The Cyprus bank confiscation could topple banking system
Mar 18, 2013
Forbes has just published an article stating the seriousness of the decision in Cyprus to tax people's savings. They say, "The Cyprus bank bailout could be a disastrous precedent. They're reneging on government deposit insurance."
The Botching of the Cyprus Bailout: Worse Than Lehman Brothers
As my colleague Tim Worstall has pointed out in a well argued contribution yesterday, they have weakened – perhaps catastrophically – the principal pillar supporting modern banking. This pillar is deposit insurance. Ordinary savers who had received a solemn assurance that deposits up to 100,000 euros were safe are now being asked to take a haircut. This raises questions about deposit insurance throughout the EU and invites runs on banks not only in the most “financially-challenged” nations such as Greece and Spain but even in Italy and France.
Let’s hope that, with reasonable luck, European regulators hold the line tomorrow (and if a commentator were to predict otherwise, it would be like crying “Fire!” in a crowded theater). But it is a fair bet that the botching of the Cypriot bailout has ensured that the agonizing economic malaise afflicting much of Europe for four years now will be further prolonged.
Given the timing of this event, March 17 announcement, followed by scheduled March 18-19 implementation of this confiscation, I don't think there is any question that this is a major event associated with the overthrow of the red dragon.
The fact that our prayer campaign ends today, March 18, is too coincidental to be a coincidence. The seriousness of this confiscation to the banking system worldwide is evident to anyone who deals with banks on a daily basis. It is as if little Cyprus has suddenly caused the entire banking system to lose credibility. Banks rely upon the faith of the people in its integrity, and if the people lose their faith in banks, the bank runs begin, and banks can be forced to close their doors very quickly.
For this reason, Forbes is telling us that the Cyprus Confiscation Act is more dangerous than the collapse of Lehman Brothers in September of 2008--which nearly brought down the whole banking system.
The results of this may not be clear for another week or so, since our primary pattern this year is from 2001. In 2001 the battle was not over until March 22-24. But it appears that Cyprus is the place to watch, as it may be the catalyst for the domino effect on the world banking system.
I suspect that the red dragon has slipped on the ice.
Dr. Stephen Jones