One of the most foreboding items in the news this week was the threat that Cyprus banks were going to
confiscate personal savings tax those who have savings accounts from 6.75% up to 9.9% for the wealthiest. That would mean forking over nearly 10% of one’s savings to the government in an attempt to forestall an economic crisis. The last I heard, this has been avoided by a bailout from Russia at an interest rate lower than prevailing market rates. It’s no secret that Russian mobsters are an integral part of this bailout.
Although the threat didn’t materialize, it sent shock waves around the world. What if this would set a precedent? Would other nations on the brink of financial ruin turn to this solution? Would Americans someday see their banks getting a take on their personal savings? One normally thinks of putting money in a bank to earn more, not to have it taken away. The irony of the “solution” was not lost on some of the political cartoonists:
Unsound fiscal policies have become epidemic in nations from every sector of the globe. While a bullet may have been dodged this time, don’t expect this crisis to be the last. This scenario is going to become more prominent without a course correction.