cyprus bailout reuters
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- The Cyprus Bailout Exposes a World of Thieves, Cheats, and Liars
- The Cyprus Bailout Sets a "Very, Very Dangerous Precedent"
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But according to Money Morning Chief Investment Strategist Keith Fitz-Gerald, the reverberations and possible implications of the Cyprus bailout extend well beyond the island nation.
Appearing on the FOX Business Network, Fitz-Gerald said Cyprus had "achieved every central banker's dream. They have privatized gains and socialized losses, and this is the first of the dominoes to fall."
He said "any nation in the world is subject to this now that politicians have figured out they've gotten away with it."
To see why it matters and what else Keith had to say, check out the video below.
This is what an 85% haircut actually looks like:
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According to Martin Hutchinson, the Cyprus bailout just turned banking even further on its head. The lesson for U.S. depositors is clear.
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As Money Morning Chief Investment Strategist Keith Fitz-Gerald warned last week, the Cyprus bailout plan is a breach of trust that could derail the entire Eurozone.
Not only does the plan fail to fix the country's economy, it has the potential to seriously damage people's trust in the banking system, making a bad situation even worse.
"Individuals deposit money in banks instead of stuffing it in their mattresses because they believe that their money will be safe there," explained Fitz-Gerald. "Once they realize, or even suspect, that the money they put in the bank is anything but safe, they will take whatever's left and run - and the bank will collapse in spite of the "bailout.'"
To get an idea of what life on the ground in Cyprus is really like right now, Fitz-Gerald recently talked to FOX Business Network's Washington Correspondent Rich Edson. Edson has been reporting from Cyprus as the controversial bailout plan unfolds.
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European Union officials voiced relief following an 11th-hour Cyprus bailout deal, but in truth, they have little to celebrate.
Not only will this deal worsen the economic crisis in Cyprus, but the damage to the trust in the banking system also has created a time bomb set to go off the next time a Eurozone country - or especially its banks - get into trouble.
Early Monday morning, Cyprus agreed to consolidate its two largest banks and inflict heavy losses on uninsured depositors. In exchange, Cyprus gets $13 billion in international loans to prevent the total collapse of the island nation's banking system.
"It is a bad deal, but the extreme scenario we had to contend with was worse," Lefteris Christoforou, vice chairman of the ruling Democratic Rally party, told Reuters.
Whether you call it a tax, a levy or even a bailout, the situation in Cyprus reeks of desperation.
This situation promises to keep the markets on edge. Here's the latest.
Let’s call the latest E.U. bailout what it really is: stealing. After all, it is the ultimate institutional goal. Take a look.
So what happens now?
Will Russia step up to offer money in exchange for oil and gas? Will China offer a similar deal to Cyprus?
Will those with money in Cyprus banks withdraw it and deposit it elsewhere, leading to a run on the banks?
Will investors flock to gold as a safe-haven investment?
Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared Tuesday on Fox Business to talk about the fast-developing story in Cyprus and the potential fallout in Europe and well beyond, including in the United States.
Fitz-Gerald said a vote in the Cyprus Parliament to reject the bailout "is a big deal because it sets the stage for a very, very dangerous precedent."
Check out this video to hear Fitz-Gerald's perspective on the Cyprus situation - and whether the U.S. government could come after your bank deposits.
On Saturday, the nation's leaders agreed to a "tax" of 6.7% on deposits up to 100,000 euros and 9.9% on deposits above 100,000 euros, to satisfy the EU's demand of 5.8 billion euros ($7.2 billion) as part of the bank bailout. Yes, they're literally raiding their own citizens' savings accounts.
Even by the standards of the EU bureaucracy, raiding the private deposits of Cyprus’ banks is spectacularly foolish.For a measly few billion euros, the EU has now put the entire Eurozone on edge - not to mention the entire global economy.
As a former banker, I can tell you that there’s no substitute for the belief that your deposits are safe and sound. It’s a thin line, and once it’s been crossed it’s nearly impossible to repair. It's all about trust.
Here's why savers everywhere should be concerned by this chilling development.