This Crazy Cyprus Deal Could Screw Up A Lot More Than Cyprus...

From Business Insider.com (Mar. 16):

Cyprus's banks, like many banks in Europe, are bankrupt.

Cyprus went to the Eurozone to get a bailout, the same way Ireland, Greece, and other European countries have.

The Eurozone powers-that-be gave Cyprus a bailout — but with a startling condition that has never before been imposed on any major banking system since the start of the global financial crisis in 2008.

The Eurozone powers-that-be (mainly, Germany) insisted that the depositors in Cyprus's banks pay part of the tab.

Not the bondholders.

The depositors. The folks who had their money in the banks for safe-keeping.

When Cyprus's banks reopen on Tuesday morning, every depositor will have some of his or her money seized. Accounts under 100,000 euros will have 6.75% of the funds seized. Accounts over 100,000 euros will have 9.9% seized. And then the Eurozone's emergency lending facility and the International Monetary Fund will inject 10 billion euros into the banks to allow them to keep operating. [read more]

Cyprus’ gov’t hasn’t approved the deal yet, but they closed the banks temporarily to stop a possible dry run on the banks. So, a citizen of Cyprus can’t use an ATM or transfer money out of the country

The Obama administration response? Ask the treasury. Huh? What? You got to be kidding me.

Could this happen to America? It could or something similar to it if Congress  and the POTUS don’t act fiscally responsibly. And if we have to borrow money from another country that country could do the same thing that Germany did.

If you notice the “tax” on the bank holder’s deposits are progressive ie the more you have saved the more you will be taxed.