Markets React to the Eurozone's Latest Bailout Fiasco


Credit: erjkprunczýk/flickr

Cyprus is the latest country facing a bailout in the eurozone crisis, with the European Union and International Monetary Fund both saying that a bailout will be conditional on a bank levy paid for by those with savings in Cypriot banks Cypriot taxpayers. European bank officials have said that they will allow for some flexibility regarding the plan, but that $7.6 billion must be raised whatever rates the Cypriot government decides on. An emergency vote on the bailout plan has been delayed and will be held on Tuesday evening.

Markets were unsurprisingly shaken by the latest developments in Cyprus, a country that (as Cato's Dan Mitchell has pointed out) has a GDP smaller than Vermont's.

Many European leaders had hoped to put the euro crisis behind them, but the latest news from Cyprus is the most recent sign that the euro-crisis is not over yet.

There have been understandable public demonstrations against the levy plan, which would require those with savings accounts in Cypriot banks to contribute. The BBC has provided an infographic detailing how these contributions would work:


Credit: BBC

The BBC reports that the president may want these rates lowered.

In order to stop what could become a major run on the banks the Cypriot government has closed banks until Thursday. Unlike other bailouts in the eurozone the bailout in Cyprus could see the government take people's savings directly rather than taking it through quantitative easing, which will not reassure those in Spain and Italy, two other countries that are hardly in an ideal economic position. 

Update: The above text has been altered to reflect that the bank levy would be paid by those with savings in Cypriot banks rather than Cypriot taxpayers

NEXT: FL Flunks Transparency Test

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  1. Could Europe bail us out? I mean, we are classified as European in some cultural and historical senses, and, you know, they owe us some for those wars we helped with and for keeping the Soviets at bay.

  2. It’s a PenalTax, so if they wanted to do it here, it would surely pass Constitutional muster.

  3. In order to stop what could would definitely, absolutely, spectacularly become a major run on the banks the Cypriot government has closed banks until Thursday.

    1. the Cypriot government has closed banks until Thursday.

      So what happens on Thursday? A bank run, but I guess by then the theft will be completed.

      1. Yep. And what difference, at that point, will it make?

        1. Well, Monday is a depressing day. So a bank run today would be really bad for the country’s overall mental health. Thursday is closer to the weekend.

          1. they will draw all their cash and spend it over the weekend. stimulus.

            1. This weekend will be long remembered.

  4. Off comes the mask. Outright theft is what taxation is, and they’re no longer bothering to be shy about it. What fun!

    1. To each according to his need. . . .

      1. think of it as an investment in your future…

    2. Don’t be silly. It’s a one-time levy! Even Feeney is calling them “contributions.”

      1. April 15th is one time…each year.

        Richard Nixon’s Head: My fellow Earthicans, we enjoy so much freedom, it’s almost sickening. We’re free to chose which hand our sex-monitoring chip is implanted in. And if we don’t want to pay our taxes, why, we’re free to spend a week with the Pain Monster.

        The Pain Monster: See you April 15th, folks!

        1. That just proves how awesome teh USA is. The Cypriots aren’t even getting the choice of the Pain Monster.

    3. Actually, the fact that people are going berserk over this theft indicates that it’s NOT the same as taxation.

      1. It’s okay if people don’t riot? Is that the standard?

        1. Most people don’t even disapprove of taxes in principle. They definitely disapprove of this.

          I do understand that doctrinaire libertarians must consider taxation to be theft, but that’s not how most people see things. Reality and rigid ideologies don’t mix.

          1. It’s certainly tax-ish. I guess if we look at Cyprus as a Condo association, the residents just got assessed.

            1. Yeah. It’s the cost of having a civilized society. And by “civilized,” they mean having a centralized government bureaucracy that runs everyone’s life from cradle to grave.

              1. And by “civilized,” they mean having a centralized government bureaucracy that runs ruins everyone’s life from cradle to grave.

            2. Technically it’s the bank depositors, not the taxpayers. There’s supposedly a lot of Russian money in Cypriot banks.

              1. There’s supposedly a lot of Russian money in Cypriot banks.

                Why for the love of God, why?

