Abandoning All Pretence

Panicked depositors form queues at Cypriot ATMs

Panicked depositors form queues at Cypriot ATMs

Behold your future. Coming soon to a banking system near you.

Last weekend’s announcement by Cypriot President Nicos Anastasiades that, as a precondition of the acceptance of a €10 billion EU bailout, his country would impose an immediate “tax” of up to 9.9% on all deposits in Cypriot banks, sent a wave of panicked savers heading for empty ATMs through Monday, a public holiday on the small island nation. The fact that this unique method of raising state revenues is being trialled here should ring enormous alarm bells throughout Europe.

The government is simply going to confiscate your bank savings? Rob you blind? What about deposit insurance? Wouldn’t it be simpler and cheaper just to send a group of thugs armed with iron bars round to every household and take the jewellery? Oh wait, I’d better not give them any ideas. How any Cypriot citizen will ever trust their government or banking system again is beyond me. The loss of trust will be permanent, irreparable, and damage Cypriot society far more than any EU bailout could possibly help.

And there’s this: there’s far more money sitting in Cypriot banks than has been put there by its citizens. The Russian mafia runs money-laundering operations through Cyprus; estimates are that up to €19 billion of their proceeds are on deposit at any one time. Ten percent of all that lolly could go a long way towards squaring the books, but Anastasiades had better not leave his house ever again without wearing full body armour. But hey, laugh the EU commissars to each other, that’s his problem, not ours.

As we say down here in Australia, at least Ned Kelly had the decency to wear a mask.

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48 Responses to Abandoning All Pretence

  1. Amanda says:

    Daylight robbery. As I said to someone on another blog recently, my classical liberal position is that I want what’s mine. The statist/Leftist position is that they want what’s mine. My position is defensible: there’s isn’t.

  2. Amanda says:

    theirs — oops.

  3. meltemian says:

    It’s probably only a matter of time before Greece itself tries this daylight robbery. We kept our savings on deposit in the UK although when we first came out here the Greek Bank Rates were excellent and we get bugger-all interest at the moment. The reason we didn’t open a deposit a/c in Greece was that we were afraid Greece would leave the Euro and devalue and so halving the value against the pound. Our money’s earning us nothing but at least it’s safe.

    Yes Mel, you’d be wise to prepare for the worst. A precedent has just been set, and robber nation-states won’t think twice now before following suit. Do whatever you need to do in order to protect yourselves, now, not when it’s too late. You all know my standard lecture on gold, so I won’t repeat it here. Or (pace FB), agricultural land – Oz

  4. Amanda says:

    Hi Meltemian. I got a bank statement from NatWest the other day, reminding me that I have all of £188 in the UK. The rest is in the U. S. of A. And in gold and silver coins.

  5. izen says:

    @- “The Russian mafia runs money-laundering operations through Cyprus; estimates are that up to €19 billion of their proceeds are on deposit at any one time”

    Apparently they were warned and took around 2billion out before the announcement.

    Wouldn’t surprise me. I guess you saw Putin in the news the other day, protesting to the EU… who do you think he’s advocating for? Oz

  6. farmerbraun says:

    What’s all the fuss about? Those Cypriots need to ” harden the f . . . up!”


    Yeah right!

    See what I mean? The genie’s out of the bottle now – Oz

  7. farmerbraun says:

    It ‘s a brilliant policy to stimulate economic activity: discourage saving!
    Get your money out of your savings account and spend it before its worthless.
    Shame about your pension fund /superannuation savings, but you did let your governments have that money, so no use complaining now. You can’t get that back.
    Nah, they’d never touch that, would they?

  8. farmerbraun says:

    NICOSIA (AFP) – Angry MPs on Tuesday rejected a divisive levy on bank accounts as part of a bailout aimed at saving Cyprus from bankruptcy, decrying as “blackmail” the EU-IMF deal that now lies in tatters.

    Speaker Yiannakis Omirou said 36 MPs voted against the bill, 19 abstained and none were in favour, prompting an explosion of joy outside the parliament among thousands of protesters who were demanding the house spurn the onerous measures.

    President Nicos Anastasiades’ office said he “fully respects” the decision and that he had a “constructive” phone conversation with his Russian counterpart Vladimir Putin, amid reports Cyprus was seeking alternative financing.

