Cyprus Depositor Haircut: 25% Off the Top for the Rich
March 23, 2013 - 7:15 am
Grabbing retirement money seems to be all the rage among the socialist kleptocrats. It’s making their mouths water thinking about what they could do with all that cash. At the moment, your 401K might not be worth what it once was, but at least its safe. Whether it will be tomorrow is an open question.
These are all short-term fixes for Cyprus’s overfed, undercapitalized banks.
Cypriot leaders fear the damage the levy would do to the country’s offshore banking industry. The tottering banks hold 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros – enormous sums for an island of 1.1 million people which could never sustain such a big financial system on its own.
With the Island’s GDP at $24 billion, there are almost 3 times as much in bank deposits as the entire economy is worth. They are going to have to address that fundamental problem if they expect to put their financial house in order.
The parliament has the ability to throw a monkey wrench into the proceedings and blow up the deal. But since the alternative is unthinkable, they will likely swallow hard and pass the legislation.