              2. Technically it’s the bank depositors, not the taxpayers. There’s supposedly a lot of Russian money in Cypriot banks.

                Is that really relevant? They are stealing peoples money, whether Russian or Cypriot is beside the point.

                1. One doesn’t steal from the Russian mafia and get away with it.

              3. Technically it’s the bank depositors, not the taxpayers.

                Are you mentally retarded? Do you know how strict EU banking rules are IRT depositors? The overwehelming majority of money in these banks has been put there by law-abiding taxpaying people.

                1. Do you?

                  There is no official sum available in Russia or Cyprus for the amount Russian banks, firms and individuals hold in Cyprus. But of almost 70 billion euros in deposits held there, a little less than half is held by non-residents and most are believed to be Russian.

                  1. So there’s no such thing as a law-abiding taxpaying Russian? And banks the world over don’t have large depositors from other nations?

                    I’ll direct you to Singapore, Suisse, Monaco, San Marino, The Cayman Islands, Bermuda, etc, etc, etc…

                  2. There is no official sum available in Russia or Cyprus for the amount Russian banks, firms and individuals hold in Cyprus. But of almost 70 billion euros in deposits held there, a little less than half is held by non-residents and most are believed to be Russian.

                    So you are saying that since there is Russian money in the banks, it is ok to take money from all account-holders? If so, is it ok the freeze all accounts in BofA because a drug lord has money in BofA as well?

                    1. Darnit. Now some prosecutor’s going to get a great new idea for asset forfeiture.

                    2. Well, if you can drone-kill someone, there’s no reason you can’t clean out their bank account too.

              4. There’s also a lot of Cypriot money in Cypriot banks. But fuck the pensioners and savers because Russians use the same banks.

                Another reason why direct deposit is a scam.

          2. Taxes people perceive to be legitimate, collected for spending they also perceive to be legitimate, yes. But this country, for example, was largely founded on a tax rebellion, so there’s obviously a line where that isn’t true.

            Besides, what’s the difference in taking money out of a bank account or making you and your employer hand it over?

            1. One does it before you get your hands on the money, the other takes it after. I suspect that’s probably the nexus of this resistance.

              If I walk up to the pay desk after drilling holes in metal all day, and the woman behind the counter says, “She do take a bite, don’t she?” after I look in shock at my paycheck, then after I deposit it, I see a line item “-$1,250.00 — Stimulus assessment” on my bank statement, how pissed am I going to be?

              They’re taxing taxed dollars. In Cyprus’ case, I’d suspect it’s… what… quintuple taxation?

          3. Reality: taxation = theft.

            Ideology : no, it’s totally different. I can’t explain the difference, but that’s what the taught in that school where I pledged allegiance to the state everyday.

            1. In theory, it’s not quite theft, as many of us are willing to pay some taxes for government services we perceive as legitimate.

              Of course, in the U.S., taxation goes far beyond that, so it is mostly theft.

              1. many perceived O.J. as innocent too…

            2. Then theft is necessary for civil society to exist. You wouldn’t have much time to celebrate the end of taxation before you started having to pay protection money.

  5. So, the run is only delayed until Thursday? Why? Because Cypriots didn’t want to miss How I Met Your Mother tonight? I think it’s a repeat.

    1. Its Orthodox Lent, starting today – maybe the Cypriot Government is hoping their citizens are giving up bank runs for Lent.

  6. Meanwhile legislators around the world are at the edge of their seats, waiting to see how the people react, as they consider tapping into all the saved money in their own country. I mean, the money is just sitting there, useless. It would be better if the government used it to “invest” in roads and teachers. Why do you hate the children?

    1. Indeed – I hate to say this, as the average Cypriot putting his or her money into a bank has done nothing wrong – but I hope this crashes hard and burns hot, pour disencourager les autres.

    2. legislators around the world are at the edge of their seats, waiting to see how the people react, as they consider tapping into all the saved money in their own country

      Well since Cypriots are effectively barred from owning firearms I hope tar, feathers, rope, etc. are put on full display.

  7. Sooo, the government of Cyprus wants to completely destroy the banking industry there by causing everyone to withdraw all their money?

    Because only a fool would think this was a “one off” thing.

