Legally Robbed

cyprus-bank-protest

As I write, the Cypriot President is in Brussels trying to negotiate a deal to rescue his financially strapped country from bankruptcy.  The potential deal is thought to include a mandatory tax of 20% on those with savings over €100,000.  Last week the tax that was being agreed was 10% on all savings over €10,000 which amounts to legally sanctioned daylight robbery.

It’s an understatement to say people on the island are aren’t very pleased about that.  Other Euro nations are also watching tentatively as this ‘rescue’ package is agreed upon.  Just whom is it rescuing? The banks that were too dumb to succeed and now are too big to fail.  It is not rescuing ordinary people that’s for sure.

With warnings from Russian President Putin if the tax is implemented and the IMF and EU warnings regarding the opposite, who would have thought that a tiny island in the Mediterranean would be on such a volatile fault line?

Taxi for Cyprus…

Bubbly

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3 Comments to “Legally Robbed”

  1. Some savers could lose 60% of their deposits how is that fair? Savers didn’t cause the crisis the banks made their own mess. imagine that happening in any other industry like if a car manufacturer would confiscate your car so they wouldn’t go bankrupt.

  2. The problem is with how banks work and the legal staus of your money once you put your money into a bank. Once you deposit money into a bank, you become a creditor of the bank and the bank effectively writes you an IOU. For the priviledge, the bank pays you interest on the deposit, like you would pay interest on a loan (albeit at much lower rates!). You are at risk if the bank then defaults on the loan you have given it, and this is what is happening in Cyprus.
    These people have effectively lent money to Laiki Bank and the Bank of Cyprus by depositing their money in these banks, and now the banks they lent to can’t pay the money back.

    There absolutely has to be more education in schools, in newspapers, where ever, on the financial system – the only reason banks have gotten away with their behaviour to date is that people (still!) don’t understand how they really work.

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