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Why You Should Be Worried About Bank Account Confiscation in Cyprus

Updated on April 3, 2013
Cyprus ECB Bailout
Cyprus ECB Bailout | Source

Make no mistake about it; what has been described as “a tax on deposits,” or a “haircut,” on bank account holders in the European nation of Cyprus, is blatant in your face theft. What is more, the so called March 2013 “bail-in,” in Cyprus has set a dangerous precedent in the Western world. Funds deposited in private bank accounts are now fair game for government confiscation. If such a thing can happen in Europe, it can happen in the United States. You should be worried.

In March, the government of bankrupt Cyprus struck a bailout deal with the International Monetary Fund and the European Central Bank. The deal was financed by directly stealing from private bank accounts in Cyprus. Despite the fact that EU taxpayers rightly did not want to fund another bailout of a poorly managed economy, the Cypriot government and the European Central Bank's actions are criminal. This is what the Daily Mail had to say about it: "People who rob old ladies in the street, or hold up security vans, are branded as thieves. Yet when Germany presides over a heist of billions of pounds from private savers’ Cyprus bank accounts, to ‘save the euro’ for the hundredth time, this is claimed as high statesmanship. It is nothing of the sort. The deal to secure a €10 billion German bailout of the bankrupt Mediterranean island is one of the nastiest and most immoral political acts of modern times.” Cyprus is now another burial in the graveyard of globalization.

In order to gain more support for the Cyprus bail-in, only larger deposit accounts were targeted, as the public seem more amenable to the deposits of “rich,” foreign account holders being seized. At least this is how it is being spun. If you consider that larger accounts might be some retiree's entire life savings, or a Cypriot small business owner's account, then it doesn't seem particularly just to target larger accounts, does it? Even if Cyprus is a tax haven, and only accounts with over 100,000 euros were targeted, confiscation is still a criminal act. If there was fraud and money laundering associated with a particular account, then it should be investigated on an ad hoc basis, as it has been traditionally. This nationalization of private bank accounts is a criminal act of theft, regardless of what cutesy terms the media try to describe it with in order to make it more palatable.

The same game of blaming the public for corporate and government malinvestment has been happening all over the world since 2008. Billionaire bankers and giant multinationals invest in risky debt instruments. If they succeed, they profit privately, and buy themselves mansions and private jets. If they fail, they come running to government asking for taxpayers to bail them out with public funds. This corrupt system of crony capitalism is publicly subsidized and privately profitable. There is no reciprocity. When bankers succeed, you get nothing, but when bankers make unwise gambles, you, your children and your fellow citizens are somehow put on the hook to the tune of billions of dollars. This is criminal behavior on the part of government and dangerous financial elites who influence government.

Too big to fail is a myth, and government bailouts are a dangerous and irresponsible practice. This type of crony capitalism is actually encouraging fraud, waste, and poor financial decisions on the part of companies which are the recipients of public bailout funds. In a free market, if a business owner makes poor financial decisions, his business will fail, and perhaps should fail. A small business owner does not run to tax payers and demand they they surrender their funds to keep him from going under. Multinational banks and corporations took gambles and invested in risky credit default swaps and other derivatives, and then demanded that you, the taxpayer, who have absolutely no responsibility for their actions, subsidize their reckless investments.

Bank Account Theft
Bank Account Theft

Up until Cyprus, recent government bailouts have been financed indirectly by stealing from the public coffers. As if it wasn't bad enough to burden you and your children with trillions which can never been repaid through growing national debt, financial elites are now making it clear that they are willing to steal from you directly, by raiding your private bank accounts! This criminality should have you worried. If the government gets desperate for money, it may come after your private deposit, savings, and retirement accounts, or anything it can get it hands on. I'm not in the business of giving financial advice, but perhaps now is the time to consider keeping less money in the bank.


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    • profile image

      Howard Schneider 5 years ago from Parsippany, New Jersey

      Great Hub, Leah. I agree that the European bank haircut idea for Cyprus is scary and dangerous. Fortunately I believe that our central bankers know history better. You cannot affect people's bank accounts below the FDIC insurance limits. There would be a run on banks that would be faster than a cheetah. I believe the Europeans have realized this also. Still we must be very wary.

    • Leah Gold profile image

      Leah Gold 5 years ago

      Hello, I agree that we need a bank account unfortunately.

    • poshcoffeeco profile image

      Steve Mitchell 5 years ago from Cambridgeshire

      Leah, this is powerful. I have been considering stashing my money under the mattress since this has happened. The only trouble is we do need a bank account in this modern world. CASH is KING in my view.

      Good luck with your Hub Page adventure. I look forward to following your progress.

    • Leah Gold profile image

      Leah Gold 5 years ago

      Absolutely. Good for you for taking action.

    • maxoxam41 profile image

      Deforest 5 years ago from USA

      It seems to be a pathological pattern, it didn't only happen to Cyprus but to Greece recently, Portugal, Italy, Spain, Ireland. It is a conscious act of thievery. I totally agree with you. Iceland was the only country to oppose a veto on bailing out banks.

      If it happened in Europe, a continent with stricter regulations than the US, let us imagine what will happen here in the US. Didn't the government steal people's gold when needed?

      As for your advise, since the bailout of our banks, I picked a smaller bank. My midterm goal is to fully withdraw my money.