The Cyprus precedent … Given that this policy was not merely rubber-stamped but engineered by Eurozone finance ministers and the IMF (indeed, the IMF wanted an even deeper cut of deposits), it sends a disquieting message to anyone with deposits in a euro area bank. Although the ministers were quick to insist that this is a one-off and is "exceptional", anyone even vaguely acquainted with the initial Greek bail-outs will remember precisely how long such exceptions last. – Reuters
Dominant Social Theme: We will do what needs to be done to salvage the EU with implacable rigor.
Free-Market Analysis: This article, an opinion piece, actually, deals with the question of why the European Union and its central bank did what it did regarding Cyprus.
It doesn't really come up with an answer, though, in fact, in various analyses we've tried to provide the only logical response to the ultimatum that Brussels gave to Cyprus.
It seems obvious to us. But we are at this point quite cynical when it comes central banking generally and to the EU in particular. First, a little more from the article:
The big loser are working-class Cypriots, whose elected government has proved powerless in the face of decisions driven by Germany, and who are now edging towards fury. The Eurozone has always had a democratic deficit: monetary union was imposed by the elite on unthankful and unwilling citizens. Now the citizens are revolting: just look at Beppe Grillo. Across the continent, they've lost their democratic right to determine their own fate at the ballot box, and instead they're being instructed what to do by Germans.
Now, in Cyprus, they're simply and directly losing their money. Someone with €8,000 of life savings in the bank can ill afford to lose an arbitrary €540, but that's exactly what is going to happen. The Cypriot parliament is probably not going to revolt this weekend, but any politician who votes for this bill is going to have a very, very hard time getting re-elected.
This decision is important not only because of the precedent it sets with regard to bank depositors, but also because of the way in which it points up just how powerless all the Mediterranean countries (plus Ireland) have become. More than ever before, it's Germany's Europe. That's bad for Cyprus — and it's not even particularly good for Germany.
These are actually the concluding paragraphs of the article and we can see the puzzlement that is reflected within them. The demands that the EU has made on Cyprus is going to leave a lasting legacy of, well … fury. There are no good outcomes, it seems.
Our conclusion, as mentioned above, is … cynical. As we watch the unfolding disaster of the European "community" we return to statements made by top EU leaders in the past that it will take a considerable crisis to create the longed-for deeper union. See here:
The only conclusion we can come to, watching events unfold not just in Cyprus but in Greece, Spain and Italy, as well, is that these moves are, in fact, being made to engender a kind of … chaos.
We've already written that Beppe Grillo's party – causing so much chaos in Italy – is likely being funded and guided by international financier George Soros and Nobel prize winning economist Joseph Stiglitz. See here:
When one examines the increasingly provocative actions and machinations of those "leaders" revolving around the orbit of the EU, the conclusion that the crisis is being exacerbated on purpose becomes an increasingly logical option.