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Subject:  Fasten Your Seatbelts Date:  3/28/2013  2:43 PM
Author:  franchot Number:  419128 of 535099

It's bizarre, isn't it? According to some bloggers re the meltdown in Cyprus, nobody is more deserving of seeing their capital eviscerated by the state than

A) savers
B) successful savers

The last fifteen years has seen a global onslaught against savers, via idiotically low interest rates. Low interest rates promoted by central banks in collusion with politicians have led to grotesque distortions in the calculation of 'risk.'

This monetary policy has stimulated numerous commodity bubbles. And politicos luv commodity bubbles. As long as they don't blow up during the short tenure of whichever party is in situ. Meanwhile, the straitjacket of the single currency has enabled Germany to massively increase exports to a record breaking €1 trillion by diluting the Deutschmark with the Peso/Drachma/Lira/etc/etc. Meanwhile, peripheral members of Club Schauble have been enabled to borrow and spend way beyond their economic capacity. The upshot? It is some kind of indictment of global interest rates that 5% is currently perceived as indicative of money laundering and criminality. The grotesque bubble inflating risk of having an interest rate of less than 1% is never discussed. The confiscation of capital is much more palatable if the media doesn't like the cut of the jib of certain depositors. The message to savers? Don't. Considering the fact that capitalism is dependent upon banks lending from deposits to entrepreneurs who wish to borrow? Er, print on. The consequence of these reckless policies? Those who are denouncing depositors as being 'money launderers or criminals?' Be careful what you wish for:

Capital controls have shattered the monetary unity of EMU. A Cypriot euro is no longer a core euro. We wait to hear the first stories of shops across Europe refusing to accept euro notes issued by Cyprus, with a G in the serial number. The curbs are draconian. There will be a forced rollover of debt. Cheques may not be cashed. Basic cross-border trade is severely curtailed. Credit card use abroad will be limited to €5,000 (£4,200) a month. “We wonder how such capital controls could eventually be lifted with no obvious cure of the underlying problem,” said Credit Suisse. The complicity of EU authorities in the original plan to violate insured bank savings – halted only by the revolt of the Cypriot parliament – leaves the suspicion that they will steal anybody’s money if leaders of the creditor states think it is in their immediate interest to do so. Monetary union has become a danger to property. Ambrose Evans Pritchard
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