Cyprus: Stealing From Pyotr to Pay Paul

The "deal" reached yesterday to bail out Cyprus is another milestone on the road to ruin of europe.  Basically, the main part of the agreement involves large depositors in Cyprus' big banks to lose either 40% of their assets or close to 100% of their assets depending on which bank they use.  Those affected have deposits in excess of 100,000 Euro, an amount which is the limit on the deposit guarantee.  (In the US, that deposit guarantee equivalent is the FDIC.)  This, however, is not actually a "soak the rich" solution.  Even if there were a 100% confiscation of the wealth of the rich in Cyprus, nowhere near the needed amount would have been raised.  No, what is unique in Cyprus is that more than half of the deposits in the Cypriot banks comes from abroad, and most of that comes from Russia.  It is estimated that over two thirds of the funds which will be confiscated by the government will be taken from Russians.  Russian prime minister Medvedev was quite accurate when he called the latest agreement "theft".

So will this move "save" Cyprus?  Well, the banks will not all fail right away; that much is true.  But Cyprus has made its living as a financial center in recent years.  Tell me what sane individual would put his or her funds in Cyprus now?  Instead of dying quickly, the Cypriot banks will linger for a while and atrophy.  The entire financial industry will die off.  There will be no new funds for investments in the island nation.  Most likely, the Cypriot economy will wither and come close to total death.  Who decided to call this "saving" Cyprus?