Cyprus and the European Union Excess

For the past two years, the EU has struggled to keep its tenuous union intact, a union based on a common currency adopted by some of the members. As Italy, Spain, Greece, and Portugal economies downturned, it did not surprise many because their admission into the EU was questionable at the time – there is a reason why they were called the PIGS (Portugal, Italy, Greece, and Spain) - they never ran their socialist economies responsibly, spending on social welfare with abandon.

Cyprus is the first chip to fall in the confiscation of private property initiated by the socialist government as directed by EU although Germany denies that claim. The government devised a plan to levy a 10 percent tax of all citizens’ savings in order to bail out the struggling nation.  This ill-advised plan sparked panic across the globe, causing stock markets to fall sharply.

The government of Cyprus made the decision to contribute to EU’s bailout package 10 percent of all citizens’ bank deposits, savings and checking, punishing the savers and rewarding the careless spenders, thus forcefully redistributing wealth to salvage the overspending of the Cypriot government.

The euro fell in value against the dollar and a justifiable fear grew that citizens across the Eurozone might start withdrawing their funds from various banks causing runs.

Stunned Cypriots found out on Saturday morning that their parliament in Nicosia would levy a tax on bank deposits, 10 percent across the board and possibly less for smaller savers. The ATMs were emptied quite fast. Bank holidays were declared on Monday and Tuesday in order to prevent citizen from withdrawing all their money. Electronic transfers were also stopped.

According to Reuters, the original proposed levies were 9.9 percent for those with deposits of 100,000 euros and 6.7 percent on lesser amounts. (Michele Kambas, March 17, 2013)

The Eurozone finance ministers have decided to lend Cyprus a 10 billion euro aid package if Cypriot savers would give up a portion of their deposits. This came as a surprise to many investors since the Euro zone has not attached such conditions before to any of the previous bailouts to other member countries. Why Cyprus? The small island has been affected financially by its exposure to the financial mismanagement of its neighbor, Greece.

It is worthy to mention that all of these nations that are in trouble financially, Portugal, Italy, Greece, Spain, and Cyprus are run by socialist governments who cannot control their spending on lavish social programs, citizens do not like to pay taxes, many participate in the underground economy, and the unemployment rates are quite high, especially in Spain with a whopping 25 percent. It is also rumored that Italy may pursue the same venue, confiscating people’s savings in order to save their struggling economy, without making any changes to its out-of-control spending.

The troika of lenders, European Commission, the International Monetary Fund, and the European Central Bank asked for a percentage of deposits which would raise 6 billion euros, but it had to be ratified by parliament. Since there is no clear majority of any party, if the parliament does not ratify the confiscation of wealth, President Nicos Anastasiades warns that Cyprus’s two largest banks will collapse, including the Cyprus Popular Bank. Is this an American style “too big to fail” bailout?

Euro zone officials said that it was the only way to salvage Cyprus’s financial sector. They were not going to pony up any more money without serious collateral and the government is broke.

The anti-bailout Syriza party leader of Greece, Alexis Tsipras, was quick to blame Angela Merkel’s “criminal strategy.” Tsipras wants the German Chancellor to forgive the debt in a pan European debt conference, thus forcing German citizen to foot the bill for the rest of the Euro zone irresponsible spending.

The President of Cyprus, Anastasiades, a socialist elected three weeks ago, promised that savers will be compensated by shares in banks guaranteed by future natural gas revenues. Cyprus may be sitting on vast amounts of natural gas worth billions but the results of the offshore drilling appraisal will not be made public until later in the year.

The IMF director, Christine Lagarde, approved the deal and asked the IMF board in Washington to contribute to the bailout. If the law is approved, any depositor who fails to pay will receive up to three years in jail and a 50,000 euro fine. Europeans and rich Russians, who live on the island and would be subjected to the levy, are livid, standing to lose a lot of money. The British military personnel on the island will be compensated by their government.

The blame game has already started, and fingers are pointing at Germany because they have benefitted the most from the European Union by being the main exporter to the EU. Germany has a relatively low unemployment rate thanks to its large exports. However, these countries with socialist governments forget to point fingers at their own problem – socialism gone amuck. As Margaret Thatcher so aptly said, “the problem with socialism is that eventually you run out of other people’s money.”  The French are not wising up either. Instead of reducing their welfare spending and reducing the heavy tax on the rich, they are blaming unemployment on their socialist “darling” President, Francois Hollande, whose approval rating has dropped to 37 percent.

There is another twist to the European Union saga. While ordinary citizens are asked to adopt austerity measures and they should, the powers that be across the 27 member states are fighting hard and dirty to join the EU administration in Brussels. Why? The technocrats have voted a law to pay themselves lavish pensions. Every EU technocrat can now retire at the age of 50 with an average pension of 9,000 euros a month.

Here are some examples of technocrats and their lavish pensions paid by hapless member countries:

-         Giovanni Buttarelli, who was the Assistant Supervisor of Data Protection is going to receive 1,515 euro a month after only one year and 11 months of service with EU

-         Peter Hustinx, with a 5 year renewed contract, will receive 9,000 euros a month upon retirement from EU service.

-         Roger Grass, Justice Court clerk, 12,500 euros per month

-         Pernilla Lindh, Judge of the Court, 12,900 euros per month

-         Damaso Ruiz-Jarabo Colomer, attorney, 14,000 euros per month

A list in French shows the names of some EU technocrats/bureaucrats, their titles, the EU body they work for, the length of service, and the pensions they receive when their terms expire. (http://www.kdo-mailing.com/redirect.asp?numlien=1276&numnews=1356&numabonne=62286)

The maximum time these technocrats are required to serve, after which they can fully retire, is 15 years, pensions are huge, and they contribute nothing to the pension fund, it is provided by the rest of the European Union members.

At the same time, while presiding over the collapse of the retirement systems in the 27 member countries, the one world EU technocrats/bureaucrats recommend longer employment for ordinary citizens - 37 years, 40 years, 41 years (in 2012), and projected 42 years in 2020. Assuming that a person starts their working career at 21, European retirement age is still earlier than the American retirement age of 65.

Le Point.fr gives more details about the EU bureaucrats’ retirement system. It is reminiscent of our Congressmen who receive full benefits after serving one term, vote lavish benefits for themselves, including a separate Cadillac health care plan, while asking the rest of us to tighten our belts and to accept the destructive Obamacare. (http://www.lepoint.fr/economie/les-retraites-en-or-de-l-europe-19-05-2009-344867_28.php)