The real problem, as I explain in this interview for Voice of America, is that Cypriot banks became insolvent because they made very poor investment decisions, particularly their purchases of Greek government bonds
"Government is theft." The old libertarian battle cry came to mind when the news hit, two weeks ago, that Cyprus was about to confiscate 7 percent of all the insured deposits in the island's two biggest banks.
Obama, John McCain and others- like Paul Krugman- who head up the Bad Idea Brigade, will likely import Cypriot banking methods to the US very soon. The risky politicians and their Liberal Conscience, would love for you to think the crisis is about the evil banks, the shady depositors, their greed and lust for money.
Cyprus will get its bailout money and the EU will get a bank levy up to 100 percent of deposits from the country’s largest banks. Accounts in excess of 100,000 euros in the Bank of Cyprus and Cyprus Popular Bank will fund the bailout. The levy will avoid taxing Cypriots, but will fall mostly on rich, Russian depositors.
The decision of the government in Cyprus to simply take money out of people's bank accounts there sent shock waves around the world. People far removed from that small island nation had to wonder: "Can this happen here?"
Cyprus, an island most people have forgotten exists, became the center of the world when they put forward a bizarre plan to solve their economic crisis. The leaders of Cyprus proposed a wealth tax that would take funds directly from people’s bank accounts.
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