The short version: in a desperate attempt to shield the German taxpayers from the cost of the bailout of Cypriot banks (and Cyprus itself) – taxpayers who will be voting for a new Bundestag in September – the EU, IMF, and ECB (a.k.a., “the troika”) floated the idea of a “levy” on Cypriot bank deposits. Cypriots didn’t take too well to the idea, and the Parliament in Nicosia shot it down. Now, Cypriot banks will be closed all week in order to prevent a bank run…and some of them might never open again.
Oh, and Russia – the source of many foreign deposits in Cypriot banks is negotiating with Cyprus’ Finance Minister in private (the rumors surrounding those negotiations have been particularly entertaining) and blasting the seizure of deposits in public (Zero Hedge).
Memo to the Eurocrats: when a Putinist can accuse you of being a bunch of tyrants – and be right – you have a serious problem.
Meanwhile, Lars Seier Christense (also at ZH, emphasis in original) asks not for whom the taxman trolls…
That we have already come to a stage where politicians blatantly attempt to confiscate innocent and weak citizens’ savings is a new low that was somewhat unexpected already at this point. It bodes ill for what can happen when the crisis deepens in the future – which it will.
The idea of a one-off wealth tax, however, is not new. Several research reports have pointed in recent years to the fact that the desperate need for funding in the public sector could – and probably will – eventually lead to confiscation of wealth in a monumental scale. Boston Consulting Group suggested in a recent report that about 29 percent of ALL private wealth, not just deposits, will eventually be likely to be confiscated to cover the debts already incurred.(Read the article on Zerohedge.com). So we had better get used to seeing our money being appropriated by money-hungry politicians. This is just the beginning. The cat is out of the bag, no matter if this particular deal should fall apart.
…for (s)he trolls for you.
This is a reminder – as if we needed one – of what happens when social democrats take charge of an economy: it becomes permanently subordinated to politics. The Postchristendom elite has made it clear it will do anything to keep their dream of “ever closer union” alive, including seizing bank deposits.
It is a lesson those of us outside Europe must heed – and remember.