I’ve been closely watching the situation in Cyprus for the past few days, and the writing is on the wall in my opinion. It isn’t simply the situation in Cyprus that is of great concern, but what can occur around Europe and the rest of the world due to that corrupt fiasco.
The politicians and the bankers in Cyprus have closed all the banks, and are claiming that it is a bank “holiday.” A holiday of course is normally a happy thing, but these banks are being closed until Thursday (for now) so that the Cyprus government can decide how much of client bank deposits can be stolen by force. There is not an option to remove one’s assets because the banks are closed, but if the truth were known, they have no money in the first place to redeem deposits!
The banking system is bankrupt, and fractional reserve banking and criminal behavior is responsible for this debacle. The banks are being bailed out at the expense of its own depositors; the same depositors who have been assured by the government that all their money is protected by the state insurance. What a scam!
The real risk here, other than any who were foolish enough to have major assets in any bank in Cyprus, is that this event will alert all who have savings in banks to be very scared, and properly so. When depositors become frightened of banks, they want to take their money out of these worthless institutions. When that happens, a bank run is the result. Since banks have only a tiny fraction of their client’s money on hand, or anywhere else for that matter, any bank run will quickly eliminate the banks funds causing that bank to shut its doors.
If this only happened at one bank, that could be absorbed, but when several banks are involved in a bank run, panic quickly ensues. Then, all banks are at risk, and bankruptcies are bound to happen, causing economic chaos. Europe could be on the brink of such an event.
If European citizens in mass flock to the banks to get their hard earned money out before it is too late, (and they should) many bank failures will become evident, and the European Union could collapse. Should that even become possible, the U.S. and many other countries will be adversly affected causing more major panic.
This may seem far fetched to some, but if this open thievery is not stopped immediately, and if real savings are stolen in Cyprus by the government and banks, then anything will be possible.
I have long said that this same scenario of a bank “holiday” due to bank runs could happen in America. I believe that it will happen in the future because the banking system is bankrupt, and few assets are available to satisfy depositors. This insanity in Cyprus could be a trigger to more of the same. If it reaches our shores, economic hell could break loose!