    Under the bailout deal reached at the weekend, the troika of the European Union, European Central Bank and International Monetary Fund were to provide Cyprus with 10 billion euros ($13 billion) on condition the island raises another 5.8 billion euros.

    It called for a levy of up to 9.9 percent to be slapped on all Cyprus bank deposits, an unprecedented move that triggered outrage among savers and raised fears other financially crippled EU states like Italy and Spain could be next.

    The Cypriot government backtracked, and on Tuesday dropped the proposed tax on savings below 20,000, while keeping it at 6.75 percent for deposits of 20,000-100,000 euros and 9.9 percent for those above 100,000.

    But that too was heavily criticised by the speaker as amounting to “blackmail” before it was flatly rejected in parliament, in a vote that plunges the eurozone into uncertainly and leaves Cyprus scrambling for other sources of financing.

    Outside the parliament, equally angry crowds had called for a “No” vote before breaking out into applause after the news of the vote emerged.

    “We’re happy because the vote is what the people wanted. We are still very anxious but we hope we are going to find an alternative and a solution because it’s clear that Europe is not the solution,” said historian Maria Gnatiou, 27.

    Anastasiades’ office said the president “fully respects today’s decision by the House of representatives,” adding he had since spoken to Russia’s Putin and Greek Prime Minister Antonis Samaras.

    “At 8:30 pm (1800 GMT) this evening he had a half-hour phone conversation with the president of Russia, Vladimir Putin… they had a constructive conversation about the economic relations of the two countries.”

    German Finance Minister Wolfgang Schaeuble said he regretted the parliament’s rejection of the plan.

    “We acknowledge and regret the decision… For a rescue plan to exist we need a credible way to know how Cyprus will regain access to financial markets,” said Schaeuble. “For now the debt is too high… it must be reduced.”

    The ECB said it would continue to provide financial support for troubled Cypriot banks and a eurozone official said it was now up to Nicosia to come up with “a counter-proposal of equivalent effect”.

    Media reports on the island said the government would seek other ways of making up a 5.8 billion-euro shortfall, with a bond issue, bank restructure and trying to secure more Russian investments among the options.

    Fearing a run on accounts, Cyprus has shut its banks until at least Thursday, with the island’s stock exchange closed for the same period. Given the latest developments, there was no certainty the institutions would open this week at all.

    Before the session, Anastasiades had called an emergency meeting of party leaders for Wednesday morning to “examine alternative plans to address the situation that may arise following… the parliamentary vote”.

    A government spokesman said Anastasiades would have further telephone discussions on the terms of the bailout with German Chancellor Angela Merkel later Tuesday, after a first round of talks on Monday.

    As the island’s leaders raced to stave off bankruptcy, Finance Minister Michalis Sarris was on his way to Moscow to seek an extension to an existing Russian loan.

    Finance ministry director Andreas Charalambous told reporters that securing an extension to the loan was “very important” as it would throw Cyprus a lifeline.

    “The first issue is we have a large loan maturing in 2016 and if we manage to come to an understanding this will help facilitate our debt repayments and debt sustainability,” Charalambous said.

    “If we manage to extend the loan the refinancing needs of the economy would be manageable. So it’s very important.”

    Moscow extended Nicosia a 2.5-billion-euro loan in 2011 at a rate of 4.5 percent.

    Sarris’s goal was to lower that rate and extend the loan’s expiration date until 2020 from 2016, reports said.

    Good on the Cypriot parliament for standing up for their constituents. Though they hardly had a choice in the matter. I still think there will be a bank run, for as I said the genie’s now out of the bottle, and no parliament can ever put it back in again – Oz

  9. Luton Ian says:

    PIIGCS going all Argentina on us?

    That acronym gets longer every time I look – Oz

  10. Amanda says:

    FB at 9:10: It’s beyond disgusting. The whole concept of private property is at risk. No: the reality of private property is under attack.

  11. Ozboy says:

    Daniel Hannan says it far more eloquently than I ever could.

  12. farmerbraun says:

    Well you would , wouldn’t you?

