A recent article examined the American decline and suggested five ways to “enjoy the decline of America”. The first and foremost was the suggest not to save for retirement because “In 2008 Argentina stole the private pensions of its workers, nationalizing those funds to deal with their own debt problems. Bolivia did the same in 2010, as did Hungary. And Bulgaria did their own scaled-down version of confiscating people’s private pensions in 2011.”
Now one can add Cyprus to this as its parliament contemplates a “one-off” tax on bank deposits. It will vote on a “6.75 percent on deposits of less than 100,000 euros and 9.9 percent for 100,000 euros or more, though a European official said Cyprus is considering charging big depositors more and small account holders less.” Needless to say Putin is not amused because “There are almost 70 billion euros in deposits held in Cyprus. A little less than half that is held by non-residents, most believed to be Russian. At the end of last year, Russian banks had around $12 billion on deposits with Cypriot banks and corporate deposits accounted for another $19 billion, according to Moody’s credit-rating agency.” While on the topic of Russian rip-off does anybody remember Czar bonds?!
As we approach the end of debt supercyle this sort of action, which so far has been limited to fringes of the economic world, will become more common unless steps are taken to drastically reduce spending and social demands. The French have already tried to address the supply side of the equation by increasing income tax to 75%, which is closer to 90% after everything is taken into account, with indifferent results. Next time you talk to your friendly “earnest, uber-intelligent and sophisticated” liberal friend, in between his harangues on stupid and racist “tea baggers”, just remember that he/she will find a way to hide in the skin folds of the some public entity and it is you will be left twisting in the wind. So hold on to your wallet tightly, ignore the calls to “social justice” and consider taking advantage of government handouts because “It’s not about morality, it’s about reality. Most Americans really have no choice. Since the government has become so large, it’s almost impossible to live an entire life without collecting some form of government assistance. The reality has been forced upon you by a short-sighted and ignorant electorate. (…) You can decide to take advantage of it or be taken advantage of.”