By Peter Schiff
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The news of the month comes from the large Mediterranean island of Cyprus, where Keynesian economic planning left the economy facing complete bankruptcy. The result was an unprecedented step forward in the financial collapse of the West: direct forfeiture of bank deposits. Despite official protestations to the contrary, this fallout will spread to a bank near you.
The recent history of Cyprus is a microcosm of the story of all Western nation-states.
Under a comprehensive entitlement system, the real economy shrank while the banking system grew. Cyprus came to be a low-tax, high-yield banking haven - mainly for Russian oligarchs. By the most recent measure, the banking sector held assets worth 7 times Cyprus' annual GDP.
Unfortunately but predictably, the Cypriot banking system parked much of these funds in Greek sovereign debt. The ongoing crisis in Greece, then, threatened to sink Cyprus.
The Russian government had already given Cypriot banks a €2.5 billion loan in December 2011, but still considered a "buyout" of Cyprus' national assets in light of the new crisis. Unfortunately, closer analysis revealed that there was little of value there besides a pile of increasingly worthless paper
http://www.ibtimes.com/peter-schiff-cypriots-streets-1165229
Peter Schiff is a well-known commentator appearing regularly on CNBC, TechTicker and FoxNews. He is often referred to as "Doctor Doom" because of his bearish outlook on the economy and the U.S. Dollar in particular. Peter was one of the first from within the professional investment field to call the housing market a bubble. Peter has written a book called "Crash Proof" and a follow-on called "The Little Book of Bull Moves in Bear Markets". He is the President of EuroPacific Capital, which is a brokerage specializing in finding dividend-yielding, value-based foreign stocks.
