The New Neo

…did in fact reject the bill to “tax” bank deposits, even though it had been amended to exclude smaller investors from the levy. The vote was 36 against, 0 in favor, and 19 abstentions.

Hundreds of protesters outside Parliament cheered in jubilation and sang the national anthem when they heard the bill had not passed.

I cheer, too, although I’m not sure the damage hasn’t been done to people’s trust in the banks and the people who oversee them, and especially the EU leaders (that is, if people still trusted the EU leaders in the first place, which I doubt).

And of course, the money will still have to come from somewhere. Maybe we can get a magician to pull it out of a hat?

Increasingly, governments and institutions such as the EU consider the rules something to be circumvented rather than protected, if it suits their needs. Ends, means, and all that. Obama did it with the Chrysler creditors. Commenter “Ray” points out that the British government raided private pension funds a while ago (see also this). There may be others I haven’t heard about. And now this recent attempt by the EU.

The trends are clear. But to notice trends, one must be looking. How many people are? At least the Cyprus thing seems to have gotten a lot of people’s attention—although probably not enough. And I bet that, if the grab had been limited to the “very rich” in the first place, it would have been just fine with a majority of people, both here and in Europe.

The problem in Cyprus was that the cooks turned up the temperature on the frog too quickly, and it jumped out of the pot. For now.

[NOTE: By the way, from the Wiki article about the frog metaphor:

According to contemporary biologists the premise of the story is not literally true; a frog submerged and gradually heated will jump out. However, some 19th-century experiments suggested that the underlying premise is true, provided the heating is sufficiently gradual.]

[ADDENDUM: European Member of Parliament Daniel Hannan opines (hat tip Legal Insurrection):

The least bad option for a country in Cyprus’s condition is to price its way into the market and export its way back to growth. But that would mean giving up on the dream of a European federal state.

Do you remember that, when the euro was launched, we were told it would add 1 per cent to its members’ growth every year in perpetuity?

As recently as four years ago, when the credit crunch hit, the anti-British leader of the Euro-liberals, a former Belgian president called Guy Verhofstadt, was sneering that the UK would soon be begging for permission to join.

Now we see the truth. The dream of political union matters more to Europe’s governing caste than the well-being of the people they represent. Shame on them.

Unfortunately, I don’t think shame is in their vocabulary.]

…unlike the EU “leaders” and the Cyprus president who agreed to the reckless trashing of the people’s trust in the integrity of their bank accounts:

Cyprus’s Parliament is likely to reject an international bailout package that involves taxing ordinary depositors to pay part of the bill, President Nicos Anastasiades said Tuesday, despite a revision that would remove some objections by exempting small bank accounts from the levies…Should the measure fail in Parliament, Mr. Anastasiades and his E.U. partners would have to return to the negotiating table.

I’ve said many times that I’m not a financial or economics expert; far from it. But I do credit myself (pun intended) with a fair amount of common sense.

Which is more than I can say for people like IMF managing director Christine Lagarde, who may be smart about the money angle but who doesn’t seem to understand the first thing about human beings, which after all are a part of the equation here. Lagarde has said that she thinks if the smaller depositors are excluded from the “tax” on deposits that will be a good fix, but she’s ignoring the effect it has on trust as a whole.

I repeat: the banking system is built on trust. Undermine it—raid the accounts of depositors, no matter how rich, no matter if they’re mostly Russian gangsters—and you do it at the peril of the entire structure.

It’s not rocket science.

[NOTE: By the way, Lagarde does not appear to be a leftist. She is described as being a member of a “center-right” party in France, or what passes for center-right there, which is sometimes to the left of what we in the US would call “center-right.”

It’s not especially relevant, but Lagarde was appointed to her current position to fill the shoes of Dominique Strauss-Kahn. Remember him?]

[ADDENDUM: It continues to occur to me that this is very similar to what Obama did with the Chrysler negotiations. Revisiting:

Why would anyone lend money to heavily unionized companies knowing that if things went wrong, the president and his men could trash their security interests by executive decree, hold them up to public vilification, and subject them to future retribution by regulators?”¦

How is the Federal Government supposed to unwind its ownership in the growing number of companies it has nationalized if prospective buyers know that should things ever take a turn for the worse, Uncle Sam will be back demanding extralegal “sacrifice” in the name of “saving” jobs?

How is private credit supposed to “start flowing again” if the United States of America morphs into a caudillo-run kleptocracy whose explicit policy is to “empower the workers,” chasing ever higher poll numbers by demonizing the very people whose job it is to provide credit?]