Cyprus

You probably don’t know, as the mainstream media’s idea of global news stops at the east and west coasts, but something unusual is happening in Cyprus. It may affect you in the future. It all depends on how things work out.

Cyprus is an island off the coast of Israel in the Mediterranean Sea. They are a member of the European Union (EU), use the Euro (€) and like many countries in the EU, by most standards bankrupt. It’s a country that was mired in turmoil as both Greece and Turkey claimed it as their own.

They like other EU countries, Greece, Italy, Spain, Portugal, Ireland and others getting handouts from the EU’s central governing body in Brussels, Belgium. Their economies are in shambles. They have too much debt because their government gave the citizens far more than revenues could justify.

The EU has decided to punish the public in Cyprus for the stupidity of their government. How? By President Anastasiades agreeing to a €10 billion, (about $13 billion) bailout (loan), they have decreed that all savers in Cyprus must pay homage to the EU by raising the extra €5 billion needed to keep the local banks solvent. In other words, the Cypriot banks needed about $20 billion, but to get the  EU loan, they had to raise another third or the original deal was off.

That homage is a “haircut” of everyone’s savings. If you have up to €100,000 (~$130,000) in your savings account, you’ll be charged a onetime fee of 6.5% or a maximum of ~$8,500 payable to Brussels as a part of the loan package. I suspect that the money locally stolen taxed will be security for the €10 billion EU loan. If you have more, it’s 9.9% or ~$13,000 minimum for savings accounts with more than €100,000 .

In the past, the EU has just punished bank bond holders and left small savers alone. The theory was that bondholders had a level of sophistication that small savers didn’t. All that has changed.

As the Cyprus population is so small (my 11th district has slightly fewer registered voters than the entire Cyprus voting population) they had to choose between stealing removing about 15% from people with over €100,000 in their savings accounts, or take some money from everyone. Everyone was the chosen solution in the hope of not upsetting the Russians who have the most money in Cypress and could yank it and risk collapsing the Cypriot economy.

There is an old saying. If you owe the bank a little money, they own you. If you owe them a lot, you own them. The Russians own the Cypriot banks.

This is the first time that everyone is being punished.

I suspect that they’ll have a serious political push-back. It may be ignored as the president was only elected a month ago, has a five year term, and that people have short memories.

Apparently the EU know suspect that Russian oligarchs have billions being laundered in Cyprus and accounts of varied sizes were being used. So the EU insisted that the Cyprus government take money from everyone, rather than just take 15% from the over €100,000 accounts.

For reference, laundering dirty money is a huge, low risk global business. Drug cartel money has been laundered through Wells Fargo/Wachovia and HSBC with minimal impact on the banks either through criminal prosecution or fines.

Fortunately, the agreement doesn’t come into effect for a few days. That makes you think that savers will wire transfer their money out. Not a chance. Substantial withdrawals are being blocked.

So wait for the news of protests. But don’t hold your breath. They’ll be noisy protests, but you may not hear much about them in the U.S. media.

Do you think that if the entire populations of Idaho, Hawaii, Maine, New Hampshire, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, Vermont, Washington, DC, and Wyoming marched on Washington it would make the news?

If you answer yes, you’d be wrong if applied internationally. The BBC reported that the equivalent percentage population of Israel marched in Tel Aviv and other Israeli cities protesting their government actions, and you didn’t hear one word about it on the major news channels!

This kind of theft will happen here. Why? Because our government watches international events very closely and learns what they can get away with, and how much push-back they’ll get. As long at the American public has plenty to eat, movies to watch, celebrities to follow and games to go to it will take a lot to rile them up. But when they finally get upset, watch out.

If the Democrats did that here, they would steal take over $60 billion from American families, about the same amount we borrow every 17 days to pay our bills.

All for the public good, as our government says.