Last Tuesday I suggested that if the European Central Bank aka the German Central Bank had its way with taxing depositors in the failing Cyprus banks, the habit was likely to spread.
Today I am proved correct - Jeroen Dijsselbloem, chairman of the Eurogroup gatherings of the 17 eurozone finance ministers, said that the Cyprus model should become Europe's default approach for dealing
with ailing lenders.
As usual, the Law of Unintended Consequences has already started to take affect, with both the Dax in Frankfurt and the Cac 40 falling sharply as did shares in French and Spanish banks. The pound rose slightly against the Euro, possibly due to some investors moving from the Euro to Sterling.
I imagine that it will probably take a few days for the ordinary investors in Spain, Italy and possibly France to appreciate what has happened and for implications of Mr Dijsselbloem's remarks to sink in, but I feel that it is now quite reasonable to expect that we could see a run on the weaker banks in those countries.
Meanwhile, as my own ISAs are with the Halifax, which is now part of Lloyds TSB and one of the British Banks in hock to the government, I must give some serious thought about moving them elsewhere before someone in our government also decides on a compulsory levy to recover the government loan. But where can I put the money; only Barclays and HSBC are not in debt to the government, but they have problems of their own with Barclays having borrowed heavily from the rich Arab countries, and HSBC with regulatory problems in various countries. Perhaps cash under the bed is now the safest option or possibly gold in the form of Sovereigns, which would be somewhat easier to hide.
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