Tuesday, March 19, 2013

Bank robbery, EU style....

Update:   Cyprus banks fear meltdown, staying closed until Thursday.

This past weekend the EU conducted its fifth bailout of a member country when it robbed the bank deposits of the citizens of Cyprus.  What makes this instance unique, and scary, is that it represents the first time that the EU has attacked bank deposits of small depositors, potentially setting a very bad precedent.  This is an important development; consequently I provide three links to analyzing the incident and its potential ramifications.  First, from NotPC:
Imagine this: You wake up this morning to a note telling you you’re the victim of a bank robbery—but instead of the bank being robbed, the bank is robbing you.
Well, strictly speaking, the government is robbing you: every depositor in the country is having their bank account raided to help pay the government’s debt.
Nice, huh?
This is exactly what savers in Cyprus woke up to this morning—and it is exactly what can and undoubtedly will happen in every jurisdiction in the world.
Next, from the Financial Times:

If one wanted to feed the political mood of insurrection in southern Europe, this was the way to do it. The long-term political damage of this agreement is going to be huge. In the short term, the danger consists of a generalised bank run, not just in Cyprus.
As in the case of Greece, the finance ministers said: “Don’t worry, this is a unique situation”. This is true only in a very narrow legal sense. The bond haircut in Greece is indeed different to the depositor haircut in Cyprus. And when they repeat this elsewhere, it will be unique once more.
And lastly, from Infowars.com:
Sadly, this decision is going to set a very ominous precedent for the future and it is going to have ripple effects far beyond Cyprus.  After the banksters steal money from bank accounts in Cyprus they will start doing it everywhere.  If this “bank robbery” goes well, it will only be a matter of time before depositors in nations such as Greece, Italy, Spain and Portugal are asked to take “haircuts” as well.  And what will happen one day when the U.S. financial system collapses?