Apparently, Stealing from Russians is Perfectly Fine

German poet Johann Gottfried Seume (1763-1810) once rhymed:

“Wo man singt, da lasse dich ruhig nieder –

denn böse Menschen haben keine Lieder”


“Where there is singing, you can always settle down –

because evil men don't have songs”

Infamous German philosopher Friedrich Nietzsche (1844-1900 – the guy with a mustache like a mop) then asked in his “Götzendämmerung” (“Twilight of the Idols”):

»Böse Menschen haben keine Lieder.« – Wie kommt es, dass die Russen Lieder haben?”


“Evil men don't have songs” – How come then that the Russians have songs?”




German philosopher Friedrich Nietzsche: when he wasn't busy philosophizing, his mother and sisters used him to mop up the floor.

(Photo credit: Wikimedia Commons)



This seems to summarize the attitude of many Germans toward Russia very well. It is an attitude that has developed historically, as Germany and Russia have often been at each others throats in various wars, but one that we believe is a huge mistake in every respect and should be shed as quickly as possible. And yet, it remains on display to this day (former German chancellor Gerhard Schröder, who is nowadays heading the shareholder's committee of Nord Stream AG, a division of Gazprom, is a noteworthy and laudable exception; he always understood that it would be far better to be allied with Russia in friendship than to adopt the US attitude that it represents a potential enemy).


The expropriation of depositors in Cyprus is an example of this attitude as well. It is held to mainly hit Russian depositors, who are assumed to be shadowy money launderers – even though there is not even a single shred of proof for this assertion.

So the EU seems to have thought it can get the Russians to pay for the bailout, while the bondholders of the Cypriot banks – who are presumably largely residing in the EU – will get away scot-free.

We actually believe that depositors at Cypriot banks would have a very good chance of successfully challenging this decision in the courts. Since when are the claims of depositors subordinated to those of bondholders? It seems to us that from a legal standpoint, this idea appears to be standing on a very weak foundation. Symptomatic for the attitude mentioned above is the following excerpt from an interview with German economist Peter Bofinger that appeared in German news magazine 'Der Spiegel' yesterday:

SPIEGEL ONLINE: The participation of Cypriot bank customers also serves another purpose. The financial institutions are holding a lot of money from wealthy Russians in their accounts. Some believe those accounts contain illicit funds from money laundering. The partial expropriation of depositors is supposed to counter the accusation that the ESM has become a bailout package for Russians.

Bofinger: There are better solutions for that, too. Depositors with up to €100,000 should be able to keep all their money. But richer depositors should be made to pay more. For example, starting at €1 million, 20 percent of an account's savings could be seized. At €10 million, that figure could be 30 percent. One could also review whether it would be legal to tax depositors from non-EU countries in Europe at a greater rate.

SPIEGEL ONLINE: So you're calling for a bigger compulsory levy for Russians than for Europeans?

Bofinger: Why not?”


(emphasis added)

Right-on. Why not steal more money from the Russians? After all, “some believe those accounts contain illicit funds from money laundering” – what more do we need? Does anyone really require proof, considering that we all know how evil these Russians probably are? Just ask Friedrich Nietzsche!

To this we would note that Russians have very good reasons for keeping some of their money abroad, and none of them have anything to do with the alleged nefarious deeds to which they are held to be prone to. In fact, Russians – by contrast to many European residents –  have zero reason to try to evade taxes, since they enjoy a 13% flat tax at home. Economic freedom is much greater in Russia than in the EU.

However, Russians also know that political and economic stability is quite fickle in their homeland, and it was only 15 years ago, when Russia's savers and depositors lost nearly everything in the Russian crisis under the rule of the den of thieves the perpetually drunk Boris Yeltsin had allowed to exercise power. While stability and certainty about the future have markedly increased under Vladimir Putin's regime, he won't live forever – and no-one knows for sure what scoundrels may grab power once he is gone. Therefore Russians have very legitimate reasons for depositing money abroad.

By contrast, there is no legitimate reason whatsoever for the eurocracy to simply steal this money to help finance one of its countless bailouts – especially as these bailouts are actually illegal under the European treaties.

Today no-one talks about the 'no bailout' clause of the European treaties anymore, but that doesn't mean it doesn't exist. When it was initially thought that only Greece would require a bailout, the eurocrats used an obscure paragraph in the Lisbon treaty to justify it. Said paragraph was meant to ensure that help could be extended to a member state stricken by a natural catastrophe like an earthquake or an asteroid strike. In other words, from the very beginning of the crisis, the eurocrats have acted in plainly illegal fashion, even if pliant national courts and parliaments have later given their placet to all the bailout activities.

And these people have the temerity to accuse anonymous Russian depositors of being 'money launderers', with not even a single shred of proof? Talk about chutzpa!


