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Ancient History
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Post by Ancient History » Wed Mar 20, 2013 8:16 pm

> Stahlseele wrote:Something i really don't understand about global economics:
> if everybody has debts to somebody else, then who has all the money?

To illustrate what name_here said, picture this:
You have 100¤, which you deposit in a bank account for safe keeping. In exchange for the use of your money, your bank promises to pay you 1% interest, and to make the bank safe the government promises to insure the money if it gets lost or stolen.
The bank then loans out 99¤ to somebody else for 2% interest. Ideally, at the end of the year the bank is paid their interest and pays you your interest and has enough money left over to pay its operating costs and profits.
As far as you are concerned, you have 100¤ in the bank, and if you go to get some cash from an ATM it will give you cash from its reserves. If it cannot give you the cash from its reserves, then the bank goes bankrupt. This usually happens when they keep too little cash on hand, or a loan is not paid back so the income they planned to have does not materialize.
However, most people don't use cash for normal transactions. They write a check or use a debit or credit card. These are not actual transfers of cash, these are transfers of credit - different banks talk to each other and move numbers back and forth without creating any more physical cash.
So it's a kind of shell game, where the bank needs to make loans to make a profit, but keep enough cash on hand to satisfy its requirements to the account holders. They usually run on very small margins, but if you get enough volume those margins still give a very large return - and, in the US and some other countries, the government partially subsidizes large banks to prevent their collapse if they overextend themselves.

> if you have a debt because somebody loaned you money, then you have the money he loaned you. if you spend it somewhere else, like loaning it to somebody else, then they have that money, it does not just disappear right?

As you can guess, a chain of loans means the actual value of the money can be spent several times - and be effectively irrecoverable - by the time you get to the end of the line. If Joe-Bob bought a car with the bank loan using the car as collateral and then crashed the car, they still expect Joe-Bob to pay off the loan, and if he can't they're screwed (which is why most banks insist on insurance on collateral loan agreements, just in case). Now imagine if Joe-Bob owned a car rental agency and leased vehicles out to customers, and you can sort of get the idea.

> so if everybody is indebted to everybody else, then where is the money everybody loaned to everybody else?

Again, it's important to think of this in both present and future terms. The total amount of a loan is how much money is required to pay it off, but it does not mean that amount of money actually exists. Loaners are betting on future income to cover a debt issued in present terms. These days money is mostly virtual - there are not enough greenbacks in existence to count for every US dollar currently in circulation. So if, say, you don't get the raise then you may owe money you do not have and that was never given to you - the money never existed! This is because the economy is generally expected to have a positive rate of inflation where the money supply will constantly grow.
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Username17
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Post by Username17 » Wed Mar 20, 2013 9:57 pm

Cypriot banks aren't opening tomorrow either. The day after doesn't involve them opening some more. Right now the open ended bank holiday has been extended until at least Tuesday of next week. It might get lengthened even more.
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name_here
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Post by name_here » Wed Mar 20, 2013 10:14 pm

I think that the banks may very well be fucked now no matter how the situation is resolved. A hell of a lot of people aren't going to want to keep their money in banks that might get randomly shut down for an extended period.
Unless they can magically convince everyone they've completely solved all possible financial risks and will not shut down the banks for negotiation in the future, they're probably going to have a bank run. People won't necessarily pull out all their money, but a lot of them will likely want thousands of dollars stuffed under their mattress if they think they might not be able to make withdrawals at will.

> DSMatticus wrote:It's not just that everything you say is stupid, but that they are Gordian knots of stupid that leave me completely bewildered as to where to even begin. After hearing you speak Alexander the Great would stab you and triumphantly declare the puzzle solved.

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Stahlseele
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Post by Stahlseele » Wed Mar 20, 2013 11:16 pm

Cyprius:
Orthodox Church offered to give them access to their whole fortune O.o
Other talks are about a credit from russia . .
Welcome, to IronHell.

> Shrapnel wrote:

> > TFwiki wrote:Soon is the name of the region in the time-domain (familiar to all marketing departments, and to the moderators and staff of Fun Publications) which sees release of all BotCon news, club exclusives, and other fan desirables. Soon is when then will become now.
> > Peculiar properties of spacetime ensure that the perception of the magnitude of Soon is fluid and dependent, not on an individual's time-reference, but on spatial and cultural location. A marketer generally perceives Soon as a finite, known, yet unspeakable time-interval; to a fan, the interval appears greater, and may in fact approach the infinite, becoming Never. Once the interval has passed, however, a certain time-lensing effect seems to occur, and the time-interval becomes vanishingly small. We therefore see the strange result that the same fragment of spacetime may be observed, in quick succession, as Soon, Never, and All Too Quickly.

