“Always acknowledge a fault. This will throw those in authority off their guard and give you an opportunity to commit more.” – Mark Twain
Well, the Cypriots and the EU have reached a “deal” that appears to be only a slight modification from the original. Deposits under 100,000 euros will be “guaranteed” – but capital controls will be put in place and some of the big banks are still closed until Thursday.
By guaranteeing the small deposits, there will necessarily be a larger penalty to the large deposits. This leads me to a simple question – do Russian billionaires go quietly? It will be interesting to see what develops next. I for one would not want to be on the list of people who “decided” that the offshore depositors should get plundered.
Speaking of next developments, I get the sense that things are picking up the pace just a bit. There was the U.S. mortgage crisis, then the Icelandic banking crisis, then the Irish financial crisis, then the Greek drama, then the Spanish near-collapse (round 2 coming up), and now Cyprus (and I’m likely missing something in there). How long before the next one? How long before there is a Spanish or Italian bank run? The cracks are showing.
We live in a democracy, and here in America it is a democracy where nearly 80% of the people claim to be Christians of one sort or another. In such a place we really ought to be able to do better than this continual fractional-reserve lending flail and the coming “crackup boom”. We really can vote to change the thing. There are plenty of sound-money-politicians out there, and sound money would really start to put a crimp in this disastrous system.
OK, off to work now. Work while it is daytime (who knows if we’ll have jobs tonight).