Monday, March 18, 2013

Cyprus

“Any government big enough to give you everything you want is big enough to take away everything you have."

(source disputed)

Some more up-to-date quotes about the situation via Robert Tracinski:

Thomas Pascoe explains why this is such an alarming precedent.
"The principle that there is no division between your private property and communal property which may be appropriated by the government whenever it sees fit is an outrageous one in any system other than Communism. The idea that a government which has chronically misspent may order the banks to close and deduct a sum of its choosing from a person's balance before allowing it to re-open is beyond parody. "In the name of saving the state, central banks throughout the West have been conducting inflationary policies which act as a tax on savings. At least that is subtle. Now, in order to mitigate the excesses of the rash, both private borrowers and the government, savers are being taxed directly.
"The establishment of the principle that a government can, and at times of economic strain must, help itself to your savings, and that this is a legitimate tool of statecraft, ought to provoke riots."
Megan McArdle explains why European finance ministers thought they could get away with raiding accounts in Cyprus: it has become a haven for tax-dodging Russian oligarchs. The problem is the question everyone is asking themselves right now: where will this be tried next?
"If Cyprus had done this on its own, the country would be in trouble, but the rest of the world would just emit a bemused sigh and move on. Now, however, this plan has the imprimatur of the EU stamped on it—and so people are going to be looking hard at other European banking systems. Which other nations' depositors might have to take a similar haircut in the future? "Hopefully, savers will view Cyprus as an extreme one-off: a tiny nation whose banking system was unsustainably oversized for its economy, and whose substantial depositor base of kleptocratic foreigners made it uniquely difficult to deliver government support.
"The problem is, Europe seems to be chock full of unique, one time problems with its banking system. There's a real risk that investors will decide that they'd rather not stick around to see what one-of-a-kind, custom-crafted solution the European ministers come up with next."

2 comments:

Richard said...

Lindsay, the original source of your quote is Job 1:21. :-)

thor42 said...

This kind of blatant THEFT is exactly what I would expect of a corrupt, non-democratic outfit like the EU.