The Cyprus Bank Tax

When Adolf Hitler and his mob had invaded a small nation it was important to them to give their conquest the appearance of legality. They did this by getting the leaders of the conquered nation to sign a document, chasing them around the table or making physical threats if necessary. It seems old habits die hard. When I wrote about the proposed Cyprus bank deposit tax last Sunday, I believed the story put out by all the news media that this tax was approved by the government of Cyprus as part of a deal with the European Central Bank. It now emerges that the ECB had rather chased Mr Anastasiades, around the table, but Mr Anastasiades did not sign. He said he would sign after the Cypriot government had approved the tax. It now emerges that the tax was dreamt up by the technocrats of the ECB and the European Union, not by the Cypriot government. Continue reading

The True Worth of a Government Guarantee about your Bank Deposits

The European Union has 27 member states. Virtually all of them have had economic problems. In virtually all the economies, the economic problems were caused by over spending. Nations in effect bribed the voters with gifts of large pensions and large social security payments which the nations could not afford. Those gifts would be paid for by future generations unless the future amounts of the bribes were curtailed, and thus “austerity” became the solution for most of the economies.

But not all of the economies got into economic difficulty by making large bribes. Certainly Italy, France, Greece, Spain and Portugal did, but certainly Cyprus did not. It got into difficulties by investing its depositors money in Greece and in particular the Cypriot banks lent money to the Greek banks that proceeded to lose the money lent. Continue reading