Remember all those crazy old people that ‘never trusted banks’ and kept all thei rmoney ‘under the mattress’? Remember how they were a stereotype for foolish, naive, bumpkins? Yeah..well….
Cyprus said on Saturday it was looking at seizing a quarter of the value of big deposits at its largest bank as it races to raise the funds for a bailout from the European Union and avert financial collapse.
Sooooo…..a 25% haircut on ‘big deposits’. Now, it’s my understanding that, to a degree, Cyprus has become a mob bank for the Russians. Even if thats the case, there are bound to be ‘legitimate; depositors who get their accounts smacked as well. No doubt this will trigger the usual ‘make the rich pay their fair share’ nonsense.
Do I think this could happen here? Nah, at least not in this way. I think what’ll happen is that.gov will eye all those lovely pension funds and ‘incentivize’ them to take their money and invest them in special new .gov bonds designed specifically for this sort of thing. Remember that a bond is, essentially, an IOU. .gov will head over to your pension fund and say “Give us all your money and will give you this bond that yields a better rate than what youre getting now”. They’ll, no doubt, throw in some other features to make it more palatable but the end result is they’ll take the pension funds and promise that you’ll get ‘em back later.
Considering the awesomely crappy interest rates at banks and the ‘real’ inflation rate, I cannot fathom why anyone would leave money in the bank anyway. May as well leave it in cash ( or gold ) in the safe at home.
My wife pointed me to podcast about the Euro and it said that when the economic guidelines for entry into the EU were put in place several countries that were so fiscally fubar’ed they wouldnt normally be admitted cooked their books and outright lied to get admitted. Once in the club they didn’t change their ways and now the rest of the EU is obligated to assist them. (I’m looking at you, Greece and Portugal.)
ETA: The link to the podcast is in the comments.
It’s articles like this that make we wanna take what I have in the bank ( I keep a few hundred bucks there to let me use my debit card conveniently) and hand it over to the Metal Pimp for a handful of shiny gold and silver tokens.