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Posted: 3/22/2013 1:50:48 PM EDT
[#1]
Even if the money isn't physically there, they're going to do a transfer of ownership from the private sector into government funds. Whether it's via cash or by moving some bits around in a computer is irrelevant.
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Posted: 3/22/2013 1:51:43 PM EDT
[#2]
Then the story line is a farce.
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Posted: 3/22/2013 1:52:29 PM EDT
[#3]
It's not ACTUAL physical money - it would just be electronic transfers, from the banks' balance sheets (and the individual depositor accounts) to the Cypriot government.
Remember, the EU (or more accurately the ECB) doesn't want this money at all (in the sense that they are going to take it or anything) - it's simply a prerequisite for the loans/bailout that the Cypriot government HAS to raise some money of their own in order to get the package. They thought it could be done by taking it from depositors (lol) - but instead they'll probably try to figure out something with gas/oil leases or something like that. But the fact that the ECB would ever have signed off on a plan to raise the money in such a fashion is pretty bizarre, I agree - simply because it was so obvious what the consequences would be, and how it would be completely unworkable. |
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Posted: 3/22/2013 1:55:21 PM EDT
[#4]
The 'secret truth' is really that money itself is worthless. Why is a piece of paper (linen actually) with a 2 and a 0 on it worth anything?? Thet whole concept is pretty abstract. Bottom line- we operate within a system of scarcity and valuation. Better hope nothing upsets that illusion. 4073 |
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Posted: 3/22/2013 1:55:41 PM EDT
[#5]
I don't understand.
The Greek govt can not print money like the fed reserve. So what good does it do to take imaginary digits in a computer and transfer them to the govt? They can't spent it. It desn't exist. Most of it is tied up in most likely bad debts. |
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Posted: 3/22/2013 1:58:33 PM EDT
[#6]
Quoted:
The 'secret truth' is really that money itself is worthless. Why is a piece of paper (linen actually) with a 2 and a 0 on it worth anything?? Send me yours, I'll dispose of it for you. Posted Via AR15.Com Mobile |
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Posted: 3/22/2013 1:59:57 PM EDT
[#7]
The articles I have read say the EU wants the Cyprus govt to raise enough money to reduce their debt to GDP ratio. That implies either spending said money so they don't have to borrow it or actually paying down some govt debt.
The govt trying to take 10% of deposits is in itself a bank run, because the money does not exist. I am not trying to be dense, just what is accomplished by reducing account balances by 10% when the money is not on reserve to begin with? |
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Posted: 3/22/2013 2:01:14 PM EDT
[#8]
Quoted:
It's not ACTUAL physical money - it would just be electronic transfers, from the banks' balance sheets (and the individual depositor accounts) to the Cypriot government. Remember, the EU (or more accurately the ECB) doesn't want this money at all (in the sense that they are going to take it or anything) - it's simply a prerequisite for the loans/bailout that the Cypriot government HAS to raise some money of their own in order to get the package. They thought it could be done by taking it from depositors (lol) - but instead they'll probably try to figure out something with gas/oil leases or something like that. But the fact that the ECB would ever have signed off on a plan to raise the money in such a fashion is pretty bizarre, I agree - simply because it was so obvious what the consequences would be, and how it would be completely unworkable. This sounds very similar to the deal I have with a Nigerian official who says if i can come up with a 10% earnest money, he will share part of the $60,000,000 that he found in an unclaimed account. |
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Posted: 3/22/2013 2:01:39 PM EDT
[#9]
Quoted:
I don't understand. The Greek govt can not print money like the fed reserve. So what good does it do to take imaginary digits in a computer and transfer them to the govt? They can't spent it. It desn't exist. Most of it is tied up in most likely bad debts. Sure it exists. When my folks bought their condo in D.C. last year, they had their bank in Luxemburg electronically transfer money to a title company (or whatever it's called) here in D.C., who then confirmed the money was there, and electronically transferred it to the seller's account when all the paperwork was signed. Technically, in that transaction, no physical money ever changed hands or "existed" - but since we all agree that's how it works, then it works. 
