"To announce that there must be no criticism of the president, or that we are to stand by the president, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public." -- Theodore Roosevelt


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Wednesday, March 20, 2013

The Raids of Cyprus' Bank Accounts Could Never Happen Here, Right?



A bank run in 1931

An interesting editorial from Investors Business Daily. Check it out.

From the editorial:

Markets tumbled after Cyprus and the EU said they might tax private bank accounts to pay for a bailout. Arbitrary property grabs are a new low and a bad precedent in this crisis. Worse still, it can happen here.
As bad as tumbling markets around the world are, they seem to be the only signal strong enough to catch the attention of Europe's otherwise unaccountable bureaucrats who have long since learned to ignore street riots.

As stocks fell from Tokyo to New York, Europe's leaders are scrambling to say they had nothing to do with the cause — the shutdown of all Cyprus banks and ATMs for at least three days and the expropriation of a large chunk of each now-captive account, as a "tax" to pay for Cyprus' $13 billion EU bailout, Europe's fifth.

Cyprus Prime Minister Nicos Anastasiades bitterly asserted he had been "blackmailed" by the EU and the International Monetary Fund to go along with the idea on Saturday, or there'd be no bailout. Cyprus' central bank chief Panicos Demetriades said the same thing.

Aside from the fact that no fiscally responsible country should need a bailout and the roots of Cyprus' financial crisis is based on long-term big-spending government and low-information voters, the bank shutdown nevertheless sets an ugly precedent rooted in the growing arrogance of EU power.

[...] 
Oh sure, the rationale was that most of the depositors were shady foreigners, particularly from Russia, laundering money. But the photos of Cypriots banging on bank doors and protesting, much as the people of Argentina did when the same thing happened to them in 2002, tells a different story of human suffering.

The expropriation of the tiny country's savings may have seemed like an easy test case for the EU because the population is small and some of the depositors are rich and unsympathetic, but the blowback will hit savings and investment — and future economic growth — all over Europe.

Worse still, it could catch on here.

Already Congressional Democrats are plotting the expropriation of Americans' private 401(k) and IRA retirement savings accounts in favor of "a guaranteed income." If bank accounts can be casually expropriated in Cyprus to pay for big-spending governments and bailouts, there is no reason a nice slice of the $19 trillion in retirement accounts can't get the same treatment.
 
I've been concerned about this possibility for some times. History has shown that very often the economic policies Obama advocates and pushes so fervently results in the confiscation of the public's retirement plans, savings accounts, IRAs etc. It is generally crouched in terms of the government "guaranteeing the investment." This is not much different than Obama's public rationale for bailing out and then running GM. Do we remember Obama's televised speech about how your GM car, financial plan, etc. was even safer now that it has government backing? A similar speech would be trotted out and delivered in a similar manner as the government raids citizens' retirement funds, turning private investment into another social security-like ponzi scheme.

This has happened with alarming frequency in South American countries, Argentina being the easiest example to look up. Unfortunately most people are ignorant of other countries' domestic policies. Worse, many who are aware of such failed foreign policies believe that the reason that the policies failed was not because of the obvious economic stupidity of the policies themselves, but insultingly because of the "inferiority"of the foreign people.

Every person I know who has voiced this opinion to me, and there's been more than a few, is on the American political Left. The thinking is not unlike the basic meme circulating among the Left now, especially at the university level and in the occasional newspaper editorial, that the reason the USSR failed was because it was run by a "peasant people" and not to the unworkability of Marxist theory.

Both are rather raw examples of the basic parochial and elitist underpinnings of Socialist and Marxist doctrine. An absolute belief that normal people are too stupid, too ignorant, too uneducated, and too peasant-like to take of themselves is at the core of the theory. Why else would Marxism require a police state to be built to morally and economically better the people (and to kill off the irredeemable)? Why the need for the modern American nanny states? Because the politicians who propose these policies believe that the average person can be responsible enough to make their own decisions?

So should these raids on private property occur here, remember that as the American political class takes your money to pay for their historically failed policies, government paid vacations, and other perks of office, their attitude will be of smug paternalism. And as they calmly inform us that our retirement funds are now "guaranteed" by the federal government with as much warmth as they and their speech writers and their acting coaches can fake, that they see us as little more than children unable to understand the complexity of a modern economy.

Does this attitude sound a little familiar? cough *Pelosi regarding the Tea Party* cough *Bloomberg and sodas and pain medications*

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