    1. I’m going to make a killing selling safes to Cypriots on eBay, even with the high shipping charges.

      1. Get the payment by credit card…

      2. Pitchforks, torches, and nooses will also be big sellers.

      3. Money ain’t got no owners, only spenders…

        -Omar Little

        1. You can’t quote Omar without using this one:

          “You come at the king, you best not miss.”

          1. “You come at the king, you best not miss.”

            “When you play the game of thrones; you win or you die.”

            1. Don’t fuck up my Omar Little side thread with your Nerd Core.

    2. The progressive fantasy of all the mean rich people keeping their money in their mattresses has lost all credibility, so they are going to make it true by any means necessary.

  8. Don’t think Obama et al aren’t watching this with keen interest. If there aren’t riots in the streets with copious bloodshed, the Dems/Treas will be tempted to try the same thing here. After all, it’s merely a tax on ‘the rich’.

    1. After all, it’s merely a tax on ‘the rich’.

      And anybody who keeps any significant money in the bank are just hoarders anyway, so it’s right to finally see that money put to good use for the benefit of all.

    2. Who needs riots, when every bank account gets withdrawn to zero, and no one will put money in a bank in Cyprus ever again?

      This is just awesome levels of stupidity.

  9. Isn’t it strange that, though it’s been obvious that the Cypriot banks were on the edge of the abyss for nearly a year, people didn’t get their money out of them? The various species of politicians and eurocrats keep saying “all is well” – and incredibly – people believe them. WTF!

    1. Im assuming Cyprus had some equivalent to FDIC, so people thought their money was insured.

      1. Trust the government. It never lies, or steals, or kills in really stupendous numbers.

      2. It is theoretically insured by the EU’s version of FDIC, but the insurance doesn’t cover government predation.

        1. That’s interesting–there’s deposit insurance at the EU level? That strikes me as a possible ticking time bomb if the European economy keeps heading down the path it’s on.

          1. Never mind, apparently the EU level deposit guarantee was shelved in September.

            1. Who says Europe doesn’t look ahead?

            2. So people left money in uninsured banks? I could see a few thousand bucks for convenience, but anything beyond that is insane.

              1. So people left money in uninsured banks?

                No, the deposits were insured up to 100k.

                1. I cant follow the link above, so it wasnt shelved in September?

                  1. It’s insured by the Cypriot govt. The scheme that was shelved was a unified EU insurance scheme.

                  2. The Euro-level deposit insurance scheme was shelved; Cyprus already had a national deposit insurance program.

            3. Thank God. I had visions of, well, bad stuff.

      3. It was insured up to 100k euro. So, yeah. That’s why those under 100k are getting slightly less of a haircut, I guess.

        On the other hand, that doesn’t really explain why deposits over 100k are getting a 9.9% haircut on the full amount, not just the amount over 100k, which was my initial assumption but seems contradicted by the chart above.

        1. There is an even higher, but less talked about haircut: any accounts over 500,000 Euros is getting 15% off the top.

          Im assuming Cyprus had some equivalent to FDIC

          Speaking of which, how is the FSLIC doing these days?

  10. Nobody needs 150k Euros, just as nobody needs and AR-15. See?

    1. I do see! Tell me more! Kristen, tell me everything that I need. And then give it to me.

      1. Would you like to subscribe to my newsletter?

        1. I was strongly considering it. Do you think I need it?

          1. Tewtally! Not onlhy that, but you neeeeeeeed it.

            1. Am I the only one that sees this exchange as totally sexual in nature?

              1. Hmm. Do you think I need to see it that way too?

              2. No, restoras. All they need to do is replace “newsletter” with “two-headed dildo” and it’s like internet porn for from the early 90’s.

      2. I do see! Tell me more! Kristen, tell me everything that I need. And then give it to me.

        Someone get Grey DeLisle to read this aloud.

  11. The night before this broke, I heard a commercial on the radio for the Treasury Department, in which they attacked the idea of taking your money out of the bank and putting it in a shoebox, because it’s safer in the bank.

    Found it kind of odd; I’ve NEVER heard a commercial like that before. It’s one of those arguments people don’t make if they think it’s correct. And then this happens.

