It has been said that history repeats itself, first as tragedy and then as farce. The interminable European economic/financial crisis neatly illustrates that saying. Mishandled from the beginning by a clueless set of politicians and bureaucrats, as chronicled in earlier columns in this series, the most recent episode descends into a melancholy comedy of intentional and unintentional errors.
Respected American analyst Criton Zoakos, author of LETO MARKET INSIGHT, says in his report “Cyprus, Gazprom and the Clowns of Europe:” “Nobody will ever know what psychotropic substance the Eurogroup and the IMF were consuming last Saturday, March 16, when they decided to light a fuse under the solemn commitment to small depositor insurance….” The witches’ brew stirred up by the requirement that Cyprus confiscate private bank deposits, large and small, includes the following elements:
The measure is manifestly unfair, not only to the owners of deposits under 100,000 Euros, but to all depositors. They were not responsible for the fact that Cyprus overborrowed and now can’t pay under the contractual terms. It is purely and simply official theft.
European deposit insurance, solemnly adopted at the height of the crisis in 2008 to avoid a run on the banks, has been rendered worthless, thereby ENSURING a run on the banks, once the Cypriot banks are opened again for business (which has now been postponed twice). It also ensures that the public at large will no longer believe that they are protected anywhere else in the Eurozone.