What if Cyprus were Dallas?
Here’s some more perspective for you as to why I think this Cyprus wealth confiscation matters so much to investors and traders here.
Cyprus is in big trouble but, as I’m sure you’ve heard, “it’s only a tiny fraction of the EU’s GDP, so who cares?”
Pretend it’s not Cyprus but, say, Dallas, Texas. The population of both Dallas and Cyprus has more than doubled in the last few decades. Each has more than a million people living there as citizens. And get this, GDP in Dallas is about $300 billion per year, which makes it a tiny fraction of the overall US GDP.
What if the banks in Dallas had all closed last week, freezing everybody’s funds and stopping all non-cash business from happening anywhere in the city? So now pretend that you’re a businessman in Houston, NYC, Seattle or Miami and you found out today that every retail and small business depositor in Dallas, Texas, with savings of more than $100,000 was going to have a huge chunk if not all of their savings confiscated. Some of them will lose everything for no other reason than the fact that they’d put their savings in the bank instead of in their mattress.
It seems crazy, but this is exactly the reality confronting the people of Milan, Barcelona, Dublin and Paris this morning.
