Originally published March 21 2013
Cyprus government's rejected seizure of private bank accounts may still set off 'systemic consequences' across Europe
by J. D. Heyes
(NaturalNews) If you still believe European-style socialism is the correct course for America, as President Obama and progressive Democrats seem to, what is currently happening in Cyprus - and what could soon take place across the Eurozone - ought to finally convince you of the fallacy of this failed economic model.
As our regular readers know, thanks to the spot-on reporting of Natural News editor Mike Adams, The Health Ranger, the government of Cyprus, at the behest of the International Monetary Fund and the German government, was considering the theft of a huge amount of cash - as much 10 percent, in some cases - from the bank accounts of private citizens.
Though the country's parliament rejected the measure two days ago, mere consideration of this government robbery - an act that would be punishable by decades in prison, were you and I to do it - has destroyed trust in the Eurozone's banking system, as more and more of the continent's bankrupt governments consider following suit.
Closing banks ahead of the anticipated theft
"With the agreement on a depositor haircut for Cyprus - in all but name - the Eurozone has effectively defaulted on a deposit insurance guarantee for bank deposits. That guarantee was given in 2008 after the collapse of Lehman Brothers," the Financial Times reported. "It consisted of a series of nationally coordinated guarantees. They wanted to make the political point that all savings are safe."
The writer, Wolfgang Munchau, went on to say this, regarding Cypriot bank depositors:
Unless there is a last-minute reprieve for small savers, most Cypriot savers would act rationally if they withdrew the rest of their money simply to protect them from further haircuts or taxes. It would be equally rational for savers elsewhere in southern Europe to join them. The experience of Cyprus tells them that the solvency of a deposit insurance scheme is only as good as that of the state. In view of Italy's public sector debt ratio, or the combined public and private sector indebtedness of Spain and Portugal, there is no way that these governments can insure all banks' deposits on their own.
He went on to point out that, based on the Cypriot government's probable actions, more broke European nations will have to ensure that any future bailouts will be "co-financed by depositors."
Other experts made similar observations.
"If I were a saver, certainly in Spain or maybe Italy, I think I'd be looking askance at these measures and think this could yet happen to me," Peter Dixon, global financial economist at Commerzbank, told Reuters.
And this, from Bloomberg News (SOURCE)
While Cyprus accounts for less than half a percent of the 17-nation euro economy, the raid on bank accounts risks triggering new convulsions in the financial crisis that began in 2009 in Greece. Moody's Investors Service said that the move is a significant step toward limiting support for bank creditors across Europe and shows that policy makers will risk financial- market disruptions to avoid sovereign defaults.
As Europe goes, so goes the U.S.?
Hours after these stories appeared online, officials in Cyprus acted to protect their nest egg. Sources told Reuters that, no doubt in order to ensure that the government has as much money as possible to steal, Cypriot officials ordered ordered that banks be shuttered until late in the week, ahead of a decision to impose what is being duplicitously called a "depositor's tax." That move effectively cut off depositors from their own money so government thieves can raid their accounts in a few days' time.
That the government of Cyprus was even considering such a scam has sent global markets plunging. Stocks and bonds, as well as bank shares, have tumbled since the news first broke; the only exception has been gold, which has risen (as real money tends to do in times of financial crisis).
Europe is imploding and there isn't enough real money on the planet to stop the implosion. This is the inevitable end for state-run economies and socialism; in the history of the planet, this is how socialism always ends.
Providing cradle-to-grave services, care and benefits is an unsustainable economic model, period. The same end in Cyprus - and Spain, Portugal, Ireland, Italy and, eventually, the entire Eurozone - awaits the United States if our lawmakers don't get their heads out of their nether-regions and steer us away from our own pending fiscal cliff.
Sources:
http://www.ft.com
http://www.bloomberg.com
http://finance.yahoo.com
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