Cyprus Bank Tax: A Terrible Idea

You probably don’t keep track of what’s going on in Cyprus.  I certainly don’t.  But the EU attempts to deal with the rolling financial crisis (rolling, I’d say due to stupid attempts to fix it) has hit this country.

What’s really newsworthy is the idea that the inevitable Cyprus bailout will involve a tax on bank deposits.  Approval is pending.

I’m sure you can figure out how this is a terrible idea on a number of levels, but let me assist you:

  • This encourages runs on the banks, creating further instability.
  • This will cause other countries to rightfully worry that their banks will be targeted.
  • This breaks a kind of sacred trust with banks and government.
  • It discourages using said banks and savings.
  • It punishes people who may not have had any part in all the financial foofaraw.
  • It’s probably going to ruin the Cypriot government if they pass it.
  • It doesn’t stimulate any economic activity, which is what is needed.

The usual austerity approach really isn’t solving the problems; what’s needed is stimulus to jumpstart things, and serious financial reform to build confidence and ensure this doesn’t happen again.

What we’re getting feels to me, more and more, like a giant financial-political game of hot potato.  Moving money around, moving responsibility around, and no one trying to let the bill and the need for action land in their laps.  It’s a giant responsibility dodge.

It’s not as if a lot of this didn’t happen on many levels; take a look at the constant tax avoidance in Greece for just one example (note: I am not sympathetic to Greece, as you can tell).  What we’ve got here is a crisis of responsibility, and an almost bizarre urge to punish or come up with bad policy; this one for instance sounds like it was made on a dare.

When the history of these years today is written, I think it will reflect a cowardly technocratic class, vastly out of touch with reality.  I think it will reflect a very angry population with a lot of alienation.  I think it will reflect a widespread ignorance of how the world works.

I hope it reflects how we finally got out of this.  I’d like to think down deep it will, but I have the feeling the inevitable confrontation of our problems is going to leave us with further scandals and recriminations for up to a decade.

– Steven Savage

Steven Savage is a Geek 2.0 writer, speaker, blogger, and job coach.  He blogs on careers at, nerd and geek culture at, and does a site of creative tools at He can be reached at