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Cyprus Unclosed
Hi Everyone
This post is simply making a point, and advancing what SD wants (I think) for the site.
Obviously we all know that the Cyprus situation isn't cool if you live over there. Furthermore, it sucks if you're one of our troops over there, but it's okay, the government..........blar blar blar.
What this means for us as preppers.
Considering the EU pushed for Cyprus to take such action means that they are looking at drastic situations, right? WRONG! About 80% of the savings in Cypriot banks comes from Russian billionaires and millionaires. So, the chances of that coming to the UK, where we will have our accounts, effectively taxed, isn't too great.
If such a thing does happen in the UK, the likely situations to occur will be:
1. A tax on interest in your account.....Already in place, and there isn't enough interest to tax as it is. Thus the chances of a negative tax-rate. Meaning.....the same thing, you pay for having an open bank account.
2. A lock down of account withdrawals while the scheme is being put into place.....if it goes through or not, there will likely be a run on the banks when they're reopened.
3. A 'bailout' from the EU, in Euros, meaning the reduction of the pound, a joint currency scheme, or a total removal of the pound....this is unlikely, but then again, many of the things we prep for are unlikely.
4. A bank-account-payment-percentage scheme like the Cyprus one becomes active.
Resolutions:
1a. Tax on interest.
From what I've read, this effects both bank and building society accounts with any level of savings. SUCKS!!!
There are things that are not taxed though, like ISAs. These will be a grey area, I believe. Personally, I'd hold as much in ISAs as possible, then change from an ISA to cash, ASAP.
1b. Negative tax rate.
This super sucks, because, you can bet your cotton socks the tax will be calculated on....PAYDAY!!! That way the basta.....government gets the most money from us. Well, there are ways around this. Get paid weekly, and pay all your bills on the same day......the day you get paid on. Get direct debits for mortgage, council tax, insurance, and even phone bills, all on the same day. It'll hit your account like a bugger, but it brings down the amount you have very quickly. If need be, you can always empty your account, down to a pound, and pay everything back into the account a day before your bills come out.
1c. You get charged for having an account.
This isn't unusual and LOADS of people already pay for these accounts. I know NatWest has a 'black card' scheme for people earning over £75k which costs every month, but the benefits are awesome and worth much more than you have to pay for it.
One of the simplest ways to get around this, open a new account! LOADS of banks will use the 'account charge scheme' as a selling ploy to get people to sign up with them by offering 'one year free' deals. As long as you're okay redoing all your accounting stuff every year with another bank offering the same deal, then go for it.
1d. Overall, just don't hold money in your account. What isn't there can't be taxed, right? Did someone say overseas and "Call a tax accountant/lawyer?" They may charge LOADS, but they are worth their weight in gold if you're smart enough to use them, and not have them use you. This route is ONLY for those that are keyed up on money and the tax system!!! If you are not making good savings or investments every month, this route is not for you!!!!
2a. LOCKDOWN!!!
This sucks, because it's something we'll hear about, and it'll be too late to take action. True as that may be, it can be avoided. Maybe you're saving for a house deposit, or something like that, or maybe you want to show earnings and savings because you want to take out a loan? If so, this is not the right thing for you to do......Regular account depletion. It really is that simple. If you have all your cash as CASH, then your account being locked down will mean.....nothing. You'll be unaffected. Obviously an increase in crime could well screw you over and you'd lose ALL your savings, but to be fair.......your house has been robbed.....INSURANCE?!?!?!?!?!?
2b. LOCKDOWN flavour
Okay, so while your accounts are locked down, you have no access to money, right? Well, that's not necessarily true. Not all banks were locked down when Northern-Suck was in trouble. A few other banks had a lockdown (Bradford and Bingley, for example), but not all. This is an excuse for having multiple accounts. If you have 4 accounts, and each has an equal amount in them, then maybe only 1 or 2 gets locked down. IF that's the case.....lucky you. But there is the chance of a TOTAL bank lockdown, meaning every account is frozen. If that's the case....who cares if you have 1 or 4 accounts? Either way you couldn't touch your money, so it's no different. This is where the off shore and overseas people become king......oh and those with cash or things that can quickly become cash. Shops like Cash-Converters and the alike, could be key to keeping going. Alternatively gold or silver merchants, that buy and sell, could be a real lifeline. Another reason to look at holding some precious metals. Who knows, they could even increase in price (just for you Barney, had to put that in).
2c. Lockdown after-taste.
