Tuesday, March 19, 2013

A Brief Note On Cyprus

W. C. Varones has already done a good job on the Cyprus bank deposit seizures here and here, but I thought I'd add my dos centavos.

If you haven't seen the news, the government of Cyprus, with the complicity of the EU, decided to take 6-10% of any deposits in Cypriot banks to pay for another bailout. That is, if you had a savings account in a bank in Cyprus, you woke up with less money in it.

What were they thinking? Where was their moral justification? The only thing I can think is that there was none. And I mean none. This was simply an algebra problem to be solved, equating money taxed to some percentage of money received in a bailout:
ax + b = y.
"We need money. Hmm. There seems to be some deposited at the bank, let's take that." And so they did. That's it.

That's the scariest part of the whole thing to me. The resulting bank runs and chaos in Cyprus will provide a rational reason not to try it again, but there don't seem to be any moral restraints at all on the people in power.

10 comments:

W.C. Varones said...

Thanks for the link!

Cyprus parliament just rejected the confiscation! We'll see what happens next... EU bailout anyway? Exit the Euro? EU bullies parliament into changing its mind?

K T Cat said...

The Rubicon has already been crossed. It's not whether it was successful or not, it's that they even considered it in the first place.

W.C. Varones said...

Agree completely. A bank run happens in Cyprus anyway, and people will be very cautious about putting money in Spanish or Italian banks too.

W.C. Varones said...

Nigel Farage rocks the house!

Doo Doo Econ said...

Maybe conservative Americans should all withdraw 1% from their bank accounts on the same day just to scare this shit out of the political elites.

jedi master ivyan said...

This is the beginning of the crash of the Euro.

drozz said...

the russians aren't happy about it. so at least there's that.

Anonymous said...

Yet another Unbridled Trojan Horse. The Greek Church begat Islam and COmmunism by rejecting Original Sin. Time for Greeks to fly off to another planet.

K T Cat said...

Well okay then. I'm guessing free will was pretty much a Greek monopoly. :-)

In all seriousness, thanks for the comment, but I'm not sure I buy that causal relationship.

Foxfier said...

I'm still thinking rumors were flying over in Europe and that's why our stock market was doing so well....