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Posted: 3/22/2013 2:02:14 PM EDT
[#10]
Quoted:
The EU wants to take 10% or so of deposits to fund government. However, the Cyprus banks are like every other bank, including the banks here. They keep less than 1% of deposits on reserves. That means 99% of the deposits exist as loaned money in a society flush with debt. The deposit money does not actually exist. You can not take 10% of money when only 1% actually exits. Of course the EU leaders know this, Germany knows this. So what is all of this all about. The money is not actually in those accounts, so what exactly are they trying to do. Am I missing something? Or is this a deliberate attempt to collapse the world financial system? You are missing the effect shaving 10% off of depositors accounts has on the balance sheet. |
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Posted: 3/22/2013 2:04:26 PM EDT
[#11]
Quoted:
Quoted:
I don't understand. The Greek govt can not print money like the fed reserve. So what good does it do to take imaginary digits in a computer and transfer them to the govt? They can't spent it. It desn't exist. Most of it is tied up in most likely bad debts. Sure it exists. When my folks bought their condo in D.C. last year, they had their bank in Luxemburg electronically transfer money to a title company (or whatever it's called) here in D.C., who then confirmed the money was there, and electronically transferred it to the seller's account when all the paperwork was signed. Technically, in that transaction, no physical money ever changed hands or "existed" - but since we all agree that's how it works, then it works. That only works because a small percent is actually on reserve and only when just a few use their money. If everybody tried to do that at the same time, the bank would have a run and collpse, because it does not have enough money on the balance sheet. Most of the balance sheet is loans. In your example, cash was not sent, but the money must be on the balance sheet to do it. That balance sheet money for a bank is called the bank's reserves. Most of the time it is less than 1%. Of account balances. |
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Posted: 3/22/2013 2:05:19 PM EDT
[#12]
Quoted:
Quoted:
The EU wants to take 10% or so of deposits to fund government. However, the Cyprus banks are like every other bank, including the banks here. They keep less than 1% of deposits on reserves. That means 99% of the deposits exist as loaned money in a society flush with debt. The deposit money does not actually exist. You can not take 10% of money when only 1% actually exits. Of course the EU leaders know this, Germany knows this. So what is all of this all about. The money is not actually in those accounts, so what exactly are they trying to do. Am I missing something? Or is this a deliberate attempt to collapse the world financial system? You are missing the effect shaving 10% off of depositors accounts has on the balance sheet. I guess so. Please explain. ETA. I guess it makes the reserves go up as a percent and improves the balance sheet. So is this all about making the banks less insolvent? |
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Posted: 3/22/2013 2:10:13 PM EDT
[#13]
Isn't there something about there are a lot of foreign account holders (namely the Russian millionaires/ billionaires with size able deposits) in Cyprus banks and the original intent was to 'tax' them more so than the Cypriots?
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Posted: 3/22/2013 2:12:38 PM EDT
[#14]
EFT
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Posted: 3/22/2013 2:13:14 PM EDT
[#15]
Quoted:
Quoted:
Quoted:
The EU wants to take 10% or so of deposits to fund government. However, the Cyprus banks are like every other bank, including the banks here. They keep less than 1% of deposits on reserves. That means 99% of the deposits exist as loaned money in a society flush with debt. The deposit money does not actually exist. You can not take 10% of money when only 1% actually exits. Of course the EU leaders know this, Germany knows this. So what is all of this all about. The money is not actually in those accounts, so what exactly are they trying to do. Am I missing something? Or is this a deliberate attempt to collapse the world financial system? You are missing the effect shaving 10% off of depositors accounts has on the balance sheet. I guess so. Please explain. I don't know if I can.  Basically, the bank has lower liabilities now. The reason the banks were in trouble to begin with was a load of bad debt hindered the ability to keep the bank solvent with regards to deposits. Eliminating 10% of the deposits puts the bank in a more tenable position as those deposits now require less good loan revenue to support.
