The banking sector in Cyprus is 5 times bigger than their economy. It is a taxheaven and also the place to be for russians placing their ..... money. Putting money in the bank is useless these days, interest is below 1% a year in savings accounts. All European countries that are situated in the southern area are problem countries ( Italy, Spain, Portugal, Greece...). Lot of corruption, nobody pays taxes correctly and lots of fraude by so called poor or sick people. And most of these countries were "socialistic" countries, specialized in spending other peoples money.
This was exactly what I wondered about as well. Won't this action have bank run effects in Italy, Greece, Spain, France and other southern European shaky financial states. Maybe delayed a bit. And would a ten percent hit in a high tax country like the Netherlands move lots of people into instant bankrupcy! Hunger can take down governments in short order. Argentina took it all by creating bonds and setting daily withdrawal limits if I recall correctly. I wonder if any of the large financial institutions manged to get it out without any 10% drop? I suppose they will examine all transactions for the past week or two. Particularly for ECB and government officials. As one US president might say something like well you didn't save that! When the STHF, laws go out the window!
Who is next, the Cayman islands? Perhaps a 10% seizure and let them claim it back will show those who have legitimate claims and those who will let it go as a business expense.
It will probably cause a bank run. I predicted Cyprus would go and also Hungary and Slovakia and some others in my book. If you want to see who will be next you can get a copy below. http://www.amazon.co.uk/Aggregate-C...cy-Weakness/dp/1613642075/ref=tmm_pap_title_0 The EU is turning out to be a great opportunity for me as I have called its failure right not just in the direction it is going but the exact countries that will fail and in order. Don't forget Malta too.
The Northern EU countries may have to dump the Southern basket case countries to save themselves. Usual cock up by the incompetent politicians.
Does this push gold up? If so, will it provide respite for the weaker gold mining companies (such as avocet mining)? Will there be new capital flight and from which Euro countries to where? Barclays is over exposed to Spanish debt. Will it affect this bank's share price, should the Spanish fear a 10% cut soon? Is it not now more likely Italy may opt to leave the Euro (5SM factor) than accept a future IMF/ECB rescue under such terms? What if ordinary Italians seek to move their money abroad? Might Argentina provide a new safe haven for capital flight, with a new Argentine pope providing a greater sense of security in this country? Assuming any future Italian deal is handled behind closed doors (as Cyprus was) which will prompt greater capital flight before the deed? Fear of a new 10% savings cut or the act of leaving the Euro altogether?
Correction: Northern and West Europe have to dump the south. There is indeed already a run on the banks in Cyprus. But because they are closed till tuesday nobody can take money, except for small amounts. From now on you should be careful if there is a long weekend when banks are closed, because these things always happen than. Financial problems will increase again all over the world. Our monetary system will get in big trouble again. Google " money as debt" and you will understand why.
not the cayman islands. obama is watching carefully. if you are in the US watch your wallet. and please no rah rah USA #1 BS.