Cyprus could / could not happen here (Reader Poll)
As part of a financial aid package from the European Union, Cyprus is being asked to confiscate up to 10 percent of bank deposits.
Cyprus’ savers bear brunt of unprecedented bailout
The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risk of a wider run on savings.
The eastern Mediterranean island becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the euro zone for financial help during the region’s debt crisis.
In a radical departure from previous aid packages – and one that gave rise to incredulity and anger across the country – euro zone finance ministers forced Cyprus’ savers to pay up to 10 percent of their deposits to raise almost 6 billion euros.
Parliament was due to meet on Sunday to vote on the measure, and approval was far from assured.
The vote now has been delayed to Monday.
An interesting aside, approximately one-half of Cyprus depositors are Russians, as Cyprus is considered a home for money laundering from the former Soviet Union:
Europe’s response: this is a unique situation. Just like the Greek bailout was unique; just like the Irish and Portuguese bailouts were unique; just like the bailout of Spanish banks was unique.
Could it happen here?
(Poll open until midnight tonight)
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Yes it could happen here. Of course the deceptive phrasing would be far a more sophisticated version of doublethink here in the USA>
Trick question! We ALL know that there is no crisis of debt. It’s not a problem, both Barack and Boehner have told us so! Right-wing-nuts are just looking for a crisis to exploit but can’t find any, so they make out debt to be their fear-mongering boogey-man. Get a grip.
We need some well-thought out conservative or libertarian legislation to be proposed in the House next week, to prevent this type of action in US banks. It would be interesting to see who supports it and who opposes it.
I recognize that there are other ways for the marxist statists to attempt to skin this cat, but let’s shine some light on them.
Good suggestion. Hopefully one of the Young Turk Republicans will take it up – there’s no hope of the old bulls arising from their sweet repose to do so. The NYT might write disrespectfully of them if they did.
Yes, it could happen here. Something very like that has already happened here. Twice.
Yes it could happen here. The poor do not have much invested in savings while those greedy rich have all the money. They are already talking about investing our 401K/IRAs in goverment bonds so why not steal, I mean invest our savings as well.
It’s not the “rich” in Cyprus who’ll be hurt by this; it’s the middle class.
Rich people tend to invest most of their wealth in real estate, stocks, art, etc. They also often, conveniently, have off-shore bank accounts.
It is the lower-income folks, i.e., the middle class, who typically have the bulk of their wealth in domestic bank savings accounts and CD’s.
As usual with these statist wealth-redistribution schemes, the rich and well-connected (i.e., government workers) are untouched, while the middle class gets screwed.
You are correct sir. Thanks to our low info (butt kissing) media, the middle class and poor will be hurt and not the rich.
Others have also pointed out we are already getting the shaft thanks to the fed printing money and banks giving only 0.5% or less on savings.
This is happening in the US too. It’s simply out of view of the general public. Here’s how: Fed institutes QE (money creation) and gives the money to the member banks for next to nothing (it’s called ZIRP [zero interest rate policy]). This rate lowers your savings account rate. Banks don’t need your money when they’re getting it from the Fed for next to nothing. If you have money in a savings account, they’re paying around 0.25% interest. But inflation is higher. The official government inflation rate is around 2%. That means your losing 1.75% on savings account deposits. If that is nothing disturbing enough, consider that the government tends to bend the truth on inflation. If we calculated inflation like we did in 1980, it would be more like 10%.
In Europe, they could bail out the banks in Cyprus with QE money. But they’ve chosen to hit Cyprus alone on this. Perhaps the secret is out on QE to the general public.
The problem is that people will start pulling their money from the banking system and stuff it in mattresses. This was a bad move on the part of the EU and the IMF.
Pat, you beat me to the punch! It is happening here.
I wish more people could understand what is happening. But it appears to be too complex a topic for most.
Lots of folks never understand until the food runs out. The Republicans are derelict in their duty to educate people about the fake money shenanigans. (I can say shenanigans on St. Patrick’s Day.) Not to exempt government schools, but somebody has to start screaming, and if Republicans want to fix the country, this is topic number one. Folks need to understand how wealth originates and where money comes from. We are sadly a country of economic illiterates, easy prey for socialists.
