Thursday, March 28, 2013

Cyprus – Individuals Running Low on Cash to Pay Food Bills as Banks set to Reopen – Who’s next in Europe?

Protesters in Cyprus warn their European Neighbors - Image and article: Draconian Controls Cyprus Banks Set to Open UK news Yahoo

From Bloomberg News: After two weeks without access to banks, not to mention a depletion of 40% of one’s accounts, those living in Cyprus are running short on money to buy staples such as food, and are behind on paying bills, including rent. The banks, which are due to open today, has some residents skittish – as they fear crowds at the banks – The small nation, has the third smallest economy of those countries participating in the Eurozone. (Bloomberg).

Those that appear to be the cause and possibly next on the list for bank closures, frozen accounts and a raid on depositors accounts, both large and small, in order to pay off the national debt, are France, Spain and Italy, who have, according to Business Day Live, have weakened the Eurozone in the past month. (Business Day Live).

The nation to go down the Cyprus path is Spain and Slovenia, suggests Reuters. Although the Eurozone's economists are in somewhat of a disagreement as to how to handle each of the member nations crisis’, “the head of the Eurogroup of euro zone finance ministers Jeroen Dijsselbloem on Monday suggested the bailout could serve as model for dealing with future banking crises.”. That model was based on the nation of Cyprus freezing accounts and raising funds to cover a portion of their bailout through assessing a fee of 40% on each bank account.

How did this affect those in the U.S.? The The Global Markets “slipped” , meaning they took a loss based on the ongoing situation in the Eurozone and Cyprus. Those holding any investment vehicle in the U.S. (be it a pension, 401K, stocks, etc.) may be set to lose a portion of their investments should the situation continue. Additionally, one has to ponder the question, how much do the U.S. banks have invested in Eurozone nations?

As Socialist Europe finds it can no longer afford the long vacations, guaranteed pensions, guaranteed jobs, subsidized utilities, etc., nations, such as Cyprus will be forced to ask more of their citizens, (or basically just freeze accounts and help themselves) in order to save the national economy. There’s a lot to be said for a free market society, one which offers, rather than guarantees opportunity, and allows those who have, to give to those who have not, rather than allow the “State” to run programs. The obvious proof In the pudding is happening in Europe now, as well as in those U.S. cities struggling to pay debts due to mismanagement and hyper inflated pensions and benefits to those unionized employees – Detroit, Honolulu, Chicago, Cincinnati, San Diego, San Jose and San Francisco to name a few (Four Winds) In the U.S. these cities problems can also be attributed to the economic downturn in the U.S., but when there is an indication of problems, most politicians, from the local level to the Federal, prefer to “kick the can down the road”. Time for fiscal restraint in both the U.S. and abroad – Should this trend continue those affected most (as in Cyprus) are not the very rich, but those that depend upon the government for their very basic needs.

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