
Have you heard about Cyprus yet? It is to Greece as California is to the US. The most suicidal portion of a country run by economic illiterates.
It's public finances are exactly what you'd expect and it required a bailout from the EU a while back. Now the rulers in the EU have decided to get some value back from the Cypriots to cover the cost. They've voted for a tax on all bank deposits, 9.9% above 100,000 and 6.75% below. The public reaction to this was on the mild side in my opinion. Not a single politician has been killed yet.
There was an immediate bank run of course. What would you expect? Today there isn't an ATM on the island that still has cash in it. And although the vote of the local parliament which would be required to approve the tax has been postponed, when the banks open Monday they will all be emptied. That is, unless it becomes illegal to empty them sometime between now and then. The Cypriots aren't foolish enough to believe that they can trust their government when it comes to something like this. "Fair Share" works great when it's the other guys' share you're talking about, but is less popular in situations like this.
In my business we sometimes talk about asteroid insurance as an example of a thought process. What you do is you sell insurance against the likelihood of an asteroid of a certain size striking the earth with fantastic payouts - say 100,000,000 to one so $10 will buy you 1 Billion in insurance. But you make sure the size of the asteroid is big enough so that it will so damage the functioning of society that you will never be compelled to pay. The Army will be busy preventing looting, the courts will be vacant, and the lawyers will all be running for their lives like everyone else. One thing about a dark age is that there is plenty of darkness to slip away into.
There's some of that in this Cyprus situation. It's not just that the EU unicorn farmers have so intruded into the natural checks and balances of the free market so that nothing works correctly anymore. To readers here that much is already obvious. But the Cyprus public is beginning to realize that all the things they put faith in, the very institutions of the modern society are all just artificial constructs. They are a veneer of civilization over a 'reality' which is as shamelessly brutal and cruel as any the world has ever seen. A veneer that thin can be peeled back or stripped away entirely in the blink of an eye. And the EU has decided that Cyprus could use a little stripping right now.
And that veneer isn't only over Cyprus, it's everywhere. But to be perfectly frank, I don't think Florida retirees will be waking this morning and saying to themselves "If it can happen in Cyprus then it can happen here too!", even if they probably should. It's just not similar enough to our environment for most of us to see the parallel. But what all those pensioners are forgetting is that liberalism (or progressivism or whatever) is highly incremental. They won't do it today of course, because they can't. But they'll get to a point where they can, one tiny drop at a time. Drip, drip, drip.
Personally I don't think anything will come of this in America. Even after 5 years of Obama and the Democrats making up new rules as necessary to accomplish whatever they like, and ignoring many others they don't, most Americans still feel like their government won't do anything that is directly contrary to their interests. I think that's a mistake. The only way you can be really sure that your assets are totally safe from confiscation is to hold those assets in a form they don't know about or can't get to. They'll even be seizing safe deposit boxes before it's all over. That's what happens when someone else decides what your 'fair share' is.
I used to think the EU would break up, but a while back I changed my mind. I realized that we in the private sector, we common citizens see this last economic crisis as an inconvenience. For some it's been a major inconvenience, that's true enough. But it isn't really a live or die event. But the to the bureaucrats in the EU and the Federal government that's exactly what this has been all along. To them this is an absolutely existential crisis. And they will do absolutely anything to preserve things more or less as they are - with them making the rules.
The ruling elite in government are so devoted to getting and keeping power that the only way anyone will ever take it from them is at the point of a gun. To preserve the status quo they will steal your property, put you in chains - literally anything. Whatever tyrannical act you can conceive of they will find a way to rationalize, and their apologist like Tom Friedman will praise them to the heavens for it. And it's not just the Europeans. It won't happen today in America, but it's going to happen. At this point it really is unavoidable. (With all the money printing that's been done it can all be worked through inflation without anyone really even being aware.)
No group of people in all of human history has wasted more earned value than the Obama administration. They call it 'investment' but their 'investments' have been losing VAST amounts of money. And one day that piper will have to be paid. You know they aren't going to pay it; what the hell do they know about creating value? If they understood that kind of thing they might not have lost all that money on all those 'investments' in the first place. Besides, liberalism is all about the self appointed elite making the rules, and the 'common folk' paying the price for their errors.
So they'll eventually seize your bank deposits, appropriate your real estate, and start taking anything else that's 'nailed down' enough for you to not be able to hide it. The rules that prevent that sort of thing will be rationalized away with empty platitudes describing 'fairness' and 'equality'. And you and I and really everyone will end up with less, while they end up with more. That's what 'change' has always really meant.
A while back I said that in a choice between punishing bond holders and punishing retirees or the recipients of entitlements, the government will choose not to punish bondholders, because they have no choice. Lending is an 'at will' enterprise. You can't 'force' someone to lend to you. And in the end force is what government always relies on. Before it's over they'll take IRA's, 401K's, pensions, bank deposits, real estate, security assets like stocks, and any gold silver or other hard assets they can prove that you have.
That's the 'other people's money' they haven't quite run out of yet.