Governments Try Robbing The Banks

Opinion

   on March 18 2013 3:01 PM
Bank of Cyprus, Athens, March 16, 2013
A man withdraws money from an automated teller machine at a branch of the Bank of Cyprus in Athens, Greece, on Saturday. REUTERS/Yannis Behrakis

During the Great Depression criminals like Bonnie and Clyde, Willie Sutton, Pretty Boy Floyd, John Dillinger and Baby Face Nelson robbed banks.

They were accorded some degree of folk hero status by sticking it to the banks some felt were responsible for the Depression-era misery. With liberal ideas firmly in the saddle, civilizing us, so to speak, we have come a long way from those dreary days. No longer would we applaud such criminals.

Instead, today, we send them to Congress, or parliament, or the legislature, where governments try to achieve folk hero status by robbing banks and depositors alike. In the 1930s, the robbers justified their acts by saying no real people were hurt, just the banks and the insurance plan that covered the depositors.

Governments today have no need of that kind of logic. They get to hurt whomever they wish because, well, they’re the government.

Stick ’em, up. May these governments all meet the same fate of the bank robbers of the 1930s.  The current heist under way, disguised as a public service measure, proposes to “tax”-- or steal, rather -- cash deposits in banks in order to raise about $6 billion euros to bail out the government in Cyprus. It’s kind of a reverse Troubled Asset Relief Program, or TARP, which penalizes people who have saved in proportion to how responsible they have been.

The money is needed in order to save the governments of Cyprus and the European Union. And the more you have saved, the worse off you’ll be. As of now, no deposits, no matter how small, will be free from confiscation if the measure passes; no one will be too small to tax.          

And make no mistake about it: The bank “tax” the European Union is imposing on Cyprus isn’t a tax at all; it’s seizure of property without due process in order for politicians to save a system for which someone should go to jail.

This, ladies and gentlemen, is what Hope and Change eventually gets you.

Just at a time when the European political and banking system is unraveling, President Barack Obama is proposing that we closely model Europe: Tax the rich, certainly, but make sure you tax everyone else too.  

“On Sunday, a source close to the consultations,” Reuters reported, saying the “authorities were hoping to cut the tax to 3.0 percent from 6.7 percent for deposits under 100,000 euros. The rate for deposits above that would then be jacked up to 12.5 percent from 9.9 percent.”

But all is well, says the EU. It’s just a tiny theft in comparison. No big deal.

“Brussels has emphasized that the measure is a one-off for a country that accounts for just 0.2 percent of European output,” Reuters wrote.

Hurray for the 0.2 percent! We can make them pay. With financial systems in Spain, Italy, Portugal, Ireland and other countries teetering, however, confidence in the European banking system -- really the world banking system -- could, and should, be shaken to the core. If this goes through, it will give food for thought to other governments that seem ambivalent about the 0.2 Percent. And yes, I’m looking at Obama.

Even the New York Times’ Paul Krugman is saying there is no better way to shake confidence in the banking system.

“It's as if the Europeans are holding up a neon sign, written in Greek and Italian, saying 'Time to stage a run on your banks!'" Krugman wrote.

When they write a history of the times we live in, I’m guessing the working title will be: The Age of the Bad Ideas. Politicians, policymakers and the public have struggled to squarely address the fact that no matter how hard you try, you can not make 2+2= $4 trillion.  

And someone has to pay the difference. In Cyprus, they’ve come up with a great idea of who that “someone” is.

“Investors were responding to the unprecedented decision by euro zone leaders,” Euronews.com reported, “to partly fund a bank bailout for Cyprus with money from savers’ accounts. Account holders in Cyprus have been appalled and many tried throughout the weekend to withdraw as much money as possible from their banks. There are fears that similar panic could spread to other euro zone countries.”

Maybe not just the euro zone either.

With tussles over the debt, social spending, deficits and taxes turning into a revolutionary struggle over what government should and should not do, it’s just a matter of time before some Democrat begins to advocate in earnest a Cypriot solution to our spending troubles.

Do you really think Obama won’t consider it?  Why bank deposits?  Because the Democrats say we need more money.  And in the words of Depression-era bank robber Willie Sutton: “That’s where the money is.”

John Ransom is finance editor at Townhall.com and the host of Ransom Notes, a nationally syndicated radio show covering the connection between politics and finance.

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