    Having your money in a bank is already risky since the govt can freeze your assets any time they please.

  12. 9.9% might be–in the end–a small price to pay to get out of the Cypriot banking system. Expensive lesson, though.

    1. It will just fuck Cypriots who haven’t been paying attention or are too poor to have any choice in banks. Who is crazy enough to have any money in any bank in any Mediterranean country right now?

  13. It isn’t theft, they are being compensated:

    Depositors will be compensated with the equivalent amount in shares in their banks

    That is much better. That way when people withdraw all their money and drive the value of the stock down, it is their own fault.

    1. Don’t think of it as theft, think of it as the central bank taking over your investment planning.

      1. Don’t think of it as theft, think of it as the central bank taking over your investment planning.

        Considering the US Central Bank has destroyed the value of the dollar*, I think I will manage my own investments.

        *1913 – $1
        *2013 – $.04

        1. Think of all the parks, roads and jobs training programs your $.96 bought you!

  14. Markets were unsurprisingly shaken by the latest developments in Cyprus, a country that (as Cato’s Dan Mitchell has pointed out) has a GDP smaller than Vermont’s.

    Really? I didn’t know that. So, wouldn’t it have been more proper to say surprisingly shakened?

    Would the world markets really reel backwards in the face of a Vermontian collapse?

    1. What concerns them is the the precedent that will be set.

      1. That the government can take your shit at any time it wants?

    2. Consider what would happen if the banks in Vermont did this at the demand of the Federal government. Would it matter if it was only in Vermont at this point?

  15. Interesting that Feeney doesn’t mention the elephant in the room, which is Russian money laundering in Cypriot banks.

    1. Doesn’t that beg the question?

    2. And if it were True(tm), wouldn’t it make more sense for the Cypriots to extract money from only the Russian depositors?

    3. Cyprus has a 4% corporate tax on foreign companies based there, it’d be stupid not to take them up on their offer.

      I guess that’s “laundering” to you. That you wag your finger at good business practices doesn’t bode well for your transition into the private sector.

      1. doesn’t bode well for your transition into the private sector.

        Where they expect results…

        1. That’s a big Twinkie.

      2. No, that’s not laundering to me. Taking money obtained illegally in Russia and stuffing it into a foreign bank, on the other hand, is.

        1. Does this only apply to accounts based on illegal money? If not, what’s your point?

  16. If I were a Cypriot, I’d grab my rifle slingshot and march down to complain.

    An unarmed populace can gripe all they want. The government will simply ignore them.

    1. I still can’t believe you have 22lr available by the pallet in Cali. Significant arbitrage opportunity.

      1. It’s illegal to transfer it across state lines for resale purposes and also illegal to sell it in California if one doesn’t have a FFL.

        1. That would explain why you have it available, perhaps.

          I just know that the clods who stalk the Walmart truck and buy 10 bricks of 22lr whenever they come in are turning around and selling it on gunbroaker.

          1. You guys don’t have a Dicks near you? I’d think they would keep the supplies from their warehouses flowing where demand is highest.

            1. I’ve been boycotting Dick’s for their behavior after Newtown, but still go there occasionally to look for ammo when I’m desperate. They haven’t had 22LR or 9mm since early January.

              1. It amazes me that there is a .22LR shortage anywhere. It’s like easier to find out here than arrows for my son’s bow are.

              2. How about Cheaper than Dirt for your online ammo sales? I haven’t checked since Newtown, but they had pretty good deals.

                1. CTD’s(the online store, not the brick and mortar) reaction to Newtown was just as bad, if not worse than Dicks. They suspended all online gun sales, then immediately started price gouging on magazines and ammo.

                  They had 30 round Pmags listed at 60 dollars apiece before the day was over.

                  So because I disagree with the way they handled the situation, I will never spend another dollar there again.

                  1. Wow, a libertarian website now has someone complaining about the completely imaginary thing called price gouging.

                    We’re fucking doomed.

                    1. I’ll agree we’re doomed, but not for the smart-assed reason you’re giving.

                      Maybe my wording was wrong. I just thought “price gouging” would be a simple term to use. They jacked up the prices on ammo and magazines, which they are completely free to do. They did it immediately after the Newton shooting to make a quick buck off a crisis. Other companies didn’t do this, even when supply started to taper off a few weeks later and demand was higher. I give my money to those companies, not the ones that decided “Oh crisis time! better raise prices absurdly high!”

