whatsinaname
Innovator
Can a government levy charge on bank account without your approval?
- Thread starter sharktale1212
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sharktale1212
Herald
Reserve requirement is way below 10%, in India stands at 4%. Even the average will be less than 10%. Other than that you are ignoring Deposit Insurance schemes (in US they are assuring people with the FDIC reserves - but then they could print some more). RBI assures only 1 lakh of the deposits.
The issue in Cyprus seems to be having is lacking their own press - having to approach ECB to print for them (what backing does ECB money have? The same sovereign countries for whom they are printing money -- a merry go around). Still the better move will be: Get out of Euro, devalue your currency (ala Japan) and correct their system. This will happen sooner or later once Germans refuse to pay for every country in the zone.
Lastly, the loan scenario make senses. But in this case, the company is being given more money to repay the debtors (the debtors taking a haircut/renegotiating/refinancing the terms). Taking more udhari to pay last udhari is not something which makes sense in my books.
whatsinaname
Innovator
I understand the numbers differ from country to country. I was just trying to indicate that the issue is not the government trying to grab resources, just that an external agent is making a not unreasonable request.
Leaving the Euro and devaluing the currency will be a tough call for Cyprus considering that they are a huge corporate tax haven. Once the currency switches away from Euro, I have a feeling all the Russian investors will want to pull out. Also, is devaluing a currency very different from directly taxing people's savings in the present world where most goods are imported from China?
I think Japan's efforts to devalue their currently very strong currency is a side effect of the shenanigans China is pulling to keep their currency low.
sharktale1212
Herald
Ok but the request is unreasonable a. Any government cant force the money from its savers. It can levy tax and raise money but cant enroach on private belongings . Specially without notice. b. Everyone knows who the target is in this case. Th russians ( why does it always have to be them
) So the government is trying to confiscate money which wasnt earned in their country. How does that make sense ? As for coming out of euro , yes it will take Russian backing. I read somewhere Cyprus is offering them board priviliges in banks and interest in future oi explorations in exchange for 20-30% cut. If Russians agree to that then payment in euro or cyprus curenncy doesnt mattert. As for devaluing being different from direct cuts is mainly an academic point. There are certain things a government is supposed to do and not do. Many fear this might set a precedent wherein anty government will try to use it powers to charge depositors. It was not done before but one developed county did it why not us will be the feeling. Hence my point on aadhar card in Op.
Japan has been devaluing its currency to kick start its economy to come out the losr decade. Never worked before might not wokr now.
whatsinaname
Innovator
Ok but the request is unreasonable a. Any government cant force the money from its savers. It can levy tax and raise money but cant enroach on private belongings . Specially without notice. b. Everyone knows who the target is in this case. Th russians ( why does it always have to be them
As for coming out of euro , yes it will take Russian backing. I read somewhere Cyprus is offering them board priviliges in banks and interest in future oi explorations in exchange for 20-30% cut. If Russians agree to that then payment in euro or cyprus curenncy doesnt mattert. As for devaluing being different from direct cuts is mainly an academic point. There are certain things a government is supposed to do and not do. Many fear this might set a precedent wherein anty government will try to use it powers to charge depositors. It was not done before but one developed county did it why not us will be the feeling. Hence my point on aadhar card in Op.
Japan has been devaluing its currency to kick start its economy to come out the losr decade. Never worked before might not wokr now.
That is true. Taking the step will kill any confidence in the traditional banking structure and set a bad precedent.
It does make one wonder what the best solution could be.
1) Take the TROIKA deal and live with the bad precedence?
2) Take up the church's offer but fear the influence of the religion in any further government decisions?
3) Sell the bank to the Russians?
4) Sell offshore oil rights to the Russians and allow for a Russian military base in Cyprus.
All options seem bad and it is generally a bad situation to be in. Not sure how this will play out.
