How long before our government decides to copy this?

Cyrpus has long been an economic basket case. When the EU converted to the Euro, one of the nuttier ideas was to include Cyprus in the zone. And since the collapse of any member’s economy would have deleterious effects on the stability and viability of the currency throughout the Eurozone, the other member states have to step in and bolster Cyrpus from time to time.

But France, Germany, et al, are a bit tired of shoveling money that way. So while they’re gonna make one more round of “loans” they’re also going to take a bit of payback.

The Eurozone leaders and the IMF have decided to simply seize from 6.75% to 9.9% of depositers holdings from Cyproit banks.

As Dave in Texas quotes DrewM at the Mothership,

“We’re to the point where ‘the people exist’ simply to support the chosen few who selflessly devote themselves to public service.”

The Eurozone is doomed. It’s a matter of when, not if, the system collapses.

Ordinarily, I wouldn’t care. Except that instability in Europe tends to eventually involve large numbers of Americans traveling to foreign shores and getting shot at.

My other concern is, just how long before some gallant public servant here in America decides that an arbitrarily imposed “one time, one off” “tax” or “levy” is a good idea?

Our current tax code is a dog’s breakfast, but it at least still has the veneer of legitimacy.

10 thoughts on “How long before our government decides to copy this?”

  1. couldn’t agree more – at least here in the uk we managed to stay out of the euro (despite new labour’s best attempts …), but i wouldn’t put it past any government to have a look at this idea. at a time we are meant to be being more responsible, saving instead of debt etc, this is punishing those who actually have saved (including foreign citizens with Cypriot accounts, eg. a fair few british retirees)! coupled with the shockingly low savings interest rates, i’m seriously thinking of taking the little i have saved and yep sticking it under my bed.
    ps: supposedly one reason this was a condition of the bailout was that ~50% of the funds saved in Cyprus are from well-dodgy Russian gangster types … no idea if true … but if so, why were they allowed in the first place? Once again ordinary folks paying for the crimes and stupidity of our ‘leaders’ …

  2. Either that, or the EU just shot a hostage. Exactly how long do you think the banking system would survive in the next country to announce they were in negotiations with the EU for a bailout? It’s not like they could keep the banks shut during the entire period of negotiations, and the minute the banks opened they’d be emptied. I suppose there could be secret negotiations, but the second the secret broke there’d be massive capital flight, and if they managed to keep it under wraps until it was done the money would leave the PIIGS faster than an Irishman can get to the pub.

    I don’t know. I think this is too clever by half for your typical EUrocrat, but maybe someone actually read the bit about moral hazard in the Econ 101 text they use for TP in Brussels.

    1. The negotiations here took a whopping 10 hours, and happily concluded after close of business on a Friday night. But accounts were partially frozen by the next morning to implement the seizure.

      You’re “shoot the hostage” scenario is indeed too clever by half for unelected bureaucrats.

    2. The final negotiations took 10 hours. There were several months of preliminary talks. On the other hand, effect is generally independent of intent. Especially with EUcrats. Given this the smart money will flood out of any country that is even rumored to be thinking about an EU bailout. Hopefully this will be the emetic that breaks up the current frankensteinian monster.

  3. Wow – to lose up to 10 percent of your deposits overnight as a result of bureaucrats’ efforts the country propped up and part of the EU. That ought to do wonders in terms of attracting capital and business to Cyprus.

  4. Rest assured, there are a lot of people in Europe who strongly disagree with their government in this. And let’s be honest, this is just plain stealing from the people by the EU (again!). Furthermore, this plan is rather short-sighted. What better to create chaos by just taking away a part of people’s savings? In a few months, maybe Spain, Italy or Portugal. And they now know what the EU’s capable of doing.
    And did anyone hear something about a plan to do something about the “dirty” money? Nope, nothing at all. Rather, strange actually….

    Anyway, i hope the EU tumbles down (and hopefully quietly although that’s gonna be hard i guess) and we go back like the way we used to have.
    It had it shortcomings but the “gulden” time was a far better one.

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