You don’t know what you’re talking about. Thanks for siding with govt seizures of wealth to “solve” public-sector deficits. Why are you defending this overt state interventionism?
“Whether in Cyprus or in other countries, politicians tend to think in short run terms, if only because elections are held in the short run. Therefore, there is always a temptation to do reckless and short-sighted things to get over some current problem, even if that creates far worse problems in the long run.
Seizing money that people put in the bank would be a classic example of such short-sighted policies.
“After going back and forth, the government of Cyprus ultimately decided, under international pressure, to go ahead with its plan to raid people’s bank accounts.
“But could similar policies be imposed in other countries, including the United States? One of the big differences between the United States and Cyprus is that the U.S. government can simply print more money to get out of a financial crisis. But Cyprus cannot print more euros, which are controlled by international institutions.”
- Tom Sowell, “Can It happen Here?”
http://jewishworldreview.com/cols/sowell032613.php3#.UVYkOlfIflY
Actually I know exactly what I am talking about. I didn't say this this was a wonderful solution, I said it was better than the alternative. I explained to people like yourself, who obviously have no clue what they are talking about, why this resolution got some things right.
Thanks for siding with govt seizures of wealth to “solve” public-sector deficits. Why are you defending this overt state interventionism?
As opposed to what? You do realize the other solution was seizing money from the taxpayers to bailout the banks, right? You do understand that the banks had failed and without some extraordinary action they would simply fold and everyone would lose everything. So are you for a taxpayer funded bank bailout instead? Do you even understand that doing nothing wasn't an option? Cypriots may not like this solution, but the government would have immediately collapsed if it had done nothing and the banks were allowed to simply implode. You do understand that the vast bulk of depositors (100K Euro and less) will not lose anything with this resolution. And no, Cypriots are not willing to default and leave the EU - and that wouldn't have helped them with the immediate problem of collapsed banks.
No one is saying this is a terrific outcome, only that is has some better features than past bailouts. This solution finally holds bank share and bondholders responsible. If you are invested in the "bad" banks (Marfin-Laiki), you are probably completely wiped out. That is how it should be. If bank share and bondholders (aka "banksters" as they've come to be called) know they could lose everything, they may start demanding the their banks adhere to more rigorous standards. This solution also treats different banks differently, which is something that should have been done all along. Uninsured depositors in the worst, most irresponsible banks will lose the most money.