Cyprus Is An Alarm Clock For The EU & America
by Tim Brown
March 19, 2013
The tiny island of Cyprus is demonstrating that government money is nothing more than the people’s money and to make the point, we are now watching as the European Union is set to seize private citizen’s bank accounts to pay off debt that is a result of bad monetary policy and unchecked spending.
Yahoo Finance reports,
The surprise decision by euro zone leaders to part-fund a bailout of Cyprus by taxing bank deposits sent shockwaves through financial markets on Monday, with shares and the bonds of struggling euro zone governments tumbling.
The bloc struck a deal on Saturday to hand Cyprus rescue loans worth 10 billion euros ($13 billion), but defied warnings – including from the European Central Bank – and imposed a levy that would see those with cash in the island’s banks lose between 6.75 and 9.9 percent of their money.
Parliament in Cyprus put off a vote on the measure – which has shaken depositors’ confidence in banks across the continent – until Tuesday, however, and with public anger at the deal widespread the government said it was already looking to ease the pain for small savers.
Without the rescue, Cyprus would have be unable to avoid a default. That would have undermined the promise that Greece’s debt writedown last year was a one-off, but the unprecedented move to hit depositors adds a radical new dimension to the crisis across the euro zone.
Peter Dixon, global financial economist at Commerzbank said, “If I were a saver, certainly in Spain or maybe Italy, I think I’d be looking askance at these measures and think this could yet happen to me.”