The government in Cyprus is scrambling to try hammer out a deal with European Unit ministers so they can arrange for a $13 billion bailout for the country before the EU’s Monday deadline.
If the deadline isn’t met, the country’s financial system could collapse, dragging much of Europe and even other parts of the world down with it.
As things stand now we’re highly likely to see the Forces of Reason and Make-Nice Public Relations prevail, so I fully expect to see some kind of settlement announced before tomorrow morning.
But whatever the settlement details are, it’s likely to wind up being a bogus deal, since the astrology that’s active behind the scenes doesn’t favor long-term resolutions right now. Even so, this is a critical situation to keep an eye on, since it could establish a precedent that allows governments around the world to confiscate wealth from depositors’ bank accounts, undoing 80 years’ worth of formal and informal banking policies that protect deposits in times of financial crisis.
It’s also important to realize that this is not a short-term crisis that we’ve encountered here; it’s implications are likely to play out for the next several years at least.
Here’s a video that provides some additional background and reveals the most critical dates to watch over the next 18 months: