Ever since the run on banks that started the Great Depression Western countries have always protected the depositors of banks knowing full well that if depositors do not have faith in the banking system, the banking system can't function. And without a banking system, commerce comes to a halt.
What is so remarkable about the theft of depositors money in Cyprus is that is breaks that trust. The results will range from bad to possibly catastrophic. The latest agreement between the EU and Cyprus is that they will forgo confiscation of deposits 100k Euros or less. Even if this becomes the case (And with the disappearance of all those Cyprus deposits that exited through Cypriot bank branches in London which stayed open last week it is unlikely the money is still there to confiscate.) retirees and small businesses will be effected.
Stephen Leeb at KWN:
“Cyprus is truly a disaster for the West. It basically says to every citizen of the West, if your country runs into trouble the governments can come along and just take your money. That’s basically what is says.”
</frame>“What worries me is if you have an individual who is retired with let’s say 300,000 or 400,000 euros in the bank, and they suddenly find they have had some of their money or a great deal of their money stolen by governments. Let’s say they are not retired and just run a small business and need to make a payroll. What happens in that situation?The funds are frozen and then part of it is stolen. This is outrageous....
“This could happen now in Spain, Italy, or any of these other countries which are in financial trouble. It seems like the only country in Europe which is not suffering right now is Germany.Germany is in a power position in terms of exports because their currency is lower than what it should be because of the Eurozone construct. So they can export like crazy. People have to remember that what brings about chaos and extremism in countries is depressions.People think this can’t happen here in the United States, well, I beg to differ. What would happen if we all woke up tomorrow morning and some disaster has happened and the Suadi oil fields were out of commission? What’s to say that the US government and the Federal Reserve can’t do the same thing that the ECB, EU, and the IMF just did to Cyprus? They could end up freezing and seizing our deposits.What if instead of JP Morgan making a $6 billion bad derivative bet, they make $600 billion in bad derivative bets? Has anybody asked that question? All of the sudden there would be no JP Morgan. Again, what’s to say that they won’t steal our money here in the United States?This is absolutely the worst precedent that the West could have set. The fundamental freedom that people in the West enjoy, and that includes Cyprus, Spain, Italy, Ireland, etc, is that the government cannot without any warning confiscate their money. Call it what it is, this is clear theft and outright confiscation.That’s the thing to worry about. I’m incredibly concerned when I see money being confiscated. This tells me that we are already seeing the makings of totalitarianism in some form. It’s getting very, very frightening at this stage.”Leeb had this to say regarding gold: “Gold continues to see a war going on at the $1,600 level. It is not in the best interest of the West to see gold do any type of move that would increase its exposure as being an alternative currency.Once gold begins its next magnificent rise and breaks to new all-time highs there will be even more demand for gold and the people in charge of the West know this. That’s why they are battling so hard to keep the price suppressed.This latest series of events in Cyprus just shows how desperate Western central planners have become. They are not letting the markets trade freely because they would reveal the horror of what has just taken place. But gold will have its day and so will silver. Just make sure you have physical gold and silver and not paper.”
What I find really disturbing is the unelected Euro-crats are forcing this on Cypriots. Here in the US we started a revolution against the British citing taxation without representation. What we have today is confiscation without representation. The Cypriot government voted down the original "tax" the EU demanded. So now, instead, the EU is describing the theft as a "restructuring" that does not require the consent of the governed in Cyprus. Cypriots who have their deposits stolen will have no day in court, no appeal, no due process of any kind. Is this not a return to serfdom? The Cypriot people should demand to leave the Euro-zone default on their debt and return to their own currency. With this they could devalue their currency to make themselves more competitive and follow the successful example of Iceland.
Oh, and for those who have money deposited in US banks, here is a reminder that as of December 31st, 2012:
As scheduled, the unlimited insurance coverage for noninterest-bearing transaction accounts provided under the Dodd-Frank Wall Street Reform and Consumer Protection Act expired on December 31, 2012