Listen (or read the transcript) to
NPR’s Planet Money “Why Cyprus Matters”, then answer these questions:
1.What was the cause of the banking
collapse in Cyprus?
2.Why did the Cypriots try getting their
money out of the Cypriot banks?
3.As a European, what do you think is a
reasonable solution? Should the Cypriots pay for their own bailout or should
the EU step in?
4.If this scenario plays out the same way
in Italy, what do you think would happen?
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1.What was the cause of the banking collapse in Cyprus?
ReplyDeleteThe cause of the banking collapse in Cyprus is due to the fact that the banks it selves invested their own money in terrible investments that went in negative (example from 3.44€ per stock to 3.00€ stock), so they lost huge amounts of money. A secondary cause though could be that all this money that the banks had to invest was thanks to the Russian Magnates and huge Russian oil companies which constantly moved their money in Cyprus’ banks. Another reason is that the Cyprus banks lent money to Greece as they thought they were secure but this is the main cause which “sank” the banks.
2.Why did the Cypriots try getting their money out of the Cypriot banks?
The Cyprus Banks then had to gain some of the money back because in this moment they had more debt than the money they had before. The EU wanted that Cyprus gained some money itself and the rest would have been put by the EU. They were taking their money out of the banks because the banks were taking from 6-10% of the money of whoever had a bank account.
3.As a European, what do you think is a reasonable solution? Should the Cypriots pay for their own bailout or should the EU step in?
The Cypriots BANKS should pay their own bailout because it was their fault for this bank crisis, because they invested money in terrible investments and they lent money to an unstable country like Greece and it’s not the people’s fault, so they should not take their money from them.
4.If this scenario plays out the same way in Italy, what do you think would happen?
If the same scenario plays out the same way in Italy there would be an enormous revolt, because already the Italians in the past year and a half had to pay the IMU that for a normal family is a whole monthly salary a year. Also it would be a complete disaster because already Italy, like other countries, is full of people who don’t pay the taxes at all and some who just pay part of them and this would bring these people to just not pay the taxes at all and to move their money to Switzerland or the Bahamas like many already do. In a case were the state takes your money from you in a mischievous way I would sincerely carry my money away from Italy.
1) What was the cause of the banking collapse in Cyprus?
ReplyDeleteThe cause of the banking collapse in Cyprus was that in order to sustain their high interest rate (5%), the banks had to invest money in order to gain money. In this case they invested in Greece, thinking that Greece’s position was safe and that they were going to be bailed out and made bonds with the Greece government. So the Cypriot banks owed more money than they had and looked out for a bailout.
2) Why did the Cypriots try getting their money out of the Cypriot banks?
The Cypriots tried to get their money out of the Cypriot banks because they wanted to get out of their accounts the most amount of money in order to be taxed on a lesser amount of money. This because they would be taxed from 6-10% according to the amount of money in the bank account, so if they got more money out then they would be taxed on a smaller sum of money.
3) As a European, what do you think is a reasonable solution? Should the Cypriots pay for their own bailout or should the EU step in?
Maybe I think it should be a compromise. Partially the Cypriots are responsible of their own bailout because they invested their money in a very risky operation, which they knew, that was at risk because Greece’s situation was rapidly declining. On the other hand the other people didn’t even know of the investments that their banks were making and where so they aren’t responsible.
4) If this scenario plays out the same way in Italy, what do you think would happen?
I think that because of the crisis in all Europe and in the world maybe the same scenario will play out in Italy because the other nations are less willingly to give out their money in order to help another nation when similarly also they are about to fail. If the Italians would be deprived of their money from their savings account it would be terrible because we are overwhelmed by the taxes and an additional one would bring many families to extreme poverty. Maybe for Italy there will be a bailout from Europe because it is a very important nation in the EU but I think it is becoming more improbable.
