That Sound You Hear is Millions of Eurozoners Moving Their Money to Swiss Bank Accounts

Well, we have already seen how the economic crisis is treated around the world.

The tax payers take it on the chin, and the bond holders, who under laws have no claim to payment from bankrupt banks, get all (or nearly all of) their money.

Well, the EU powers that be have taken it a step further, by stealing money from the account holders to pay the bond holders:

European finance ministers have agreed an £8.7bn bailout for Cyprus which includes all Cypriot bank customers handing over up to 10% of their savings.

Cyprus becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the eurozone for financial help amid the region's debt crisis, but also faces a possible run on its banks as depositors try to avoid losing up to 10% of their savings.

The savers, half of whom are thought to be Russian, will raise almost €6bn. It is the first time a bailout has included such a measure.

"I wish I was not the minister to do this," the Cypriot finance minister, Michael Sarris, said after 10 hours of late-night talks in which eurozone finance ministers agreed the package. "Much more money could have been lost in a bankruptcy of the banking system or indeed of the country."

Without a rescue, Cyprus would default and threaten to unravel investor confidence in the eurozone, a renewed confidence fostered by the European Central Bank's promise last year to do whatever it takes to support the euro.

They do not understand what this means.

Something north of 50% of the deposits in Cypriot banks will be gone in the next few months, going to banks in Germany, Switzerland, or into mattresses.

This comment is delusional:

Such levies break the taboo of hitting bank depositors with losses, but [ Dutch finance minister Jeroen] Dijsselbloem said it would not have otherwise been possible to salvage its financial sector, which is around eight times the size of the economy.

They have just destroyed the financial sector in Cyprus, and perhaps through much of the Euro Zone.

Since the 1930s, in the developed world, at least, deposit insurance that makes the the depositors, at least the smaller ones, whole has been the core of our banking system.

This will likely precipitate a return to the days before the FDIC and its brethren around the world, when people stored kept their wealth in safes, or in commodities like gold, and the (temporarily)better off of members of the EU have just made it insane for anyone to ever put more than a few days walking around money in the banks of any Euro Zone nation. (Except perhaps for Germany and the Netherlands, for now.)

H/t Atrios.