Friday, March 29, 2013
Shenanigan is a nice Irish sounding word. I use it in honor of those Irish savers who've already taken a major haircut from their banks.
Plenty of shenanigans going on in Cyprus. It looks like some major Russian depositors have taken it on the chin. For every one of them many thousands of regular people are being ripped off. I tried to imagine how I would behave if something like this happened in the United States.
If my savings were taken or even just make unavailable due to daily withdrawal restrictions, I'd have to do something. If I had limited access to money, the last thing I'd do is pay any debts owned to banks. I wonder if they've thought of that? I bet a lot of Cypriot credit card bills are not getting paid. That can't be good for the banks. Of course, local banking is probably a very tiny part of the banks business. Apparently most of the depositors were of foreign origin. Screw the foreigners first and hardest, but put it to everyone sooner or later.
Tricks that worked in Ireland and Cyprus probably won't work in Spain or Italy. No doubt the creative financial gnomes have new tactics for different countries.
Unless things go seriously sideways, bank holidays like those that just took place in Cyprus probably won't happen in the US. My guess, and it's really only a guess, is that we won't have to deal with the same sort of currency restrictions. Besides, there probably isn't a big enough pile of money in US savings to rob. Pension funds are big enough to rob. Some collusion between government and big banks could vacuum those up -for our protections, of course.
We've really got to find a better way to make money work. If we don't we'll be bartering eggs for firewood sooner or later.