The Bank is closed.
The ATMs are all empty.
You heard it on the news but couldn’t believe it. The internet is unreliable; surely it’s against the law for the federal government to just take money out of your bank account along with every other one in the state, right?
Note: be sure to read Adam’s previous article, “Financial crisis revealed and resolved in the world of Bitcoin” and “Ulterior motives behind the Copyright Alert System”
Funny thing – it is illegal, at least it used to be. But things are bad! The situation is serious, surely any rational person can see that, and the need for all to contribute. And you are rational, aren’t you?
So you rushed down to your usual ATM, only to find the line stretching around the block. You try the local branch and find there are armed men and police surrounding it. A ray of hope! The Police have heard and they’re going to help us get our money back!
Reality sets in: they’re guarding the bank from you.
Things are bad all over, but if you bank in Cyprus chances are good this was part of your day yesterday. As part of a 14 billion euro “bailout” package, the EU and IMF demanded a “wealth tax” that will be deducted directly from the bank accounts of any person, citizen or not, who has a bank account under Cyprus’s legal system.
For accounts larger than 100,000 euros the confiscation is 9.9%, for smaller it is 6.7%.
Editor’s note: the confiscation may actually be raised to 12.5% for larger accounts and lowered to 3% for smaller ones, according to the latest reports.
Confiscation is expected to raise 5.6 billion euros, which along with 1.5 billion euros from the IMF (US taxpayers contributed 64 billion USD last year) and another few billion from the ECB (European taxpayer backstopped), the total bailout winds up being entirely financed by taxation or direct confiscation.
We’ve all bought this thing if it goes through – which right now looks like a big question mark – so what are we buying? Why is this happening now?
The Banks are out of money. Again. The president of Cyprus, currently searching for the votes to pass the confiscation into law wrote this letter to his constituents:
It is well known that the deep economic crisis and the state of emergency in which the country has found itself did not come about in the last fortnight since we have undertaken the administration of the country.
The state of emergency and critical nature of the times do not allow me, as they do not allow anyone, to embark on a blame game.
In the extraordinary meeting of the Eurogroup, we faced decisions that had already been taken and came across faits accomplis through which we were faced with the following dilemmas:
On Tuesday, March 19 we would either choose: the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis, which would put a definitive end to the uncertainty and restart our economy.