SYDNEY, Australia – When a nation’s treasury empties, democracy tends to fail. The decision of the tiny island statelet of Cyprus to grab 10 percent of every private bank account should be an alarm-bell to America and the wider West.
The Cyprus bank-raid is likely to have catastrophic effects, not the least of which is a run on every bank on the island, followed by a flight of capital, mass unemployment and a crash in property prices. Europe’s Mickey-Mouse “currency” is already tumbling in response.
And why did Cyprus go bust? I spent eight years there. The central bank was one of the most sensibly administered in Europe. The Cyprus Pound was one of the world’s strongest currencies. Thousands of international companies (including mine) were headquartered there. Tourism boomed.
Then the people of Cyprus made a colossal mistake. They voted to abandon the democracy they had had for less than half a century. They joined the dismal, failing European Union.
I had done my best to warn them that becoming a mere insignificant satrapy on the southeastern fringe of the EU’s tyranny-by-clerk would make them subjects of a colonial power a great deal less amiable than Britain.
In the strongest possible terms, halting just this side of outright rudeness, I had warned Cyprus’ chief negotiator at the accession talks that joining the EU would drive away the offshore companies that provided a hefty fraction of its annual budget. Membership would also spell the end of democracy. And I had practically ordered her not – under any circumstances whatsoever – to take Cyprus into the euro.
She was far from stupid – a graduate of the London School of Economics with a fine mind and a reputation for diligence. However, the government she served was blinded by two considerations that were ridiculous even at the time.
First, Cyprus wanted to splash about in a bigger pond. Secondly, its people thought that becoming a vassal state of the EU would somehow protect them against the military might of Turkey, which had helped itself to the northern half of the island in 1974.
Cyprus should have joined NATO, not the EU. The NATO treaty – like all the best treaties – says just one thing. An attack on any member state is to be treated by the others as an attack on them all. There is no such provision in the grim EU treaties.
Besides, the EU is incapable of taking any decision quickly (except a decision to extend its own vast powers over the member states). By the time the unelected kommissars had reached a conclusion it would have been far too late.
In any event, the sole motive of the Turks in invading had been to protect their own citizens in Cyprus from attacks by Greek extremists trying to drive them out once Britain’s steadying hand had gone. The Turks have no ambition to grab the rest of Cyprus.
I once tried to explain this to my biker buddies in the Sunday At Seven club. But their hatred of the Turks blinded them to the catastrophic damage their Yes vote in the EU accession referendum was bound to do to their nation.
Cyprus joined the EU. At once, nearly every offshore company – including mine – fled. The unelected EU bureaucrats marched in and began ordering Cyprus about. The euro collapsed as predicted. Cyprus – once one of the most secure and prosperous nations in the Middle East – went bankrupt.
I saw the Cypriot chief negotiator the other day. Ruefully, she admitted Cyprus’ membership of the EU had been a disaster. She herself had been treated like a servant by EU officials during Cyprus’ six-month Buggins’-turn EU presidency.
And that was before the Cyprus government’s proposed bank raid on every deposit account in the island.
Why does all this matter for America? Well, your nation, like mine and many others in the West, is as bankrupt as Cyprus. And your people, like the Cypriot people, actually voted for bankruptcy. The Cypriots voted for the EU. You voted for bankruptcy, too. You voted for Obama. Twice.
Whom the gods would destroy they first make mad.
If the ambition of the communist in the White House was to wreck America by reckless borrowing, he has succeeded. The sole reason why the United States is not in the same dire straits as Cyprus is that the markets cannot quite believe just how quickly what was once the world’s most prosperous nation has been brought down.
It is only a matter of time before the financiers wake up and smell the coffee. So here is an action plan to protect your family’s wealth from what has happened to Cyprus.
First, do not keep large sums at the bank where the government can steal them. Buy gold and hide it well.
Secondly, buy $1,000 each in Vietnamese Dong and Iraqi Dinars. Both are about to be rehabilitated as internationally tradable currencies. When this happens, you could make many times your investment (or, if not, you could lose the lot).
Thirdly, get your congressman and your senators to write to the U.S. Treasury demanding to know on what conditions each tranche of U.S. sovereign debt to countries such as China has been borrowed. Your representatives will be astonished when they learn how much of the assets and undertaking of America has been given away by stealth.
It is not only your bank account that is at risk as the president you chose sets about bankrupting America. It is democracy itself. Just ask the Cypriots in the line outside the bank.