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DSMatticus
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Post by DSMatticus » Wed Mar 20, 2013 11:50 pm

Yeah, the cypriot banks are totally fucked. Not only is there justifiable concern that if they don't withdraw their money, there will spontaneously be less of it the day after, there is also the totally justifiable concern that as a result of the previous justifiable concern everyone will try to withdraw their money and the banks won't be there at all tomorrow. They have given people every incentive to take money out of the banks and put it under their mattress, so that is what is going to happen.
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Username17
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Post by Username17 » Sat Mar 23, 2013 12:01 pm

> Jean-Claude Trichet, President of the European entral Bank, 2008 wrote:Furthermore, for a small open economy such as Cyprus, the euro adoption provides protection against international financial turmoil, which often has a disproportionate effect on smaller economies.

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Whatever
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Post by Whatever » Sat Mar 23, 2013 1:03 pm

Their new plan is to leave <100,000 euro accounts alone, and hit the >100,000 accounts with a 20% or higher levy. So:
1) Russians are going to be piiiiiiiiissed
2) Russians will take all their money out of the Cypriot banks, because fuck having 20% of your account disappear overnight
3) Cypriot banks will collapse
4) all those <100,000 depositors will lose their money anyway
5) ...
6) Profit!
The ratings agencies have downgraded bank deposits in Cyprus to almost their lowest possible rating, worse than most junk bonds. Let's repeat that: bank deposits, which are nominally insured up to 100,000 euros, are considered a riskier investment than basically anyone who isn't already in arrears or bankruptcy.
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Morat
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Post by Morat » Sat Mar 23, 2013 9:37 pm

Part of me thinks that the ECB needs to backstop Cyprus' deposit insurance by just guaranteeing all accounts up to 100k eurozone-wide. The rest of me thinks that since the ECB is apparently run by idiots, their guarantee would be worth precisely dick.
Maybe the US government should just unilaterally declare that FDIC is taking over.
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hyzmarca
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Post by hyzmarca » Sat Mar 23, 2013 10:44 pm

> FrankTrollman wrote:

> > Jean-Claude Trichet, President of the European entral Bank, 2008 wrote:Furthermore, for a small open economy such as Cyprus, the euro adoption provides protection against international financial turmoil, which often has a disproportionate effect on smaller economies.

> -Username17

Assuming that the ECB did its job, this would be true.
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Username17
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Post by Username17 » Mon Mar 25, 2013 7:38 pm

The head of the Euro Group has gone off the reservation.

> Jeroen Dijsselbloem, Dutch Finance Minister and head of the Euro Group wrote:A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors, the head of the region's finance ministers said.

So apparently the new "template" is that if you have more than €100,000 in a Euro-zone bank, the Euro Group may decide to freeze your assets for more than a week and then take double digit levies off the top without warning or explanation. Also: fuck you.
Can the Euro Group give me or anyone else any reason at all to put more than €100K into any bank in the Euro Zone? These guys are fucking insane!
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Stahlseele
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Post by Stahlseele » Mon Mar 25, 2013 8:10 pm

accounting tricks still apply.
if the account has 4 owners, then all is good up to 400k i think.
also having more than one account with 100k in it works too.
Welcome, to IronHell.

> Shrapnel wrote:

> > TFwiki wrote:Soon is the name of the region in the time-domain (familiar to all marketing departments, and to the moderators and staff of Fun Publications) which sees release of all BotCon news, club exclusives, and other fan desirables. Soon is when then will become now.
> > Peculiar properties of spacetime ensure that the perception of the magnitude of Soon is fluid and dependent, not on an individual's time-reference, but on spatial and cultural location. A marketer generally perceives Soon as a finite, known, yet unspeakable time-interval; to a fan, the interval appears greater, and may in fact approach the infinite, becoming Never. Once the interval has passed, however, a certain time-lensing effect seems to occur, and the time-interval becomes vanishingly small. We therefore see the strange result that the same fragment of spacetime may be observed, in quick succession, as Soon, Never, and All Too Quickly.

