Work and life having calmed down again for a little bit, there’s so much to catch up on, so with a bit of luck and a few pints expect a bit of a blog frenzy (may as well enjoy it whilst I can – but that’s for another post). The wheels continue to fall off the glorious EU project with Cyprus first saying they’re going to raid people savings, this turned out to be unpopular so their MPs voted against it, but despite that Cypriots are still limited in how much of their own cash they can with draw from ATMs and banks remain closed. Whilst they keep the banks closed the Cypriot government is discussing capital controls to stop everyone taking all their money out the moment they re-open, in the meantime people aren’t allowed to access enough money to continue to actually live a normal life or trade in any meaningful way. As other such as Snowolf have observed a very clear message has been sent to the rest of us – our money can be taken at a moments notice for “the greater good”, regardless of if Cyprus does pilfer it’s citizens savings I’d predict an awful lot of money will be leaving European banks, especially in Spain, Italy, Greece and rest just in case the pilfering spreads. If there’s any doubt that it might spread it’s worth noting that Spain is preparing the ground to follow the Cypriot example and have changed their laws so they can steal a moderate amount of money from peoples savings. Samizdata presents two alternative views which I’m not quite sure I agree with, confiscation of savings, like windfall taxes are different from 50p tax rates and aren’t a logical end point from tax systems as Cypriot style cash grabs represent a sudden change to the rules of the game. Taxes whilst still being theft of your property by the state are at least, meant to be, carried out according to announced rules which can be worked round and planned for. Likewise yes not bailing out the Cypriot banks would mean they failed and everyone would be out of pocket but that’s the risk we all allegedly take when we entrust our money to a bank, and letting banks fail would be the moral thing to do. Most Governments guarantee the small investors so it’d only be the “rich” that got hurt and once a few banks had failed and lost larger investors money I suspect we’d quickly see those investors paying a lot more attention to the probity of the banks and the emergence of sounder banks. Such winnowing of bad banks and encouraging investors to be as wary as any other purchaser is surely how free markets are meant to work and is how banks can be kept “honest”. Let banks fail, reintroduce consequence to the bankers and they might well start behaving.
Britain has nothing to feel smug about in this situation as we’ve been gradually stolen from by our Governments policy of printing money, though at least you can plan for that, and the last Government floated the idea of helping themselves to “dormant” accounts. The logical position to be in now is to have no savings, don’t count on a state pension and inest in things which don’t look valuable, mansion taxes make houses risky, history has seen seizures of gold from private citizens so any asset has to look worthless to escape the governments grasp. Which with one thing or another means that if MoneyWeek is to be believed means we’ll be royally screwed in due course.
One politician is sounding an ominous warning. Some have interpreted this as a euro-fan waving the horror of war to make everyone toe the line, predictably enough I disagree or at least I disagree with what to do about it. The economic conditions in Greece, Cyprus and elsewhere are due to the Eu and the Euro in particular and our lords and masters forcing us into a union which few on the streets wanted if fraying tempers. The EU hasn’t brought the economic prosperity and stability it promised and we’ve discovered we’re all crowded into a room full of people we don’t hugely like, the answer isn’t to move into an even smaller room but to say enough lets go our own way. Let the struggling countries leave, let tensions ease and after the required period of throwing blame around things may recover, further forced union may prevent a war between nations, but only because it’ll technically be a civil war between member states. I’m not seeing a huge advantage to that myself – except of course none of them will be able to afford to buy more bullets though they could always melt down euro coins.