The world is in an uproar over a financial bailout offered by The European Union to the island nation of Cyprus. Specifically, the controversy is over a plan to seize SIX to TEN PERCENT of bank deposits in Cyprus to pay for the bailout.
The Cypriot Parliament is balking at that provision of the proposed bailout, threatening to vote the whole package down:
Cyprus’s Parliament is likely to reject an international bailout package that involves taxing ordinary depositors to pay part of the bill, President Nicos Anastasiades said Tuesday, despite a revision that would remove some objections by exempting small bank accounts from the levies.
Lawmakers were scheduled to vote late Tuesday on the €10 billion, or $13 billion, bailout.
Should the measure fail in Parliament, Mr. Anastasiades and his E.U. partners would have to return to the negotiating table. Analysts have also raised the possibility of bank runs and a halt in liquidity to Cypriot banks from the European Central Bank if the measure did not pass.
The bailout plan, negotiated over the weekend, has aroused harsh criticism in many quarters for its unprecedented inclusion of ordinary bank depositors — including those with insured accounts — among those who would have to bear part of the cost.
The original terms of the bailout called for a one-time tax of 6.75 percent on deposits of less than €100,000, and a 9.9 percent tax on holdings of more than €100,000. The moves are designed to raise €5.8 billion of the total €10 billion bailout cost — a condition imposed by Cyprus’s E.U. partners.
Under a new plan put forward by Mr. Anastasiades early Tuesday, depositors with less than €20,000 in the bank would be exempt, but the taxes would remain in place for accounts above that amount.
But Mr. Anastasiades said that the changes probably would not be enough to secure a majority in the 56-member legislature to approve the bailout plan.
“I estimate that the Parliament will turn down the package,” he said on state television as he headed into a series of meetings.
A government spokesman, Christos Stylianides, echoed that opinion, telling state radio, “It looks like it won’t pass.”
The managing director of the International Monetary Fund, Christine Lagarde, said Tuesday she was in favor of modifying the agreement to put a lower burden on ordinary depositors.
“We are extremely supportive of the Cypriot intentions to introduce more progressive rates,” she told an audience in Frankfurt.
She urged leaders in Cyprus to quickly approve the plan agreed to by European leaders in Brussels last weekend.
“Now is the time for the authorities to deliver on what they have commented,” Ms. Lagarde said.
She complained that critics have not recognized how much the agreement will force Cyprus banks to restructure and become healthier.
“On the parameters of this levy, we will not comment as long as that’s a process that’s still under way,” Mr. O’Connor.
Cypriot banks were closed Monday for a bank holiday that has been extended through Wednesday.
The governor of the Cypriot central bank, Panicos Demetriades, warned lawmakers on Tuesday that as much as 10 percent of the €65 billion in deposits placed in Cypriot banks would flee the country as soon as banks’ doors open Thursday morning, should Parliament approve the deposit tax.
He also cautioned that the plan to exempt deposits under €20,000 from the tax posed a new problem, since the government would only be able to raise €5.5 billion, instead of the full €5.8 billion required by lenders. The gap would be considered a breach of the bailout agreement and “perhaps might not be accepted” by Cyprus’s lenders, he said.
It could also mean that Cyprus could eventually seek a higher tax on bigger deposits, a move that raised further alarms in Russia, where President Vladmir Putin has condemned the tax as unfair.
On Tuesday, Russia’s envoy to the European Union, Vladimir Chizhov, said in Brussels that the levy was “similar to forceful expropriation,” and warned that “the whole banking system can collapse,” Reuters reported.
So, imagine that some deal negotiated by pointy-heads within the federal reserve or the IMF or the UN called for a “tax” on — or seizure of — private funds held in private accounts in private banks. In other words, unelected — sometimes foreign — bureaucrats would be seeking to sink their claws into that money, which you’ve already been taxed on, you have deposited in BB&T or First Citizens. Can’t happen here, huh?
Our “leaders” in Congress have us in debt up to our eyeballs to all kinds of foreign nations and international entities — just like Cyprus. We’ve done bank bailouts here. Some members of Congress have actually been musing aloud about seizing or nationalizing funds set aside in private 401Ks and other retirement accounts. ObamaCare includes a 3.8 percent “Medicare tax” on the sale of any asset you already own valued at six figures or more — like your house. Can’t happen here? Think again.
Some folks in this country, back in the 60s and 70s, scoffed at the idea that same-sex marriage would be legalized ANYWHERE in these 50 United States. Prior to the 2012 election, there were tons of people who told us there was no way in HADES that little Barry was going to be reelected.
You can keep sitting back and let the political elite keep running the country into the ground while telling us they know what’s best. Or you can stand up to them and assert your authority as THEIR BOSS. Sitting back and letting things run their course is a great way to bring us a scenario like the one now being dealt with by the people of Cyprus.