It is like decreasing the balance on a credit card. It makes it easier to pay back, and you may go from $10 short a month to being able to make the payments. Basically, they may not be transferring actual money, but adjusting balance sheets in an attempt to make the banks more solvent. I could be way off base, though. I don't know if there is a resource to the detailed mechanics behind the whole thing. There are a lot of ways they could go about it, with a lot of different intended and unintended effects. |
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Posted: 3/22/2013 2:15:06 PM EDT
[#16]
I can't decide which is stupider, proposing something as inflammatory as a bank deposit excise tax/confiscation or proposing it then walking away from it as soon as the (easily anticipated) resistance comes up.
It's like the people running the EU/ECB are determined to do the absolute stupidest possible thing, at every fork in the road. |
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Posted: 3/22/2013 2:16:44 PM EDT
[#17]
Quoted:
Quoted:
Quoted:
The EU wants to take 10% or so of deposits to fund government. However, the Cyprus banks are like every other bank, including the banks here. They keep less than 1% of deposits on reserves. That means 99% of the deposits exist as loaned money in a society flush with debt. The deposit money does not actually exist. You can not take 10% of money when only 1% actually exits. Of course the EU leaders know this, Germany knows this. So what is all of this all about. The money is not actually in those accounts, so what exactly are they trying to do. Am I missing something? Or is this a deliberate attempt to collapse the world financial system? You are missing the effect shaving 10% off of depositors accounts has on the balance sheet. I guess so. Please explain. ETA. I guess it makes the reserves go up as a percent and improves the balance sheet. So is this all about making the banks less insolvent? If the banks own large amounts of the nations bank notes and they are crashing in value, this would make it easier for the bank to hold on to them, thus propping up the prices of the notes, making debt easier to finance. Of course, when the people crash the banks trying to pull out the other 90%, I can't see that helping any.
This is still one of the most puzzling moves I have seen a government attempt to make. I can't see how you can possibly hope to fix a failing system by attacking the very foundation of that system. Even if they don't do it, the damage is done, PLUS the original problem is still there. Once they announced they were doing it, they may as well have done it. Now they are just doubling down on the failure. Please leave any morality aside for this conversation. I am trying to approach it from mere cause and effect. |
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Posted: 3/22/2013 2:17:18 PM EDT
[#18]
Quoted: I can't decide which is stupider, proposing something as inflammatory as a bank deposit excise tax/confiscation or proposing it then walking away from it as soon as the (easily anticipated) resistance comes up. It's like the people running the EU/ECB are determined to do the absolute stupidest possible thing, at every fork in the road. In another thread it seems most of the money in those banks is Russian, so it may an attempt be the EU to get Russia to pony up the bailout instead. |
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Posted: 3/22/2013 2:17:33 PM EDT
[#19]
Quoted:
I can't decide which is stupider, proposing something as inflammatory as a bank deposit excise tax/confiscation or proposing it then walking away from it as soon as the (easily anticipated) resistance comes up. It's like the people running the EU/ECB are determined to do the absolute stupidest possible thing, at every fork in the road. It is mind blowing. It is so crazy that it is hard to divorce from conspiracy theories on this one. It seems malicious at face value. |
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Posted: 3/22/2013 2:18:39 PM EDT
[#20]
Quoted:
Quoted:
I can't decide which is stupider, proposing something as inflammatory as a bank deposit excise tax/confiscation or proposing it then walking away from it as soon as the (easily anticipated) resistance comes up. It's like the people running the EU/ECB are determined to do the absolute stupidest possible thing, at every fork in the road. In another thread it seems most of the money in those banks is Russian, so it may an attempt be the EU to get Russia to pony up the bailout instead. Which is even WORSE. Russians have no local interest, so the money will go away over night. At least local depositors need some kind of bank in country for something.
