As we ave seen the past few days, Cyprus is scrambling to make deals with the Russians and other investors. Their pleas were not well heard and no deals were finalized. Their last resort has been to tax the bank accounts of its citizens. With limited withdrawals allowed, Cypriots are scrambling to buy necessities and salvage what cash they have left.
Do you feel a government should be allowed to dip their hands into the accounts of its citizens to pay off debt they themselves have accumulated?
What are the consequences for not only Cyprus, but the rest of the financial world?
Actually, early today, the euro-zone came up with a $13 billion bailout package for Cyprus. In it, it's going to place a hefty tax only on LARGE depositors, but will also guarantee a 100,000 euros cover for all depositors. Similar to what the U.S. did during the financial crisis, Cyrus too has decided to bail out two of its largest banks!
ReplyDeleteI personally don't think that the government should be allowed to do that.
ReplyDeleteA "deal" and a "solution" are not the same thing. You could make a deal to buy a used car but it is not a solution to your transportation problem if the wheels fall off as you drive the car off the lot. Same holds true for the Cyprus banking deal designed by the Eurocrats as a bank run and capital flight are in the making when the banks reopen there.
The whole idea of taxing citizens' bank accounts at such a high percentage is wrong. As Mainza pointed out that the EU has decided to bailout Cyprus with a 13 million dollar bailout package, hopefully this will take the focus off of taxing bank accounts of its citizens. Hopefully the banks will open again in the near future.
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