Cyprus-Forum.com

[Paphitis]

I wish you lived just round the corner! I am sure that with your intelligent replies (even if I think you are wrong) we could have some very interesting conversations over a cold beer or two?

I will reply ..... just give me time.

be happy to have a beer or 2 with you RH.

In fact, we can arrange this for the middle of 2015.

Are you mostly in Cyprus or the UK?

[Robin Hood]

I wish you lived just round the corner! I am sure that with your intelligent replies (even if I think you are wrong) we could have some very interesting conversations over a cold beer or two?

I will reply ..... just give me time.

be happy to have a beer or 2 with you RH.

In fact, we can arrange this for the middle of 2015.

Are you mostly in Cyprus or the UK?

I will take you up on that ..........

Permanently here, this is my home and where I intend to spend what is left of life. Quite content ..... often frustrated! I have not lived in the UK as a permanent resident since 1994 when we moved here and was last there for 3 days in 2007 and could not wait to get out. I felt like a foreigner ...... in my country of birth!

[Paphitis]

I wish you lived just round the corner! I am sure that with your intelligent replies (even if I think you are wrong) we could have some very interesting conversations over a cold beer or two?

I will reply ..... just give me time.

be happy to have a beer or 2 with you RH.

In fact, we can arrange this for the middle of 2015.

Are you mostly in Cyprus or the UK?

I will take you up on that ..........

Permanently here, this is my home and where I intend to spend what is left of life. Quite content ..... often frustrated! I have not lived in the UK as a permanent resident since 1994 when we moved here and was last there for 3 days in 2007 and could not wait to get out. I felt like a foreigner ...... in my country of birth!

Nice RH.

I will be in Cyprus for 10 days only. A meetup will have o be coordinated with others as well from CF.

So far I am only interested in meeting Stud, CG, Cap, DT, Milti, B25 and yourself.

Not keen on meeting others at all.

Whereabouts do you live. Limassol, Paphos, or Larnaca area?

we will talk later as the date approaches via PM.

[Robin Hood]

I live in Souni ........ in the hills outside Limassol. You arrange it and I will be there, where ever 'there' happens to be. It will also be interesting to meet others on the forum. I am looking forward to it already.

[Paphitis]

I live in Souni ........ in the hills outside Limassol. You arrange it and I will be there, where ever 'there' happens to be. It will also be interesting to meet others on the forum. I am looking forward to it already.

Souni will be easy.

[Robin Hood]

Paphitis:
I cannot argue that there is no need for banks and agree with your comments in the main but, you are in complete denial of the fundamental fault with banking. Where does this ‘money’ come from? How is it created? The bank of England article explains that in detail as it applies to the modern economy. Quite simply ……… it is created by commercial banks out of nothing! That is a fact and has been known for decades.

US Presidents tried to stop the formation of the Federal Reserve Bank. The cause of their concern is best explained by a comment attributed to Mayer Amschel Bauer (Rothschild) who said something on the lines of: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”

The fault with the system is that Private Commercial Banks, which are for profit institutions, are now the origin of 97%-98% of money in circulation. That percentage is increasing and eventually they will have total control. As the BoE article explains they do this by issuing credit (not money) and thus create New Money ………. New …….. as in ‘…did not previously exist.’ and it is this that is the threat to the system because the creation of this New Money is beyond the control of anyone but the Bankers. Three significant statements that are made in the article regarding the creation and the destruction of money are;

• When a bank issues credit to a borrower, it creates New Money.
• When a loan is repaid, this New Money is destroyed.
• Loans create deposits …. Not the other way round.

Thomas Jefferson said: “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” (1809).

Lincoln said: “The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”

There are many other similar quotes on banking by credible and qualified people. Try this on your browser ........'The Money Masters - famous quotations on banking'.

How is this relevant to the OP?

