Bailout terms: good idea or not?

[Kalis]

Due to the screwed up Cypriot economy, the Cyprus Government has decided to take out a rescue package of €10bn ($13bn).

Of that sum, an estimated €5.8bn is to be funded by, "People with less than €100,000 in their Cypriot bank accounts will have to pay a one-time tax of 6.75 percent, those owning more money will lose 9.9 percent."

Other measures include raising corporate tax, and capital gains tax.

http://news.yahoo.com/cyprus-secures...--finance.html

So, are the terms good, and is this a possible way of dealing with bailouts in the future?

Edit: there is a typo in the article: corporate tax will go from 10% to 12.5%, not 25%.

[Deleted]

Those terms are awful. I'd take all of my money out of the banks immediately...

[zorkuus]

Those terms are awful. I'd take all of my money out of the banks immediately...

Sometimes you have to suck it up for the common good.

[Kalis]

Those terms are awful. I'd take all of my money out of the banks immediately...

You can't, they've frozen a certain amount in each account.

[Sunseeker]

That's pretty shitty IMO.

[Deleted]

Sometimes you have to suck it up for the common good.

Or not. They're punishing people that are more financially successful as well, also a dick move.

[zorkuus]

Or not.

The options are: take one for the team or let the economy sink for good. Atleast they're trying to solve the problem among themselves instead of the usual proven to fail method of taking more debt.

[Deleted]

The options are: take one for the team or let the economy sink for good. Atleast they're trying to solve the problem among themselves instead of the usual proven to fail method of taking more debt.

It still doesn't justify taking more from people that either earn more or have saved more just because "they can afford to give more".

[Deleted]

I, being a resident of Cyprus, am seeing right now all the backlash going on against the government for this decision. I agree that some measures need to be taken, but this is seriously going to affect alot of people. What of the people with savings accounts for their children to study or for operations?

[Deadvolcanoes]

I'm not sure that I understand this completely. They're going to tax everyone's bank account by 6.75%? How could that possibly be good for the economy? It will devastated the poor and middle class.

[Deleted]

Well, one thing to keep in mind is that it is only a one-off thing, they will only tax us once.

[Deleted]

It still doesn't justify taking more from people that either earn more or have saved more just because "they can afford to give more".

It is a dick move to collect a symbolic part from investors in return for the massive subsidies given to them? These banks are bankrupt or would be without the subsidies granted by the Cyprus government and the EU, and without subsidies these people would lose 100% and not at most 9.9%.

This is a dick move, but towards the people who will have to pay for the bailout, both directly with taxes, and indirectly with austerity and privatisations. Iceland was the only country who made a good choice.

[SirPiken]

Taxes on wealth are bullshit, I wouldn't be surprised if next they made you report all your assets and tax you on your net worth. OH what's that, you have a car worth 10,000? we're gonna need you to cut us a check at 6% of the worth of that too.

This will make the savings rate in the country plummet, and will almost certainly increase consumer debt. Fucking with people's savings is wrong.

[Deleted]

To be honest it's not that they put taxes and crap, but they should let the banks sink. They failed as corporations and should die and new good banks should take their place.

Well, one thing to keep in mind is that it is only a one-off thing, they will only tax us once.

Now. They will only tax you once now. What if the banks continue to sink? They'll tax you again. And again. And again. Because you accepted to give your money to them the first time.

[zorkuus]

To be honest it's not that they put taxes and crap, but they should let the banks sink.

The banks wouldn't be the only thing to sink.

[Sunseeker]

The options are: take one for the team or let the economy sink for good. Atleast they're trying to solve the problem among themselves instead of the usual proven to fail method of taking more debt.

No economy is ever sunk "for good". Yeah it might collapse totally, and that sucks, but that doesn't mean that nation can never build it up again.

Is it better to keep a sinking ship afloat with patches? Or scuttle it and build a better one?

[zorkuus]

Is it better to keep a sinking ship afloat with patches?

Debt spiral is the real patch here, now they're trying to do something about it. Will it work? I don't know, but it's still a better option than not doing anything and hoping to build up the country again sometime in the unforseeable future. And let me assure you, the other countries which have given you loan are not going to like not one bit if you go for the latter option.

[Deleted]

Iceland was the only country who made a good choice.

I'm still waiting on my money.

[Ryve]

Taxes on wealth are bullshit, I wouldn't be surprised if next they made you report all your assets and tax you on your net worth. OH what's that, you have a car worth 10,000? we're gonna need you to cut us a check at 6% of the worth of that too.

This will make the savings rate in the country plummet, and will almost certainly increase consumer debt. Fucking with people's savings is wrong.

Please, just stop. It's a horrible situation they're in, and it really sucks for them... But if the economy completely collapses, their life saves aren't worth anything anyway.

Don't look at it as "the horrible government is stealing almost 10% of everyone's money", look at it as "the desperate government is doing what it can to ensure the citizens retain at least 90.1% of their wealth". With 90% of your wealth, you can probably still put food on the table. With 0% of your wealth, in a nation full of others who are suddenly broke, you're in the shit.

[Deleted]

I'm still waiting on my money.

And that's how it should remain, and should have been the case for other banks. The high interest was a sign of a risk, which you should have known when you lent your money to Icesave.