Comment: The 'Trigger' We Were Waiting For In Europe

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The 'Trigger' We Were Waiting For In Europe

http://www.businessinsider.com/cyprus-deal-could-trigger-eur...

Now, the banks have a problem on their hands. "The Cypriot cabinet has declared Tuesday a bank holiday, for fear of capital flight, and this may even be stretched to Wednesday, as depositors are certain to withdraw huge sums from the Cypriot banks after the haircut imposed," reports Greek newspaper Kathimerini.

Many market observers are expressing concerns that the decision could have a ripple effect throughout Europe come Monday when markets open. After all, if European leaders have decided to violate the unspoken rule of bank bailouts – that deposits are sacrosanct – what's to say it can't happen in a bigger eurozone country, like Spain?

In a Sunday morning note to clients, Morgan Stanley economist Joachim Fels wrote, "I view this as a worrying precedent with potentially systemic consequences if depositors in other periphery countries fear a similar treatment in the future."

Read more: http://www.businessinsider.com/cyprus-deal-could-trigger-eur...

"Give a man a gun, and he could rob a bank. Give a man a bank, and he could rob the world."