A Dutch auction in Cyprus

A Dutch auction of the deposits in the Cypriot banks continues. The latest bid from the government came in at 60%. Yes, you are reading it right – up to 60% of the bank deposits over 100 000 Euro will now be stolen:

http://www.bbc.co.uk/news/business-21982652

Bank of Cyprus depositors with more than 100,000 euros (£84,300; $128,200) could lose up to 60% of their savings as part of an EU-IMF bailout restructuring move, officials say

I am not often lost for words but this latest act of state-sponsored theft has left me speechless. The linked article sheds some light on why the 40% levy mused previously was not enough:

Before leaving Cyprus, I visited the Junior and Senior School of Nicosia, which teaches the British system to 900 children. School fees are paid into Laiki Bank, taking its deposits well over 100,000 euros. With huge losses, it will now struggle to pay staff salaries. (…) There’s talk of one university with a 6m-euro EU grant in its account.

Because the “levy” was never meant to target schools and universities these institutions will have to be somehow compensated for the financial loss. The money for this will have to come from other, private deposits which will now be trimmed even more. But this is only “fair” – is it not? In a democracy the will of the majority rules and most people want public education even if the money to pay for it is stolen from the bank accounts of the “rich”.

What does not get mentioned often enough is that the Cyprus government and EU-IMF, without stating it explicitly, are after the Russian money. For the second time in a century (the first being the October Revolution) the wealth of the Russian elite is being directly targeted by socialists – this time of a European variety. Ironically, exactly opposite to what happened in 1917, this time round the Russians’ error was keeping their money overseas.

It is pointless to look for any logic in the money grab unfolding in Cyprus but the message to potential investors is chilling. Never, ever keep your money in a bank – cash deposits are a low hanging fruit the socialists will reach for first. Bonds are a risky proposition – the current spat in Cyprus was triggered by a collapse of the Greek government bonds which the Cypriot banks had invested in. Currencies are not a solution, either – their value can easily erode when governments decide to print more. Investing in real estate may look safer but bricks and mortar are not a fluid asset and so hard to transfer overseas when circumstances change. Perhaps shares are the safest bet – easy to cash up and harder for governments to levy.

The political madness in Europe is showing no signs of abating so prepare for more updates on da-boss in the coming weeks and months.

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