Deja Vu...All Over Again!
News hit the wires over the weekend that the Republic of Cyprus would begin stealing money from depositors in order to resurrect confidence in its flailing banking system. They want to avoid a crisis, in other words, by creating exactly the kind of uncertainty in which crises thrive.
“More likely,” observes Laissez Faire Books’ Jeffrey Tucker, “the plan to tax all Cyprian bank deposits 6.75-10% will trigger one. Or maybe just the talk of it already has. We can’t know for sure, because the government of Cyprus has declared a banking ‘holiday,’ a term that means that the robbers take a vacation from being held accountable for their actions.
“True to the nature of government propaganda,” continues Mr. Tucker, “the Cypriot head of state, Nicos Anastasiades, says this ‘stability levy’ is necessary to forestall ‘a complete collapse of the banking sector.’ It’s the same kind of language we heard in fall 2008 — an intimidation tactic used to shove through TARP and unending bailouts.”
Predictably, the measures met with harsh resistance. Turns out people don’t like having their money stolen…even if they’re happy to receive money stolen from others. Reading from that tired old playbook, Cypriot legislators have since sought to shift the terms of the heist to focus on higher-net-worth depositors, those who are “able” to shoulder a larger portion of the “social responsibility.”
One new draft bill proposes that accounts under €20,000 ($25,900) be spared, while a larger scythe would be taken to those above that amount. “From each according to his ability, to each according to his need” was the tune to which Marx marched.
The question, of course, is will the masses fall in line? It seems likely. In times of scarcity, those with plenty (or indeed any) become unpopular. They begin to feel the targets on their foreheads…the sniper’s red dot burning into their brow. Then the crowds grow restless, whipped into a frenzy by government officials demanding action, each of whom has his own eye on a portion of the to-be-stolen loot. Folks with something to lose begin looking around nervously. Some bunker down…others head for the escape chutes…
“Back in the bad old days of 2009,” recalls Dan Denning of The Daily Reckoning Australia, “it was like Stalingrad every day. Trapped capital was encircled by wealth-destroying news events. Money that could still walk fled to the core of the global financial system.
“Are we going to see the same pattern again?” Mr. Denning wonders. “The weekend drama in Europe could prompt another money migration from the periphery to the core — from southern Europe to northern Europe and from the euro to the dollar. It depends on how self-aware and how arrogant Europe’s political leaders are.”
The moment may soon arrive when are again forced to choose between the certainty of government-sponsored theft…and the uncertainty of decentralized workarounds.
On that last note, one data point that has not gone unnoticed: While fear and uncertainty spreads across the European banking sector, that fringy cybercurrency we’re hearing so much about, Bitcoin, shot up roughly 25% overnight.
Maybe a 400%-plus increase YTD signifies a bubble…then again, parachutes tend to appreciate rather quickly when the plane begins to nose-dive.
Our advice: Grab a chute now before they’re all gone…
Regards,
Joel Bowman
Original article posted on Laissez-Faire Today
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