Real Estate safer than cash for Europeans

Guns, gold and butter has become guns, gold and co-ops.

This is quite a significant event. Imagine if you had your money in a bank in Spain, what would you be doing right now? Hitting the cash machine? Gold prices are sure to go up. But so will interest rates.

On a related note, since Russian gangsters and oligarchs all hold their money in Cypriot banks, and they obviously just took a significant hair cut, do you think they will now invest more money in NYC RE or less? What is the over/under on the gangster effect?

Here is a clue. It will be more difficult for the Russians to launder money. It will definitely affect Miami RE as there are entire communities of Russians with new found (laundered?) money. From der Spiegel:

Germany and other countries have been irritated by a combination of a low corporate tax rate and lax financial oversight that they claim has made Cyprus a haven for Russian money laundering to the tune of billions. Under the agreement, an independent private company will be installed in the country to observe Cyprus' adherence to the EU's anti-money laundering regulations.

Sophies Choice: Let the banks fail and endure hardship for all its citizens or take 10% of depositors money and risk Euro contagion thus putting same banks at risk:

http://www.reuters.com/article/2013/03/17/us-cyprus-parliament-idUSBRE92G03I20130317

Might be safer than cash for Americas too

Yep this is a big deal and not many people i know in the USA are talking about it this weekend.

Cyprus isnt the issue.....its all the people in Italy/Spain/Portugal that are lining up to hit the bank on monday morning

This is going to hit their economy like a lead weight next week.

Lol Americans think the Jan payroll tax numbers were a big deal....wait until the numbers for europe materialise in a month.

Its almost like people think Cypruse doesnt matter because its just russian money.....yeh ok but jane and john does in italy are freaking out today....

Good morning Mr Chase bank on Monday as i'm organising my GoCash regardless of what overnight rates i'm offered this week.

lol some fun for you to make you laugh until the markets open Monday (Hitler parody)
- http://bit.ly/CyprusSeizure

Mixed feelings here. In Cyprus half the bank money is in the name of Russians, much of it illegally transferred. But the thought that a country would just legislate 1/10 your savings away is earth changing. We're not talking a country that gambled and lost ,but a country's savings. Lots of people in Europe , maybe the U.S. will watch this and will wonder if money in banks is as protected as cash under the mattress, or a real estate investment.

Just got $200 out of my chase ATM. No lines yet.

Brooks, Maye Spain , Italy or France should be most worried... first.

Big worry is that you really don't want to piss off Putin. There is lots of KGB black money in those banks. Putin was KGB. He might just push the pedal to the metal on the currency wars. I'm buying more gold.

Obviously apt23 won't be calling the police on Putin like she did on her husband (before recanting, of course).

>Putin was KGB

That's funny. GHW Bush was CIA.

I agree apt23. A few months ago it seemed Russia would bail out Cyprus. I'm kinda shocked the country took any hit. They easily could have played Europe and the U.S. against the Russians...maybe even against the Turks & the Chinese. Very strategic country, with newly discovered gas reserves(Would love to have been the fly on the wall in those conversations).

This time it will be a different banking crises RE will go up this time. That's a good one.

People do buy real estate as a way of protecting assets. Legally real estate is harder to go after than cash in a bank.

RE can be seized. A pot of gold under the rainbow is a lot tougher.

Or cash under the mattress, in the Fridge or where ever you saw Tony Saprano hide it. But RE I don't think so.

Does anyone know, has something like this ("we are taking 10% of your deposit to cover sovereign debt") EVER happened before? If Italy and Spain have bank runs we are headed for some ugly days ahead.

In the United States the banks no longer pay interest on savings. Yet Tax payers give the banks a quarter percent interest on their savings at the Fed.

Even if the parliament recants - though there are few options-- the horse is out of the barn. The countries facing real economic problems are not going to wait to see if the Euro powers/IMF cut their deposits. Money will likely go into mattresses, gold and real estate. Brooks, RE is a good bet in a high inflation environment. But there is an inflection point. Interest rates will go up in spite of the central banks money printing thus putting pressure on debt, GDP and employment. A vicious spiral. As rates go up, prices on RE will come down. And banks will be even less likely to lend in an inflationary environment because they will be paid back in devalued dollars. Interesting times.

Sharon Bowles, chair of the European parliament’s economic affairs committee, said the move was aimed at circumventing EU rules on deposit guarantees.

“It robs smaller investors of the protection they were promised. If this were a bank they would be in court for mis-selling.” she said. “The lesson is that the EU’s single market rules will be flouted when the eurozone, European Central Bank and International Monetary Fund say so.”

The eurozone depositors are mostly Greeks who moved their savings to Cyprus as a safe haven from their own financial crisis. UK nationals, who form a sizeable expatriate community, account for most of the non-eurozone depositors from other EU countries, with about €1.9bn of exposure at the end of last year.

Lawyers handling scores of Russian and Ukrainian companies based in Cyprus were fielding calls on Sunday from owners worried that their funds would be frozen and that the levy on deposits would be repeated

"And banks will be even less likely to lend in an inflationary environment because they will be paid back in devalued dollars"
This has always been the case over the past 70 or so years. We've had constant inflation at varying levels and I've never heard of banks not giving mortgages BECAUSE of inflation. Are you sure about this? What makes you think this time is different?

Define Inflation. We've certainly had our share of asset inflation in many marktes.

RS: to me inflation is "official" govt statistic of CPI/PPI increases that they publish. My question is whether banks have ever set policy where they're reluctant to provide mortgages due to high inflation for fears to being paid back in cheaper dollars. I'm curious because I've never heard this theory before.

Yea, and what makes you think this banking crisis is different? Saying RE will go up as a result? Come on

uwsbeagle. As far as banks are concerned. Inflatin is not the issue, but duration and convexity risk. If rates go up the value of the mortgage declines. They can hedge that risk to some extent via swaps or selling the loan but at the end of the day, they will maintain exposure, as they are probably buying back a similar mortgage in the form of securitized product, or by being a counter-party to someone else's mortgage risk, or by holding onto servicing rights.

A government big enough to give you everything you want is strong enough to take away everything you have.