Mar 30, 2013 No Comments ›› Chuck Biscuits
Excerpted from WND: “The eyes of Texas are upon you” goes the song, but right now those eyes seem to be squarely focused on the financial crisis in Cyprus.
Texas Gov. Rick Perry is supporting a bill that would return the state’s $1 billion in gold reserves currently stored by the Federal Reserve at a vault in New York to the state.
The sponsor of the bill, State Rep. Giovanni Capriglione, R-Southlake, told the Texas Tribune, “For us to have our own gold, a lot of the runs on the bank and those types of things, they happen because people are worried that there’s nothing there to back it up.”
Bank runs were the great fear in the Mediterranean-island country of Cyprus today, as banks reopened for the first time since March 16, while the European Union imposed unprecedented austerity measures on the nation, including confiscating money in bank accounts. WND reported on March 18 the concerns that the crisis could spread to the U.S. financial system.
Capriglione said his bill is, “not about putting Texas on its own gold standard, [but instead will] give the state a reputation as being more financially secure in the event of a national or international financial crisis.”
“If we own it,” Perry told Glenn Beck last week, “I will suggest to you that that’s not someone else’s determination whether we can take possession of it back or not.”
Capriglione’s bill would establish the Texas Bullion Depository to hold the gold.
“We don’t want just the certificates. We want our gold. And if you’re the state of Texas, you should be able to get your gold,” said Capriglione.
However, he concedes transporting $1 billion worth of gold bars would be impractical, so he suggests selling the gold and repurchasing it in Texas.
The bill might get bipartisan support. State Sen. Rodney Ellis, D-Houston, called the bill “an interesting concept” and wants to consult financial experts on its merits.
That bipartisan support may stem from the severity of the crisis in Europe and fears it could spread here.
Cyprus fell into turmoil while the government and European financial leaders hammered out a $13 billion emergency assistance package to keep the nation’s banks from collapsing.
Cypriots were outraged and took to the streets to protest an unprecedented plan to impose a confiscatory tax on all bank accounts.
Depositors with more than 100,000 euros, or about $130,000, would get 9.9 percent immediately deducted from their accounts. Smaller deposits would suffer a deduction of 6.75 percent.
Following the protests, the plan to confiscate money from the smaller accounts was rejected by Cyprus’ parliament.
Banks in Cyprus reopened today with a 300-euro ($383) daily limit on withdrawals and restrictions on transfers to accounts outside the country. Customers were orderly, though they faced lines of 15-20 people.
This is the first time since the introduction of the euro that a European country has prevented bank depositors from having full access to their own cash.
The European Union said in a statement today the restrictions on access to money will be lifted as soon as possible.
The heavily indebted government of Cyprus is still planning to raise as much as $8.3 billion with its “one-time” tax on bank accounts of more than 100,000 euros, to satisfy the bailout demands of the EU.
The Cyprus crisis has sparked a surge in an alternative currency that exists only in cyberspace.
The trading value of a digital cash called “bitcoins” has soared, increasing by 20 percent on one U.S. currency exchange in just the last week.
“Incremental demand for bitcoin is coming from the geographic areas most affected by the Cypriot financial crisis – individuals in countries like Greece or Spain, worried that they will be next to feel the threat of deposit taxes,” said Nicholas Colas, chief market strategist at ConvergEx.
“This is a clear sign that people are looking for alternative ways to get their money out of the country,” said Christopher Vecchio, currency analyst at DailyFX.
Even though some economists say Cyprus is a special case and the “contagion” of taxing bank accounts is unlikely to spread, until now bank accounts worldwide, no matter how dire the government’s financial woes, have been held sacrosanct.
Now the government in at least one nation is poised to simply take money out of depositors’ accounts. That’s a first.