In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit a portion of their deposits in return for a 10 billion euro ($13 billion) bailout for the island, which has been financially crippled by its exposure to neighboring Greece.
The originally proposed levies on deposits are 9.9 percent for those exceeding 100,000 euros and 6.7 percent on anything below that.
Say what? The proposal is to keep the stockholders and bondholders of the banks and sovereign debt
intact by administering a haircut to small depositors. This will not go over well...
To be noted: As always, news like this is announced after the end of business hours on Friday. And Monday is a bank holiday. If you live on Cyprus and have a bank account there, well, it sucks to be you. Of course, if you were among those privy to the news ahead of time, there was plenty of time to get out of Dodge, get your funds tucked away in Switzerland, and wait for things to come unwound around you while you have a wad of cash in your pocket. Distressed people end up selling distressed assets for a couple of dimes on the dollar. In that case, it's sweet to be you.
Of course, all those folks in places like Greece, Spain, Italy, France, Ireland, Protugal--they're watching this like a hawk. They know if the central bankers get away with this, they're next.
Therefore, short-term, OS expects the T-bill to go to a negative rate of interest, as people will actually pay Uncle Sam a fee to hold their cash for them.
The US stock market will get a new influx of hot money, as those who can get their money out will park it there as well.
Gold and silver will move a leg up, and...
there will be unrest on a lot of high streets in a lot of towns all over Europe.
Chin-straps on.
1 comment:
It is clear to me that the politicians do not know what "taxes" do to the common man's behaviors.
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