Posted Apr 2, 2013 by Martin Armstrong
One of the most frustrating things is when you really do have to deal with governments and you realize that all those people who spin wonderful conspiracy theories crediting them with such vast knowledge have absolutely no idea how bad things really are. The people in government are largely lawyers. They know the fine detail of words and how to wrap them around the truth so you do not actually have to say anything. However, these people DO NOT think beyond one step at a time. There is no long-term planning and Cyprus proves that.
Phase II in Cyprus is starting to emerge. Sounds nice, you put in a €300 limit on deposits, and you block cashing checks, with no wiring out. So exactly how is the economy supposed to function? How can business do business? If you take a credit card, how do you pay for the services clients want?
Brussels did not think what happens next. They wanted to screw Cyprus because they did not like the banking there and saw this as a place Europeans would hide money. They wanted that destroyed. However, banking and tourism were the primary industries. Wiping out the banks sends the island into the stone age. Business can not function. How do small businesses pay employees?
How does the island pay for food imports? None of these questions and a hundred others were even considered. All this is about is collecting taxes to support socialism that is collapsing because it is easy to make promises, but too complicated to fund them.
Cyprus is the litmus test for how to destroy an economy. Pay attention. Riots and revolution cannot be far behind. It may be like the Panic of 1869 when Black Friday was the day of dragging bankers to the streets and hanging them. This time, they may share the gallows with politicians. This has to be the stupidest move perhaps in all history. This plan to bailout banks by just confiscating the assets of depositors to save what? Depositors or Politicians?
This scheme is not going to end well. Money is already fleeing Europe. This is what we get with lawyers at the helm of the Titanic. Expect capital controls before reform. Europe is rapidly sinking and the lawyers can debate individual words and pretend they do not lie and they are within their legal authority to take people’s money since whenever you deposit money in a bank, it is then THEIR money. It is NOT yours legally – you are but an UNSECURED creditor. So nobody legally owes you a damn thing. Welcome to banking 101. The problem is – the law sucks. It is by no means ethical or moral. That is the real test in the court of judgment.