    That name… sounds like Richie Rich – Oz

  13. Amanda says:

    A related topic — another outrage in the making, another attack on the right of adults to live as adults, without undue interference:


  14. farmerbraun says:

    Purely coincidental (naturally) :-

    Genie’s out of the bottle, Pandora’s box is open, cat’s out of the bag – use whichever metaphor you like, the state now has a precedent to behave as common bank robbers – Oz

  15. izen says:

    The Cyprus economy and its problems are much less than one percent of the Eurozone economy, its a storm in a teaspoon.
    And anyone who has more than 100,000 euros in savings is part of the tiny elite, not the ninety percent of the population without a chance in hell of ever having that much money to their name. The decile with that sort of wealth can survive a ‘haircut’.

    Off topic, came across this old discussion of an aspect of freedom that libertarians often seem to be blind too.


    And here is one for farmerbraun, this guy is making waves in the blogsphere, probably for overstating the applicability of his methods and implying it could work on all or most deserts.

  16. farmerbraun says:

    Gidday Izen, farmerbraun weighed in on the original wuwt thread which featured Savory, and ran into an “anti-organic” nutter, and had a little fun
    FB found Savory’s management theory in relation to Wholistic Resource Management very helpful (20 years ago), but Savory’s grazing management stuff was simply a repetition of the work of Voisin, which had been further developed elsewhere by McMeekan et al. anyway.
    A further wuwt blog dealt with it recently:-

  17. Ozboy says:

    I’m off for the weekend, so Happy Easter to everyone. I’ll have a new thread up next week sometime.

  18. FergalR says:

    Enjoy your Easter Ozboy. I’m hearing disturbing news that a fellow countryman of yours might have been wobbling things far more serious than his board. Who’s it gonna be?

    ROFL – Oz 😮

  19. meltemian says:

    Have a good Easter, we’ve still got about 4 weeks to go here, the Greek Orthodox Easter isn’t always the same date as everyone else’s.
    Καλό Πάσχα everyone anyway.

    And you, Mel. Back with a bang in a few days – Oz

  20. farmerbraun says:

    In the meantime , read the Slog while you still can; I can’t see this sort of “alarmism” being allowed to have breathing space for much longer:-


    “1. Global Looting is coming and it will be self-defeating.

    2. The people at the top are mad and stupid.

    3. They will not countenance debt forgiveness, so they must be replaced by those who will.

    4. The mercantilist model of global economics and Friedmanite econo-fiscal ideas are a busted flush.

    5. Self-sufficient Sovereigns trading in surpluses represent the best future for the human race.

    Tell me why I’m wrong – with the facts to support it – and I’ll happily listen. For me, it’s Page One sanity compared to what we have now. Over to you.

    And for the rest of us who know the self-styled élite will wind up killing us all given half a chance, I’m making a special appeal for you to forward and repost this essay in as many places as possible. Hits are of absolutely no importance to me beyond the raising global awareness of the need to do something before it’s too late. Thanks.”

    “Eunatics”!! I love it – Oz

  21. Kitler says:

    Who said they lost the war….

  22. In a world that becomes more insane and unpredictable by the moment, it’s good to know that at least one investment is safe…


    Keep up the good work OZ. I thought you were taking a break?

    Yep, as you’ve noticed not many threads lately. I do take a look in here most days though – Oz

  23. farmerbraun says:

    “more insane and unpredictable by the moment, ”

    Yep it is definitely more interesting. Really , we are blessed.

  24. Kitler says:

    I’m not posting as much myself or blogging not that I did much because I sense something big is coming our way and it may be best to keep a low profile, it seems they are going to manufacture yet another war and it will be an excuse to impose fascism on us all. Undesirable people spouting about rights and freedoms and not wanting to pay 99% taxes may end up being detained for the greater good of the ultra wealthy and then er go missing. The near future is making me uneasy. It appears that the money has finally run out and can kicking is nearly done so the usual lethal distraction will be used to lower the unemployment figures.

  25. Luton Ian says:

    There’s a rather interesting little “brown” smear diversion blowing up around Sunderland soccer clubs new manager.

    a Miliband has resigned as a non exec director, and the Durham miners union has asked for its banner back.

