Guess who gets screwed by the Cyprus bail-in?
I'm sure you guessed! Felix Salmon:
The big loser are working-class Cypriots, whose elected government has proved powerless in the face of decisions driven by Germany, and who are now edging towards fury. The Eurozone has always had a democratic deficit: monetary union was imposed by the elite on unthankful and unwilling citizens. Now the citizens are revolting: just look at Beppe Grillo. Across the continent, they’ve lost their democratic right to determine their own fate at the ballot box, and instead they’re being instructed what to do by Germans. Now, in Cyprus, they’re simply and directly losing their money.
Someone with €8,000 of life savings in the bank can ill afford to lose an arbitrary €540, but that’s exactly what is going to happen.
Consider it: overnight a widow’s life savings, carefully saved up over decades, have been gouged, simply because EU bureaucrats decided to protect hedge funds and the German surplus, and to teach Russians a lesson.
For the past six months, the global financial markets have become increasingly complacent, convinced that the euro-zone crisis is, for practical purposes, over. Cyprus is the test of whether that is correct, or whether the complacency was instead misplaced.
In other words, if there is going to be a new wave of crisis in Europe, historians will be able to trace its starting point back to today’s Cyprus bank bailout.
Rather a horrible choice, if you ask the question "What are you going to do about it?" A European bank-run or worldwide expansion of the tactic. It would be foolish to think nobody would follow this example, after all. FWIW, my take is that it's the banksters testing how much they can get away with. (Salmon has a far more informed view, of course.)