The bottom-line reason the banks blew up in Cyprus was that they were using their reserves to buy Cypriot gov’t bonds. Beyond the folks now not trusting the banks with their Euros nobody but nobody will be buying gov’t bonds. Not only are the banks on their way out of business but the gov’t will now be limited to it’s tax income stream-——————————————————————————————————————Hang on folks-—the exact same thing is coming to a bank near you. The biggest US bond trader in the US, Bill Gross of PIMCO, announced some months ago that he was on his way out of US bonds entirely. I sold all mine back in the mid 90’s when Clinton was scaring me and haven’t owned one since. Greece drew the map on gov’t bond defaults and our own genius Beranky doesn’t know a dammmmm thing that the Gleeks didn’t know. He’s printing/digitizing/papering/faking/ imagining some 85 billion dollars a month of unsecured US bonds, they can’t be sold at zero interest rates, and there is absolutely no way to make them good. Divide Obamuzzie’s 17 trillion dollar debt by the 300 million people who are on the hook for it ( can’t do it here because I don’t have enough zeros) and you see how much money each of us is on the hook for——and doesn’t have.
I’m sure that there will be a back room deal to put more dollars chasing bonds. It will come after the next big market drop. Something about 401Ks are retirement plans needing to be protected and that the only way to do that is to require investors to put some X% into bonds. It will likely start small, say 5% or some such. Later it will get larger and larger. There have already been calls by the Dems for this.
Mark my words, its coming.
People need to be carefull in comparing EU nation’s financal problem with American problems.
EU nations are comparable to U.S. States in that they can’t tax by way of inflation. This has forced them to take direct acts to balance their books rather than indirect acts.
People don’t like direct acts because they can see them directly. But people tend to missatribute to a bad economy or “corporate greed” the effect of indirect acts such as inflation. Thus indirect taxation thou inflation is politically common.
The politician simply reaches around to your left pocket to take your money while blaming the thief on the guy standing to your left. As a group voters fall for this lie almost every time, because following the money is far too much work for your typical voter. Simply put as a population we are apathetic, and easy made fools of, particularly by figures we want to trust.
I digress... the U.S. Federal government will not likely run into any such problem because it has the power of indirect taxation. People like Obama will simply convince the majority to stop worrying about debt, and when interest rates become prohibited to “Take over the bank” and defraud the lenders.
E.U. nations don’t have that option, they have to be open and more honest with their population. At least as far as getting money goes.