For those who don’t believe the government is prepared to take extreme measures that may include the seizing of retirement accounts, cash savings or even gold, look no further than Cyprus, the latest recipient of bank bailouts.
As of right now, citizens of Cyprus are scrambling to withdraw funds from their bank accounts after the EU, with agreement from the Cypriot government, announced they will decimate funds held in personal bank accounts to the tune of up to 10% of existing deposits.
You read that right.
The European Union has made the determination that the people of Cyprus are now responsible for the hundreds of billions of dollars in bad bets made by their government and bank financiers, and they are moving to confiscate money directly from the bank accounts of every citizen in the country.
Restrictions have been imposed to stop people emptying their accounts or moving their money out the country after the Cypriot government announced that up to ten per cent of deposits will be seized and used to bailout the island’s crisis-hit banking system.The deal with other eurozone finance ministers is the first time that ordinary citizens’ deposits have been directly raided in this way.…One furious expat said: ‘This is plain theft. I’d love to hear someone explain to me why it isn’t.’…Under the deal, all bank deposits over €100,000 will be hit with a levy of 9.9 per cent. Those with smaller savings will pay 6.75 per cent.…The move sparked panic and violent protests yesterday as crowds desperately tried to withdraw their money at cash machines.…‘Why would you risk putting your money in Greek, Spanish or Portuguese banks after this?’British expats were stunned by the news, with many left high and dry by the restrictions on accounts.Cash machines had been working, but many ran out of notes because of the panic withdrawals.…But financial experts said the raid – designed to stop Cyprus crashing out of the euro, potentially destroying the currency – would send shock waves through the eurozone.If savers in other troubled nations fear their accounts might be next, they could withdraw their money and spark a catastrophic run on the banks.Source: Daily Mail
They’re calling it a “tax.”
As Market Ticker’s Karl Denninger notes, “Like hell that’s a tax. That’s direct confiscation of the funds of people who did nothing wrong!”
It should now be obvious. There is no recovery. There never was.
No matter where you live, your government is likely preparing measures to deal with the coming financial and economic collapse. This means they are going to be coming for anything of value that they can get their hands on.
If you have the majority of your net worth allocated in bank accounts, money market funds, retirement plans, stock markets or the host of other ‘safe’ assets recommended by your financial adviser, then you are playing Russian roulette.
In a move that could set off new fears of contagion across the eurozone, anxious depositors drained cash from ATMs in Cyprus on Saturday, hours after European officials in Brussels required that part of a new €10 billion ($12.6 billion) bailout must be paid for directly from the bank accounts of savers.
The move - a first in the three-year-old European financial crisis - raised questions over whether bank runs could be set off elsewhere.
Jeroen Dijsselbloem, president of the group of euro-area ministers, on Saturday declined to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered. Although banks placed withdrawal limits of €400 on ATMs, most of them had run out of cash by early evening. People around the country reacted with disbelief and anger.
Under an emergency deal reached early on Saturday in Brussels, a one-time tax of 9.9 per cent is to be levied on Cypriot bank deposits of more than €100,000 effective on Tuesday, hitting wealthy depositors - mostly Russians who have put vast sums into Cyprus's banks in recent years. But even deposits under that amount would be taxed at 6.75 per cent, meaning that Cyprus's creditors will be confiscating money directly from pensioners, workers and regular depositors to pay off the bailout tab.
Cyprus's newly elected President Nicos Anastasiades said taxing depositors would allow Cyprus to avoid implementing harsher austerity measures, including pension cuts and tax increases, of the type that has wreaked havoc in neighbouring Greece. That thinking appealed to some Cypriots, including Stala Georgoudi, 56. ''A one-time thing would be better than worse measures,'' she said.
But Sharon Bowles, a British member of the European parliament who is the head of the body's economic and monetary affairs committee, said the accord amounted to a ''grabbing of ordinary depositors' money'' billed as a tax.
The surprise policy by the International Monetary Fund, the European Central Bank and the European Commission is the first to take money from ordinary savers.
It is difficult to describe the weekend bailout package to Cyprus in any other way. The confiscation of 6.75 percent of small depositors' money and 9.9 percent of big depositors' funds is without precedence that I can think of in a supposedly civilised and democratic society.But maybe the European Union (EU) is no longer a civilised democracy?
I heard rumours about this when I visited Limassol last week, butdismissed them as completely outlandish. And yet, here we are. The consequences are unpredictable, but we are clearly looking at a significant paradigm shift.
This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere - not that it would have mattered much as the trust is gone anyway. It is now difficult to expect any kind of limitation to what measures the Troika and EU might take when the crisis really starts to bite.
If you can do this once, you can do it again. if you can confiscate 10 percent of a bank customer's money, you can confiscate 25, 50 or even 100 percent. I now believe we will see worse as the panic increases, with politicians desperately trying to keep the EUR alive.
Depositors in other prospective bailout countries must be running scared - is it safe to keep money in an Italian, Spanish or Greek bank any more? I dont know, must be the answer. Is it prudent to take the risk? You decide. I fear this will lead to massive capital outflows from weak Eurozone countries, just about the last thing they need right now. Even from the EU as a whole, I suspect, as the banking union is in place in most countries already.
