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Cyprus ATMs Low On Cash, Credit Card Payments Refused; Medvedev Compares Europe To USSR

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Zero Hedge
March 21, 2013

So far the market has been largely oblivious of the shattered trust and changed dynamic in European banking dynamics for one simple reason: Cyprus banks have been closed, and likely will be closed indefinitely, preventing the mass media from broadcasting what happens when an entire population, and foreign depositors, decide to clear out the holdings of their bank accounts, either physically or electronically, and the public anger the will result when they find that courtesy of fractional reserve banking, only a tiny amount of said deposits is actually present.

In the meantime, retail depositors have had their withdrawals limited through a form of capital controls, allowing them to pull only as much as the daily limit is on given ATMs. So far the banks have had enough cash to keep ATMs stocked up to the daily required minimum, but that may soon be ending. BBC’s Mark Lowen, in Nicosia, reports that “Cyprus’ banks are still giving out cash through machines - although with limits, and some are running low.” Ironically, as physical cash becomes ever scarcer, merchants are now clamping down on electronic payments unsure if they will ever be able to convert electronic euros into actual ones: “Some businesses are now refusing credit card payments, our correspondent reports.”

Logically, this progression of limited transactions will accelerate exponentially until by some miracle, either normalcy returns and faith in the local banking system is restored, or every form of commerce, trade and exchange grinds to a halt, leading to a localized, at first, manifestation of the “just-in-time” supply-chain cross contagion that was explained in painful detail in “Trade-Off: a study in global systemic collapse.”

Since we don’t believe in miracles, our money is increasingly on the latter. This sentiment is further reinforced by former Russian president, current Prime Minister, and Putin mouthpiece, Dmitry Medvedev, who said that what Europe has done is nothing shy of what the USSR used to do in its attempt to destroy faith in private property, and thus, capitalism.

From the FT and Reuters:

Mr Medvedev said the EU and Cyprus had acted “like an elephant in a China shop”.

“All possible mistakes that could be made have been made by them,” he added.

“We are living in the 21st century, under market economic conditions. Everybody has been insisting that ownership rights should be respected.”

Mr Medvedev also criticised the decision to freeze the Cypriot banking system, and not just withdrawals from troubled banks, warning that if this continued for any length of time it could “result in losses . . . even bury the whole banking sector of Cyprus. It will cease to exist,” he said.

The proposed bank levy, rejected by the Cypriot parliament on Tuesday, had a “clearly confiscatory, expropriating character,” RIA quoted him as saying – remarks that echo earlier criticism by Russian President Vladimir Putin.

It was, Medvedev said, “absolutely unprecedented“.

“I can only compare it some of the decisions taken … by Soviet authorities, who did not give a thought to the savings of the population.”

Alas, it is not just in Cyprus that the current failing status quo has become the USSR incarnate: one can see it in the central planning of the stock market, in the general approach toward the wealthy, in the absurd penetration of cronyism and the terminal corruption of the system.

And while we commiserate with the simple people of Cyprus (and soon everywhere else), who have for no fault of their own become the first pawns to be sacrificed in the systemic endspiel, we are grateful to Europe for proving us, once again, correct.

Because our only purpose with this media experiment has been to warn our readers that concentrating unlimited decision-making power in the hands of a very few conflicted individuals, without checks and without balances, always, always, ends in absolute disaster, bloodshed, and ultimately war.

Sadly, at this point there is nothing that can change the final outcome of what is an ongoing systemic failure. One can, at most, prepare as much as possible and hope for the best.

This article was posted: Thursday, March 21, 2013 at 6:23 am





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