The scariest sentence written in a very long time shows that no banks, anywhere, are safe anymore.
Savings accounts in Spain, Italy and other European countries will be raided if needed to preserve Europe's single currency by propping up failing banks, a senior eurozone official has announced.
It started in Cyprus, where one bad idea was followed by another, they closed banks so depositors could not retrieve their money until the government decided on whether or not to take depositors money directly from their bank accounts.
Going on two weeks now that local Cyprus residents cannot access their bank accounts, yet in all their European brilliance, branches elsewhere allowed money to flow out.
Via Reuters:
Zero Hedge sums it up:
No one knows exactly how much money has left Cyprus' banks, or where it has gone. The two banks at the centre of the crisis - Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus - have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks' largest depositors.
While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.
In other words, by now any big Russian funds in Cyprus are long gone, and the only damage accrues to the locals: for one reason because their money over the critical EUR100K threshold has been "vaporized", and for another because the marginal driving force and loan demand creator in Cyprus, the Russians, are gone and are never coming back again.
This is what passes for monetary real-politik in the New Normal - an entire nation becomes collateral when pursuing a wealthy group of people. And the "wealthy group" is victorious in the end despite everything...
If we were Cypriots at this point we would be angry. Very, very angry.
Here is another quote that could qualify as scary, from The Hill on March 18, 2013:
The Obama administration is closely watching Cyprus’s effort to tax bank deposits in the island nation in exchange for a $13 billion bailout, the White House said Monday.
Heh.... I just bet they are.