Cypriot woes threaten to spread across Europe

And you thought it couldn’t get any worse.

How wrong you were.

So far it’s only the Cypriots who are being robbed of their life savings. But who’ll be next? That there will be a next is virtually certain, particularly if we allow the perpetrators of this ignominy get away with what they are doing. Funny, isn’t it, how the little people are always the ones to suffer?

Now you might say, particularly following the visit of IMF supremo Christine Lagarde and the mutual backslapping with our pretend-to-be leaders, that all is right in the Irish garden. But if you think that you are badly mistaken.

As is clear from the recent actions of the deputy governor of the Central Bank, our banks here continue to underplay and not face up to the mortgage arrears crisis. If economists are to be believed, it could all be a deck of cards just getting ready to collapse.

Indeed there are grounds for believing this, not least because of the continuing understatement of mortgage problems and the general misinformation that has emanated from the banks and, to a certain extent, from government departments from the outset of the crisis back in 2008.

Our political and banking leaders still haven’t manned up to the fact that there is a mortgage problem, in the hope that somehow it will be all right on the night.

When Matthew Elderfield stuck his head above the parapet and tried to say it as it really was, he was taken publicly to task, including even having his continuing employment questioned.

They still haven’t learned the old maxim that ‘if you always do what you always did, you always get what you always got’.

Why should this time be any different? The argument is that Cyprus is a special case. Its banks have grown to be several times the size of the economy. A third of the banks’ deposits of €70bn are allegedly owned by Russians and Ukrainians.

Despite the specific circumstances of Cyprus’s problems, it is an extraordinary situation where the risk-averse, aka a deposit account holder, is burned, while the risk takers, and big ones at that, get away unscathed. It makes one wonder, not for the first time, who it is that governments, including our own, actually represent.

It would now appear that none of those who supposedly made this decision to ‘tax’ the savings in Cypriot banks have the cojones to own up to that decision, and are suggesting that all that the funding agencies want is that the Cypriot government cough up €5.8bn of the monies required.

The original mix was that those with deposits under €100,000 would pay 6.75% and those above €100,000 would pay 9.9%. The Cypriot government is now looking to change that to reduce the tax under €100,000 and increase it above that figure. It doesn’t matter how they package it, Pandora’s Box is opened and the demons are out.

Governments across Europe are desperately trying to prevent a run on their own banks. One can only wonder how such geniuses never thought of it beforehand.

Assurances from Fine Gael or Labour that it will not happen here are about as useful as waving at a drowning man. We only know this Government from its actions and its performance. It has not been one to inspire confidence.

A British MEP said on Tuesday that Cyprus’s best move would be to take the ‘least worst’ option: Default, leave the euro, go back to its own currency, devalue, and become more competitive. Perhaps it just might push Cyprus closer to Putin’s Russia. Now that would be a seriously unintended consequence.

But the decision to ‘steal’ from deposit holders and let the fat cats off once again, taken with the Irish finance minister in the room, could well go down in history as the straw that broke the camel’s back.