Mish's Global Economic Trend Analysis |
| Posted: 16 Mar 2013 03:20 PM PDT 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. Contagion-Begging Actions 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?) Also note that EU Court Strikes Down Spain's Eviction Law. Think the parlay of EU contagion-begging actions for a second.
Expect Bank Runs Why would any rational thinking Spanish person keep any money in Spanish banks? They shouldn't and I suspect they won't. Moreover, this is bound to further inflame the situation in Italy, where Beppe Grillo's Five Star Movement is already the largest party. In short, this action was one of the single stupidest things the EU could have done and they crammed it down the throats of all Cyprus citizens, hoping to stop the spread of contagion. My friend Bernd who lives in Germany had these comments. "Judging by the German forums on Focus, Der Spiegel, SZ, FAZ and Die Zeit, there is hardly any support for this action. The name calling and swearing is rather blunt. These guys did not study their Machiavelli. He said roughly if you hurt people, you must never hurt all of them at once." The closest Machiavelli quote I can find is "If you need to injure someone, do it in such a way that you do not have to fear their vengeance." Rest assured there is going to be vengeance over this action. The Cyprus government will fall, and deposit fear will spread everywhere. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Wine Country Conference I am hosting an economic conference on April 5 in Sonoma, California. Proceeds go to the Les Turner ALS Foundation (Lou Gehrig's Disease). Please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs for my association with the disease. To learn about the economic conference with world-class speakers including John Hussman, Michael Pettis, Jim Chanos, John Mauldin, Mike "Mish" Shedlock, Chris Martenson with guest moderator Lauren Lyster and other Special Guests, please visit Wine Country Conference April 5, 2013 |
| Cyprus Rapes Citizens with 6.75% to 9.9% "Tax" on Deposits; Contagion of Idiocy is Everywhere Posted: 16 Mar 2013 08:55 AM PDT The hot news out of Cyprus today is the direct confiscation of depositor's money via an alleged tax on deposits of 6.75 percent on amounts less than 100,000 euros and 9.9 percent above that. The measures will raise 5.8 billion euros, Dutch Finance Minister Jeroen Dijsselbloem, who leads the group of euro-area ministers, told reporters early today after 10 hours of talks in Brussels. The euro region's bailout kitty and, possibly, the International Monetary Fund will look to make up the shortfall. A partial "bail-in" of junior bondholders is also possible.Read that last paragraph carefully. Officials raped Cyprus citizens to avoid "unsettling investors in larger countries". Here's the deal. Large investors should have risk. The nannycrats and thugs in Europe still don't see it this way and this is the most blatant example of theft yet, all in the name of preventing "contagion". Contagion of Idiocy is Everywhere. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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