Russian Deposits in Cyprus Are Far Smaller Than is Widely Held

It also appears that no-one bothered to consult the most recent data from the  central bank of Cyprus. As it turns out, Russians only own an indeterminate portion of the 30% of deposits held in Cyprus by 'rest of the world' residents. The by far largest portion of deposits is held by residents of Cyprus themselves – about 63% of all deposits – while the remainder, or about 7%, belong to other euro area residents.



Cyprus deposits

Deposits at Cypriot banks, chart via CLSA. Russians only hold a part (though probably the greatest part) of the 30% of all deposits belonging to 'rest of the world' residents – click for better resolution.



Nevertheless, Russia's government seemed – quite rightfully – incensed that it was not even consulted about the decision – while the EU still expects it to lend another €2.5 billion in emergency funds to the government of Cyprus! So the chutzpa of the eurocrats is even greater than it appears on the surface.


“Russian President Vladimir Putin criticized on Monday a levy imposed by the European Union on bank deposits in Cyprus as unfair and setting a dangerous precedent.

"While assessing the proposed additional levy on bank accounts in Cyprus, Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous," Kremlin spokesman Dmitry Peskov told journalists.

Russian citizens account for the majority of the billions of euros held in Cypriot banks by foreign depositors, and Russian banks are heavily exposed to the island as a favored offshore centre for big business. The levy, imposed as part of a 10 billion euro bailout, sparked panic among Cypriots over the weekend and hit Russian and other European financial markets on Monday.”


(emphasis added)

Putin might as well have added: “and it is highly questionable whether it is even legal”.


Lying Eurocrats

Meanwhile, the protests of savers in Cyprus have prompted the new president of the euro-group, the Dutch socialist Jeroen Dijsselbloem, to backtrack a little, but only a little: the parliament of Cyprus 'may' alter the distribution of the confiscation, so as to let smaller savers off the hook – as long as the total amount confiscated remains the same, i.e., larger deposits are to be subjected to an even bigger levy than heretofore considered. Below follow a few excerpts from Dijsselbloem's statement and our comments:

“I reiterate that the stability levy on deposits is a one-off measure. This measure will – together with the international financial support – be used to restore the viability of the Cypriot banking system and hence, safeguard financial stability in Cyprus. In the absence of this measure, Cyprus would have faced scenarios that would have left deposit holders significantly worse off.”


This is very likely nothing but lies. First of all, when pressed by journalists, Dijsselbloom yesterday would not allow himself to be pinned regarding the 'one-off' promise – in other words, he refused to completely rule out further confiscations elsewhere (even if he had done so, there would be precisely zero reason to believe him).

Secondly, the assertion that 'depositors would have been worse off' in alternative scenarios is very likely untrue as well. The main difference of the 'alternative scenarios' would have been that depositors would have been first in line among creditors – the bondholders and shareholders of the Cypriot banks may conceivably have suffered a complete wipe-out of their investments after depositors were paid, but we don't even know that for certain – as no-one has bothered to inform the public what the precise situation actually is. Instead, everybody is supposed to take the assurances and assertions of the eurocrats on good faith – a tall order even under the best of circumstances, never mind in the middle of the commission of large scale theft.

More from Dijsselbloem's statement:

“The Eurogroup continues to be of the view that small depositors should be treated differently from large depositors and reaffirms the importance of fully guaranteeing deposits below EUR 100.000. The Cypriot authorities will introduce more progressivity in the one-off levy compared to what was agreed on 16 March, provided that it continues yielding the targeted reduction of the financing envelope and, hence, does not impact the overall amount of financial assistance up to EUR 10bn.

The Eurogroup takes note of the authorities' decision to declare a temporary bank holiday in Cyprus on 19-20 March 2013 to safeguard the stability of the financial sector, and urges a swift decision by the Cypriot authorities and parliament to rapidly implement the agreed measures.”


(emphasis added)

So now the euro-group is suddenly concerned about “guaranteeing deposits below € 100,000” – but one may well ask, why this arbitrary cut-off point? Why should the property rights of smaller depositors be regarded as more 'valuable' than those of bigger ones? We are not asking for moral justifications here (theft is theft), we are asking what the legal basis for this differentiation is. Of course the real reason behind this idea is to keep mobs armed with pitchforks and torches as small as possible. We doubt that there is really much concern over the fate of small depositors – the concern is probably over what the righteously incensed subjects might end up doing to their rulers.

As to a “bank holiday safeguarding financial stability”,  this is ridiculous. Does Dijsselbloem actually believe that depositors are going to be calmed by not having access to their funds at all? Very likely he doesn't believe such nonsense, so what he is really saying here is: “while the details of the theft are worked out, we are simply going to keep the banks closed”.

Residents of other euro area nations with wobbly banking systems should pay heed to these events, and so should actually all euro area residents. It seems obvious that depositors in countries like Portugal, Greece, Spain or Italy are in grave danger should things take another turn for the worse on the economic front. They may well end up being asked for an involuntary 'contribution' as well when push comes to shove and it comes to the question of bailing out bank bondholders in the future.

