US Announces All Depositors Must Pay 6-10% "Tax" on Savings to Bail Out Banks: Sound Good?
NOT. US protects depositors from Bank malfeasance and hanky panky.
I don't care how many Russian Mafia hide their money in Cyprus. Governmental Robbery is wrong and sends a chilling wave across every bank and investment in the world. Depositors have nothing to do with the banks, they aren't bondholders, or shareholders, etc.
Another unthinkable policy like sequestration in the US. What part of stupidly damaging and self inflicted is not understood? Ugh. Futures off general market, and silver down half percent.
"Great." job, european financial community! Great job political leaders in Europe. Thanks for taking a sledgehammer to the pin poised over the stock market bubble.
The people on Cyprus live on an income about 25% that of the US--so a 20000 euro exemption has the clout of about $100,000 in the US in local buying power. How hard would it be to build an excel spread sheet from 0-11% in small increments of 100 euro, and make the tax infinately progressive? Probably zilch. There isn't any sense to this "tax" but at least it could be levied with a modicum of progressiveness.
Yup,it's wrong but.....the original deal was basically to take a 10% vig.on the laundry.
After the outcry the boys get what they want.
What's outrageous here is look whocontrols the EU.
Anyone that cried out "Bankster" is vindicated. And the banksters rule.
What a world.
Meanwhile, legit money MUST COME HERE!
The FDIC insurance (which coverage amount was recently lowered back to the $100k cap from the higher cap put in place during the "crisis") only covers our butts if a bank fails. A number of countries in the EU have a similar depositor insurance system. The punch line is that by levying a "tax" on depositors, the banks weren't actually failing, so the insurance would be useless anyway.
As for this never happening in the US, you do understand that the fine print on your (and my) bank accounts pretty much states that what we deposit in our accounts IS A LOAN TO THE BANK, and as with any lender, there is always a risk on not getting your money back. Especially if you look into the details of Fractional Reserve Lending, which pretty much guarantees that not a bank in the country actually has enough money available to give back to depositors. It's gone, either as loans or investments for the bank. About 3% is left to deal with the few who want cash.
And finally,, you do also understand that the Cyprus debacle was pushed by the EU, ECB, and the IMF. Two of those organizations sleep nightly with our Fed, and the last is a Washington DC US policy arm. Think of all of the "tax the rich" rhetoric you've heard, and then tell me you really don't see the jerks here at home not trying at one time or another to institute a similar "wealth tax". It might go after deposits, it might just dent everyone's IRAs and 401ks, but the number of trial balloons being floated here for a similar move are on the rise. Wouldn't shock me in the least to find that pressure here at home pushed for doing what was done to the Cypriots, just to see it in a live fire exercise but not in our own country first...
Actually one "Jerk" in the US has already floated the idea many years ago. Teddy Kennedy floated a plus minus 2% annual tax on assets. That failed nearly instantly, but the tax goes on and on in the form of reduced purchasing power due to endless monetary expansion and fractional reserve banking. We hold PMs and PM stocks to preserve wealth against the idiots running this country. Then again we keep returning the same idiots to Washington, so we have to look in the mirror when looking for someone to blame.