    The BBC with its description of what brown politics consists of – is notable for what it fails to say – that Italian fascism was a national socialism, with little separating it from the policies of the blairites or the current con- dem clowns, or jug lugs and his past 3 or 4 predecessors in the whitehouse;


    state control of all things, and only the veneer of private ownership in title alone surviving
    state entitlements for education, healthcare etc
    State “prestige” projects; the first motorways, high speed rail lines, big sporting events, and make work schemes
    imperialist wars; Abyssinia, then the big one
    beating, summary killing and locking up without trial of “terrorists”

    They also singularly fail to point out the mutual interest which benny, vlad lenin and Leon Trotsky showed in each other’s “social experiments”

    and that co -author (?Benny’s ghost writer?) for the whole project; Margherita Sarfati was Jewish

    There’s a reason why the BBC is funded on the proceeds of armed robbery.

  26. Luton Ian says:

    Paging Farmer Braun,

    What is going on with NZ subsidizing lamb sales to Britain?

    The word we get from Kiwis, says the farmers are getting better prices than we were for fat lambs, but all the British supermarkets have stopped buying British fat lambs, the price has crashed and they’re all stocked up with Kiwi stuff, at lower price than the kiwi farmers were getting.

    what is getting subsidized?

    The slaughterers and packers?

    The shippers?

    The distributors at this end?

    Do the Kiwi public know what their taxes are being used for?

  27. Luton Ian says:

    sorry, pressed “post” too soon

    have the kiwi pols and voters forgotten that subsidies were what got them to the crisis in the eighties?

    Yep ditto Ian’s question, FB: what’s the story with export subsidies? Oz

  28. Kitler says:

    Could it be the middle eastern market has crashed thanks to meddling by certain western governments and the locals have no money to buy Kiwi lamb? So rather than have their own farmers suffer the government is taking the hit until the situation improves. I know lamb from Oz and Australia is still expensive here so the subsidies are aimed at certain markets.

  29. Ozboy says:

    H/T Michael Smith’s blog – from Shaun Micallef’s Mad As Hell:

  30. Luton Ian says:

    The story I’d heard – usual caveats apply to its reliability…

    Kiwi exporters had got sick of waiting for late payments for exports to China, so the politicians have volunteered the tax victims to subsidise sending the stuff to Europe.

    I’m curious to see find out if FB has more reliable info on where in the chain, the subsidy is being paid

    Since the reform government (I know – big oxymoron) in the mid 80s, the kiwi farmers have claimed to be without subsidy

    something to be justly proud of (if true) and something all of us should be

    Rant follows

    I’m not managing the farm here, but I can say that with stupid single farm payments, stewardship schemes and other wastes of tax victims hard earned, europe is far from subsidy free

    they’re just not specifically linked to production -thats all

    and all “require” armies of parasitic bureautwats to shuffle papers and justify their own existence by lopping money off for various supposed misdeeds – there are no appeals for such penalties

    and finding excuses for very late payment

    The armies of bureautwats of course “require” politicians to oversee – so more junior ministerial perks for more of the unproductive caste of parasites

    and it all breeds a type of parasitic statist european farmer, who thinks he’s entitled to the contents of productive people’s wallets for his “services” of providing what no one would ever voluntarily pay for

  31. Luton Ian says:

    But Oz, the end (“progress”) justifies the means

  32. izen says:

    @-“state control of all things, and only the veneer of private ownership in title alone surviving”

    That may be a feature of communism, but it is not of fascism.
    Look at the major industrial businesses in Germany and Italy before and after WW2. The big industrialists where participants in the fascist system, any claimed unwillingness, or coercian seems to be mainly a post hoc excuse.

  33. Luton Ian says:

    National socialism’s retention of a veneer of ownership, certainly makes cleaning up the mess when their party is over, a lot simpler,

    but do not mistake that aspect of fascism for being in any way sympathetic to a free market, in any way shape or form.

    What is made, by whom, in what quality and what quantity, what prices are paid for the inputs, from whom they can be sourced, what labour is used, what hours are worked and what payment is received…

    all is decided by the central planners

    It varies in degree, even the soviets and the maoists were unable to completely eliminate some degree of free exchange between individuals and groups of individuals, despite the level of violence used trying

    The fascists tended to have a greater degree of variation than the “international” brand of socialism did (they had the leninist trotskyite – stalinist, the maoist brand of marxism “with Chinese characteristics” and the Titoist – more syndicalist form – interestingly, despite claiming to be internationalist, they were amazingly nationalistic).