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Posted: 3/22/2013 2:19:07 PM EDT
[#21]
Quoted:
Quoted:
Sure it exists. When my folks bought their condo in D.C. last year, they had their bank in Luxemburg electronically transfer money to a title company (or whatever it's called) here in D.C., who then confirmed the money was there, and electronically transferred it to the seller's account when all the paperwork was signed. Technically, in that transaction, no physical money ever changed hands or "existed" - but since we all agree that's how it works, then it works. That only works because a small percent is actually on reserve and only when just a few use their money. If everybody tried to do that at the same time, the bank would have a run and collpse, because it does not have enough money on the balance sheet. Most of the balance sheet is loans. In your example, cash was not sent, but the money must be on the balance sheet to do it. That balance sheet money for a bank is called the bank's reserves. Most of the time it is less than 1%. Of account balances. The digital world at its best. Our money exists in cyberspace
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Posted: 3/22/2013 2:20:32 PM EDT
[#22]
Quoted:
Quoted:
Quoted:
Sure it exists. When my folks bought their condo in D.C. last year, they had their bank in Luxemburg electronically transfer money to a title company (or whatever it's called) here in D.C., who then confirmed the money was there, and electronically transferred it to the seller's account when all the paperwork was signed. Technically, in that transaction, no physical money ever changed hands or "existed" - but since we all agree that's how it works, then it works. That only works because a small percent is actually on reserve and only when just a few use their money. If everybody tried to do that at the same time, the bank would have a run and collpse, because it does not have enough money on the balance sheet. Most of the balance sheet is loans. In your example, cash was not sent, but the money must be on the balance sheet to do it. That balance sheet money for a bank is called the bank's reserves. Most of the time it is less than 1%. Of account balances. The digital world at its best. Our money exists in cyberspace What's the difference between electrons and IOU's on pieces of paper? At least the electrons are efficient. |
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Posted: 3/22/2013 2:25:24 PM EDT
[#23]
Quoted:
The 'secret truth' is really that money itself is worthless. Why is a piece of paper (linen actually) with a 2 and a 0 on it worth anything?? Thet whole concept is pretty abstract. Bottom line- we operate within a system of scarcity and valuation. Better hope nothing upsets that illusion. 4073 When you have the time, check out this book: Title: Money and the Meaning of Life Author: Needleman http://www.amazon.com/Money-Meaning-Life-Jacob-Needleman/dp/0385262426 |
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Posted: 3/22/2013 2:37:37 PM EDT
[#24]
Quoted:
Quoted:
I can't decide which is stupider, proposing something as inflammatory as a bank deposit excise tax/confiscation or proposing it then walking away from it as soon as the (easily anticipated) resistance comes up. It's like the people running the EU/ECB are determined to do the absolute stupidest possible thing, at every fork in the road. It is mind blowing. It is so crazy that it is hard to divorce from conspiracy theories on this one. It seems malicious at face value. With you on this one. Almost like it is tailor made to cause a larger, spiraling crisis. And there are several different angles that this could be the catalyst for. Mind blowing indeed. |
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Posted: 3/22/2013 2:43:50 PM EDT
[#25]
Quoted:
Quoted:
Quoted:
I can't decide which is stupider, proposing something as inflammatory as a bank deposit excise tax/confiscation or proposing it then walking away from it as soon as the (easily anticipated) resistance comes up. It's like the people running the EU/ECB are determined to do the absolute stupidest possible thing, at every fork in the road. It is mind blowing. It is so crazy that it is hard to divorce from conspiracy theories on this one. It seems malicious at face value. With you on this one. Almost like it is tailor made to cause a larger, spiraling crisis. And there are several different angles that this could be the catalyst for. Mind blowing indeed. Yes. It makes no logical sense. They had to have known what the results would be. There must be a reason. |
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Posted: 3/23/2013 3:59:25 AM EDT
[#26]
Quoted:
Quoted:
Quoted:
Quoted:
