Cyprus is SAVED!

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Hell FireIf you consider being dumped in to the flaming fires of Hell to be some form of salvation.

We’ve been following this story for a while, and it’s a disaster all around.  Here’s a brief background on the story.

Last year the European Central Bank “stress tested” the banks in Cyprus and they passed with flying colors.  Last week the Cypriot banking system, that would be two banks, essentially crashed.

Last week the ECB cooked up a deal to bailout the banks and wanted “contributions” from account holders in the range of 6% of account balance for small depositors and 15% for large depositors.  That failed a vote of the Cypriot parliament so everybody went back to the table.

Today it appears that Cyprus is going to have a “good bank” and a “bad bank” and the small depositors – accounts less than 100,000 Euros – will not get hit while larger accounts could get tapped for as much as 40%.  It’s worth noting that small account holders are overwhelmingly Cypriot while large account holders tend to be Russians.

At this point the most interesting thing about this mess is the statements that were put out last week to calm other Southern European countries that are in a financial mess, notably Spain and Italy.  Last week the story was this…

Making bank depositors bear some of the costs of a bailout had been taboo in Europe, but euro zone officials said it was the only way to salvage Cyprus’s financial sector, which is around eight times the size of the economy.

European officials said it would not set a precedent.

In Spain, one of four other states getting euro zone help and seen as a possible candidate for a sovereign rescue, officials were quick to say Cyprus was a unique case.  A Bank of Spain spokesman said there had been no sign of deposit flight.

Last week I noted, “Wanna bet?”

I wish somebody would have taken that bet.

According to Reuters, the head of the Eurogroup said this…

A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors, the head of the region’s finance ministers said.

As with any government controlled grab for absolute power the insistence about “unique” is complete bull stuff.  My only surprise is that it only took about a week to prove it to be a lie.

Keep this in mind as other countries in the Eurozone hit the wall.  Italy and Spain have both been bailed out once and they’re going to be going back to the well again before long.  In fact, Spain is getting ready to hammer the investors (not the depositors – yet) at their nationalized banks.

MADRID—The Spanish government will impose heavy losses on investors at nationalized banks and hire external advisers to help it manage these banks’ assets, its latest efforts to overhaul a financial sector battered by the collapse of a decade long housing boom.

Forcing shareholders and bondholders to share the cost of restructuring the country’s five nationalized banks was a politically costly step for the government of Prime Minister Mariano Rajoy, but one that was required under the terms of a European Union bailout of Spain’s ailing lenders.

I don’t have any issues with “investors” getting hammered, it’s called investment risk.  The important part of that is the required part.

There are two important things to remember in all this:

  1. 1.       The Golden Rule:  He who has the gold makes the rules.
  2. 2.      Thomas Jefferson:  A government big enough to give you everything you want, is a government big enough to take away everything that you have.

And you can be assured that the government absolutely will.

About Author

Michael Becker is a long time activist and a businessman. He's been involved in the pro-life movement since 1976 and has been counseling addicts and ministering to prison inmates since 1980. Becker is a Curmudgeon. He has decades of experience as an operations executive in turnaround situations and in mortgage banking. He blogs regularly at The Right Curmudgeon, The Minority Report, Wizbang, Unified Patriots and Joe for America. He lives in Phoenix and is almost always armed.

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