Another open question is what will happen to the huge number of brokerages based in Cyprus? There is about 100 or more FX and other brokers currently operating under the relatively light Cypriot regulation. How will this impact the trustworthiness of these many small institutions? What IS the exact impact on the client deposits they might be holding in Cyprus? Will anyone dare to do business with them going forward?
This is a major, MAJOR game changer and the fallout will be with us for a long time to come. I believe it could be the beginning of the end for the Eurozone as this is an unbelievable blow to the already challenged trust that might be left among investors. Talk about a possible own goal.
Market reaction? it must be very good for gold - and for safe-haven countries like Switzerland, Singapore and economically more healthy non-Euro countries in, for example, Scandinavia. I would think the EUR and associated markets will be undermined by increasing lack of confidence when the full implications become clear for investors.
This is full-blown socialism and I still cannot believe this really happened.
Be careful out there...
Up to 60,000 British savers are to lose thousands of pounds each as expats in Cyprus have their savings decimated in part of a painful bid to bail out the bankrupt island.
The Chancellor said the financial situation in Cyprus was ‘an example of what happens if you don't show the world that you can pay your way’, adding: ‘We are not part of the bailout.’
Britons have about £1.7billion of deposits in Cyprus and could lose up to £170million. The Cypriot government has agreed to seize up to ten per cent of savings and use the money to bail out the island’s crisis-hit banking system.
The move sparked panic and violent protests yesterday as crowds desperately tried to withdraw their money at cash machines.
Restrictions have been imposed to stop people emptying their accounts or moving their money out of the country following the deal with other eurozone finance ministers, under which ordinary citizens’ deposits will be directly raided for the first time.
One furious expat said: ‘This is plain theft. I’d love to hear someone explain to me why it isn’t.’
But financial experts said the move – designed to stop Cyprus crashing out of the euro, potentially destroying the currency – would send shock waves through the eurozone.
If savers in other troubled nations fear their accounts might be next, they could withdraw their money and spark a catastrophic run on the banks.
Economist Howard Archer from IHS Global Insight said: ‘It is an alarming precedent to hit the man in the street. As much as they say this is a one off, people will say if they can do it once they could do it again.’
A spokesman for the Cypriot government said yesterday the agreement with Brussels was ‘serious but not tragic’ and said that the EU had wanted a much higher levy, but the government had fought hard against it.
Mark Levin reaches tens of millions of listeners weekly, and what he talked about recently on his nationally syndicated show has sent shivers down the spines of many of them.
A few years ago this was fringe theory, restricted only to the sphere of alternative (conspiracy) news.
Warnings of a massive economic collapse, government stockpiling of weaponry, and the idea that Americans could be broadly classified as terrorists and then detained indefinitely or killed often fell upon deaf ears.
Today, as more information ‘leaks’ into the mainstream, it is no longer just conspiracy theory. We now have some of the most influential journalists and commentators in the country alerting Americans to the possibility that everything the government has been preparing for the last several years may soon be realized.
A few years ago this was fringe theory, restricted only to the sphere of alternative (conspiracy) news.
Warnings of a massive economic collapse, government stockpiling of weaponry, and the idea that Americans could be broadly classified as terrorists and then detained indefinitely or killed often fell upon deaf ears.
Today, as more information ‘leaks’ into the mainstream, it is no longer just conspiracy theory. We now have some of the most influential journalists and commentators in the country alerting Americans to the possibility that everything the government has been preparing for the last several years may soon be realized.
I’m going to tell you what I think is going on.
I don’t think domestic insurrection. Law enforcement and national security agencies, they play out multiple scenarios. They simulate multiple scenarios.
I’ll tell you what I think they’re simulating.
The collapse of our financial system, the collapse of our society and the potential for widespread violence, looting, killing in the streets, because that’s what happens when an economy collapses.
I’m not talking about a recession. I’m talking about a collapse, when people are desperate, when they can’t get food or clothing, when they have no way of going from place to place, when they can’t protect themselves.
There aren’t enough police officers on the face of the earth to adequately handle a situation like that.
I suspect, that just in case our fiscal situation collapses, our monetary situation collapses, and following it the civil society collapses – that is the rule of law – that they want to be prepared.
There is no other explanation for this.
I don’t think domestic insurrection. Law enforcement and national security agencies, they play out multiple scenarios. They simulate multiple scenarios.
I’ll tell you what I think they’re simulating.
The collapse of our financial system, the collapse of our society and the potential for widespread violence, looting, killing in the streets, because that’s what happens when an economy collapses.
I’m not talking about a recession. I’m talking about a collapse, when people are desperate, when they can’t get food or clothing, when they have no way of going from place to place, when they can’t protect themselves.
There aren’t enough police officers on the face of the earth to adequately handle a situation like that.
I suspect, that just in case our fiscal situation collapses, our monetary situation collapses, and following it the civil society collapses – that is the rule of law – that they want to be prepared.
There is no other explanation for this.
The Pentagon and military have been war-gaming large-scale economic collapse and civil unrest for nearly four years. Those within our government who understand the ramifications a massive breakdown in our systems of commerce, transportation and justice are preparing by stockpiling weapons and ammo, tens of millions of food rations, and even emergency shelters. They are spending hundreds of billions of dollars on continuity of government programs and exercises, preparing for what they know is coming.
Now why would the government be doing this if there wasn’t a reasonable chance that such events could come to pass?
We’ve urged our readers to prepare a well thought out contingency plan for the very scenarios our government is spending your hard earned tax dollars on.
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