1. The cause of the banking collapse in Cyprus was that the banks had to invest money in order to gain money and they had a high rate which had to be sustained. Banks invested i Greece believeing that it was a good, promising, and consistent place to settle in, they also planned to work with the government of Greece, however it came out that there was too much money being lent and they were stick with huge amounts of money to owe back.
ReplyDelete2. Cyprus Banks needed to get some of their money back because it was a period in which they owed more than what they actually had. EU planned to make Cyprus re gain some money and the rest would have been put by the EU. They began takng money from banks from society as a whole and would take up to 10% of people who had accounts in those banks.
3. Cypriot Banks made huge mistakes, and it is their problema nd fault if they made bad choices in investments which were not going to be successful. They lost money and caused a crisis all because of theur bad choices also in lending money to a country which wasn't as stable as they thought (greece) therefore I believe that the Cypriot Banks must pay for theur own bailout.
4. I personally believe that due to the European crisis in all countries and throughout the world, I think teh same scenario could possibe happen as well here in Italy because not many natjons are willing to give their money to help other nations when they themselves are on teh border line of failing. If money would be taken out of banks here in Italy than things would get even worse as taxes here are really high and it would cause even greater poverty than there already is.
1.What was the cause of the banking collapse in Cyprus?
ReplyDeleteThe cause of this banking collapse in Cyprus was due to the high rate of loan of money, and the banks had to invest money in order to gain money. With a high interest rate, the Cypriot government decided to invest and lend the money to Greece, at the time believing that it would have a strong bond and it would be safe. Unfortunately, with also the economic crisis in Greece, this led to a disproportional rate of loan and had to somehow owe back. The European Union will not aid completely Cyprus, thus its nation needs to find a way to invest the rest of the money.
2.Why did the Cypriots try getting their money out of the Cypriot banks?
The Cypriots are trying to get their money out of the Cypriot banks because of how they loaned more than they had, and the EU would only give up a certain percentage while the rest was to be gained from the Cyprus government itself. The solution the government found was to take away up to 10% of the bank accounts of the Cypriots, an act that would betray the banking promises.
3.As a European, what do you think is a reasonable solution? Should the Cypriots pay for their own bailout or should the EU step in?
As a European, the most reasonable solution is for the EU stepping in because as a whole, the European Union is a union that would aid one another, and will collaborate to help each other. It is understandable, that this crisis was because of the Cypriot government, however it is necessary for the EU to step in and aid, to keep the union, the bond together.
4.If this scenario plays out the same way in Italy, what do you think would happen?
If the same thing were to happen in Italy, then I believe that the European Union would have to bailout and aid the Italian government with no doubt, because of its economic crisis and how unstable it is. Due to its high interest rates, and the difference in the regions, from the North and the South, that creates a unbalance between the two, it will be hard for the Italian government to find a solution, and clearly, using the Cypriot's methods would be very difficult to stand.
Thanks guys, for some very insightful comments!
ReplyDelete1) The cause of the collapse of the banks in Cyprus is the high loan rate and the high intrest rate. The banks had to invest more and more money to gain money, they loaned money to Greece believing it was a safe "investment" however it turned out that they were lending too much money and when the Greek banking system collapsed they found themselves in a sticky situation
ReplyDelete2)The Cypriots are trying to get their money out of the banks because to get out of this banking crisis the government said that they are going to extract 6.7%-9.9% of the money each person had in his or her bank account
3) As a European I don't think this is a reasonable solution, taking money out of people's bank account isn't a solution at all. This could ignite civil revolutions and widespread discontent among the Cypriots. However I also think it's not "fair" that the EU pays for Cypria's debt. They should try to raise money in a different way and then see how much money they have; at that point the EU could step in and help a little.
4)If the same thing were to happen in Italy I think a civil revolt would begin as Italians have already seen though times with the IMU, however most of Italians would take out money from their bank accounts and store it in places like Switzerland so that the government takes the least amount of money possible; just like many Cypriots are doing.
