Things are about to hit the fan in Cyprus. Cyprus is a small country that is suffering from Greece's financial woes. It is a member of the EU, and the EU has laid an ultimatum at their feet. The EU will bail out Cyprus, but only if Cyprus is willing to participate in their own bailout. So, the Government of Cyprus has decided that it will seize 10% of the "rich's" cash deposits in banks.
Who is the rich? Anyone with an account that has more than about $26,000.
Of course there is some push back on this, and it looks like the number will be pushed up to 100,000 Euros, that is the maximum that is insured by the EU bank. The thought being that anything over the insured amount is fair game.
What is this doing? It caused an immediate run on all of the banks in Cyprus. So much so that the Government of Cyprus ordered all banks, and ATMs, to be shut down until Thursday 3/21/2013. What is going to happen on Thursday? Anyone with a bank account is going to be trying to pull their money out. The banks are going to close and Cyprus will have riots on their hands. The government will have caused their own banking system to collapse.
This is spooky just because it is actually happening in the Western world. What is more spooky is that Politicians here in the United States are thinking that this is a really good idea. They already tax interest income, what about taking a percentage of the account? Again, you only do it on the "rich." The problem is, that it prevents ANYONE from saving ANYTHING. You think we have a retirement problem now? Start doing this crap.
I have to admit that this has really got me spooked. I would like to say that our government would never pull a stunt like this, but with all of the talk on Capital Hill of taxing 401(k)s and ending the Roth IRA and IRA exemptions, I don't know if there is anywhere that I can keep money without forking over a huge chunk of it to the Government. I am frightened that I won't have anything to live on when I am older. It might be time to buy gold coins and bury them in the yard.
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