I can't decide which is stupider, proposing something as inflammatory as a bank deposit excise tax/confiscation or proposing it then walking away from it as soon as the (easily anticipated) resistance comes up. It's like the people running the EU/ECB are determined to do the absolute stupidest possible thing, at every fork in the road. It is mind blowing. It is so crazy that it is hard to divorce from conspiracy theories on this one. It seems malicious at face value. With you on this one. Almost like it is tailor made to cause a larger, spiraling crisis. And there are several different angles that this could be the catalyst for. Mind blowing indeed. Yes. It makes no logical sense. They had to have known what the results would be. There must be a reason. On the other hand the kind of bureaucratic, banker/academic, crony-net system that makes up the EU establishment may really be that stupid. |
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Posted: 3/23/2013 4:10:56 AM EDT
[#27]
Quoted:
The articles I have read say the EU wants the Cyprus govt to raise enough money to reduce their debt to GDP ratio. That implies either spending said money so they don't have to borrow it or actually paying down some govt debt. The govt trying to take 10% of deposits is in itself a bank run, because the money does not exist. I am not trying to be dense, just what is accomplished by reducing account balances by 10% when the money is not on reserve to begin with? It's not like the money has to be in stacks of hundred euro notes to exist. .gov says "gimme money!" Bank says "OK, here's some digibits". Sure, the money in the bank's accounts may be out on loan, but that doesn't mean it can't be transferred. Problem comes when everyone wants those stacks of hundred euro notes. Bank run, bank runs out of cash, merchants won't take credit/debit, populace panics, buildings burn. |
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Posted: 3/23/2013 4:21:45 AM EDT
[#28]
Quoted:
Even if the money isn't physically there, they're going to do a transfer of ownership from the private sector into government funds. Whether it's via cash or by moving some bits around in a computer is irrelevant. bingo bankrupted on paper..... property titles are on paper too. this is all about transfer of current wealth (on paper) to other organizations / people....on paper. ONce it is out of your account...you will never get it back. think they will stop at banks? Personally I am loading mags and getting ready. We are much closer than you think or know |
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Posted: 3/23/2013 4:23:30 AM EDT
[#29]
Fractional reserve banking.
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Posted: 3/23/2013 4:23:48 AM EDT
[#30]
What no one is talking about is the fact that those in Cyprus who had cash on hand, are probably seeing that their cash is worth at least 10% more than those with it in the bank.
Of course that will change once the bank <s>fail<\s> open next week.
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Posted: 3/23/2013 4:25:10 AM EDT
[#31]
It's their next step towards a Euro-dominated one-world government.
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Posted: 3/23/2013 4:30:36 AM EDT
[#32]
Taking 10% of the Russian mob's money is never a good idea.
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Posted: 3/23/2013 4:38:55 AM EDT
[#33]
I think one side effect will be yields going up/down and flight to bigger countries like the US. Now all of those billionaires are saying "well I am not putting my money in a small country anymore....maybe it is better to go to a UK/US and take my lumps but my money is safer". Then smaller countries will have to pay higher yields of deposits to try and give an incentive for that money coming to them/staying. Could have interesting effects on the overall interest market, JMHO.
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Posted: 3/23/2013 4:39:44 AM EDT
[#34]
Quoted:
However, the Cyprus banks are like every other bank, including the banks here. They keep less than 1% of deposits on reserves. That means 99% of the deposits exist as loaned money in a society flush with debt. IDK what the banking rules are in Cyprus, but your idea that 99% of the deposits are lent out in the US is simply incorrect. By statute, the US system requires a minimum of 10% reserves. By FedReserve rule the reserve is higher. Last time Ilooked, it was 16%. That may have been changed. If the reserve rules in Cyprus are roughly the same as those in the US, there are sufficient deposits for the government to steal. |
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Posted: 3/23/2013 4:55:43 AM EDT
[#35]
The banking system in Cyprus is approximately 4 times bigger than Cyprus's GDP, this is an enormous cash cow that's being eyeballed. As far as the loaned amounts you'd have to refer to the BASEL requirements for deposit percentages. I'm not sure what the requirements are in Cyprus, but here the banks are required to have about 6.5% of their deposits on hand but not necessarily in the form of cash.
