Is this the end of the euro?
In an unprecedented move, the European finance ministers this past weekend decided a bailout plan Cyprus – really for the banks there – for about 10 million euros ($13 million), provided that a levy is placed on every bank account there of about 9.9% for deposits over €100000, 6.75% for smaller deposits.
They say that this is a “unique” situation, and one-time only. To explain, unique because in Cyprus the banking sector is very large compared to the overall economy there. But you see, the banking sector is so large because of the money policy that attracted investors, a lot of them reportedly rich people from Britain and Russia.
And then the banks got into trouble because of money loaned to Greece, and you probably heard about what happened to such loans in the bailouts for Greece.
What about one-time only? So far yes, just because it hasn’t been done before. May it happen again? Who knows. Who is going to say that it can’t happen again, in Cyprus or anywhere else.
And once politicians and bankers get the taste of it …
Actually, the banks generally know it already. They know how to get the money from the poor and send it to the wealthy. Just look at the overdraft fees. Guess who are levied most of the time – the one who have the least money.
Just wondering what happened to the $6 billion that JP-Morgan Chase lost just last year or so. Somebody got rich there.
So it is no wonder, that the Cypriots rushed to their banks, only to find out that they closed early (which were open that day), the ATMs ran out of cash, and all online transaction were suspended.
Unfortunately, we need the banks for everyday business nowadays. But I’m wondering how anybody can trust these banks. The complicated Wall Street deals are designed so that nobody else beside the insiders understand what is going on. For them it is also like gambling in a casino – with other people’s money. And as I said the situation with the Cyprus banks didn’t arise by itself. They invited all the money to come in and lent it to Greece.
Speaking of Greece: remember, the – first – Greek bailout was also announced as a one-time thing.
The more you emphasize it is one-time only, the more unbelievable it becomes. And there is the real danger. The people in Spain and Italy may say, see what happened in Cyprus, and it can happen to us as well. When it escalates this way, even people in Germany are not safe. You end up having a bank-run all over Europe.
For the sake of the people over there, I certainly hope it doesn’t happen. If only the politicians would be a little bit wiser and not open a Pandora’s box like this, but this is a hope in vain I guess…