The island of Cyprus is about to go under. Not literally, of course, but financially … as in the nation’s banking system.
Cyprus is seeking a $12.9 billion bailout from the European Union to keep its banks in business, but the catch is a $7.5 billion payment the island is supposed to put up on its own. That money would come from a tax on depositors – the threat of which has prompted a run on Cypriot banks.
Seriously, people … go watch the cable news networks. Cypriots (what a great demonym) are literally standing in line at ATM machines taking as much cash as they possibly can out of their bank accounts. It’s mass hysteria.
“The population is quickly losing confidence in the political order,” one analyst told Time.
Really? What took them so long?
Cyprus is the latest example of the unsustainability of the European order – in which the solution to every sovereign debt or banking crisis is borrowed billions and new taxes on people who are already struggling to make ends meet.
Which of course amplifies everyone’s struggles …
Governments around the world (and especially here in the United States) grew beyond their means in the preceding decade – operating on the belief that everyone was entitled to live the high life irrespective of whether they could afford it.
That was mistake number one …
Mistake number two? Presuming the situation could be resolved by printing money out of thin air and taxing the engines of prosperity.
We don’t know what the fallout from Cyprus will be … another dubious deal that adds explosive power to Europe’s ticking time bomb? A limited financial collapse? The fall of the Eurozone? That remains to be seen.
All we know is it’s coming … “and that right soon.”