This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

The Real Deal With Cyprus

This was no surprise to Felix Salmon, whose piece on this we ran recently. He said the Cyprus banks were broke months ago.

This fact wasn't known to the people of Cyprus until recently, but it should be no surprise. Cyprus is next to Greece, and many Cypriot investments are in Greece. Cyprus joined the EU only in 2004 and the eurozone in 2008, Wikipedia writes.

The way Cyprus' European bankers saw it, depositors had a choice between having no money and having roughly 90% of it, with an implicit guarantee, which would if explained that way be a very good deal. The "tax" would buy the insurance.

But that's not how it was reported. Salmon called it a "precedent," implying it could spark panic withdrawals across Europe. He's most troubled by the idea that the tax hits small depositors.

In working to save the levy this week, Cypriot lawmakers tried to address Salmon's concerns, aiming their tax more squarely at the Russians. The latest proposal drops the tax on deposits up to 20,000 euros, about $27,000. The Sun reports some Russians were apparently tipped off and took out more than $3 billion in the days before the levy was announced.

And Cypriots themselves took to the streets, as The Guardian writes, apparently unaware that, without the EU insurance guaranteeing 90% of their money is safe, they'll likely be left with nothing.

Although the big lesson for most analysts is that Cyprus shouldn't have been brought into the euro, or that the euro shouldn't exist, the larger lesson is that of instability caused by money that is on the run from the law. Whether we're talking about criminal law, civil law or "just" tax law, the question for me is whether the world will be ruled by law, or by money.

At the time of publication, the author had no investments in Cyprus.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $124.43 -1.54%
FB $82.22 -1.18%
GOOG $548.00 -0.73%
TSLA $188.77 -0.94%
YHOO $44.44 -1.15%


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs