I wrote this yesterday, during my overnight shift following the winter weather on Monday. But then, I saw the date, and remembered that there was something specifically about March 19th that I wanted to write about. It took me a few moments to remember that this was the anniversary of when the Iraq war was first waged, ten years ago. So, I wrote about that and published it instead, leaving this story for the next day. Already, however, it is a bit outdated, as the proposal was actually rejected earlier today. Still, it was an important story with widespread ramifications, and was the most talked about topic, seemingly, for Monday and Tuesday. So, here is what I wrote about it, with a few links to related articles, if you are interested in learning more about it.
Well, there was one news story today that absolutely dominated the headlines like few news stories have dominated so exclusively in recent months. This story has wide possible ramifications for all of us, although it is happening (possibly) on a small nation island thousands of miles away, with a population of less than a million.
Of course, I am talking about Cyprus, and the plan to tax bank deposits.
But before I get to that, I just wanted to mention the recent bad weather as of late (literally, I am not trying to symbolically elude to anything here). Tonight's storm was the worst that I have driven through in a long time. That was because the snow, and at some points the ice, was incredibly slippery. I was in northern New Jersey, as I usually am on Mondays, and left West Milford, heading towards work, with one stop to visit my son before finally heading off. Usually, I watch him on Mondays, but tonight, his mom was able to watch him, freeing me.
So, I headed off, and it was incredibly stressful. Accidents all over the place, and even road closures. I actually saw two accidents, and saw the aftermath of a couple of others. The road closures, I would imagine, very well may have been even more accidents. There were people sliding around, losing control every now and again. This was one of the worst snow storms for driving that I have ever been in.
Perhaps the worst was when I got to where it appeared it was not snowing anymore. Just because you can see blacktop, does not mean it's clear, right? I mean, we've all heard of hail, and ice, right? That stuff is worse, and way worse at that, than snow, precisely because people assume it's not ice, and drive as if it's just rain.
Apparently, it is a surprise when they lose control, because just prior, they were driving like it's seventy degrees and sunny, instead of icy and slippery.
This was one of those storms, of which we have now had a few as of late, that seems to really grate on people's nerve. After some tease tastes of springs, some really incredibly beautiful days, Old Man Winter reminds everyone that this is still his time. Pretty much everyone was ready to move on, and then, bam! One winter storm to remind you. Another just so you won't forget. Then another, and perhaps another, really rubbing it in.
Tonight was rubbing it in a bit too much, I think. This had to be one of the most severe winter storms in terms of driving conditions that I have seen, and yet, there probably was not three inches of snow on the roads. It was not the quantity, but the quality that made this particularly slippery. There were lines everywhere, and it was just awful. It seems the worst driving conditions that I have ever seen are actually when there is not that much snow. When it can be measured in close to feet, everyone has to slow down. But when it appears not to be so bad, a few people perhaps get cocky, and that's when accidents happen.
Okay, sorry, I just had to get that out of my system. My back is really aching, I'm tried from lack of sleep, had a rough weekend (if you read my blog yesterday, then you know about it), and that very long and stressful drive just kind of sealed the deal. I have tomorrow night off, and frankly, I can't wait. Spring is looking better and better, more inviting now, following such storms after the tease tastes of spring.
In any case, back to the big news. In Cyprus over the weekend, a decision was made by the European Union leaders that a tax (of up to ten percent, although I heard somewhere that in some cases it could go up to twelve percent) could be taken out of transactions for bank accounts, including checking and even savings. This is part of a plan by the European Community to deal with much of the debt issues (perhaps we can begin to use the word crisis now?) that they have been dealing with. Cyprus had asked for help to solve it's debt problems, and this was the proposal, the conditions that Cyprus had to follow in order to obtain help from the rest of Europe.
Cyprian President Nicos Anastasiades warned that Cyprus would default if the measure did not go through, and that this would result in the failure of the banking system, and the departure of Cyprus from the European Union.
It has sparked considerable controversy, because despite Cyprus's small size, many are worried that this sets a dangerous precedent. After all, many of the economic problems, both in Europe and North America, are the result of bad investments, and bad decisions overall, by banks. That customers of these banks essentially are going to have to pay for those mistakes involuntarily through their own accounts is a scary thought.
Of course, the crisis is real, has been a major concern for many for years, and there does need to be some sort of a solution, right? This was, at least in theory, aimed at the very wealthiest, who tend o have crafty means of avoiding taxes and other such things, while the rest of us wind up footing the bill.
Cyprus, like many small nations (a bit like Switzerland, or some other "offshore accounts" places), had friendly banking for the very elite. As such, it has attracted many Russian customers - very elite Russian customers, who are taking full advantage of these friendly banking institutions that cater towards a wealthier clientele.
Although the proposed plan to tax accounts was, at least theoretically, designed to crack down on these kinds of elites -particularly Russian customers - many people are worried, and not all of them rank among the very wealthy. That is because, again, this could set a dangerous precedent. Banks are, after all, supposed to be the safest and most stable of places to keep our money. Yet, unusual, and often unfair, fees and costs have hindered this traditional view as of late, in recent years. Now, with the first outright tax on deposits and accounts, including saving accounts evidently, that really calls this very notion into question. No wonder if had many Europeans worried. It has many other people in the world worried, because some get a sense of foreboding that a tiny nation like Cyprus is the experiment, and the results, if favorable, could then give the green light to these changes being seen in other places, other, bigger nations. It plants a seed of doubt about bank accounts in general, and casts doubts on what can be considered "your money".
It was meant to target wealthy people, with up to 10% tax for wealthy, elite customers. But it did not leave everyone else untouched, as there was a possibility of a 7% tax, even on average people without big money.
Russian President Putin blasted the proposed law, when news of it first came out, and warned that it set a dangerous precedent. Some were surprised that he was even that calm about it.
Many European community figures have vehemently denied that Cyprus serves as some testing ground, or that this will set a precedent for other European nations to follow.
That said, once the seed of doubt is planted, it becomes virtually impossible to kill off.
Breaking News - The Cyprian parliament rejected the proposal earlier today. Some called it legalized robbery.
Here are some of the news stories that I have been following, and which helped me to write this blog. If you are interested, they may help you to understand this news story a bit better as well. Also, it has been dominating news and radio discussions on places like NPR and the BBC. In any case, here are some links to interesting articles on the subject, a couple from Bloomberg news, and one Yahoo link to an article (Cyprus races to avoid financial disaster) by Mark Thompson of CNN Money, and finally, an NPR (All Things Considered) piece by Joanna Kakissis that allows you to listen to the news story, if you so choose. I found the NPR piece particularly informative. Finally, a couple of articles from the BBC were added, that explain the situation in more detail. One, by Edwin Lane, "Cyprus Crisis: What Happens Next?", which offers a lot of "What if" scenarios. The other is from yesterday (March 19), "Cyprus warned over parliament's bailout rejection", that explains how Germany's Finance Minister warned about the consequences of Cyprus's parliament rejecting the deal, and it expands on Russian unhappiness with the proposed plan:
http://www.bloomberg.com/news/2013-03-20/cyprus-won-t-set-precedent-for-eu-banks-denmark-s-rohde-says.html
http://www.bloomberg.com/news/2013-03-19/europe-weighs-cyprus-s-fate-after-lawmakers-reject-bailout-deal.html
http://finance.yahoo.com/news/cyprus-races-avoid-financial-collapse-123500731.html;_ylt=A2KJ2Ua_00lRbAwAO2XQtDMD
http://www.npr.org/2013/03/19/174767354/cypruss-lawmakers-reject-bank-deposit-tax-tangling-bailout-negotiations?ft=1&f=2&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NprProgramsATC+%28NPR+Programs%3A+All+Things+Considered%29&utm_content=Yahoo+Search+Results
http://www.bbc.co.uk/news/business-21844363
http://www.bbc.co.uk/news/world-europe-21854353
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