How well is socialism working in Cyprus? The Financial Times explains what happened. (H/T ECM)
International lenders agreed to a €10bn bailout of Cyprus early on Saturday morning after 10 hours of fraught negotiations, which included convincing Nicosia to seize €5.8bn from Cypriot bank deposits to help pay for the rescue, a first for any eurozone bailout.
However an emergency parliamentary session on Sunday to discuss the levy on bank savings was postponed until Monday, according to the Cyprus News Agency. Earlier, Cyprus president Nicos Anastasiades postponed an informal meeting of lawmakers also scheduled for Sunday morning.
The cash from Cypriot account holders will come in the form of a one-time 9.9 per cent levy on all deposits over €100,000 that will be slashed from their savings before banks reopen Tuesday, a day after a Cypriot holiday. An additional 6.75 per cent levy will be imposed on deposits below that level.
Cypriot finance minister Michalis Sarris said his government had already moved to ensure deposit holders could not make large withdrawals electronically before Tuesday’s open; Jörg Asmussen, a member of the European Central Bank executive board, said a portion of deposits equivalent to the levies would likely be frozen immediately.
[...]Mr Asmussen justified the measure by saying it broadened the number of people who will shoulder the burden of the bailout. Without the measures, he said, much of it would fall on Cypriot taxpayers; by going after all large deposit holders – many of whom are Russian or British – outsiders would help fund the rescue.
[...]While Jeroen Dijsselbloem, the Dutch finance minister who chairs the group of eurozone finance ministers that hashed out the deal in all-night talks, declined to categorically rule out hitting depositors in future bank bailouts, he insisted that it was not being currently considered for any other country.
Got that? Even Russian and British depositors are having their funds confiscated, and all electronic transfers have been frozen to stop them from getting their money out. My prediction is that anyone with any money in these poor-performing socialist countries will be pulling it out in the next few days. Property rights are not respected by European socialists – that’s the clear message to people who earn and save their money.