Europe is being screwed by Germany ...but this is thuggery of the highest order,..and the run will still happen, with exodus to outside of the Eurozone and gold etc etc..and the loss of trust. It will take a hundred years for the Cypriot banking industry to win back the confidence of depositors.

@Hisah.Consider the following statement:

"Regardless of one’s interpretation, in the entrenched eurozone North-South stand-off, this clearly represents a victory for the German government and German taxpayers over their southern counterparts, as it was Berlin that drew a line in the sand. In many ways, Cypriot depositors fell victim to the forthcoming German elections in September..."

Read more:

http://blogs.telegraph.c...-is-political-dynamite/


Word on the street is that Cyprus got flushed with the blessing of Angela Merkel as she sees the never-ending bailouts, this being the fourth in Europe, as a threat to her re-election in September. Recall the SPD and Greens had a narrow regional majority win in January.

"It was a neck-and-neck race in the German state of Lower Saxony, but ultimately Chancellor Angela Merkel's conservatives lost. The center-left Social Democrats and environmentalist Green Party have scored an upset victory..."

Read more:

http://www.spiegel.de/in...nd-greens-a-878690.html

Germany is being dragged down the Black Hole of Calcutta by the bailouts.

The lesson to be drawn from the European Debt Debacle is when a group of nations band together to form a currency union, their debts should also be unified. The Eurobond proposal would have worked. The best example is the United States where all state debt upon formation of the Union became federal debt and recognized as reserves. Any debt formed thereafter by any of the individual states would not be reserve status. The federal government could still print bonds for the use of the entire union recognized as reserves. That way, even when Detroit had a debt moratorium in 1933, it did not threaten the entire nation. In recent times, states such as California have been facing funding challenges, yet, the federal government, federal bond market and U.S. Dollar are still standing.

With a unified Eurobond market, the EU can institute a clever default the way the ancient Romans and even Japanese did it. Caracalla (188 - 217 AD) devalued the denarius for the first time since its issuance in 211 BC by issuing the new double aureus and double denarius. The coinage had 50% less metal content thus were a 50% devaluation. His thirst for money was to pay the military who in those days were the hand behind the throne. The Japanese Emperor during the Nara Period (710 to 794 AD) would issue coinage that he stated was valued 10 times the former coinage in circulation. The "New Euro" currency could be devalued by a formulated percentage, effectively defaulting on the bondholders without the anguish of market driven bond market crashes such as was the case in Greece.

Some history tea leaves on deposit raids by the state

In 1936, Norway imposed a bank deposit tax, which caused capital flight (bank run) from the nation.
On July 11 1992, Italy's Socialist PM Giuliano Amato imposed a one-off levy of 0.6% on bank accounts.

If history were to repeat itself based on these 2 euroland nations, an Amato will likely happen in Italy very soon. This Cyprus experiment is going to be rolled out to all those out of sorts with fiscal discipline. It will be interesting to watch this capital flight event when it happens.

This is a dangerous precedence, I have my doubts it will go down without causalities! One wonders what the EU Central bank was doing when these Greeks were getting into this mess!