Would anyone care to make a small (very small) wager that one of the consequences of the shenanigans going on with the Cypriot banking system will be a “flight to quality”? That is, depositors who’ve stowed their cash in European banks in countries with shakier banking systems will start closing their accounts and depositing their money in banks in countries with more secure banking systems, e.g. Canada, Sweden, Luxembourg, Australia. Maybe even the U. S. Which I suspect will play hob with the Fed’s master plan.
Probably. Since a lot of the money is supposedly from Russian “businessmen” not clear if it will be as easy to get the money in legitimate banks. After all, the US banks have some standards.
On second thought, they probably will deposit here.
Steve
Perhaps this is nothing but a sample of the worst case scenario:
First They Came for the Cypriots….
jan- This is IBD. The same folks who proclaimed Hawking would be dead if he were cared for by the British health care system. I am sure some Democrat somewhere wants to do this. I am also know for a fact some Republicans want the Bible to be the basis for our laws. Neither is happening.
Steve
OT- Interesting take on cap gains taxes from Wharton prof (Sanchirico).
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2222843
Steve
Like I said Steve, it’s the worst case scenario. But, it’s also prudent to never say never, because even the implausible can become possible, given the right blend of circumstances.
As most people (hopefully) know, I comment here with a healthy dose of hyperbole and tongue in cheek. I comment here today with no such thing.
The Cyprus situation should not be underestimated. Private property is being expropriated because politicians can, and because they have failed to steward their country’s economic reality. View Cyprus as unique at your own peril.
I’m sure we all look with amusement at government delving into Big Gulp’s etc. We think its trivial, perhaps even correct as a societal governor. Its the mindset that people don’t get. Once you cross the Rubicon there is nothing left. What can government not do if deamed by an adoring minority and zealous populus and fawning but derilect press to be acceptable?
They just took people’s property away in Cyprus. I know most are either to busy to care, or say “it could never happen here.” But the thing the left never understands is that its all fine and well when their pet projects are in favor, but if the worm turns, and the state has powers never envisioned in the spirit of liberty, there will be an “oh, shit” moment.
I may disagree with Michael, and he with me. But until our different interests are enforced by the state we can coexist and debate the issues of the day as civil people. When the state dictates, we will have real trouble. Cyprus is the test tube.
Not quite yet. Cypriot legislators just rejected the plan. My understanding of this move is that either the eurocrats must back down, the Cypriot legislators must back down, or they must come up with some other way of bailing out their banks.
The people raised their hands with a ‘No’ emblazoned on them, and the world press did not reinforce Cyprus’s idea of embellishing it economy with other people’s savings. So, it was voted down by the powers that be…for now.
However, I view this as a trial balloon to see how passive the people would be on such an idea. They resisted, and the plan limped away. But, the economic conditions of the world are in disarray. And, the policies governing how to remedy them continue in more of a ‘take it from the rich’ progressive vein’, rather than actually rubbing innovative neurons together to produce economic growth and jobs in these flailing economies.
Even here in California, Jerry Brown was being given raves, at OTB, for putting the economy on such a great path, through higher taxation, and supposedly cuts. Yeah, he balanced the budget on tricky number gimmicks! However, there remain conditions hovering around that make California’s economy look like a deck of cards waiting to be knocked down. For instance, money is being borrowed (like we can afford any more borrowing) for the ‘smart’ train that still hasn’t purchased land for it’s tracks, costs keep increasing, and no one wants, except Brown for his legacy. Also, start-up businesses are now receiving notices canceling earlier tax benefits granted by the state, going back retroactively 5 years, and handing these people 6 figure tax bills, including penalties. This is only augmenting California’s anti business reputation even more. In the meantime, CA has the honor of having the highest UE figure in the country, almost 10%, which by some estimates is closer to 20%, when you calculate in underemployment figures and those not participating in looking for work anymore. And, the long-term deficit remains staggering. But Jerry Brownie, according to his progressive fan club, is doing a heck of a job!