Christopher Lee

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Could Cyprus Happen In The UK? Sure It Could. Ask Any Banker

24 March 2013

The British are all toffee nose about what’s going on in Cyprus banking.  In the Westminster parliament this past week the mood was that it could never happen in the UK.

MPs were telling their Right Honourable and Honourabale Friends in the Chamber there was no need to think the Cyprus contagion would spread this side of the English Channel. Really?

Never is one of the words that should be banned in financial crisis analysis.  Never inevitably means: Here Next.

Today Cyprus. Tomorrow Italy. Then Spain.  Then why not the UK. Clearly, we are just two or three calamities away from crash barriers and helmeted policemen outside banks and ATMs telling Brits no more than fifty pounds a day.

And it’s all in a good cause. It’s to save the banks, the places in which we still put most of our money in and get less and less of it out.

When the banks have the money, then what happens?  The bank plays casino betting and hands out twelve million share bonuses to directors who fancy the odd £k on the second favourite at Leopardstown; and, if there’s anything left, then they’ll give us point one per cent interest – and leave it to the Chancellor to explain that times are hard and we’re all broke for another generation?

But there’s worse. Using the Cyprus experience he now feels he can cream ten percent of whatever we have left.  Given a couple of years and two or three more crises, it’ll become the norm.

There are about fifty million adults in the UK.  Only one million of them do not have bank accounts. And every month the banks are opening 30,000 basic accounts.

Just do the sums: a ten per cent tax on the average current and savings account would solve the Chancellor’s borrowing requirement inside three years and there’d be enough left to order one and a half Trident submarines. Easy peasy.

So what would happen if the UK went the Cyprus way?

You only have to watch when a headline says there’s going to be a bread shortage.  The supermarkets are cleaned out inside an hour.  Remember the petrol tanker strike? Remember the queues from the Tamar to the Tweed?

There’d be crisis statements from the great and mostly good.  The archbishop of Canterbury would announce he was selling off all those twelve bedroom bishops’ palaces and sending the money to the Bank of England.

The Queen, like her late mother ever aware of the need to suffer with the people, would call in PropertyWhiz dot com to see what her country estate at Sandringham would fetch. May even promise to pay a couple more taxes.

Man U would discount Wayne Rooney for a quick sale – a sort of Premier Division When It’s Gone It’s Gone! bargain and send ten per cent of the transfer fee to 11 Downing Street.

But there’s a darker side. The Markets won’t wait to be ripped off. The price of gold would hit new highs. Because the UK is not in the Euro, the Euro would trade above parity. Same with the dollar and because oil is bought in dollars, the price of oil would rise.

This would dramatically increase domestic fuel prices in the UK, diesel and petrol would reach new highs and therefore transport costs would rise and so would goods and importantly food.

So even before we got to the near panic of Treasury raids on bank accounts, the weekly domestic economy of the UK would be turned upside down.

The public dimension of this would be two-fold – what it was being told and practical experience on the day. So there’d be government and opposition briefings to newspapers and broadcast media as Downing Street went into its Keep Calm mode.

But it’s here that the whole theory breaks down and if we want to know why, just think of the Arab Spring.

Texting, emailing and messaging would be the most effective disruption of any official position.

Anecdotal evidence from every UK high Street would be only part of it. This would be a global issue and particularly an EU one. Every smart phone in Brussels would be beaming rumour and counter rumour the shorthand of which is chaos.

There would be no way the British banks and government would keep a grip of the public response once the banks started freezing accounts.

Contrary to romantic ideas of the World War Two British Stiff Upper Lip, modern Britain was shaped in the nineteen eighties, not the nineteen forties.  Modern Britain no longer queues.

And because of the collapse of respect in the institutions, modern Britain no longer believes – especially when someone puts a foot on what’s left of their money.

As a last resort, maybe government would ask the monarch to say something; that could turn out to be a miscalculation that would see an assault on the only institution in Britain still trusted.

Those left in the saloon bars may well listen and watch the monarch’s appeal for calm. Those same people, poorer on the day by ten per cent with more to come, may wonder why they should take notice of the most privileged person in England.

The answer is of course: it’ll never come to all this because government and the banks will make sure it cannot. But, but, but … every day the British are becoming more used to seeing major issues incompetently handled by governments who, for example announce policy without checking its consequence.

See how sadly complicated it gets? We’re down to asset selling.

Sell Southampton to the Chinese? They’ve more or less bought Paraeus so they must be interested. The gas companies to the French? The trains to… nope. No good. They’ve already been sold.

Mind you the Greeks and Italians have been getting billions out of their banks; where’s it all going? They’re buying up Kensington and Chelsea (current sales worth more than the whole of Northern Ireland).

And, let’s not forget there are 300,000 or so Russians in the UK and a lot of them looking for bargains. Could be that’s how it will end? The arrival of the new colonists?  The great empire trick reversed. It’s actually happening now.

Britain is gradually being sold off to stop the Cyprus Disease spreading to these shores. Or is there another reality?  There is: the UK is having a clearance sale of its assets to save the very people who started the crisis: the banks.

What then, happens next? Ask the man who likes a bet on the second favourite at Leopardstown and beware one thing: never believe it could not happen in the UK.

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