News: Europe's economy destruction thanks to my small country?

cypriotpcdfan

So, Im from a small island in Europe called CYPRUS. No one really knows us, our population is like less than 1 million.
Our economy has hit rock bottom, and our banks are close to being bankrupt.

So, our new president has asked the help of Eurozone.

Their plan?
When Cyprus's banks reopen on Tuesday morning, every depositor will have some of his or her money seized. Accounts under 100,000 euros will have 6.75% of the funds seized. Accounts over 100,000 euros will have 9.9% seized. And then the Eurozone's emergency lending facility and the International Monetary Fund will inject 10 billion euros into the banks to allow them to keep operating.

Read this article, its VERY enlightening

Quote:

You can be forgiven for thinking that you don't need to give a hoot about what's going on in Cyprus this weekend.

After all, it's just a little island somewhere in the Mediterranean.

But what's going on in Cyprus could actually matter--not just to the rest of Europe, but to the rest of the world.

Here's the short version of what's happening:

Cyprus's banks, like many banks in Europe, are bankrupt.

Cyprus went to the Eurozone to get a bailout, the same way Ireland, Greece, and other European countries have.

The Eurozone powers-that-be gave Cyprus a bailout--but with a startling condition that has never before been imposed on any major banking system since the start of the global financial crisis in 2008.

The Eurozone powers-that-be (mainly, Germany) insisted that the depositors in Cyprus's banks pay part of the tab.

Not the bondholders.

The depositors. The folks who had their money in the banks for safe-keeping.

When Cyprus's banks reopen on Tuesday morning, every depositor will have some of his or her money seized. Accounts under 100,000 euros will have 6.75% of the funds seized. Accounts over 100,000 euros will have 9.9% seized. And then the Eurozone's emergency lending facility and the International Monetary Fund will inject 10 billion euros into the banks to allow them to keep operating.

Cyprus's government tried to explain this deal by observing that it was better than the alternative: Immediate bankruptcy and closure of the major banks. In that scenario, depositors would lose a lot more of their money. Businesses would go bankrupt. And tens of thousands of people would be instantly thrown out of work.

But, still, not surprisingly, news that deposits in Cyprus's banks would be seized triggered an immediate run on the banks.

Depositors rushed to ATMs and tried to withdraw their money before it could be seized.

But the ATMs weren't working. And the government has now made it impossible to transfer money out of the country.

So, assuming Cyprus's government approves the deal (still pending), depositors will have some of their money seized on Tuesday morning.

Now, half of these depositors are said to be Russian oligarchs and other non-residents. And unless you happen to have the misfortune of having an account in a Cyprus bank, you may not care much whether these depositors have their money seized.

After all, that was the risk they took for storing their money in bankrupt banks, right?

Well, yes, that was the risk they took.

But ever since the Great Depression wiped out a big percentage of the world's banks, vaporizing the bank depositors' savings in the process, banking system regulators have tried to do everything they can to protect bank depositors.

And they are smart to do so.

Because the moment depositors think that there is risk to their savings, they rush to banks to yank their money out.

That's called a run on the bank.

And since no bank anywhere has enough cash on hand to pay off all its depositors at once, runs on the bank cause banks to go bust.

That's what happened to hundreds of banks in the Great Depression.

And it's what happened to Bear Stearns, Lehman Brothers, and other huge banks during the financial crisis (though, with Bear and Lehman, the folks who yanked their money out weren't mom and pop depositors but other big financial institutions). It's what threatened to bring the entire U.S. financial system to its knees. And it's why the US and European governments have been frantically bailing out banks ever since.

But now, thanks to Eurozone's bizarre decision in Cyprus, the illusion that depositors don't need to yank their money out of threatened banks because they'll be protected has been shattered.

Depositors in Cyprus banks will lose some of their deposits.

They will be furious about this.

And they will, rightly, feel that it is grossly unfair--because depositors in the bailed-out banks in Ireland, Greece, etc. didn't lose their money.

And they will feel like fools for not having taken their money out.

And...here's the important part...

Other depositors at weak banks all over Europe, in places like Spain, Italy, and Greece, will rightly wonder whether this is the beginning of a new era of bank bailouts, an era in which bank depositors are going lose some of their money.

What do you think those other depositors in Spain, Italy, Greece, etc., are going to feel like doing when they realize that, if their banks ever need a bailout, they might have their deposits seized?

