So, what unintended consequences do you see happening here?

[draco664]

I think the idea of a bailout is that you've first got to prove you aren't just going to spend it on sweets, by coming up with a small contribution first.

And yet the other bailout packages didn't require it. Banks for instance that accepted bailout money are still buying sweets, er, paying obscene bonuses.

[Rapscallion]

And yet the other bailout packages didn't require it. Banks for instance that accepted bailout money are still buying sweets, er, paying obscene bonuses.

The Greeks ended up rioting over the austerity measures required of their government for their bail outs.

Rapscallion

[MadMike]

true, but the point is that taxpayers are at least theoretically capable of finding someone more honest.

In theory, yes. In reality, no. The only power you have is picking who screws you. Kind of like the scene at the end of "Ghostbusters", where they're told to "choose the form of your destroyer." I think I'll just vote for the Stay-Pufft Marshmallow Man next time around.

[SongsOfDragons]

Vote Cthulhu! At least he admits he's evil!!

This was a poster I had up in a window during our last General Election. XD

[Duelist925]

Vote Cthulhu! At least he admits he's evil!!

This was a poster I had up in a window during our last General Election. XD

Theres a bumper sticker I want... "Vote Cthulhu! Why vote the LESSER of two evils?"

[wolfie]

One newspaper article I read said that Cyprus lost a lot of money because they had Greek bonds that were written down as part of the bailout for Greece. It would be interesting to see how much they lost, compared to the bailout they were asking for. Sounds like a case of "You're in trouble because we (Germany) took this pile of money away from you to bail out Greece? It's your own damn fault - so you need to raid your citizens' bank accounts and destroy trust in your banking system".

[Aethian]

I wonder what would happen if everyone came to the table and figured out who owes who and cancel some of the debts. For example

Country A owes Country B 10,000
Country B owes Country A 9,000

Cancel the amounts and now Country A just has a much easier to pay 1,000.

[s_stabeler]

because politicians can see what the opposition would say? ( "The Government threw away $x Billion taxpayer money! The government is ruining the country!")

[D_Yeti_Esquire]

I wonder what would happen if everyone came to the table and figured out who owes who and cancel some of the debts. For example

Country A owes Country B 10,000
Country B owes Country A 9,000

Cancel the amounts and now Country A just has a much easier to pay 1,000.

Credit markets seize up because people stop issuing debt that can be invalidated by governments. Companies relying on short term financing for cash fail as their borrowing costs skyrocket. Recession at best and depression at worst occurs.

[s_stabeler]

I think they were referring to government-owned debt, actually. Governments buy each other's debt all the time.

[draco664]

I wonder what would happen if everyone came to the table and figured out who owes who and cancel some of the debts. For example

Country A owes Country B 10,000
Country B owes Country A 9,000

Cancel the amounts and now Country A just has a much easier to pay 1,000.

Because debt is not owed by some big 'government' pot. Some department may owe a big chunk of the money, others owe less. Some may have to provide services with it, or pay different interest amounts, or guarantee things. The payment schedule will be different for different loans, some may be interest only, others may be forgiven totally after a certain time.

It's like if you have a mortgage, car loan, personal loan and credit cards. They might all be 'owned' by the same bank, but the mortgage will be financed by a different part than your cards, likewise your loans. If 90% get forgiven, which gets forgiven first? Or will it be proportionally forgiven?

It's a nice idea, but in reality there is too much complexity for such a simple solution.

[Aethian]

I think they were referring to government-owned debt, actually. Governments buy each other's debt all the time.

Yes, yes I was.

If 90% get forgiven, which gets forgiven first? Or will it be proportionally forgiven?

It's a nice idea, but in reality there is too much complexity for such a simple solution.

I was thinking proportionally but then I really don't understand some of the world loan structors that are out there. But this would be a awesome time for simplicity to overrule complexity.

[SongsOfDragons]

Well, they've figured out what they're going to do. They're closing one bank and restructuring the other, migrating all €100,000-or-less accounts. €100,000-or-more accounts are going to be levied heavily, by as much as 30%. And probably other things I've missed. (It's on the BBC, I can post the link in the morning...)

All I can say is: ouch. I don't know if Cyprus was a tax haven, but a lot of their economy revolved around people using their banks to deposit large sums, or along those lines. The EU finance people have put a stop to this. And this time their government don't get to vote on it...

[D_Yeti_Esquire]

I think they were referring to government-owned debt, actually. Governments buy each other's debt all the time

Ahh. Well that would make more sense but draco points out why that would be problematic. Because it was private Cypriot banks making holding government debt, I thought something else was meant.

I wish there were "simple" solutions, but unfortunately finance and economics tend to get inordinately complex.

[protege]

All I can say is: ouch. I don't know if Cyprus was a tax haven, but a lot of their economy revolved around people using their banks to deposit large sums, or along those lines. The EU finance people have put a stop to this. And this time their government don't get to vote on it...

From what I understand, Cyprus was the Mediterranean equivalent to the Cayman Islands. Quite a few of those depositors were shady--either they were people looking for a tax dodge, or Russian Mafia-types. Because they're seen as "criminals" (at least according to CNBC), that's why there's a backlash over a bailout. Why should criminal enterprises get bailouts?