Your Savings, 401(k), and Retirement Are in Danger
by William F. Jasper
Tuesday, 04 February 2014
“I went to sleep Friday as a rich man. I woke up a poor man. I lost all my money.” That was the tearful lament of 65-year-old John Demetriou, who lives in the fishing village of Leopetri on Cyprus’ southern coast. In one fell swoop, he lost his life savings — the result of 35 years of hard work and thrift — in the “capital levy” imposed on Cyprus by the International Monetary Fund, the European Commission, and the European Central Bank (ECB), a trio commonly known as the Troika.
In March of last year, the Troika announced that as part of its deal for resolving the Cypriot banking/financial crisis, Cyprus would have to impose a “one-off capital levy,” a one-time tax on savings deposits in Cypriot banks. This was sold to the public globally and in the EU as a necessary and just solution because Cyprus had become a haven for money laundering and Russian “oligarchs.” However, it was small depositors, not the big speculators, institutional bondholders, or Russian billionaires, who took the hit. According to reports from Cypriot, Italian, and German media, as much as 20 billion euros fled Cypriot banks in the early months of 2013, with 4.5 billion euros taking flight in just the week before the banks were closed and accounts frozen. Some of the “smart money” folks who were in the early capital flight, undoubtedly, were merely savvy savers who could see the writing on the wall and wisely moved their assets before the politicians could grab them. But credible reports charge that Cypriot president Nikos Anastasiades and Troika officials warned insider banking friends about the coming “haircut,” thus allowing those most responsible for the financial debacle to escape the levy, and leaving Demetriou, and tens of thousands like him, to foot the bill.
“It’s not Russian money, it’s not black money. It’s my money,” Demetriou told the Sydney Morning Herald. Demetriou fled to Australia from Cyprus with his wife and children in the early 1970s, during the country’s war with Turkey. Starting with nothing, he worked long hours six and seven days a week selling jewelry in the Sydney area markets. He retired to his native Cyprus in 2007, having amassed a respectable nest egg of nearly $1 million. He intended to build a home and have sufficient money to live comfortably and take care of his medical expenses. But those hopes and dreams have been largely wiped out; he may end up losing up to 90 percent of his savings.