Right now, in a galaxy not so far away…
(As reported by Forbes…)
“Why is a dot-sized European country causing outsized effects? Because what starts in Cyprus, a tiny isle of 1.1 million people, could soon spread to London or New York or Hong Kong, making misery for many millions more.
Cyprus experienced severe turmoil this weekend after its prime minster agreed to force a tax on all bank deposits in order to receive a bailout. The prospect of a tax set off a run on ATMs and made observers worry that financial contagion could spread throughout the continent and then beyond…
How unpopular is this in Cyprus?
Forgive the understatement. It’s deeply, deeply unpopular. Cypriots made a run on all available ATMs this weekend, depleting cash reserves across the country. Cyprus, in response, also suspended electronic transfers.
Why are we even talking about this?
To receive a 10 billion euro ($13 billion) bailout, [Cypriot President Nicos] Anastasiades agreed to the taxes. Cyprus badly needs foreign aid, and a deal has been in official discussions since June. The complexity of any package delayed it, as did the opposition from Anastasiades’ predecessor. The money, in part, comes from the Troika: the International Monetary Fund, European Commission and European Central Bank. But the tax on depositors ensures a major portion comes from Cyprus, too. And here’s the larger picture. Cyprus is badly indebted. Its debt-to-GDP ratio pushed to 127% in the third quarter of 2012…”
[One more tangent comment from Forbes…]
Did the president really get elected while supporting this tax?
Anastasiades rejected the idea during the campaign.”
So here are the facts:
One federal government. So deep in debt. Owes billions to foreign countries. Has a history of overspending. Has never prioritized a specific plan to pay back the debt. And has a debt-to-GDP ratio over 100%.
(Note: A general debt-to-GDP guideline is that a ratio below 50% is considered healthy, while a ratio above 90% is regarded as potentially, economically dangerous. If economic growth is strong, a country can support higher debt.)
How have the leaders of Cyprus determined to stop the economic bleeding?
Government agreed to seize the citizens’ income. Those in power decided it is legal, moral, and appropriate to confiscate what belongs to the people. Call it “seizure.” Call it “confiscation.” One could inarguably also make a case for “theft.”
Quoting Forbes once again, “why are we even talking about this?”
Because one American government… so deep in debt… owes billions (now over $1 trillion) to China… has a history of overspending… has not prioritized a plan to pay it back… and has a debt-to-GDP ratio that crossed the 100% mark in early 2012, with current projections hitting 113% in 2013. How will our leaders stop the economic bleeding? What will they determine to be legal, moral, and appropriate?
In response to the mandated confiscation in Cyprus, there was a rush to withdrawal money from the country’s banks. In response to the citizens’ withdrawal, the banks have now closed. Hence, more are making a valid case for “theft.”