That's right.

They're going to feel like yanking their money out of their banks.

And if some of them yank their money out of their banks, well--then the financial condition of those banks will go from weak to insolvent.

And the banks will go rushing to their governments and the Eurozone for help.

And if, god forbid, the Eurozone decides to seize the deposits of more bank depositors...

Well, then, a good portion of Europe is going to suddenly experience a good old-fashioned bank run.

That, to put it mildly, could be a disaster.

It could bring the European financial crisis, which has lurched from one flare-up to another for most of the past five years, to a rather sudden head.

How much would it cost for the powers-that-be to bail out all of Europe's weak banks at once?

A lot.

More than the Eurozone has in its emergency lending facilities, certainly. And more than the International Monetary Fund has on hand.

So the U.S. would probably have to get involved.

And, regardless of whether the U.S. needed to get involved, the European economy would likely suffer the equivalent of a heart attack.

That wouldn't be good for the U.S. economy.

Or the Chinese economy.

Or any other economy that sells things to Europe.

So, you can see, this little decision to seize a little money from bank depositors in the little island of Cyprus could be a much bigger deal than you think.

It could conceivably precipitate a run on weak European banks.

And a run on weak European banks could hammer the European economy and then the economy of Europe's trading partners. And it could cause global markets to crash.

So keep an eye on what's going on over there in Cyprus.

It's potentially much more important than it seems.
http://www.businessinsider.com/cypru...#ixzz2Nl1KIOPP

Im currently a student in the UK. And i CANT withdraw money from my Visa, nor use it. Im left without money until Tuesday.
Things are ****ed up.

My small country could bring the entire European economy down

Pedro

I am from Portugal, we are in the middle of a financial crisis as well. This is not getting any better.

cypriotpcdfan

I was lucky that i went grocery shopping yesterday and i have something to eat

And bought a pack of cigarettes

3 days without any money. We are F'd up

.:Allen:.

Well I think it's more complicated than this one country, because all the economies in Europe are in the toilet.

cypriotpcdfan

Quote:

Originally posted by .:Allen:.

Well I think it's more complicated than this one country, because all the economies in Europe are in the toilet.

Yes, but as the article said. If this is the plan that they are aiming to use for every country that seeks help from Eurozone, they will make things much worse.
People will withdraw all their money from the banks.

Kworb

I know, I was speechless when I read what they were doing to Cyprus. I don't think the doomsday scenario is a realistic one, but it is a huge mess and very worrisome.

MikeFenty

Small countries making the world go on a financial crisis

KT&T

Wow interesting read, it's plausible it could worsen global economies.

Quote:

And they will, rightly, feel that it is grossly unfair--because depositors in the bailed-out banks in Ireland, Greece, etc. didn't lose their money.

I find that true, but I think the European Union are tired of giving bailouts. Very sad for Cyprus and for you cypriotpcdfan. Should have kept your money in a UK bank.

cypriotpcdfan

Quote:

Originally posted by Kworb

I know, I was speechless when I read what they were doing to Cyprus. I don't think the doomsday scenario is a realistic one, but it is a huge mess and very worrisome.

They are completely ripping us off

I spoke with my mom earlier and she told me people are FUMING. They went after the president, they're all running to the ATMs to withdraw as much money as they can.

A man even got his bulldoze and tried to destroy a bank building. People are freaking out

cypriotpcdfan

Quote:

Originally posted by MikeFenty

Small countries making the world go on a financial crisis

Cyprus, our global impact

MikeFenty

We won't be hearing bout this in North America

RatedG²

Damn, this sucks. I hope you're gonna be okay soon in Cyprus

nicklada

It's so bad over there

My parents still send the rest of my family in Greece/Italy money just in case it gets worse

new evolution

I'm so sorry to hear that. I do know that Cyprus has (or had, idk if it's still the same) a communist party in power, so is that why the banks had the right to take money?

Rihductive

Sunlighter

They gon' take Queen Ivi's money empty your accounts girl!!

Fernando.

Hey go ask Obama to bail your banks out

Troye

That's a scary scenario.

I hope it gets better.

SupahBass05

I feel like TPTB want an economic crisis tbh lol

SupahBass05

Quote:

Originally posted by Fernando.

Hey go ask Obama to bail your banks out

You dislike Obama don'tcha lol... ATRL ain't the place to preach anti-Obama shizz.