Is't PAN card the requirement ? I think its compulsory for opening bank accounts, aadhar in my case was accepted as a POA and POI but I still had to show pan card to put in the records.
sharktale1212
Herald
The end will be a. Troika deal without any deposit scheme b. Leave the euro. With a being more than 70% probability. I found it very funny how Merkel was happy to tax Russian oligarchs saying they made money in the boom, now they should pay. Really? Everyone including Merkel's Germany made money in the boom years. Germans have been paying for their stupidity to make the Eurozone continue (their dream of Euro unification even if monetary finally realized). They should have started the disintegration when Greece slapped in their faces twice. But now they are pushing it on a smaller country.
Btw, I couldn't help but find an extension to the loan scenario you gave. While the company assets will be liquidated and 50% paid to each debtor. You wont say that the MD, CEO, executive including the chaprasi made money when the company was open so lets dock each of their savings account for 10-20% amount.
whatsinaname
Innovator
It wasn't a very straight analogy, I must admit.
I saw another comment on Reddit where something was pointed out and it was something I hadn't thought of. With the large scope of even conventional banks, I didn't think of the bond holders and equity holders.
It seems that in the case of a normal bankruptcy dealings of a bank, depositors are repaid first, then bond holders and then equity holders. This rule would have completely inverted that, with the common depositors bailing out the bank owners and larger organizations.
As a side note, it seems that in the US derivatives holders go to the head of that line. :/ I am sure Goldman Sachs had some lobbying to get that rule passed.
Germany is smart enough to continue the Euro. As long as the currency stays depressed, German exporters stand to stay competitive, to the pain of most bankrupt countries. Of course it keeps business costs low and economic policy firmly with them. Of course the cost of any country leaving will have enormous costs in the near future.
sharktale1212
Herald
well the problem is every time they bailout a country, they are picking up the tab. Long term loss for a short term exporter gain. I guess they never learned from the experiences of the Weimar republic. To top it off, german public are/were not happy with the bailouts. What chances are for a pro-bailout pro-exporter leader to make a comeback? Let see.
sharktale1212
Herald
You keep ignoring the deposit insurance. The main aim of the bailout was to go after the uninsured deposits. The money which factually the government need not pay out of its pocket. To use an indian analogy - any balance over 1 lakh will make that bracket - if such a thing was to happen.
Still it remains to be seen how much money is really collected. The London and Moscow offices of the "closed" banks were fully operational. It has allowed many russian to withdraw the money. End result? Ask for more money for the bailout.
They just keep doing things which will make matters worse.
Time to go back to the days of hiding money in your house
This is why Gold is getting interesting valuations in recent years. Some say Gold is still cheap.[DOUBLEPOST=1364318892][/DOUBLEPOST]
To add to miseries, they are making Aadhar compulsory for reaching Govt. for some functions. Heard central govt. pensions will only be provided if you have Aadhar card /applied for it.
Now, I think it will be better to keep very less money in accounts linked with Aadhar card.
better option is to make govt open new 0 balance bank ac linked to your aadhar no. that option is there in the form. you guys should have just ticked it.
Recently, Bharat Gas supply guys told I should give them aadhar card details to them to avail subsidies. I found TJSB Bank opened a counter at gas agency's door for opening 0 bal. a/c.. SBI opened a table at their gates to open 0 balance a/c. To top it all, UBI is selling debit cards and 0 balance a/c. like aaloo batata at road side in night time here !!!
This whole system of DBT is such a mess. I work with SBI in Ratnagiri and we literally have been drowned in the sea of account forms. It is so unproductive and inconvenient for old villagers living far off to come and collect benefits. Many of them don't even have a mobile phone, so we can't even give them mobile banking / SMS alerts to give info about any credits to the account.
Very unlikely, since Germans are not liking the bailout and Merkels ratings are down. Angela Merkel may be criticised for her role but I think she's adopting the best course of action in the given time and space. She can't appear too dominant and make Germany look like an economic Nazi, however bitter the prescription.
sharktale1212
Herald
It is certainly not the best course of action on pan-Europe basis. Its just achieves two things - 1. German dream of a unified europe 2. Lower euro to give them some export advantage. Countries taking the loans have a bleak future at best. -- all of them invariably are looking at long spell of recession.
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