Two thumbs up.
It’s disgusting. Our money is burning from the moment we get it.
The government should not be in charge of the money. They should not have a monopoly on money. That is the worst idea anyone in history has ever had.
Ha! It has happened and continues to happen. When the gov’t bails out the to-big-to-fail financials, where does the money come from? On top of that, those same financials caused a drop in investment values, which amounts to a taking from Joe American. The kicker is the Fed’s money-printing operation that pushes cash into banks who, in turn, use it to manipulate the markets as they see fit. Fed printing dilutes the greenbacks in your wallet. That’s your future buying power once reality catches up.
So, don’t worry about outright confiscation. It won’t happen because it doesn’t need to happen. I mean, it’s already well underway.
The govt. has already given the spooks access to our financial records (http://www.reuters.com/article/2013/03/13/usa-banks-spying-idINDEE92C0EH20130313), so I would not put it past them to do this type of thing…!
It couldn’t happen here today, but it can happen eventually as institutional checks and balances wear down.
Remember, confiscation can take many forms.
– The confiscatiion of gold at below market rates under FDR
– Artificially low interest rates that punish savers and benefit banks and government
Expect government in the near term to continue forms of taxation and confiscation that take other forms less obvious.
Expect the government to test other forms, such as investment of 401ks on “behalf of the people” to protect them from Wall Street, as forms of this and more canary in the coal mine towards broader efforts.
So, not today, our institutions are still strong enou to resist. But I would not bet forever, and I would focus any many sneakier forms in near-term to confiscate money.
But wait for the next “crisis”. The sheep will agree, and the wolves will feast.
What I forgot to add in my previous post is that QE causes inflation. Additionally, the FED purchases government bonds with QE money. Therefore, the Fed QE does two bigs things. It bails out banks and it funds government deficits. Even though income taxes remain the same, you’re money value lose do to QE instituted inflation is funding government deficits and bailing out highly leveraged bank investments gone bad.
QE also pushed the prices of stocks and the Dow Jones Industrial Average higher. This has a “soothing” effect on the people by making them think we’re in a recovery.
Oh, but the DOW is at record highs! Obama has saved us! What … you mean it’s all just speculation, pumped up with free money? You mean it’s fake, and we still have to pay for it someday?
Good post. I suspect you read http://www.zerohedge.com as do I.
Here is a more interesting point. You see all the commercials saying buy gold and silver yet gold and silver have flattened out over the last 1-2 years. And the DJIA keeps rising. There is a disconnect here. As a reader of Zerohedge (me too), you probably suspect manipulation. The fundamentals are not playing out in the precious metals markets.
It’s probably best to ask why the metals have stalled in growth. If a large entity with money to burn could short the metals on a periodic basis, they could scare the average person from investing in them. But why do that? Because precious metals growth is a sign of inflation, something the political leaders do not want you to know about. Increased inflation means cost of living adjustments to SS payments (and lots of other undesirable stuff). Being $16T in debt, we cannot afford to raise SS payments.
I don’t know how long they can play this game until something terrible happens here.
The Dow is a really crappy indicator of the health of the economy.
ESPECIALLY when you consider that BIG, compliant enterprises will predictably flourish under a fascist economic regime, such as we have now.
And those are what makes up the Dow: BIG, compliant enterprises.
When you shred the Founding Document, throw morality to the four winds and no longer have a Free Press to watch those in power, anything is possible.
The Perfect Storm has become Ordinary.
With the BOZO’s WE have ‘Ain’t THAT the damn truth!’
The fact of the matter is that monetary policy certainly and probably budgetary policy should be in the Bill of Rights. We must run a balanced budget and the government cannot have a monopoly on money.
Leftists are Leftists. They’ll definitely try it here; whether they’d get away with it remains to be seen.
While destruction of the dollar and the beggaring of all wealth has accelerated under this administration, it has been an implicit policy for my entire life, and of most governments since the beginning of time. The rule of thumb is 90% devaluation over your lifetime, an apt assessment in mine. To succeed, one must make it faster than they can trash it. It may be useful to reference the book “When Money Dies” for an instructive look at which assets devalue and the rough order in which they do it as it tells the story of the German hyperinflation of the 1920s. My own view is that it is more likely than not to happen here in a material dimension since responsible policy and winning elections have nothing to do with each other.
