Will Cyprus Be a Sarajevo?

This Monday morning I'm trying to understand why there is, apparently, no run on Eurozone banks in countries with troubled banks and shaky sovereign debt.  Over the weekend news of the latest Eurozone bailout emerged, in which the EU, which I read as Germany, has agreed to bail out the Cypriot banks but only upon the condition, never seen before, that such banks seize from depositors a hefty amount of deposits, some of which have guarantees.  On the other hand, the deal does not require that the equity holders or bondholders take a hit, which would be how it should be.  The reason, as I'm reading, appears to be because the equity holders and bond holders are to a great extent foreigners who would truly collapse the banking system in Cyprus, and then perhaps elsewhere, with a run if they were to take a hit.  So Cyprus agrees to seize a percentage of guaranteed deposits from small depositors, many of whom, like the 3,000 Brits living there at the moment (link), are not even Cypriots.

I understand that underneath this is a reluctance by German leaders to put the German people on the hook for yet another bailout if Cypriots themselves don't have to pony up as well.  But seizing guaranteed deposits appears to be in violation of bank guarantees, if not the law, so in essence the deal upends the law and sound business practice to protect the big players and screw the little ones.  Boy, sounds exactly like Obama's seizure (link) of Chrysler and General Motors to circumvent normal bankruptcy procedure and replace it with a forced deal that illegally screwed bondholders to unjustly enrich the unions.  And in another nod to the machinations of Obama, the Cypriot government is calling the seizure not a seizure but a "tax", which apparently as with Obamacare makes it all OK.  Gangsta government is in vogue all over the West.

Now it seems the Cypriot government is having second thoughts about illegally screwing small depositors, and is mulling it over while it keeps the banks closed.  Meanwhile, apparently no run on banks in Greece (what's left there to run on), Italy, or Spain, despite this clear indication of bank insolvency and EU treachery.  Has socialism turned Eurozone people into sheeple?  Will Cyprus be a Sarajevo, or will the sheeple roll over?

John M Greco