Cyprus: A Precursor of Things to Come
Is anyone one going to be the least bit surprised when Obama does this? He’s probably drawing up the papers now.
We keep waiting for the American people to wake up and they keep hitting the snooze bar, folks. But something, someday, will wake them up. Of that I’m confident. I don’t know when. It could be ten years. For example, you would think something like this would. This is fascinating the way this happened. Cyprus has gone ahead and done it, except it’s worse than what the original plan was. The original plan in Cyprus was for the banks to be bailed out by the EU if the banks would simply confiscate between six and 10% of everybody’s bank deposits. Didn’t matter, everybody. Rich, medium, poor.
There was such a cacophony of opposition that they put the news out that the idea was shelved, and the last we heard about this was that they weren’t going to do it. And then out of the blue, over the weekend, they did it, and it is worse than ever. Now, when it was originally opposed, the EU, the euro zone and the banks said to the people of Cyprus, “Okay, okay, how about if we just take 10% from the rich.” “No, you’re not taking anything from anybody.” They steadfastly opposed the whole thing. So they let everybody believe that the idea had died and they were gonna try to find some alternative.
And then out of the blue, Cyprus secured a ten billion euro bailout package, that’s $13 billion. This is rescue loans, last-ditch negotiations early today. In return for the bailout, Cyprus must drastically shrink its banking sector, cut its budget, implement structural reforms, and privatize state assets. But before they did that, they announced a 40% tax on savings accounts of $130,000 or more. Now, it originally was six to 10% of everything, not just savings deposits, but checking deposits as well. It went away when everybody opposed it. Now, early today rich in Cyprus is defined as $129,000 a year, and those people have now been taxed, they’re calling it a tax, 40% of their deposits have been confiscated. Forty percent. And a companion story says that Spain could well be next. It’s in the Wall Street Journal, and it’s unreal.