    The fascists came in many flavours, from the hyperactive nationalist, but not completely racist Benny, through the rabidly racist ‘Dolph, to the milder nationalist central planners such as Peron, Franco, Salazar, Dolfuss etc

    each dictator with his own take on what it was vital to centrally plan at any cost, and what they were more relaxed about. The extent of central planning is reflected in the ammount of violence which each regime used to enforce its plans.

  34. Luton Ian says:

    returning to your point about a cozy relationship between some German business leaders and the NSDAP

    certainly; and it is called “regulatory capture” (I think it was Robert Higgs who came up with the term)

    Your average proletarian national socialist (international socialism never reallly took hold of the proles like the national variety did) who’s found him/her self as a top central planner, and realizing that they have to perform (or get shot), and who knows eff all about what they’re doing, is almost certain to form committees of people in the field as advisors

    many business leaders naturally want to use central planning and the violence which enforces it to their own advantage

    The same is true now

    who do you think decided that even bottles of water should have best before dates on them?

    the big multiple retailers, who have sufficeint rate of stock turnover – they want the corner shops limited in how long they can hold stock, and so limited in the kinds of stock / choice they can offer to customers.

    With the teeth of the central planners, it also becomes possible to forcibly remove those owners of business who won’t play the game.

    one example for you to google is Prof Hugo Junkers, the aircraft maker:

    from wikipedia “In 1933 the new Nazi government interfered and, on taking power, immediately demanded ownership of Junkers’ patents and control of his remaining companies. Under threat of imprisonment he eventually acquiesced, to little avail; a year later he was under house arrest. He died on 3 February 1935 in Germany.”.

    later on, due to the stress of total war on two fronts, pockets of resistance did pop up in essential businesses, for example MAN, the truck makers in Augsburg, had several openly dissident top engineers, and was a safe refuge for dissident junior staff too.

  35. farmerbraun says:

    ” the British supermarkets have stopped buying British fat lambs, the price has crashed and they’re all stocked up with Kiwi stuff, at lower price than the kiwi farmers were getting.”

    That would be cosistent with the flood of Kiwi lambs killed early at low weights as a result of a nice hot dry summer , for which Kiwi farmers , having squandered the plentiful feed produced in the dozen or so cool wet summers preceding, were totally unprepared. The meat companies took advantage and paid farmers some fairly low prices, up to 30 -40% lower.
    Expect KIwi lamb to become scarce and expensive. Needless to say, FB kept all his lambs 🙂

  36. farmerbraun says:

    Also, the prices paid to farmers drop after the UK Easter cutoff point is reached. There was a mad scramble , and it sounds like the market got a wee bit full.

  37. Luton Ian says:

    Thanks FB

  38. izen says:

    Just been toying with the concept that Fascism is the endpoint of regulatory capture of government by capitalism….

  39. Luton Ian says:

    Crony “Capitalism”, state cororatism / corporativism, to big to fail,

    They’re all variations on a theme

    The theme of using state coercion to ensure that the cronies get to make profits and that their customers are denied a free choice.

    such use of state coercion does not respect individuals or their property rights, and is therefore socialistic, hence my use of inverted commas for crony “capitalism”

    Why are journalist collaborators helping states expropriate people’s savings?

    and why are those collaborationists implying that such robbery is legitimate?

  40. izen says:

    @-“Why are journalist collaborators helping states expropriate people’s savings?
    and why are those collaborationists implying that such robbery is legitimate?”

    An eastern mediterranean activist a couple of thousand years ago was asked this when the government was expropriating people’s assets.
    He asked whose head was on the coin…..

    Now that’s a conversation starter on a Libertarian blog, if I ever saw one!

    “Give unto Caesar what is Caesar’s”. His modern-day equivalent has a monopoly privilege of printing money, it is true. And there’s half the problem, right there – Oz

  41. Luton Ian says:

    yet another monopoly forced upon us.

    even something which might look simillar elicits a particularly violent response and accusations of “terrorism”

    states don’t like competitors for their own counterfeiting activities – about 3% of circulating £1 coins are private counterfeits


  42. izen says:

    It is an obvious truism that money only has the value ascribed to it by the collective social system that issues it. It has no real resource value, but is a communal symbol of a rationed access to resources.

