a) The fractional reserve banking system has worked for decades and I would claim has never really failed. Almost never has a depositor whose funds were insured in ANY jurisdiction lost his money in the end due to a banking crisis. Please show me an example. You should be careful to not fall victim to spurious correlation. Hyper inflation or other economic crises cannot be traced back to a faulty fractional reserve banking system. A dictator who nationalizes assets is not related to a faulty fractional reserve banking system, there is simply not logical relationship between the two. b) yes smarter and ethical people bank at smart locations and smart institutions. There are tons of people on this site, I am willing to wager, who traded through Cyprus-based shady retail brokerage houses who did not honor their commitments, front-ran clients, including outright theft without the slightest protection in favor of clients. Why would an intelligent person want to do trade with such institution? Why would an intelligent person bank with a Cyprus bank domiciled in a country that is about to blow up (its not that their CDS spresds widened overnight, the precarious situation has been known for many months) UNLESS you believe you can get out even when the house is burning (which implies you profit from insider knowledge and preferential treatment). c) Yes, I would have never and will never bank with anyone in Cyprus. Nor would I ever bank with an institution in the Ukraine or Russia for that matter. I miss out on opportunities and yield but I just am not willing to take such risk. So, does that put me into the camp of the smarter people on this planet? Long-term probably yes, in the middle of boom cycles probably not. You chose. d) Nobody in Cyprus is living on the street BECAUSE they could not get more than 100 euros per day out of their ATMs. Please play the ball low and do not be such a drama queen. Nor has anybody with insured deposits lost a penny, and even in the worst case a 6.75% haircut that was on the table for deposits <100k initially took 6750 euros out of your pockets, you are telling us that the average citizen did not benefit by a multiple of that over the past 9 years Cyprus has enjoyed all the EU privileges that they cheated themselves into? Are you suggesting that all economic evil in this world is brought upon by corrupt and greedy politicians and bankers? That the US financial crisis had nothing to do with the greed of the average person on the street wanting to believe they deserve their own house and 2 cars and annual vacation no matter how little their income. Are you trying to convince us that Cyprus's situation is because a few bankers and politicians had just a few too many good times and squandered wealth? Please, tell me you at least see a reasonable amount of responsibility lying in the laps of every citizen.
It always amuses me how we find ways to justify these type of things. We feel everything needs to have a quick conclusion so we can stamp our opinion on it. We are in a rush to make sense of it all. As was the taking of peoples funds from their accounts. Yes it was not planned out at all. That is why it takes so long to resolve it. The problem is that people think governments are stupid They are destroying a system. But they have a plan and everything is organised. You cant look at Cyprus without looking at the rest of the world. Everything is out of context. Look at the real results. Look at them everywhere.
Once upon a time... There was a concept called Fiduciary Responsibility... Which most politicians and bankers and lawyers and brokers took seriously... And the Rule of Law still held sway in the Developed World. The "average person" does not build States and their Institutions... And, therefore, is not responsible for their failure.
Really? You may want to study ancient history and the rise and collapse of empires. Every revolution in China was brought about by corruption and greed. And each time a revolution succeeded, the bottom feeders who originally rose up turned in the same corrupt people they fought against before. Surprise? Please do not try to convince me there was a time in history where lawyers, politicians, or bankers were civil, honest, self-less, public servants. For every honest, community minded bureaucrat and politician there are 9 others, 1 of which destroys the hard work of the 1 honest one and 8 others indulging in corrupt schemes. Of course does the average person build states, what do you think is your right to vote other than a direct power in your hand to decide who comes and who goes. All above pertains obviously to a democratic society My point was that its not just a few people on top who can force the masses to take on ridiculous mortgages, behave in irresponsible ways. It was a shared responsibility and the average citizen has the same civil rights AND duties than any other politician has.