The official line, as reported by Bloomberg, is that,
Cyprus Bank Deposits to Be Taxed in $13 Billion Bailout
What this means is that 6.75% 0f the money in any account up to €100 000 and 9.9% of any amount over that has already been frozen in the account and will, if the plan goes ahead, be removed from that account and given to the banks.
It also means the Cypriot government’s depositor protection scheme is worthless. It was a lie. It also means that since this has happened once, it can happen again. Only a complete fool would leave their money in a Cypriot bank.
If you leave it there you are betting that it’s all sorted and under control now and anyway they would never think of doing this to you again. The question you have to ask yourself is “Do you feel lucky? Do you think you can trust them?Well do you?”
Not only that, but now that it has happened in Cyprus it can happen in any other European country. Of course our governments will say ‘this is a one-off’, ‘exceptional circumstances’ etc, etc. but that assurance is worth as much as the promise that depositors would always be protected. How sure do you feel that this could just never ever happen in Portugal, or Italy or Greece?
What the EU is trying to force onto the Cypriot people is not a ‘tax’ as per the headline, nor a ‘levy’ as they refer to it in the body of the article. It is a Collective Punishment.
People in Cyprus who have not done anything wrong, who have broken no law, have not lived beyond their means or taken on debts they could not pay, will be punished, by having their money taken from them. And that money will be given to the banks who did break the law, did take on debts they could not pay and they will not be punished.
This is being done at the barrel of a gun. According to Cypriot President, Nicos Anastasiades, quoted in another Bloomberg article,
“We faced decisions that had already been taken,” Anastasiades said in a statement yesterday. He said the European Central Bank would stop providing liquidity to one of the country’s banks on March 19, leading to its collapse if his government didn’t accept the rescue package.
This is the gun he will now put to the heads of Cypriot members of Parliament telling them they must vote in favour of ‘Collective Punishment’ or the ECB will allow a bank collapse.
You might object to the use of the term ‘collective punishment’ especially given Germany’s role in pushing for this solution, and the resonance ‘collective punishment’ has in recent Germany history. But this is what it is.
Germany has made it clear for months it was against any EU bail out of Cypriot banks on the grounds that such a bail out it would put German tax payers’ money into the hands of Russian tax avoiders and criminals. And they are quite right. It would.
I have spent the last three months researching accusations of money laundering by Russian criminals in Cyprus. I have now oevr a hundred of pages of documentation from bank transfer records to court records. What it all says is that money has been laundered through Cyprus. What it also says is that it was not just Cypriot banks but banks from other nations that have been involved.
But worse it also says that this was known years ago. The Russian authorities themselves, since at least 2009, have known for years that Cyprus has been where wealthy and sometimes corrupt Russians have put their money in order to avoid taxes.
While as far back as 2008 the Cypriot police had been given information, which I have seen, which if they had pursued it at all would have led them to question certain banks, companies and individuals in Cyprus and in other countries, about money laundering. But of course no one wanted to then and certainly no one wants to do so now.
No one wants to sort out the criminals from the innocent because that would be to admit there were criminal acts taking place in Cyprus involving Cypriot professionals and banks. It would lead to questions about the rule of law in Cyprus.
And once you ask those questions in Cyrpus how long would it be until someone started to pull on the string and find links to banks and companies in other European countries? The countries so keen to punish Cyprus and who love to talk about other peoples’ criminals but not their own?
The fact of the matter is that no one wants to find a criminal in Cyprus and certainly no one wants to find the bank or company which was servicing them. Because absolutely no one wants any major bank to be accused, let alone ever found guilty of ‘criminal’ behaviour.
What this on-going bank crisis has shown over and over, is that no regulator, no parliament, no country will allow any of its systemically important banks to be found guilty of a crime. Again and again massive wrong doing that would in any other circumstance, done by any other person or organization, be very clearly criminal, has been re-branded and spun from Criminal to “unfortunate regulatory failure”. Citi and HSBC did launder titanic amounts of money, much of drug money. But neither of them were guilty of any criminal act. Repeat after me, they were not guilty. NOT GUILTY.
And this is the necessary re-branding because if it is not done then the banks might be found guilty of criminal behaviour and that would kill them. SO NO ONE will allow that to happen. No one will allow that to even be talked about as a remote and theoretical possibility. Far better to draw a curtain over any facts and details that might pull the guilty, especially the wealthy and powerful guilty, from their hiding place among the innocent, and instead impose a blind and collective punishment on all, and call it a tax.