                      Pmags are in short supply, and are in high demand, but even still you can find them within a reasonable price (under 25 dollars) which is well below the CTD price, which immediately rose to 80. Even now, the price of the Pmag at CTD is 50 dollars. I’m sure some people are willing to pay this, and good for them. I refuse to do business with CTD.

                    2. If they’re so easy to find cheaper elsewhere then buy them elsewhere.

                      If CTD’s price increases are unjustified, they’ll be hurt by losing sales. No boycotts needed.

                      My boycott of Pussy’s Sporting Goods was due to their pulling Evil Black Rifles from their stores, and not quietly either, they made a big press release and everything about it.

              3. If you spent as much time searching for ammo as you do bitching about there not being any ammo, you’d have ammo.

                I’ve bought over 1000 rounds of .22 in the last few weeks.

                1. So, 2 bricks in a few weeks? That’s not much.

                  I don’t have time or gas money to spend driving around the county looking at gun shops. I hit the cluster at West Mifflin once a week and that’s it.

                  It really sucks considering how I lost all my ammo, guns, precocious metals, and ferrets in that boating accident.

                  1. It really sucks considering how I lost all my ammo, guns, precocious metals, and ferrets in that boating accident.

                    This strikes me as a cultural reference I’m not getting, and I feel poorer for it. Explain.

                    1. Sometimes a tragic boating accident is just a tragic boating accident.

                      I just feel it necessary to explain, to anyone reading the Internet, that I don’t have any of those things any more.

        2. Illegal under federal law or CA state law? If the latter, how exactly is that going to be enforced when someone loads their trunk with ammo and drives across the border, and refuses to let anyone search their vehicle without a warrant?

          1. Pretty sure it’s illegal under Fed law. It falls under the same schemes as tobacco and liquor do with the feds enforcing the state’s taxation and availability schemes.

            If I’m wrong, I’d like to know. Not for any financial reason (see Newman and the mail truck to Cleveland scheme), but to ensure I can take ammo to my digs when we buy a second house in Vegas in the next couple of months.

            1. Can’t find anything on google saying transporting ammunition across state lines is illegal.

              In any event, load your guns and ammo in boxes labeled “books” in a locked moving van, and refuse to consent to any searches when crossing borders. Can’t see how any government official could generate probable cause to search such a box.

              I say never ever ask a government official for permission to own guns or ammo — if they know about it, they can confiscate it.

              1. For example, this does not mention it as illegal, so long as the firearms or ammo are not accessible in the passenger compartment of a vehicle:


                1. I gave my GF 600 rounds of .22 to take back with her to WA.

                  It was pretty easy and painless at the airport, surprisingly enough.

              2. Meh. Looks like I was wrong on the transport part. Not so sure about selling it without a FFL, though. I could get pinched like Henry.

      2. I still can’t believe you have 22lr available by the pallet in Cali. Significant arbitrage opportunity.

        We still do too. At least as of a week ago. It wasn’t until a week before that that 9mm started to be hard to come by. Not that hard, but they started limiting folks to buying 1 box of a thousand rounds each (which was also the smallest quantity available).

        1. IL requires a FOID showing ownership of a firearm of that caliber for ammo purchases, correct?

          Looks like the states with oppressive restrictions are the ones that have stock.

          1. No. IL requires only a FOID, which can be held (and is) by plenty of people who don’t own guns at all. At the state level, you can buy any kind of ammo (the FOID is not tied in any way to what guns you own). In the City of Chicago, you are not allowed to possess any ammo unless you have a city permit for a gun of that caliber.

            But yes, I’m sure it still has to do with the generally more oppressive restrictions. No one can come in from IN or WI or whatever and buy up ammo.

            1. In the City of Chicago, you are not allowed to possess any ammo unless you have a city permit for a gun of that caliber.

              I know that can’t be constitutional. Why was it not challenged during McDonald?