1) The banks in Cyprus collapsed due to their high rates of loans and interests. They also decided in investing money with Greece, thing it would be safe, until their banks started collapsing.
ReplyDelete2) The Cypriots are trying to get their money out from the banks because the government said that they are going to take a certain percentage from the money that each person has in his or her account.
3) I think that the Cypriots banks have to solve this problem by themselves because it was their fault. However, they should not take money from the people because it is not fair. The EU should not step in, but if it is really necessary than they could help a little.
4) If something like that were to happen in Italy, I think that the government will do the same thing that the government in Cyprus is doing and people would start taking their money out.
1.What was the cause of the banking collapse in Cyprus?
ReplyDeletePart of the cause for the banking collapse in cyprus is the wrong investments in greece made by the banks in cyprus. To sustain the high rates of interests offered, the banks invested, unfortunately, partially because of the world crisis, the investments caused big loss of capital.Cyprus invested in greece that went in default many months before the crisis in Cyprus.
2.Why did the Cypriots try getting their money out of the Cypriot banks?
The cypriots tryed to get their money out so to avoid the compulsory levy that the government planned.
3.As a European, what do you think is a reasonable solution? Should the Cypriots pay for their own bailout or should the EU step in?
If ciprus does not have the economical possibility of paying for their bailout the Troika shoud step in to stabilize the situation.
4.If this scenario plays out the same way in Italy, what do you think would happen?
It is very plausible that something like this will happen since italy is governed, (or at least is strongly influenced) form the Socialist Party and the Democratic Party. A compulsory levy in Itay in any case would probably cause many tension and riots and a probable revolution since italy is already bled by the direct and indirect taxation.
1) The cause of the collapse of the banks in Cyprus is the high loan rate and the high intrest rate. The banks had to invest more and more money to gain money, they loaned money to Greece believing it was a safe "investment" however it turned out that they were lending too much money and when the Greek banking system collapsed they found themselves in a sticky situation
ReplyDelete2)The Cypriots are trying to get their money out of the banks because to get out of this banking crisis the government said that they are going to extract 6.7%-9.9% of the money each person had in his or her bank account
3) As a European I don't think this is a reasonable solution, taking money out of people's bank account isn't a solution at all. This could ignite civil revolutions and widespread discontent among the Cypriots. However I also think it's not "fair" that the EU pays for Cypria's debt. They should try to raise money in a different way and then see how much money they have; at that point the EU could step in and help a little.
4)If the same thing were to happen in Italy I think a civil revolt would begin as Italians have already seen though times with the IMU, however most of Italians would take out money from their bank accounts and store it in places like Switzerland so that the government takes the least amount of money possible; just like many Cypriots are doing.
1. The banking in Cyprus had failed because the banks had made many investments in order to gain money, however one of the major investments had been in Greece and when Greece tanked the banks owed a lot of money and were looking for a bailout. Unfortunately for the banks their main depositors were Russian oligarchs and the European Union didn’t want to bail out the Russians. Because they wouldn’t be bailed out, the banks essentially stole their clients’ money, around 10% from all accounts in order to pay what they owed. Because of this many of their clients are planning to take out their money from the Cyprus banks, which had once brought prosperity to Cyprus.
ReplyDelete2. The Cypriots tried to takeout their money from Cyprus because they knew that Greece was going to tank, or once they knew they did not want to keep their money In a bank that was in debt due to fear of what might happen. Ordinary citizens however found out too late once the banks had locked them out and only gave them access limited ATMs.
3. I believe that even though it is the banks of Cyprus that had caused this issue, it is not fair to make them take away 6-10% of their clients money; especially because their clients were mainly unsuspecting and had no part in this. Because of this I think that there should be some aid from the European Union, the European countries should take care of themselves.
4. From what I’ve heard about Italy so far I guess that there would be many protests and walkouts until the banks both gave them back full control of their money and didn’t take any of it, or until the government found a reasonable solution to the problem.