Expect Bank Runs!
By Mike “Mish” Shedlock
March 16, 2013
Contagion-Begging Actions; Expect Bank Runs Following Cyprus Idiocy; Have Money in a Spanish Bank? Take It Out Now!
In Cyprus, a decision was made to screw savers with a 6.75% to 9.9% “Tax” on deposits.
Supposedly this move was made to “avoid unsettling investors in larger countries and sparking a new round of market contagion.”
In reality, the action was mandated theft, imposed by EU officials to protect senior bondholders.
How can such an action do anything but cause contagion?
The move is expected to raise a mere 5.8 billion euros according to Dutch Finance Minister Jeroen Dijsselbloem, leader of the euro-area ministers. Fallout from this action will cost far more than that.
What is someone in Greece, Spain, or Italy supposed to think?
Consider Spain. By a 526 to 86 vote, the nannycrats in Brussels just passed a regulation that will require a country to accept a bailout if offered. (Please see An Offer You Cannot Refuse; EU Passes Law Forcing Countries to Take Bailout; Is Spain the First Target?)