This statement ………(BoE Link) “When a loan is repaid this New Money is destroyed.” is where the problems for Cyprus of repossessions started because it didn’t happen! The New Money that the bank created by making the loan is now circulating within the monetary system and is beyond the reach of the banks. As far as the books are concerned they cannot write off the capital sum, so they declare this as a liability. In actual fact the money still exists but the banks have no Plan ‘B’ to recover it. They have never needed a Plan ‘B’ because in the past they have been bailed out by the taxpayers.

Recovery of the capital sum is of no interest to the banks as all they do with this money when it is repaid in the course of a loan, is to write off the capital debt …. on the books ….. i.e. the money is ‘destroyed’! The only profit the bank sees from this transaction is the interest due on these NPL’s and is what will be paid as the purchase price of ABS's by the ECB, we will then see the banks writing off their ‘losses’. (i.e. The capital ….. that never actually existed).

To retrieve the bank’s profits all the ECB needs to do is to pay the banks an amount as near equal to the accumulated interest plus a bit to cover their legal costs etc. and the banks, who caused this situation in the first place, make up all their ‘lost’ profits ……..… they won’t lose a cent. (Unlike many of their customers)
Any interest recovered by the banks is profit for the bank’s, it will not be used to compensate those who lost money through the ‘bail-in’. So what you said about banks losing 93% if they were only paid 7% is not true at all because you wrongly included the capital sum! The bank cannot lose that because they have no liability to repay it to anyone as it never existed until they created it in the first place …. It was never more than a book keeping entry. Talk to any bank manager and he will tell you that any interest received on a loan is profit and that the bank makes nothing out of the capital sum.

If you use current banking practice and allow the CBC to open up a line of credit for each banks NPL’s, the banks could ‘borrow’ the capital sum from the CBC and pay off the debt. In exactly the same way banks credit the borrowers account with a negative figure, the CBC does the same. All the banks now have to do ….. is pay off their debt. BUT ……… they have already paid off their debt to the CBC and as such, also the government, as the money they created which was never taken out of circulation is equal to the value of the capital sum that has never been paid off and still remains in circulation! The CBC practices just what the commercial banks do.

Repossession problem solved ………..

[Paphitis]

Paphitis:
I cannot argue that there is no need for banks and agree with your comments in the main but, you are in complete denial of the fundamental fault with banking. Where does this ‘money’ come from? How is it created? The bank of England article explains that in detail as it applies to the modern economy. Quite simply ……… it is created by commercial banks out of nothing! That is a fact and has been known for decades.

US Presidents tried to stop the formation of the Federal Reserve Bank. The cause of their concern is best explained by a comment attributed to Mayer Amschel Bauer (Rothschild) who said something on the lines of: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”

The fault with the system is that Private Commercial Banks, which are for profit institutions, are now the origin of 97%-98% of money in circulation. That percentage is increasing and eventually they will have total control. As the BoE article explains they do this by issuing credit (not money) and thus create New Money ………. New …….. as in ‘…did not previously exist.’ and it is this that is the threat to the system because the creation of this New Money is beyond the control of anyone but the Bankers. Three significant statements that are made in the article regarding the creation and the destruction of money are;

• When a bank issues credit to a borrower, it creates New Money.
• When a loan is repaid, this New Money is destroyed.
• Loans create deposits …. Not the other way round.

Thomas Jefferson said: “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” (1809).

Lincoln said: “The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”

There are many other similar quotes on banking by credible and qualified people. Try this on your browser ........'The Money Masters - famous quotations on banking'.

How is this relevant to the OP?

This statement ………(BoE Link) “When a loan is repaid this New Money is destroyed.” is where the problems for Cyprus of repossessions started because it didn’t happen! The New Money that the bank created by making the loan is now circulating within the monetary system and is beyond the reach of the banks. As far as the books are concerned they cannot write off the capital sum, so they declare this as a liability. In actual fact the money still exists but the banks have no Plan ‘B’ to recover it. They have never needed a Plan ‘B’ because in the past they have been bailed out by the taxpayers.

