The Cypriot bailout agreed in the earlier hours of Saturday morning could be a game changer for the eurozone. It was a resounding victory for Germany, but the compromise reached could see banks collapse across Southern Europe.
Saturday’s decision allows Germany to have its cake and eat it. The meeting of eurozone finance ministers decided to loan Cyprus €10 billion. The International Monetary Fund (IMF) will probably also join in. But the bailout comes with a shocking and unprecedented condition.
Cypriots will have money taken directly out of their bank accounts. Monday is a bank holiday in Cyprus. By the time banks open on Tuesday, all depositors will have a chunk taken out of their account. Accounts with less than €100,000 will face a levy of 6.75 percent. Those with more, will be taxed at 9.9 percent.
This decision blurs the line between taxation and theft. If you had $10,000 of savings in a bank account—that you had already paid tax on—the government would take $675.
“The move was apparently pushed by the Germans,” writes Robin Shepherd, who owns and publishes The Commentator. “Every depositor in southern Europe has now been put on notice that if their country needs bailout money any time in the next few years the deal could easily involve swiping money from the accounts of ordinary savers.”
That could be the pattern from now on: Germany bails out a nation in return for key concession. But not only do they get power over that nation, but ordinary savers are recruited to provide some of the cash. The German taxpayer will be much less opposed to this kind of bailout, because Germany gets the same amount of power for a lower cost.
But there is yet more uncertainty. The Cypriot parliament was meant to meet on Sunday to approve the bailout. The meeting has been cancelled. The most obvious reason is that the government isn’t sure the bailout will be approved. It wants more time to drum up support. Cypriot President Nicos Anastasiades has said that a vote against the bailout is a vote for Cyprus to leave the euro. So if it doesn’t pass, Cyprus could be the first country to leave the euro, putting the eurozone in uncharted territory.
If Cyprus leaves the euro, though, it would almost certainly mean the total collapse of the island nation’s banking system. It must submit to Germany, or else. Only, Germany’s terms are so harsh that Cyprus is seriously considering the “or else.”
The Trumpet has long said that the euro was deliberately set up to trigger a crisis. This crisis would force Europe to unite and bring more power to Germany. We are seeing that dynamic in action in Cyprus.
Full article: Cypriot Bailout: A German Victory that Threatens to Unleash Chaos (The Trumept)