Cypriot Government Freaks Out

Cyprus government sees pissed off citizens, backs away slowly.

This is called "between a rock and a hard place", the hard place being suspect Russian bank depositors having plumped up their own "Cayman Island Bank" special place of money love. And the European godanged Union.

Cyprus, a member of the EU which will not brook a default, needs a bailout.

Cyprus, a new haven for shall we say, "special monies" that might be, unsavory.

Citizens of Cyprus get caught in the middle with their government, which desperately wants the bailout, isn't interested at all in austenture let's keep the government jobs protected, and the price seems to be "how big are the riots going to be?"

Well they might be big so let's slow roll this thing and see how we manage the ire of the Russians and the control of the sputtering EU lords who worked out this deal only to see it unravel.

This is the sobering part of the story, and one the rest of us oughta keep an eye on.

And there is more to it than that. This is confiscation, but it a particular kind of confiscation with particular implications. It is the end of deposit insurance. Depositors, particularly small depositors, are supposed to have an ironclad guarantee that their money will always be there, no matter what—that they won't wake up one Monday morning to find that 6.75% of it is gone.

That's why the Cyprus heist is really important. It is a warning that the whole system of deposit insurance is coming unglued.

It's a service fee, or something.

posted by Dave In Texas at 09:52 PM

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