18-03-2013, 11:32 PM
(18-03-2013, 11:26 PM)d.o.g. Wrote:(18-03-2013, 07:36 PM)greengiraffe Wrote: The point to note is that most of the smart and big money in these troubled nations would have long flee the country given the ease of money flow (lack of restrictions as a result of the union). The beneficiaries of such money are none are than the stronger EU countries such as Germany, Holland and UK. Note that these safer countries have already experienced massive asset inflation. Hence, the residual funds that will flee will no longer be significant but really belong to that of mum and dads. Unfortunately, the innocent guys are always the ones that are punished and hence the latest twist.
Actually 37% of the deposits in Cyprus come from overseas. You can safely assume these are not mom-and-pop depositors. In fact Cyprus is widely viewed as a major money laundering centre for Russian money. Many of the Greek tycoon families, who have historically paid little or no tax in Greece, also park funds in Cyprus. So the tax is another way to hit the dirty money and tax dodgers.
The Cypriot government is now proposing 3 tiers, where the lowest tier pays nothing or at most 3%, and the highest tier pays 15%. So they are really after the dirty money, not your average Cypriot citizen. The dirty money can't easily move to Paris, London, Zurich or Frankfurt because of KYC requirements. Anyway with the capital controls they are stuck - the only practical way to move $10m is to wire it, gold weighs too much and diamonds incur too high a transaction cost. So it looks like Cyprus will be able to part-fund its bailout. The big losers are the money launderers and the tax cheats, but nobody likes them anyway so it's all good.
So like that lagi no worries lah. Ill gotten money to pay for mess - well worth it for good cause.
So it is just another learning experience and noise for a mid term correction. Fantastic for value seekers.