Let me tell you right now, this aftertaste is BITTER!!! Remember people queueing outside the banks in 2007 and 2008? Well, imagine that at every bank. That would really suck! This is an argument for online banking, if you have multiple accounts. You can put it all into one account and wait outside one bank, instead of 3 or 4. Or....you could just accept that the deposits are safe and realise the panic isn't too important to join in with. Is losing a chunk of money worth losing your life? If you're a robber/mugger, look for these things and you can make a WEDGE of money!!! People will be walking around town carrying their life's savings with them!!! IDIOTS!!!!
The run on the banks could end up causing such big after effects, total economic collapse, riots, murders, and all the rest, that I'd prefer to just get what money I had already and just hoped the government were happy to secure the deposits I had. Not worth dying for. Dead people don't use money....as far as I can tell.
3a. EU Bailout
Seriously, this sucks. The UK remained active because of the pound and staying away from the Euro. That would have killed us.
A joint currency will simply lead to confusion with exchange rates, and one of the currencies will be kicked. It's obvious and inevitable. History repeats. Small businesses will be forced out and will end up sticking to what they know......everything in pounds. Welcome back the pound, good bye euro.
3b. EU Bailout, pound reduction.
The lower the global confidence in the pound, the less it can buy, the weaker our economy.....to a point. Our exports will increase...YAY to those with exporting businesses. But our import costs will be much higher as our pounds can buy less...BOOOO to those who have importing businesses.
The bailout would likely come in the terms of buying Pounds of Euros. A gradual pound reduction, be that eternal or temporary. I couldn't really see this happening for the same reason as 3a. History repeats. So, unless they created another currency altogether, to replace the Pound and Euro, then this is VERY unlikely.
3c. EU Bailout, Pound Removal.
This is the most likely of the bailout from the EU scheme if a Cyprus style scheme was to be dealt with. Even then, there would be HUGE problems. The EU is such a large player in the Euro-Zone, that it would cause major problems for them to FORCE a currency conversion on us. Smaller places, it's doable, but with us, not so likely.
3D. My multi-dimentional solution.....with this, we'd have to suck it up and try to change what we could into easy convertible forms. First thing I'd do if I heard of something like this on the horizon......swap out ALL bank bonds! They're only payable in the currency of the time. If you have pound bank bonds, and the currency changes to Euros, then the banks don't have to pay you back. It's a small print thing. Previously, the governments have held to those bonds like when the Euro came into place, but they don't legally have to. So, I'd sell all of those, maybe make a small loss, but better a small loss than a total one. Also, keeping money in the bank would make it quick and easy to convert. Quite the opposite way to deal with the earlier scenarios hu? Leave money in the bank?!?!? Crazy? Maybe, but for this scenario, it'd be the easiest thing to do to convert your money.
4. UK stuck with what Cyprus avoids.
This would totally suck and would be a MAJOR problem. Most (probably all big) businesses apply a single payment scheme, e.g. 'We pay all employees on the 28th of every month' However, there are multiple schemes available. Look into these, as they could help you avoid MAJOR cash deposits that could put you above a threshold (if they sanction one) and it can help you avoid a specific day that is the log-day of how much is in your account and how much will be taken out. If that day shows £1.00, then it sucks to be the tax collector haha.
Again, this is a time for cash to rule. With this, I'd also look into precious metals again, as financial problems seem to increase their value. I would say stocks, as you can buy them in many different currencies, as long as you have an account in that Exchange, but stocks usually reflect the general feeling of the market and would probably fall with the financial confidence or the country. Again, you want to be able to liquidate financial-products and get them into cash ASAP.
One very simple solution, stay abreast of all financial data coming in. Get rich friends and do as they do with their money. Keep at least £100 in every bag you own. If something happens, at least you can buy fuel and food. Look into precious metals, but listen to some information first, they are not a long term investment, and should be seen as a hedge against this kind of financial problem.
p.s. all information in here is as accurate as I can figure, given the frustration at the Cyprus information being put forward but nobody giving a solution or ideas of how to prepare for it. As a result I am probably not making loads of sense, but am instead annoyed......but that's probably because of having to look after 2 crazy whippet puppies!!! WOOOO DOGS!!!
Oh yeah, and remember kids.....don't do drugs. But whatever currency is around, drugs will always have a market haha.
Dissent is the highest form of Patriotism - Thomas Jefferson
Those who sacrifice freedom for security deserve neither - Benjamin Franklin
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