I’m going against the grain and saying no. In 2008, when a money market fund planned to “break the buck”, it caused an electronic run on money market funds. Because money market funds invest mostly in short term commercial paper, it caused the CP market to freeze. You had gigantic, global, financially sound companies like Caterpillar, Deere, ADP, etc. unable to rollover and refinance their CP. So they were forced to draw down bank lines to avoid default on their CP obglications that came due. The banks do not hold reserves against standy by revolving credit lines, so when that all happened in a very short period of time, the financial system is so inter-connected that it really came dangerously close to a meltdown because now the banks were dastically undercapitalized. And that all happened because an obscure money market fund announced it could only pay back 96 cents on the dollar because of bad investments, not confiscation.
If Congress votes to give a government agency authority to actually confiscate deposits, it will lead to an insurrection. And that’s exactly why we have the 2nd Amendment.
They WILL take what we have. They’re already talking about confiscating our 401k’s. The question isn’t “will they do it?” but, rather, “how do we survive it?”
So let’s see…. the banks in Cyprus and the government will get billions of dollars, but the middle class working family gets the shaft? Yup, there’s your social democracy at work.
1. I was going to vote Present, but the LIans who pointed to QE convinced me that it’s already happening. A tougher question is how openly our politicians will dare to do it in the future.
2. Here’s more:
They’re no longer even pretending to govern in the public interest.
3. And more:
(boldface mine) One-time. Uh huh. Just like the “temporary” British income tax.
3. Are the Eurocrats so deluded by their own BS that they’re ripping off the Russian mafia?! Will Brussels experience an outbreak of Litvinenko’s Disease?
4. Not a peep of protest out of you, Putin, or face the wrath of the EU.
Not overtly. The best and brightest prefer confiscatory taxation through trillion dollar distortions of the market, including progressive inflation of medical services and pharmaceuticals protected by Obamacare regulations.
No. Along with gun confiscation, confiscation of banked funds is a line at which Americans will fight. I don’t see it getting past the trial balloon stage.
I agree with this. I have a feeling that the Cypriot people are not going to take this either.
I fear this is going to be a bad week for the markets.
As for the poll question, just about anything ‘could’ happen just about anywhere, but the minute somebody in DC suggests (trial balloon) confiscation of savings, retirement accounts, etc., anything like that, is the minute the Tea Party goes apeshit, followed closely by the American public in general. Conservatives, moderates, independents, and liberals all have savings and retirement accounts.
Yes, it could happen here and has, in many ways, already begun.
This reminds me of the overnight enactment of the NY SAFE Act in which millions of New Yorkers went to sleep believing they owned legal and permissible firearms only to wake up the next morning to the news that any gun or rifle with a capacity larger than a 7-bullet magazine was illegal.
Overnight millions of New Yorkers were criminalized.
If Crapo had had his way all firearms might have been confiscated.
If a State government can come so close to confiscating private property, in this case, firearms, what’s to say it can’t also confiscate financial assets?
As Zero Hedge succinctly writes:
Today, lots of people woke up in shock and horror to what happened in Cyprus: a forced capital reallocation mandated by political elites under the guise of an “equity investment” in insolvent banks, which is really code for a “coercive, mandatory wealth tax.” If less concerned about political correctness, one could say that what just happened was daylight robbery from savers to banks and the status quo. These same people may be even more shocked to learn that today’s Cypriot “resolution” is merely the first of many such coercive interventions into personal wealth, first in Europe, and then everywhere else. For the benefit of those people, we wish to point them to our article from September 2011, “The “Muddle Through” Has Failed: BCG Says “There May Be Only Painful Ways Out Of The Crisis”, which predicted and explained all of this and much more.
There should be politicians and bankers hanging from every light post there.
In every country, giving in to insane, delusional power drunk politicians has to stop.
This could happen.
Obama and friends woke up this morning and read about Cyprus.
Their initial take was: “Wow. Why didn’t we think of that?”
Followed by: “When do we do start?”
“Yes, MF Global was the Direct Antecedent to Cyprus”
Posted by Ann Barnhardt – March 17, AD 2013 2:06 PM MST