Ruddy hell. From the BBC:

 

People in Cyprus have reacted with shock to news of a one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.

 

Savers could be seen queuing at cash machines amid resentment at the charge.

 

The deal reached with euro partners and the IMF marks a radical departure from previous international aid packages.

 

President Nicos Anastasiades defended it as a "painful" step, taken to avoid a disorderly bankruptcy.

 

The Cypriot leader, who was elected last month on a promise to tackle the country's debt crisis, will address the nation on Sunday.

 

While Cyprus may be one of the eurozone's tiniest economies - its third-smallest - there could be serious repercussions for other financially over-stretched economies, such as those of Spain and Italy, Robert Peston writes.

 

The point of the levy is as a caution to lenders to banks that they should take care where they place their funds, and avoid banks that overstretch themselves - as Cypriot banks did, he adds.

 

Cyprus is the fifth country after Greece, the Republic of Ireland, Portugal and Spain to turn to the eurozone for financial help during the region's debt crisis.

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The country has been in financial difficulties since the collapse of the Greek economy, where Cypriot banks had huge investments.

'Robbery'

 

People in Cyprus with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said.

 

Those with greater sums will lose 9.9%.

 

Depositors will be compensated with the equivalent amount in shares in their banks.

 

Reports suggest that depositors will be able to access all of their money except the amount set by the levy.

 

The levy itself will not take effect until Tuesday, following a public holiday, but action is being taken to control electronic money transfers over the weekend.

 

Co-operative banks, the only ones open in Cyprus on Saturday, closed after people started queuing to withdraw their money.

 

"This is robbery and we must get the EU to stop this," Alan, a British expatriate saver in Cyprus, told BBC News.

 

"We retire and bring our savings to a bank in Cyprus and they can just take our money away without permission and then say we have shares in a bankrupt bank."

 

I didn't think that this sort of action was legal. Hopefully the UK government don't get any ideas.

Oh well it doesn't surprise me. It's the usual group of finance ministers who have their heads up each other's arses making these decisions. I've witnessed all these neoliberal policies being forced upon us in Ireland and I highly doubt Europeans will allow it to continue for much longer. Try and force the French or German to pay a double tax on their house or a fee each time one LODGES money into their bank account and you'll have another thing coming. Perhaps I'm being too hopeful.

It's not quite as bad as the heaadline suggests as they get shares in the bank. So, effectively, they are being forced to buy shares in their bank. Of course, with a large number of new shares being created, the value of those shares will fall in the short term so anybody wanting to sell them immediately would lose money.

 

Bear in mind that there is a wealth tax in France. This has some similarities with the exception that it is a one-off (perhaps), it applies to everyone rather than just the wealthy and people get something in return.

 

That shouldn't be taken to mean I think it is a great idea. After all, if people avoid it (or reduce their liability) by withdrawing money, that could lead to a run on the banks.

What else were they going to do then? They should do something in order to get money from us, we ain't no charity!

This is currently on hold after a parliamentary vote yesterday when not a single MP voted for the scheme. That was after it had been revised so that anybody with savings under €20,000 would have paid nothing.