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Istred
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Post by Istred » Mon Mar 25, 2013 9:37 pm

> Stahlseele wrote:accounting tricks still apply.

For now. If the Euro Zone is crazy enough to try this trick again, I'm betting they will say change the method to "every person/company who has more than x on his/its accounts pays y%"...
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Stahlseele
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Post by Stahlseele » Mon Mar 25, 2013 10:05 pm

rumors have it that 20 billion US dollar in russian black money are stored on bank accounts all through cyprius . . if they manage to take 10% of that, then they are a good step away from being bancrupt . .
Welcome, to IronHell.

> Shrapnel wrote:

> > TFwiki wrote:Soon is the name of the region in the time-domain (familiar to all marketing departments, and to the moderators and staff of Fun Publications) which sees release of all BotCon news, club exclusives, and other fan desirables. Soon is when then will become now.
> > Peculiar properties of spacetime ensure that the perception of the magnitude of Soon is fluid and dependent, not on an individual's time-reference, but on spatial and cultural location. A marketer generally perceives Soon as a finite, known, yet unspeakable time-interval; to a fan, the interval appears greater, and may in fact approach the infinite, becoming Never. Once the interval has passed, however, a certain time-lensing effect seems to occur, and the time-interval becomes vanishingly small. We therefore see the strange result that the same fragment of spacetime may be observed, in quick succession, as Soon, Never, and All Too Quickly.

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K
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Post by K » Mon Mar 25, 2013 10:30 pm

> Stahlseele wrote:rumors have it that 20 billion US dollar in russian black money are stored on bank accounts all through cyprius . . if they manage to take 10% of that, then they are a good step away from being bancrupt . .

Considering that the Russian government assassinates tiny people like local journalists and their criminal organizations are renowned for violence and cruelty and taking revenge, is stealing their money a good idea?
I'm kind of assuming that bands of Russian assassins and hit-men have been leaving horse's heads in beds every night this last week. Cyprus has less than a million people, so it's not like their government officials and banking officials don't probably live in the same gated neighborhood.
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Stahlseele
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Post by Stahlseele » Mon Mar 25, 2013 10:38 pm

black monies, private accounts from business men, not official black monies for secret service stuff, according to the german BND at least . .
Welcome, to IronHell.

> Shrapnel wrote:

> > TFwiki wrote:Soon is the name of the region in the time-domain (familiar to all marketing departments, and to the moderators and staff of Fun Publications) which sees release of all BotCon news, club exclusives, and other fan desirables. Soon is when then will become now.
> > Peculiar properties of spacetime ensure that the perception of the magnitude of Soon is fluid and dependent, not on an individual's time-reference, but on spatial and cultural location. A marketer generally perceives Soon as a finite, known, yet unspeakable time-interval; to a fan, the interval appears greater, and may in fact approach the infinite, becoming Never. Once the interval has passed, however, a certain time-lensing effect seems to occur, and the time-interval becomes vanishingly small. We therefore see the strange result that the same fragment of spacetime may be observed, in quick succession, as Soon, Never, and All Too Quickly.

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Korgan0
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Post by Korgan0 » Mon Mar 25, 2013 10:48 pm

From what I understand, the Russian state is so deeply enmeshed in private economic interests, both legal and illegal, that it's difficult to say where one ends and the other begins.
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Stahlseele
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Post by Stahlseele » Mon Mar 25, 2013 11:07 pm

*snickers*
vlads wolves eh? ^^
Welcome, to IronHell.

> Shrapnel wrote:

> > TFwiki wrote:Soon is the name of the region in the time-domain (familiar to all marketing departments, and to the moderators and staff of Fun Publications) which sees release of all BotCon news, club exclusives, and other fan desirables. Soon is when then will become now.
> > Peculiar properties of spacetime ensure that the perception of the magnitude of Soon is fluid and dependent, not on an individual's time-reference, but on spatial and cultural location. A marketer generally perceives Soon as a finite, known, yet unspeakable time-interval; to a fan, the interval appears greater, and may in fact approach the infinite, becoming Never. Once the interval has passed, however, a certain time-lensing effect seems to occur, and the time-interval becomes vanishingly small. We therefore see the strange result that the same fragment of spacetime may be observed, in quick succession, as Soon, Never, and All Too Quickly.

