EU Goes All Soviet on Rich Russians

John Ransom
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Posted: Mar 26, 2013 12:01 AM

Oh, my gosh; what a great idea: Does Obama even KNOW that he can tax Russian millionaires and billionaires?

Just wait until he finds this new method of taxing and spending. Think of all the bad ideas we can fund with these new “revenues.” 

The European Union and Cyprus teamed up over the weekend to come up with a revolutionary way to destroy confidence in the banking system.

Confiscate the biggest depositors’ money in the country’s largest bank, kill the second largest bank- and just make sure that you only give Cyprus enough money to ensure a second- and third- crisis is in the offing.   

“If anything,” writes the Irish Independent, “the situation is more troubling than a week ago; with the bizarre idea that depositors in one bank should be levied more heavily than in others; that at least one bank would be wound up; and that there would be restrictions on the movement of money in what is supposed to be a monetary union.”

The EU plan makes the USA’s bank bailout- known as TARP, but pronounced C-R–A-P- look like the American plan was run on the good intentions of a local chapter of the 4H Club. 

Last week an unlikely group of people- liberals and conservatives- banded together to denounce the idea of “saving” the Cypriot banking system by one-time confiscations- confiscations disguised as a tax- of depositors’ money.

The European Union proposed to lend Cyprus 10 billion euros that, in part, would be paid back by a one-time levy on bank deposits regardless of size of account and regardless of nationality of account holder. The plan was just another stunning example of how the European Union and the global banking  “Group-Think” got us into the mess to begin with. 

The cure in saving the banking system here, in other words, was to be much worse than the disease of letting the system fail.  

“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!’” wrote Paul Krugman, the self-appointed Conscience for Liberals, about the EU bailout plan.

A week later the European Union and Cyprus politicos came up with a much better idea: Make only the rich Russian millionaires and billionaires with deposits in Cyprus pay.  As I said last week, they are, after all, only just Commies.  

OK. It didn’t exactly take a week for them to come up with the plan, just a week to implement it. And perfect it for later use in Italy, Spain or anywhere else.

“A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems,” reports Reuters, “and other countries may have to restructure their banking sectors, the head of the region's finance ministers said.”

Last week euro zone officials were calling the Cyprus “bail-in” a “one-off.” Now they are calling it a good idea for everyone.     

Everything, it appears, will be satisfactory: 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, a levy that will avoid taxing Cypriots, but will fall mostly on rich, Russian depositors.

Hurray! Tax the rich Russians!

From the UK’s Telegraph:

Meeting deputies at his residence outside the city, Russia’s Prime Minister said there was a need to “understand what this story turns into in the long run, what the consequences for the international financial and monetary system will be - and thus, for our own interests as well.”

Mr Medvedev prefaced his comments by addressing Deputy Prime Minister, Igor Shuvalov, with the words: “Let us, Igor Ivanovich, talk about what’s happening with Cyprus. The stealing of the stolen is continuing there, I think.”

The seemingly clumsy phrase was in fact a sharp reference to a quote attributable to Vladimir Lenin, who used it to justify the confiscation of capitalists’ property.

And:

It is not the first time Mr Medvedev has made such a reference. Last week, he compared the proposed bank deposit levy on Cyprus to “expropriation and confiscation… only comparable to decisions made at a certain period of time by Soviet authorities, who did not stand on ceremony when it came to people’s savings.”

An unintended consequence of the levy- ha, ha, ha! Are there any other kind of consequences for liberals?- will be in closing down another offshore tax haven in Cyprus, a place where foreigners are free from the snooping governments of the EU.

Because, amidst the madness, one central problem faces the Western governments: How to prevent rich citizens from fleeing one tax jurisdiction to another tax jurisdiction when governments decide that once again they need to make the rich pay the freight for everyone else.  

Well that problem is now solved.

Depositors now know that EU tax havens won’t enjoy the benefits of the EU monetary union.

It’s almost as if the crisis was…I don’t know…CREATED by the EU to send a message?

Message received loud and clear: Don’t worry; all is well. The rich will pay.