              1. This is part of the post-McDonald law. I honestly don’t know what was allowed WRT ammo before McDonald.

              2. Probably because the plaintiffs were afraid of scaring Kennedy over to the other side if they got greedy in asserting their rights. Heller basically said he would be satisfied if he just got a permit to keep a gun in his home.

  17. I don’t understand why this hasn’t caused a run on the rest of the EU banks?

    Can someone more financial savvy than I esplain to me why anyone would have their money where the powers that be can dictate upwards of 10% of it can be appropriated?

    1. It’s not really expropriated. The banks have assets of $126bn, Cyprus’ GDP is $18bn. The banks need new capital of $13bn or they go bust.

      If that happens, the economy would be royally fucked, their deposit insurer would go belly up and people would lose much more than what is currently proposed.

      Pretty good deal, if you ask me.

      1. So this is a way of raising capital reserves for the banks?

        1. Exactly. After the haircut on Greek bonds last year they need $13bn asap.

          1. So the EU causes a banking crisis in Cyprus by making Greece write down their debt (which was heavily financed by Cyprus) in exchange for a bailout, THEN bails out the Cypriot banks at the expense of the depositors?

            It seems that Cypriots have just bailed out Greece.

            There is no way that this is smart or good for anybody. Look for more EU/FDR style “capitalism” to come in the wake of the crisis that this bailout/tax causes.

            1. Sure. The Euro was a bad idea; I’ve fought against it. Bailouts are also bad for a variety of reasons.

              One thing: the EU isn’t technically bailing out anyone, that is explicitly forbidden. Greece got a loan which it is supposed to pay back. That’s also why some form of Cypriot involvement was necessary; they couldn’t just hand over the money.

      2. Pretty good deal, if you ask me.

        Easy to say, when its somebody else getting rammed.

        1. Agreed. I hate to sound callous but I am sick of the constant avoidance of consequences, in Europe and here in the US.

          At least the way this deal is structured responsibility is situated closer to home with people who can perhaps do something. I doubt that Mr. Christofias will be very interested in the wrath of German taxpayers.

    2. Why wouldn’t you put your money in a chartered and federally insured bank? It’s perfectly safe! Sure they’ll loan your money out and sure the government can monitor and freeze the account when they widh, but that just means Uncle Sam and the banks are working hand-in-hand to keep your money safe!

      Only prepper, kulak,teabagging,wrecker, counterrevolutionaries worry about bank solvency.

      In Barry We Trust.

    3. I had a friend here in Prague who did offshore for many years mostly based in Cypress.

      It was seen as a very stable place to set up an offshore company, perhaps on par with Isle of Man. They might have toughened things up in the last few years at least within the EU.

      Certainly was supposed to be more stable than West Indian offshore places and such.

  18. Cue the same action on US account holders in 3…2….1….

  19. They’re doing it wrong. Instead of a tax on balances, they should put a tax on withdrawals.

    You’re welcome.

    1. Brilliant. Add taxes on deposits, too, and all will be well.

      1. Didn’t some genius lefty pol (Faucahontas, perhaps?) propose putting a “fee” on all financial transactions in the US so the government could skim a little more money out of our personal accounts? Or was it just for stock transactions? Either way it was a horrible idea then, and it’s a horrible idea now.

        1. You’re probably thinking of the Tobin tax.

          As you can see from the link, Sweden tried a version of it in the 1980s and got rid of it because they’re a bunch of far right-wing whack-jobs.

          1. Thanks for the link Ted. I followed it to here, and found the list of people sponsoring legislation in the US.

            The House of Representatives has introduced since 2009 ten different US FTT related bills and the Senate has introduced four. The bills in the Senate have been variously sponsored by Tom Harkin (D-Iowa) or Bernie Sanders (I-Vermont). The bills in the House have been variously sponsored by Peter DeFazio (D-Oregon), John Conyers (D-Michigan) or a number of other Representatives.[61]

            It’s like a who’s-who list of thieving assholes.

  20. My question is “who is getting bailed out?” Is it the banks or is it a general bailout of the government? Can’t seem to locate a definite answer in TFA. If the banks are in deep shit by themselves then it is somewhat acceptable to take it from the depositors. But if it is a raid by the government to pay off their creditors without giving the bondholders a haircut first, then get the pitchforks and torches because it’s time to raid the castle.

    1. It’s the banks. They need new capital of $13bn. This is not a Greek-style bailout, more of an AIG thing.

      1. Then I don’t have a huge problem with it. It’s obviously not a good thing but it’s what should happen when your bank fucks up, instead of the taxpayer getting screwed or inflating the damn problem away.

        The fact that it jeopardizes the other banks is just an extension of the unfortunate fact that fractional reserve banking is untenable in the long run, particularly if the required fraction is constantly getting smaller. Too much moral hazard.

        It’s obvious that the banks would much rather a govt bailout because nobody is going to trust them anymore. And why should they be trusted?

        1. I’ll clarify in light of what GBN posted above. If this is a result of the Greek debt writedown, then the obvious takeaway is “DON’T BUY GOVERNMENT BONDS, OR PUT YOUR MONEY IN BANKS THAT DO.”

          Of course, since the government almost mandates buying their own bonds, I don’t see how you get away from the problem.

          What a fucked up mess.

        2. Fractional reserve banking if tenable if you dont have the government insuring the deposits.

    2. Is it the banks or is it a general bailout of the government?

      Same thing, really, since the banks buy the government’s debt. While this seizure may be nominally to shore up the bank’s balance sheet, that cash will be converted to sovereign debt in short order. Count on it.

      1. I’ll be interested to see how that works out. If they buy a bunch of worthless Cypriot bonds with the new reserves, then I would expect the depositors to burn the damn buildings down.

        1. There will be elaborate money laundering going on, via EU bonds and other banks and guarantees and shit, but I have no doubt that damn never every penny confiscated will find its way to some government or other.

  21. While its hard to draw a clean line between taxation and confiscation, everybody knows that this is the latter. That’s why people are so pissed.

    And, what’s worse, they’re confiscating from everybody, not just “teh rich”.

    Taxation without representation is bad. Confiscation without representation (which is what this is) is the stuff of riots and revolutions.

  22. I’m not sure I quite understand the objections to the levy on depositors.

    When a bank fails, the depositors should be paying for 100% of the losses. They shouldn’t be getting any bailout at all.

    The people we should be weeping for are the EU taxpayers who will be footing the bill for the bailout. Not the depositors in Cypriot banks, many of whom are Russian mafia.

    1. I’ve been confused too, but I think the root of the problem lies in why the banks are failing. The EU forced a writedown of Greek debt, which Cypriot banks held in mass. Then the EU forces a haircut on Cypriot depositors. So basically, the EU just fucked Cypriot depositors for the benefit of the Greek government and social welfare state.

      1. Well, the Greek debt WAS bad, wasn’t it? Without EU involvement, Greece would have defaulted, and Cypriot banks would still have taken those losses. Probably even larger losses.

        The fact that the EU is involved in managing the process artificially is objectionable, but if anything the EUs actions have lessened the pain for Cypriot depoitors at the expense of taxpayers elsewhere in Europe.

    2. That’s why I called it a pretty good deal. Of course, the whole situation is FUBAR.

    3. I’m not sure I quite understand the objections to the levy on depositors.

      The banks should be let to fail.

      1. Yes, depositors should be the last to get tagged, not the first.

        I love the “Depositors will be compensated with the equivalent amount of shares”.

        I’m guessing these banks aren’t worth a fucking thing, especially now that their depositors are getting robbed by the banks themselves.

  23. I’m not sure I see why the depositors* deserve to get robbed.

    *Investors (both equity and debt) and managment, absolutely, but why depositors? Unless the plan is to utterly destroy banking as an institution, and drive 90% or more of the economy into underground cash.

    1. They don’t deserve to, but the alternative scenario would hit them much harder.

  24. Believe it or not, I am not completely opposed to a financial transactions tax, if it is constructed on a fee for service basis: deposit insurance, regulation, market “stability”, contract enforcement, and such.
    Using a financial transactions tax to fund choo choo boondoggles is an entirely different thing.

    1. This is not based on financial transactions, it is decimating any portfolios held in Cypriot banks.

  25. So, who in their right mind comes up with all that stuff.

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