Cypriots rushed to pull their money out of banks and ATMs before the tiny Mediterranean nation’s government could finalize a plan to seize depositors’ funds to satisfy euro zone leaders, sparking a run that prompted banks to be closed until at least Thursday.
The island nation’s leaders were huddling to come up with a way to soften the blow on average depositors, with one proposal targeting accounts with deposits above $130,000. The plan elicited an angry response from Russian President Vladimir Putin, whose nation’s oligarchs may have as much as $19 billion secretly deposited in Cyprus banks.
……The Brussels-based euro zone agreed on Saturday to give Cyprus a $13 billion bailout, but demanded levies that would take between 6.75 and 9.9 percent of bank deposits.
……The $19 billion figure comes from Moody’s, and would account for as much as half of all Cypriot deposits. Cyprus’ bank deposits dwarf by 8-to-1 the gross domestic product of the nation of 1 million, indicating a dangerously oversized banking system stuffed with foreign cash. And Cypriot banks are invested heavily in Greek government bonds, which were restructured last year at the EU’s demand, incurring big losses on bondholders.
News of the coming bank accounts seizure sent shockwaves rippling through Europe and beyond. Not only did it spook wealthy foreigners who have long parked money in the island nation’s banks, it was seen as possibly setting the stage for similar grabs in bigger nations within the troubled euro zone.
The economic crisis across Europe was all brought about by fiscal irresponsibility and stupidity. Their governments promised an endless well of ridiculous entitlements, but was forced to cut back when economic reality set in. Out-of-control spending, unsustainable debt, insurmountable deficit, and the bleeding of taxpayers has resulted in Europe’s financial failure.
Sound familiar? It’s happening here, too.
We have our own entitlement culture in this country who thinks everything earned by someone else belongs to them; free gratis. Obama obliges them by demonizing the very job creators who invest in business and became successful.
Watch as the self-inflicted collapse of Europe unfolds. America is on the verge of becoming a carbon copy.
- Alea iacta est – The Cyprus Deal and its consequences. (alfredmeier.me)