The government is debating a levy on deposits, taking 9.9% from those with accounts showing a balance of over 100,000 Euros and a smaller percentage from those under 100 grand.
Naturally, people today are lined up outside banks withdrawing their deposits.
This will not, of course, stop the government – they can simply back date it and send residents a bill.
While Michigan residents may be thankful they don’t live in Cyprus, Michigan does have the same problems that Cyprus has.
An article in the Lansing State Journal reported three days ago that “Michigan cities (are) facing $12.7 billion in unfunded liabilities” (March 15th). The unfunded liabilities are mostly for healthcare and pension commitments to local employees.
As reducing spending never seems to be an option for government, an economist at MSU, our local university, warned of “higher taxes.” An alternative would be for cities to charge people for streetlights and other services, which is the reason we needed city government in the first place.
What is clear from the report is that government employees are not subject to the vagaries of the market as are people employed in the private sector. Thanks partly to strong unions their incomes and benefits are guaranteed and cannot be tampered with.
Unless this changes, Michigan may have to follow Cyprus and find innovative ways of taking more money from over-taxed tax payers.
If stealing from peoples’ bank accounts isn’t an option, the federal reserve is already helping. Since the crash of 2008 the money supply has been increased by 25%. This will inevitably speed up the rate of inflation. Inflation has often been described as a “hidden tax.” It’s a clever way for governments to increase spending and, while they are at it, reduce the amount of debt they have to pay back.
Sorry, not an option for Cyprus where they use the Euro, a currency shared by sixteen other nations and controlled by the European Central Bank.
Cypriots are blaming Germany. The Germans won’t help without the proposed levy.
As the Germans remain one of the few creditor nations (nations with a surplus), could a debtor nation like the US one day need German help? In which case, we also may have to suffer a levy on our bank accounts. That is, of course, assuming we have anything left in the bank by then!