CEO: Cyprus Bank Account Looting Could Blow Up Europe
Pimco CEO Mohamed El-Erian told CNBC today that the decision to loot the bank accounts of Cypriot savers could blow up Europe and lead to civil unrest across the continent.
El-Erian said that the European Union had lit two sticks of dynamite in backing a proposal that could see bank accounts raided for up to 15% of their value in what has ludicrously been described as a "wealth tax" yet amounts to nothing less than an act of wanton financial plunder.
"By including small depositors, they are risking social unrest, political disorder, and potentially an exit from the eurozone," said El-Erian, referring to people with under 100,000 euros who will still be hit by a levy of 6.75% under current proposals. Savers with 500,000 euros in the bank face losing as much as 75,000 euros.
"The worst outcome is that you get complete political breakdown, social unrest, and then Cyprus is forced to exit," said El-Erian, adding that the move had accelerated the journey to disorder which could lead to more countries exiting the eurozone.
"The other stick of dynamite that's been lit is much more complicated and more uncertain," El-Erian stated. "That is a question mark about the sanctity of bank deposits in Europe," alluding to the threat of bank runs in other Mediterranean countries.
Although El-Erian and CNBC hosts professed ignorance as to why the IMF would knowingly enforce policies that could foster domestic disorder, a brief look at the organization's track record in Greece and Argentina answers the question.
As we discussed in our earlier article concerning a potential move to loot Italians of 15% of their savings, the infamous "IMF riot" is a deliberate move designed to engender civil unrest, scare away investors and allow western banks to buy up assets on the cheap in exchange for the target country's dependency on IMF loans.
Fearing an escalated bank run, Cyprus today delayed a vote on the "bailout tax" until tomorrow and announced that all banks would remain closed until Thursday.
Large protests are set to take place in the Mediterranean country tonight as well as during tomorrow's parliamentary vote. Demonstrators have already begun congregating with signs that read "hands off Cyprus".