March 28, 2013
For a country as small as Cyprus that relies almost exclusively on international banking and tourism for its sustenance, this will be costly.
Speaking of international banking, Russian mobsters reputedly launder money through Cyprus, just as they do in banks throughout the world. However there are billions of dollars from foreign investors of all types in Cyprus ranging from the typical middle-class saver to upper-class businessmen.
Then why do we hear nonstop about the Russian Mafia? Because the Troika was hoping people were as stupid as they think we are. Many of the larger accounts belonged to non-Cypriots, Russians alone with almost two billion in assets. By characterizing all these foreign investors as a handful of criminals, the Troika was apparently hoping Cypriots would be fooled into this swindle. It didn”t work because ordinary people realized any plan that steals from the rich inevitably steals from the poor.
In no non-Soviet Bloc country has the specter of hyperinflation, cash-based economies, or the idea that bank deposits are unreliable been other than pure fiction for over 70 years. Yet now, due to either reckless demands or feckless provocation, the Troika has reintroduced such ideas to the Western world.
Wary individuals in Portugal, Ireland, Italy, Greece, and Spain are reviewing their bank accounts at this moment. Should any of them need further assistance from the Troika there is no guarantee these nationals would not suffer a similar “tax” of 10% or more of their savings. Flight of capital from these countries could undermine or collapse their own fledging recoveries.
In only a few weeks central Europe’s pompous and blundering managerial idiots have managed to undermine the most valuable asset Western banking had in its favor”depositor confidence. They will never again regain such esteem. That is why Cyprus matters to the rest of us.