Bank bail Outs are extremely rare. In actual fact I do not recall this occurring in the Western World (I could be wrong) but Cyprus and Iceland.

From the Cypriot banking perspective, there was no way of recovering something like 6 Billion Euros which were cut from the Greek National Debt in the form of a haircut. It was a liability to them and had to be recovered in the form of Capital Guarantees from the roC Government which in turn also needed a bail out, and in the end large depositors also had to pay for the Bail In.

Central banks are only able to print money and this is how money is created. There are limitations of course otherwise inflation will be rampant. You just can't create as much money as you like because it simply can't be done without inflicting a great deal of pain.

Recovery of the capital sum is of no interest to the banks as all they do with this money when it is repaid in the course of a loan, is to write off the capital debt …. on the books ….. i.e. the money is ‘destroyed’! The only profit the bank sees from this transaction is the interest due on these NPL’s and is what will be paid as the purchase price of ABS's by the ECB, we will then see the banks writing off their ‘losses’. (i.e. The capital ….. that never actually existed).

To retrieve the bank’s profits all the ECB needs to do is to pay the banks an amount as near equal to the accumulated interest plus a bit to cover their legal costs etc. and the banks, who caused this situation in the first place, make up all their ‘lost’ profits ……..… they won’t lose a cent. (Unlike many of their customers)
Any interest recovered by the banks is profit for the bank’s, it will not be used to compensate those who lost money through the ‘bail-in’. So what you said about banks losing 93% if they were only paid 7% is not true at all because you wrongly included the capital sum! The bank cannot lose that because they have no liability to repay it to anyone as it never existed until they created it in the first place …. It was never more than a book keeping entry. Talk to any bank manager and he will tell you that any interest received on a loan is profit and that the bank makes nothing out of the capital sum.

If you use current banking practice and allow the CBC to open up a line of credit for each banks NPL’s, the banks could ‘borrow’ the capital sum from the CBC and pay off the debt. In exactly the same way banks credit the borrowers account with a negative figure, the CBC does the same. All the banks now have to do ….. is pay off their debt. BUT ……… they have already paid off their debt to the CBC and as such, also the government, as the money they created which was never taken out of circulation is equal to the value of the capital sum that has never been paid off and still remains in circulation! The CBC practices just what the commercial banks do.

Repossession problem solved ………..

Well RH, we fundamentally disagree on how banks actually work. I am fine with that.

Loans and deposits are not just created. Money is either sourced from deposits or the Money Markets (Central Banks) at a cost. That's how it has been explained to me by Bankers themselves (Relationship Managers) who basically manage the lending portfolios of customers and also act as Customer Liaisons.

There are many Banks who rely 100% on Deposits. I will give you an example of one:

The Bank Of Cyprus Australia would rely on deposits for its lending. It was as such among one of the most conservative banks in Australia as the larger Commercial Banks such as Commonwealth bank, ANZ, Westpac and National Australia Bank would not just rely on deposits. They would borrow against the Money markets and have massive departments which are engaged to work the markets themselves, including derivative and futures.

So BOCA was low risk but also low profit compared to the Big boys of Finance. When the banking Collapse was occurring in Cyprus, BOCA, a Cypriot Owned Australian Bank was still profitable. The Bank of Cyprus ended up selling BOCA to an Australian Bank for $140 million because BOC needed the money in Cyprus to recapitalize. Cyprus lost a real good conservative and money making asset to say the least. BOCA has since been re branded to Adelphi Bank and is fully owned by Bendigo Bank.

The big banks do in actual fact take some risks but it always pays off for them. They are sensible enough to leverage any losses against their profits. They are not keen on losing money but it can happen, but they will trade on by not over exposing their Bank to things which will shut them down. They actual factor in all their potential losses before they go ahead with any transaction as any business would do. They end up making Billions. In Cyprus, the opposite happened. The banks were over exposed to Non Performing Sectors and they paid the price for that!