Socialist contagion ripples forward
The tiny island of Cyprus is a stunning example of the ravages of the financial crisis that has ridden like a dark horse through much of Europe. A deal to prevent Cyprus from leaving the shaky European Union and abandon the euro needed financing to overt a catastrophic financial meltdown. The small nation’s hefty banking sector, which is over eight times the size of the economy is reliant for its survival on Germany — the EU’s leading economy. All very complicated.
First some background: The thrust behind the 1992 treaty that formed the union, was the belief that the 17-nation EU group would grow into a world power based on joint financial strength — with the euro as the controlling currency. That entailed surrendering the national currencies of the union’s members. As an example, France gave up its franc, Italy abandoned the lira and Germany its detusch mark on the promise of this strength. The EU became the reigning government of the European community with a controlling Parliament and Court of Justice, mutual Foreign and Security Policy, and Justice and Home Affairs — as the nation states retained little more than their own languages.
In the past couple of years the situation was further exacerbated by the longstanding socialism that undergirds the European countries. When the mechanism for funding health care and other social benefits upon which the masses had become reliant began to deteriorate, hundreds of thousands rioted in the streets, furious over talk of austerity and government cuts. Great Britain, Greece, Italy, France, Spain and Portugal experienced violent demonstrations. Although plagued by the same economic problems, Great Britain is not a member of the EU.
Individual, private bank accounts above 100,000 euros have been seized by the government and earmarked to pay the bailout. The accounts are expected to yield 4.2 billion euros ($5.5 billion). It was previously reported that account holders would suffer an estimated 40% loss of their own assets. Under today’s regulations the news worsens. Depositors in the Bank of Cyprus will get shares in the bank worth 37.5 percent of their deposits over 100,000 euros. The rest of their deposits may never be repaid. The bottom line is that officials now acknowledge that these private account holders will lose 60% of their own money, saved in their own bank accounts — and now confiscated by their own government. Reuters has more here.
After being shutdown for nearly two weeks, banks reopened Thursday as Cyprus negotiated what is being called a “rescue package.” Cypriots are permitted daily withdrawals of 300 euros.
Think it can’t happen here? We are seeing the future in Europe. Obama has been laying the groundwork for such a power grab as he demonizes the wealthy and encourages class warfare — while continuing to spend over $11 billion a day and saddling Americans with nearly $17 trillion in debt, with no end in sight.