Monday, March 18, 2013

The Government Is Going to Seize Your Savings Account. (You Don't Mind, Do You?)

I've heard of some incredibly arrogant (and stupid) actions by governments, but this one goes (almost) beyond belief: The European Union is going to take up to 10% of the bank accounts of everybody in Cyprus.

Actually, the EU is ordering Cyprus to steal its citizens' money. Not sure that makes any difference.

Apparently, this is a condition of the latest bailout package in the EU.

In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit a portion of their deposits in return for a 10 billion euro ($13 billion) bailout for the island, which has been financially crippled by its exposure to neighboring Greece.

The decision, announced on Saturday morning, stunned Cypriots and caused a run on cash points, most of which were depleted within hours. Electronic transfers were stopped.

The originally proposed levies on deposits are 9.9 percent for those exceeding 100,000 euros and 6.7 percent on anything below that.

The Cypriot government on Sunday discussed with lenders the possibility of changing the levy to 3.0 percent for deposits below 100,000 euros, and to 12.5 percent for above that sum, a source close to the consultations told Reuters on condition of anonymity.

Do these buffoons have any idea of the message they're sending? -- which is: Anybody who puts money in an EU bank is a total idiot.

That will definitely help stabilize things in Europe.

Oh, but there's really nothing to worry about, because the article says, "European officials said it would not set a precedent."

Well, good. That sets my mind at ease.

Update: A further thought about this -- given that Italy and Spain are currently on the brink, what would you do if you had money in an Italian or Spanish bank? You would withdraw it, and get it out of the country, right?  If a substantial number of Italians and Spaniards do that, it will bring down the banking systems in those countries.

This is really, really stupid.

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