You think this could spread like wild fire everywhere now that Cypress was the Guinna pig? Maybe other country’s will try such things depending on how the depositors react? It is funny that the us debt is around $16 trillion and our 401k and retirement funds are around the same amount?
I object to the term “seized”. People, many of them not even Cypriots, put their money into Cypriot banks. In the aggregate, the banks were insolvent. Depositors are getting a haircut, but not nearly as big a haircut as they deserve. The difference is being made up by “Eurozone ministers”, with other people’s money.
No government is taking anybody’s money. This is like a bankruptcy, with creditors (in this case) getting over $0.90 cents on the dollar, with about $0.14 cents of the $0.90 cents coming out of the pockets of Eurozone taxpayers.
The Bailey Savings & Loan of Bedford Falls, wasn’t insolvent, it was temporarily illiquid. Its deposits were backed by mortgages, not by bags of greenbacks in the vault. GM was insolvent, its debts were backed by future earning that were never going to be adequate, and it got bailed out with taxpayers’ money. The Cypriot depositeros are the IAWU in this little drama.
BTW, during the American banking crisis of 2008, some banks were practically immune to the contagion. Mostly conservative, family owned or other closely held banks, turned up their collective noses at CMO’s being marketed by Fanny and Freddy. The bankers *knew* CMO’s were mackerel on ice, they smelled and they shined. The employees of limited liability corporations were driven by quarterly results, they really didn’t care where their institutions were when the music stopped, they had already pocketed their bonuses.