In case you haven't been watching, the newly elected right wing President of Cyprus signed off on a deal that includes a one-time tax on all savings accounts in the country - 6.75% on accounts worth less than €100,000, 9.9% on bigger accounts. (Considering that the IMF and Germany originally wanted 40%, this probably sounded like a pretty good deal.)
The ripples through the financial world have been significant, and the banks in Cyprus closed to avoid the entirely predictable bank runs while ATMs stopped working, giving only messages about "technical difficulty."
The vote was supposed to happen today, but has been pushed back by a day while President Anastasiades tries to gather support in Parliment. (Good luck with that!)
The CEO and founder of a bank in Denmark has written a post about the topic that should send chills down the spine of every liberty lover.
This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere - not that it would have mattered much as the trust is gone anyway. It is now difficult to expect any kind of limitation to what measures the Troika and EU might take when the crisis really starts to bite.
While he applies the fright to all of Europe, it isn't hard to imagine this type of action coming to America, too - especially with the endless chatter from the left about rich people not paying their fair share. (I digress rhetorically, but why is it that their fair share is quite a bit more than my fair share? Oh, because they have it. And because government said so.)
Of course the IMF is on board: "We believe the proposal is sustainable for the Cyprus economy." "The IMF is considering proposing a contribution to the financing of the package ... The exact amount is not yet specified." - International Monetary Fund Person Who Should Be Beat With Her Briefcase Managing Director Christine Lagarde, who managed to slither out of her former position in France just ahead of a potentially career-ending scandal.
This is worse than socialism - this is banksterism. Nobody in Cyprus voted to have the IMF swoop in and manage their funds, and almost none of them are responsible for the current mess that the Cypriotic banks are facing. They are largely ex-pats, who retired to the island and brought their retirement funds with them, and Russian businessmen, probably looking for a haven safe from the eyes of the Russian government. Asserting that any of these people have some fiscal duty to ensure that the banks are alright at all costs is just Pelosi-esque absurdity.
(Too bad In-Trade is shuttered up: I'd like to take 3 months in the bet about how long it will take the media to discover that lots of high ranking government officials pulled their money out of the Cypriotic banks Friday.)
And get this: the main reason the Cyprus banks are in trouble is that many of them had invested in Greece, in an attempt to keep that country afloat. So, they do the wrong thing for the right reason. Happens. But check this out:: the Greek units of Cypriot banks are excluded from the deposit levy.
If you think it can't happen here, remember that right wing economist Greg Mankiw has already suggested using negative interest rates as a method of stimulating the economy. That would entail, say, being able to borrow $100 and only paying back $97. It would, however, also entail withdrawing a lesser amount than originally deposited into deposit accounts. (Gee, what could possibly go wrong there?)
Also remember that nationalizing our 401(k) plans is an idea that occasionally floats back up to the top of the D.C. cesspool. And while current political dialogue usually calls it an Obama scheme, it not only predates his administration, it has also been considered on both sides of the aisle.
From Karl Denninger's blog:
$100 bills in your hand have just been declared to be worth somewhere between 7-10% more than those "deposited" and "stored" in a bank. May I ask the following pertinent and rather timely question: Where are yours?