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Koumei
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Post by Koumei » Mon Mar 25, 2013 11:48 pm

Just assume that no matter what, Putin is going to kill someone for this. Possibly "everyone on the entire planet".
Interestingly, the basic "steal money from billionaires who are clearly criminals and stashing their money away in what they probably thought would be a tax haven" idea itself, without the "bank runs" part, has a lot of traction amongst basically everyone.
You have socialists, who like to point out it's not inherently their money via the magical bank account fairy (it's just usually your own government that gets to take taxes from you), and "fuck 'em, that's one way to get the money to help the countries that need it". You then have capitalists, who are saying "And Russia foots the bill! I haven't been this happy since we won the cold war!" (Though mainly they felt so good then because it was their first Birthday, I imagine.)

> Count Arioch the 28th wrote:There is NOTHING better than lesbians. Lesbians make everything better.

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Username17
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Post by Username17 » Tue Mar 26, 2013 6:15 am

New hilarity: Cyprus is trying to put together a "solidarity fund" backed by the island's natural gas reserves. Problem: those natural gas reserves are half under Turkish territory. The Turkish foreign minister has said that Cyprus unilaterally selling shared gas reserves to a 3rd party would be grounds for war.
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hyzmarca
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Post by hyzmarca » Tue Mar 26, 2013 1:24 pm

> FrankTrollman wrote:New hilarity: Cyprus is trying to put together a "solidarity fund" backed by the island's natural gas reserves. Problem: those natural gas reserves are half under Turkish territory. The Turkish foreign minister has said that Cyprus unilaterally selling shared gas reserves to a 3rd party would be grounds for war.
> -Username17

If they went to war with Turkey and then unconditionally surrendered, wouldn't Turkey pretty much be forced to foot the bill for their fucked up banks as part of the occupation?
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Lago PARANOIA
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Post by Lago PARANOIA » Tue Mar 26, 2013 1:47 pm

> If they went to war with Turkey and then unconditionally surrendered, wouldn't Turkey pretty much be forced to foot the bill for their fucked up banks as part of the occupation?

In the words of Babbage: I am not able rightly to apprehend the kind of confusion of ideas that could provoke such a question.

> Josh Kablack wrote:Your freedom to make rulings up on the fly is in direct conflict with my freedom to interact with an internally consistent narrative. Your freedom to run/play a game without needing to understand a complex rule system is in direct conflict with my freedom to play a character whose abilities and flaws function as I intended within that ruleset. Your freedom to add and change rules in the middle of the game is in direct conflict with my ability to understand that rules system before I decided whether or not to join your game.
> In short, your entire post is dismissive of not merely my intelligence, but my agency. And I don't mean agency as a player within one of your games, I mean my agency as a person. You do not want me to be informed when I make the fundamental decisions of deciding whether to join your game or buying your rules system.

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hyzmarca
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Post by hyzmarca » Tue Mar 26, 2013 3:40 pm

I'm just saying that being conquered by Turkey is probably the best way for Cyprus to smoothly exit the Euro.
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Kaelik
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Post by Kaelik » Tue Mar 26, 2013 3:48 pm

As a general rule, to be conquered, you need the consent of your conquerer. Nothing about unconditional surrender prevents Turkey from looting the country and then letting it descend into anarchy.
Anything that required Turkey to annex Cyprus would be a conditional surrender.

> DSMatticus wrote:Kaelik gonna kaelik. Whatcha gonna do?

The U.S. isn't a democracy and if you think it is, you are a rube.
That's libertarians for you - anarchists who want police protection from their slaves.
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hyzmarca
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Post by hyzmarca » Tue Mar 26, 2013 4:53 pm

Under international law, the TRNC and the ROC are still one country, just partitioned. Only Turkey recognizes Northern Cyprus's independence. So it isn't really a matter of annexation at all. It's just a matter of getting the recognizing the Turkish Republic of Northern Cyprus as the only legitimate government of Cyprus. It would be less annexation and more reunification.
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Orca
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Post by Orca » Wed Mar 27, 2013 12:12 am

If you have 200 000 euros of legal money to invest, why wouldn't you invest it in something paying better interest than a bank? Probably a few different investments to spread the risk around.
Dropping vast amounts of money into a bank account and leaving it there sounds like either the money isn't legal (and the Cypriot banks don't care) or they don't know how to invest. Or, possibly the banks were paying sufficiently high interest that it should have sent up warning flags to those investing.
So: not so much sympathy to those caught there.
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