The immediate problem that the people are going to face is the availability of cash money. Banks do not have all of their required deposit percentages in the form of cash so the availability of cash money is going to take a hit. Now most business are going cash only and not accepting credit so that puts a further strain on the populace. Once the dust settles people are going to pull their money out of the bank. In response the government of Cyprus has enacted strict capital controls. In short they're going to limit the amount of money people can pull out of their account. This will reduce the amount of money flowing out of the banks, but it will not stop it; the damage has been done. The real issue, the real damage in this mess will come from over-leveraging of assets. As people pull their money out of the banks this is going to affect the leveraging of the banks assets and their balance sheets. As these leverage ratios are increased then small fluctuations in the markets will have serious effects on the banks. Lehman Brother's balance sheet suffered from very high leverage ratios in their investments. So when you had a declining market from late 2007 to early 2008 this had a dramatic impact on their bottom line and caused them to go bankrupt. As a consequence is was the failure of Lehman Brothers that is widely viewed as the catalyst to the late 2008 market crash. I could be wrong, but I think Cyprus could be a Lehman type of event and we won't feel the real impacts of this until later this year. |
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Posted: 3/23/2013 4:57:56 AM EDT
[#36]
Some great facts here:
Just as I was getting used to thinking of Cyprus as the Mediterranean clime where Hezbollah agents go to spy on ‘the Jews’ and Rami Makhlouf is granted citizenship, I awaken to the fact that future of the eurozone may in fact depend on the good graces of Vladimir Putin. An island nation with a ten percent corporate tax rate and no-questions-asked banking protocols is hardly the new “sick man of Europe,” as it’s been called. It’s a national Rick’s Cafe, where everyone professes himself shocked, shocked to discover that illicit or suspect activities have been going on all this time.
The oligarchs may cut the first check, but they’ll still have the last laugh. Russian wealth now accounts for a third of Cyprus’ entire banking sector, with Russian commercial, institutional, and individuals’ deposits – some 31 billion USD – exceeding Cyprus’ GDP. Much of this money is thought to have been stolen or laundered. There are, according to a leaked and much-discussed German intelligence assessment, around 40,000 shell companies in Cyprus, all registered with no background checks as to where their capital came from. |
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Posted: 3/23/2013 5:01:29 AM EDT
[#37]
On the drive the other morning, NPR was running a story about the fallout from the announcement of the plan to tax bank accounts. They described that the government was considering various alternatives for a "Plan B" to get the bailout, and proceeded to rattle off a few of the options under consideration by the Cypriot legislature...
One of the potential Plan B items that they indicated was getting consideration was "nationalizing private pension accounts." 
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Posted: 3/23/2013 5:06:11 AM EDT
[#38]
Quoted:
On the drive the other morning, NPR was running a story about the fallout from the announcement of the plan to tax bank accounts. They described that the government was considering various alternatives for a "Plan B" to get the bailout, and proceeded to rattle off a few of the options under consideration by the Cypriot legislature... One of the potential Plan B items that they indicated was getting consideration was "nationalizing private pension accounts." lulz... dust off the OD Green.... |
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Posted: 3/23/2013 5:08:46 AM EDT
[#39]
The revised plan (as of this morning) is as follows:
1. Exempt deposits up to 100,000 euros (the EU deposit-insurance limit) from any kind of levy. 2. Offload the Greek branches of the two largest Cypriot banks to the Bank of Pireaus (a private Greek bank) without touching any deposits therein. 3. Wipe out the equity holders and bondholders of the Cypriot banks. 4. Levy a tax of anywhere from 20% to 100% on deposits in the Bank of Cyprus in excess of 100,000 euros. (This will hit the Russian depositors particularly hard.) 5. Split the Laiki Bank into a "good" bank with all the viable assets, and a "bad" bank (which would presumably go out of business) containing all the troubled assets. |
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Posted: 3/23/2013 5:17:11 AM EDT
[#40]
GD understands money creation and banking worse than GuyinFL understands women. Money is loaned into existence which is why reserve requirements (Deposits and the like) are important. Remember M=1/R
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Posted: 3/23/2013 5:28:08 AM EDT
[#41]
It works as long as the banks are open.
http://www.guardian.co.uk/business/2013/mar/18/eurozone-crisis-cyprus-bailout-savers-markets EFT are NFG if the banks are DOA If a little country like Cyprus can cause big ripples, wait until the one of the bigger boys gets into the uh-oh zone. |
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Posted: 3/23/2013 5:30:32 AM EDT
[#42]
I love the fractional banking system.
