever, it was indiscriminate. It has to do with a calculation that the Cyprus may have suffered even more if the economy collapsed with no bailout. Other solutions would have worked in the U.S., I'm just not so sure about Cyprus because I don't understand it that much really.
As far as who to fault - blame Cyprus for making policies that made people money that were not sustainable. Now the remaining players are being called in pay for it. Just another example of socializing losses.
Yes the actual crime took place much much earlier, the levy was just when it became visible.
gimmethesimplelife
3-19-13, 12:35pm
Doesn't that happen every day, as inflation punishes savers and reward borrowers?I see your point but wonder if interest rates can ever go up in the United States again - and if they do, what level of pain would ensue. Should rates go up from literally nothing where they are now, how does the interest on the debt get serviced without some segment of society taking to the streets and the stock market going down as the US appears unstable to the rest of the world? UGGGGGH. What a mess we are in. And remember those days of 5.25% in a simple passbook savings account? I remember in college economics in 1986 how the instructor was going on and on about what a rip-off such accounts were, and now I think of how generous 5.25% interest on an account truly seems. Rob
IshbelRobertson
3-19-13, 1:04pm
The fault lies with France and Germany, both of whom were so obsessed about increasing the size of the EU (and the Euro)' that they pushed through the admittance of small states, some with dodgy banking systems, eg Cyprus.
I think it kind of interesting that only cash deposits, not bonds are involved in this grab. Now, could it be because, as rumour has it, Germany has massive stakes in bonds in places like Greece or Cyprus?
Cyprus is a part of the Commonwealth. It is also still a British military base. Nearly everyone speaks good English, and they even drive on 'our' side of the road! This has made it a mecca for british retirees and some business people. Those are the people whose life savings have been hijacked, because many were attracted by higher interest rates to transfer their funds to Cypriot banks. So it doesn't just affect Cypriots. The british govt is flying out lots of money so that our troops and their families, ditto civil servants can have access to cash. It will not be available to other British citizens.
I know Cyprus very well having lived there for over four years as a child, and regularly visiting since then, both the Turkish and Greek parts of the island. In the past ten years, the island has become swamped with Russians, their pushy, peroxided lady friends and shady looking hangers-on! They have/are building the most monstrous, ostentatious, totally out of character villas. Somehow, I don't think they will take this 'levy' lying down!
I see your point but wonder if interest rates can ever go up in the United States again - and if they do, what level of pain would ensue. Should rates go up from literally nothing where they are now, how does the interest on the debt get serviced without some segment of society taking to the streets and the stock market going down as the US appears unstable to the rest of the world? UGGGGGH. What a mess we are in. And remember those days of 5.25% in a simple passbook savings account? I remember in college economics in 1986 how the instructor was going on and on about what a rip-off such accounts were, and now I think of how generous 5.25% interest on an account truly seems. Rob
I think Herbert Stein once said something to the effect that if things can't continue as they are, then they won't. I think the likliest outcome of the present situation is a period of 1970's-style stagflation like we saw after Vietnam and the introduction of Medicare.
flowerseverywhere
3-19-13, 5:47pm
Doesn't that happen every day, as inflation punishes savers and reward borrowers?
yes, but people make a concious choice to put savings in a low paying account. Those who agree to accept more risk and possible more reward take that risk such as the stock market. It is the rule changing in the middle of the game when everyone agreed to play by certain rules. You put money in, you earn x% interest. Changing the interest is one thing. Taking it back is an altogether different thing. Just because you weren't playing the game doesn't make it right for others to pay the penalty.
ApatheticNoMore
3-19-13, 6:23pm
yes, but people make a concious choice to put savings in a low paying account.
They make a conscious choice among alternatives, but the game itself may be rigged, ZIRP is a bank bailout among other things. ZIRP savers can foresee they will get screwed I guess and take it because of the risks of the other alternatives, and in Cyprus it came as a surprise. Still ZIRP savers made the worse investment choice.
Those who agree to accept more risk and possible more reward take that risk such as the stock market. It is the rule changing in the middle of the game when everyone agreed to play by certain rules.
Possibly. How much those who invested in Cyprus banks suspected their savings might be at risk, who knows. Countries that are paying higher interest rates are sometimes doing so because they are more risky though and that's not news. Risk and reward operate in a market to set prices even when they are not explicitly spelled out as such. An investor likely suspects it, average folks and retirees not so much so.
Yea that's investment think but big picture: The European Union is becoming a complete disaster, it might be accurate to call it economic warfare, the 3rd world war (or European war anyway like WWI and II started out) of Germany against everyone else. The lack of forgiveness parallels the lack of forgiveness to Germany itself after the WWI, only German is on the economic agression path now. The banksters? Well the banksters and corrupt FIRE sector are a major problem in the U.S. and they are a major problem in Europe too, corrupt crony criminal bankers looting the whole world, only Europe has the whole supernational EU thing to contend with as well and that complicates. And any individual decision like a levy? Is sometimes made in a double bind, when there are few good alternatives left, although maybe they could have gone after the bondholders.
gimmethesimplelife
3-19-13, 10:59pm
Well my guess is that things in Cyprus may be getting interesting here.....I just read on the economic collapse blog that the parliament in Cyprus shot down the haircuts on accounts for all.....wonder what is going to be the headline from Cyprus next? Rob
The US has moved so far away from taxing income (from a high for the max of 91% in 1962 to a max of 38% today) that there are many, many steps back down the path we've been on before we need to worry about taxing of saved wealth. When the max income tax gets back up into the high 80%'s come on back and we can start seriously discussing the issue of taxing saved wealth in the US.
yes, but people make a concious choice to put savings in a low paying account. Those who agree to accept more risk and possible more reward take that risk such as the stock market. It is the rule changing in the middle of the game when everyone agreed to play by certain rules. You put money in, you earn x% interest. Changing the interest is one thing. Taking it back is an altogether different thing. Just because you weren't playing the game doesn't make it right for others to pay the penalty.
That's very true. Simple confiscation seems a lot worse to me than the subtler inflation route, especially since we've come to expect it from our governments.
The US has moved so far away from taxing income (from a high for the max of 91% in 1962 to a max of 38% today) that there are many, many steps back down the path we've been on before we need to worry about taxing of saved wealth. When the max income tax gets back up into the high 80%'s come on back and we can start seriously discussing the issue of taxing saved wealth in the US.
We don't need to wait for the happy day when government takes 80% of any success achieved in excess of authorized levels. I think we're already taxing wealth in a number of direct and indirect ways. Property taxes based on the value of your home. Inheritance taxes based on the value of your estate. Requiring recipients of certain benefits to reduce their assets to some minimal level.
Property tax based on value is indeed a tax on wealth, but it is well-established, being older than income taxes in this country, and strictly controlled by the state.
Inheritance taxes is a tax on income. I know people who hope to pass along their wealth to future generations want to try to make it sound like it isn't, but it is - it is income for the beneficiaries. I think there can be purer ways to tax it, but a change like that is more likely to lead to fraud, so I suspect that's why the current system of inheritance tax is employed, instead.
Means-based eligibility for subsidies and benefits isn't a tax, but rather a limitation on accepting society's largess. I'll grant that that's a subtle nuance, but one that is well-warranted on the merits: There are proponents of that approach on all sides of such disputes.
More importantly, though, you've inadvertently highlighted two additional reasons why the concern about taxing of savings is not significant: We can expect to see proposals for a federal property tax, and comprehensive deployment of means-based eligibility for subsidies and benefits, before we see any consideration of the taxing of savings.
Powered by vBulletin® Version 4.2.5 Copyright © 2025 vBulletin Solutions Inc. All rights reserved.