Tuesday, 19 March 2013

Alarm bells ring in Spain about Cyprus bank account levy

Protest in Nicosia
SPAIN The Spanish media has recently been raising the frightening spectre of a corralito - the popular name for what happened in Argentina in 2001, when the banks simply closed their doors on government orders and clients large and small were unable to access their accounts for a full year. The fear of something similar happening in Spain comes directly from what is currently happening in Cyprus. Reasoning behind the fear is usually stated as a question: 'If an EU government can just take what they like from my deposit account, what's to stop them from doing that here?' Here are some street-level comments and questions we picked up:>>>
From the owner of a bar, who has worked hard since he was thirteen, is  some ten years from retirement and has some savings: "What right do they have to do something like that? What am I supposed to do to protect my money? It's not a lot, but it's all I've got!"

From one lawyer to another, overheard in front of a courthouse in Algeciras: "It's just not right! Surely the law doesn't allow that!" The other one answered: "Who makes the laws? The banks!"

From a 78-year-old farmer waiting for his grandson at the school gates: "D'you mean they can just take my money whenever they like!? No wonder my mother hid hers under a great big trough for the pigs!"

News includes the fact that Cyprus wasn't expecting the reaction to the measures, and is keeping the banks closed at least until Thursday. Other European media report that there is a fear of contagion with the Cyprus situation, and bank runs could happen in other EuroZone countries.

In Spain, government spokesperson María Dolores de Cospedal has said that there is no reason to be afraid of any such thing - but then, they said that about the financial crisis some years ago.

The Cypriot government, however, has backed down from taking 6.75% from the small saver (the under-€100,000s) and it has a broad agreement to lower that to 3% - at the time of writing. That is still reason for demonstrations in the street in Nicosia, though.

As usual, the question is, 'if the banks created this situation, why should we pay?'

Another question that must surely come up in Cyprus, but could well be applicable in Spain: 'If the banks are so full of money being laundered, why should the small savers have to pay anything at all?'

The famous corralito in Argentina brought about a whole new underground economy based on barter, something that has spread to many parts of Europe, usually as an alternative lifestyle.

In Jimena, for instance, a new 'currency' was created last year, the ximeno, a system that allows an exchange of products and/or services among members. (More about this later, as you, Dear Reader, may well be interested in it.)

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