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Posted: 3/23/2013 5:31:51 AM EDT
[#43]
Quoted:
I love the fractional banking system. It's the only way to have a banking system. And a functional economy. What you should despise is government meddling in the system. |
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Posted: 3/23/2013 6:02:19 AM EDT
[#44]
Fractional Reserve Banking is fine, but only if reserve minimums are reasonable and all institutional assets are valuated and marked to market at COB on a daily basis. Unfortunately, the CONgress critters repealed Glass-Steagall under Clinton, the banks are not required to mark to market (they continue to play pretend and extend) and the K street lobbyists bought off the SEC so there has been little effort to enforcement reserve requirements.
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Posted: 3/23/2013 6:09:41 AM EDT
[#45]
If there were not federal insurance for deposits and a policy of bailing out banks that get themselves in trouble, the fractional reserve system would probably sort itself out rather quickly as banks making risky loans and using ever-lower reserve ratios would fail and people would flock to more conservatively run institutions. Let the market sort it out.
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Posted: 3/23/2013 6:29:49 AM EDT
[#46]
Quoted:
Fractional Reserve Banking is fine, but only if reserve minimums are reasonable and all institutional assets are valuated and marked to market at COB on a daily basis. Unfortunately, the CONgress critters repealed Glass-Steagall under Clinton, the banks are not required to mark to market (they continue to play pretend and extend) and the K street lobbyists bought off the SEC so there has been little effort to enforcement reserve requirements. You do know on a Macro-economic level forcing banks to write off losses before they occur (If they even occur) reduces time. Since Markets are forward looking this wipes out capital making recovery and credit more difficult. 
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Posted: 3/23/2013 6:32:10 AM EDT
[#47]
Quoted:
Lehman Brother's balance sheet suffered from very high leverage ratios in their investments. So when you had a declining market from late 2007 to early 2008 this had a dramatic impact on their bottom line and caused them to go bankrupt. How soon we forget. Like most investment banks at the time, LB refinanced much of its enormous debt every night.
MSNBC reported rumors (untrue at the time, as it turned out) that LB was insolvent. As a result of those reports lenders were not willing to lend to LB and it was unable to refinance its debt. Since it could not do so, it became insolvent. 
The "credit freeze" and market crash followed. |
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Posted: 3/23/2013 6:37:40 AM EDT
[#48]
Quoted: 100% exist, only a small percentage of actual currency is "on hand" for withdraw.The deposit money does not actually exist. You can not take 10% of money when only 1% actually exits. |
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Posted: 3/23/2013 6:40:48 AM EDT
[#49]
95% of Russia's government finance accounts run through Cyprus. Big losses if Cyprus doesn't get fixed.
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Posted: 3/23/2013 8:02:22 AM EDT
[#50]
Quoted:
Quoted:
Lehman Brother's balance sheet suffered from very high leverage ratios in their investments. So when you had a declining market from late 2007 to early 2008 this had a dramatic impact on their bottom line and caused them to go bankrupt. How soon we forget. Like most investment banks at the time, LB refinanced much of its enormous debt every night.
MSNBC reported rumors (untrue at the time, as it turned out) that LB was insolvent. As a result of those reports lenders were not willing to lend to LB and it was unable to refinance its debt. Since it could not do so, it became insolvent.
The "credit freeze" and market crash followed. IIRC, they also panicked the ROK into not buying into LB, which triggered the collapse. Until the panic one of the big players in the ROK was near a deal to take a stake in LB. |
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