    I have noticed that people from nations with less well established currencies, or with a history of economic underdevelopment, tend to use acquired wealth to buy land. Freehold property is regarded as the true measure of wealth, not money in a bank or the acquisition of top model cars, global holidaying and the latest techno-bling.

    In that context perhaps the biggest expropriation of resources were the land enclosure acts in the UK and similar land reforms(?) in other nations.
    But from a libertarian POV perhaps it counts as a transition from communal governance to individual ownership.

    But the ideological issue of expropriation of property/assets/symbolic value, that might be raised by the Cyprus bank problems is rather obscured by the process that has led to the problems. Setting up as a tax haven can do wonders for the local economy.
    A large source of foreign investment flowing into Russia became the Cyprus banks.
    Rich Russians were avoiding local tax – perfectly legally – and re-investing in Russian business (as well as UK football clubs newspapers and all the ‘bling’ of the super-wealthy) instead of the tax take going to government and being ‘re-invested’ according to government priorities and budget constraints.
    Of course the rich Russians were also re-investing in the financial markets that had invented the idea that a debt in the present could be sold as an asset of the future…

    I wonder how much privacy individuals or business should have over these, entirely legal, transactions? If all the parties involved agree that financial arrangements like those used by starbucks or specsavers to avoid paying tax in the country in which they do business by paying expenses to a company based in a tax haven are legal, should they be in the public domain or completely confidential?

    These are no longer theoretical questions as it appears that information about at least some of the transactions involving the Cyprus banks and the Russians may become available. The BIG leak of data on offshore tax avoidance banking that has recently been announce promises, or threatens, to make names dates and amounts available. It appears much pertains to the British Virgin Islands which is a major destination and source of investment out of and into China and the Far East. But the problem seems to be the sheer bulk of information, the inherent attempts to obscure a clear path of responsibility, ownership and control.
    Then there is the legal threat that if these actions are not criminal in any of the jurisdictions in which the financial arrangements are conducted then the publishing of the information is.

    Here is a link to a discussion of what information has been revealed by the big leak, and the problems it poses –

    A couple of quick points:

    You’re right about freehold, arable land being seen as a greater measure of wealth than currency. It’s a perception that’s comparatively unknown in Australia, which is the size of Europe but has a population of just 22 million. Yet urban residential land prices here are among the highest in the world.

    The Enclosure Acts and the end of the feudal system of land tenure in England was a topic I had once considered discussing over here but decided against as a bit too arcane. Would anyone else be interested?

    Re your point regarding privacy of transactions, you’d find a receptive audience among those who believe “all tax is theft”. It’s a contradiction that nation-states tend to claim absolute sovereignty and jurisdiction over its citizens’ activities, including their financial affairs, yet those citizens are also capable of placing their wealth beyond that nation state’s grasp. It’s analogous to laws which have passed here (and in Britain, I believe) forbidding citizens to travel to certain destinations for purposes of “sex tourism”. A noble gesture, or state over-reach? Oz

  43. A J Brenchley says:

    Izen: If ‘the latest techno-bling’ allows you to connect with future customers, it may well be worth more (to you) than land. On the other hand, I have always believed that a home-ownership means a) ownership of the entire infrastructure, not just this wall and that wall; and b) the power of redesign and even of destruction. If you can’t do these things, you’re renting.

    Having said that, it’s a shame that my architect aunt & uncle have bought a Georgian place and destroyed the fireplace to put up what is no doubt a ghastly soulless contemporary creation. (They are best described as Coarse and Flaky, respectively.) I’m sure that from the viewpoint of beauty, they have committed vandalism. Sure: they own the property and I don’t. But this points to a problem: on the one hand, private property is THE bulwark of freedom, because it is the only thing that tangibly asserts one’s independence from the power of other adults, i.e. the state. On the other hand, if someone bought a Caravaggio or Blenheim Palace just to burn it, human society as a whole would be worse off.

  44. A J Brenchley says:

    The Enclosure Acts and the end of the feudal system of land tenure in England was a topic I had once considered discussing over here but decided against as a bit too arcane. Would anyone else be interested?

    Oz: Put me in the Yes camp.

  45. A J Brenchley says:

    mistake: apart from the unneeded ‘a’, I meant the whole structure, rather than infrastructure.

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