Yesterday we wrote about Fun and Games in the Mediterranean, how the government of Cyprus was getting set to “tax” bank accounts from 6% to 10% to get the IMF to bail out their two largest banks. The banks shut off all electronic transfers, today is a bank holiday and the government has extended it through Wednesday. The Cypriot (interesting the last four letters of that little nation) Parliament has not yet codified the “tax” but it’s on the way.
Let’s take a quick look back at the two most interesting quotes from Europe’s political class from yesterday.
European officials said it would not set a precedent.
officials were quick to say Cyprus was a unique case.
Today, we’re learning more about this “grand bargain.”
First of all, it appears that the highest tax rate will be 15%. It will have three tiers, 6% on small accounts, 10% on account of rich people and 15% on the wealthy. I’m sure it’s all about fairness.
Now you may think a 15% tax on your bank account is outrageous, but the Cypriots are lucky the Germans didn’t get their way. ZeroHedge reports that they wanted a flat tax of 40%.
Second, let’s talk about yesterday’s highlights. No precedent, Cyprus was a unique case.
The Germans, who are throwing up their hands and screaming “Not our idea!!” are pointing every finger they can find and everybody who’s handy.
BERLIN (Reuters) – Finance Minister Wolfgang Schaeuble deflected blame on Monday for a European bailout deal for Cyprus that foresees hitting small savers in the Mediterranean island’s banks, saying this solution had not been a German idea and that he was open to it being changed.
They’re obviously lying through clenched teeth.
Not only are the Germans – who provide all the European money for bailouts in the EuroZone – lying about Cyprus, they’ve got their eyes on Italy.
Joerg Kraemer, chief economist of the German Commerzbank, has called for private savings accounts in Italy to be similarly plundered. “A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product …”
I find it interesting that the IMF, the European Union and the financial media are calling this raid on private bank accounts a “tax.” Kind of like the way the Obama administration, the Congress and the US major media are now referring to the ObamaCare penalties as a “tax.” In fact, neither are taxes.
Again, from ZeroHedge…
Let’s be quite clear; the European Union has confiscated the private property of the citizens in Cyprus without debate, legislation or Parliamentary agreement …
A bank account is not a bond or a stock or any sort of investment. This seems to be lost on many people. A bank account is the private property of a citizen or a corporation and does not belong to the government or at least that was the supposition up until now in Europe.
Europe is on the edge. For all the talk of “austerity” in Greece, Spain and Italy, those governments haven’t faced the reality that they have to make fundamental changes in their government. There were riots in Greece and Italy over cuts that were the rough equivalent of the sequester here in the US. In other words, no real cuts.
Greece, Italy and Spain will all require additional bailouts from the EU and IMF. France will be the next country to fall off the fiscal cliff. Look for more “taxes” imposed by the unelected financial wizards and then you will see real rioting.
Note that big concern with Italy is that their debt to GDP ratio is over 100%. That is a financial red line from which there is little hope of recovery. Note also that President Obama and his Democrats have driven the US debt to GDP to 107% and the US major media hasn’t said a word.
Pay attention to Europe, the same situation is coming our way and there will be nobody around who can bail out the US.