As for the residents of euro area nations with banking systems that are currently regarded as relatively stable, they should not forget that all banks in Europe are fractionally reserved, and the minimum reserve requirement is a paltry 1%. They should also not forget that they have been repeatedly asked to open their wallets in the name of 'solidarity' already, in order to support profligate governments and overleveraged banks elsewhere. Everyone with money on deposit at a bank – and this includes most people –  has suddenly become a sitting duck.

As an aside to the above – by protecting small depositors to the detriment of large depositors by stealing more from the latter, one only ensures that the largest depositors at European banks will be panicked. The funds that have recently flown back from US shores to Europe may well end up flowing back again just as fast.


Fresh Light is Thrown on the War on Cash

It is all the more reprehensible that all across Europe, authorities are trying to ban or at least partially ban and/or undermine the use of cash. Various pretexts are forwarded for this,  but the real aims are to destroy financial privacy, to make it easier for the State to extract as many resources as possible from citizens and to support and subsidize the fractionally reserved banking system by ensuring that money remains on deposit. Now we know that there is yet another reason: to make sitting ducks out of savers and depositors who can be robbed at the stroke of a pen.

As Joseph Salerno recently wrote in this context with regard to France and the decisions of the rapacious administration currently in charge there (see “The International War on Cash”):

France’s state auditing bureau, Cour des Comptes, informed the French government that it was “dreaming” in forecasting that the French economy would grow this year by 0.8 percent, which would enable it to meet its budget deficit target of 3 percent of GDP. The bureau told French Prime Minister Jean-Marc Ayrault that a growth rate of 0.3 percent was more like it, which would not be sufficient to meet the deficit reduction target.

This was the case despite–or more likely because of–the fact that a broad based tax increase had just been imposed that would extract another €32 billion euros from overburdened French businesses and households this year.

So would a desperate Ayrault finally open his eyes to economic reality and slash the budget of the bureaucratic and bloated French State, a budget that is liberally larded with fascistic corporate welfare subsidies and bailouts? No way, no how. Instead Ayrault convened a meeting of the National Anti-Fraud Committee to crack down on tax cheats and presided over it himself – ”A first for a head of government,” he crowed.


Tax fraud in France has been estimated to be in the range of €60 to €80 billion annually. Buried in Ayrault’s proposal to crack down on tax cheats and further squeeze more revenue from its “fiscal residents” – those citizens and foreigners who have not been driven into part-time exile to escape French taxes – is a draconian provision that would lower the maximum cash payment per transaction from €3,000 to €1,000.


Under the new limit a French citizen would not even be able to buy a used car for cash. The provision would not apply, however, to citizens and foreigners wealthy and savvy enough to have placed their income beyond the clutches of the rapacious French State by becoming fiscal residents of other countries. They would be subject to a limit of €10,000 per purchase in cash, down from the current limit of €15,000 per purchase. This may come to be called the Depardieu exception because French actor Gerard Depardieu recently caused a public stir by obtaining a Russian passport in order to take advantage of Russia’s flat-rate income tax of 13 percent.

One commentator perceptively summed up the inextricable link between the war on cash and the war on personal liberties :

“With this law, the French government will be able to tighten the vise on its people one more turn, restricting their freedom of choice (how to pay), wiping out any privacy in those transactions, and imposing another layer of government control. Once people have gotten used to the €1,000 limit—based on the great principle of incrementalism with which restrictions of freedom come to pass in democracies—the vise will be tightened further, until the government can document every purchase made by “fiscal residents.”


(emphasis added)

And so statism marches on all over Europe. When will citizens finally say enough is enough? Unfortunately, many continue to expect the State to steal in their name, in the utterly vain hope that they will get more of the loot than will be taken from them. It is only when a broad swathe of the population suddenly is threatened to quite obviously become victimized as has just happened in Cyprus that people tend to wake up a little.



Jeroen Dijsselbloem

Dutch socialist Jeroen Dijseelbloem, lifelong bureaucrat and politician (meaning, similar to Tim Geithner, he never had a 'real job' and has been the recipient of funds extracted from tax payers throughout his career) and currently head of the euro-group (which should perhaps be renamed “Thieves R Us”).

(Photo credit: AFP / Georges Gobet)




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One Response to “Evil Men Don’t Have Songs – So How Come The Russians Have Songs?”

  • Crysangle:

    If Cyprus reverted to the pound there would not necessarily have to be any writedowns on investment or depositor holdings – they might see a strong devaluation … or not .

    Cash transaction minimums are an outrage , consider Portugal where every little receipt has to be tagged with the payers ID . Purchases of lesser amounts have no legal obligation to provide an actual ID card while submitting the detail , which has led to the PM being registered all over the country as buying meals, shopping at local supermarkets and so on … after social media got hold of his tax no. … amongst the most enthusiastic proponents of attributing his number to receipts are business owners fed up with the associated bureaucratic paperwork .

    I suppose the rule does not exist in Cyprus , or the UK would have trouble flying in its million in cash , but will France take its transit of French airspace as an insult ?

    ‘UK taunts France by waving cash overhead’

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