On March 18, CNNMoney reported that Dennis Gartman called the Cyprus president a “fool” for the shocking turn of events that occurred in his tiny country over the weekend. Gartman is a trader, economist and professor, and author of The Gartman Letter, a well-regarded daily financial commentary and trading advice newsletter.
Cyprus's recently elected President, Nicos Anastasiades, agreed on Saturday to a EU proposal to bail out his country’s ailing banking sector, but at a price to bank depositors that has not been demanded from other countries.
Deposits would be subjected to a one-time tax of 6.75% for small accounts and 9.9% for accounts holding more than 100,000 euros. This caused an immediate panic among depositors and a run on bank ATMs across the tiny country.
"President Anastasiades is a fool. He said the consequences of rejecting the deal would be the collapse of at least one of Cyprus's major banks, amid widespread weakness in the country's banking system. Instead, he's opted for the full scale assault upon the economic system as a whole and has given cause to the collapse of the EUR itself."
"The Cypriot government has taken...stolen...taken title to...call it what you will, but we call it theft," he said to subscribers in his current newsletter, which was released on Monday.
Depositors to this point have always been assured, through various governmental programs such as the FDIC in the United States, that their deposits are safe (subjected to certain limits) in the event of a bank failure. To find that this basic tenet of banking is untrue is troubling, to say the least.
Cyprus’ parliament has scheduled an emergency meeting for Monday, and expectations are that the terms of the agreement will be changed to result in more favorable treatment of smaller depositors at the expense of larger ones, but this unprecedented action has shaken the nature of banking to its core and will not be soon forgotten, whatever the outcome.