Well, it's pretty much what everyone expected to happen in Europe once the government made plans to use depositor's own bank accounts over $100,000 to pay for the bailout in Cyprus. In the wake of the bailout being made on Monday, a top eurozone official has now said that the Cyprus model will be used as a template for future bailout in the European Union.
Jeroen Dijsselbloem, the Dutch chairman of the eurozone, said "If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?"
He then added, "If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders."
The policy is a shift from the past three years where large bank accounts with over $100,000 and senior bondholders had been protected. Dijsselbloem said that the Cyprus bailout showed that private investors could be forced to pay a "haircut" for bad investment and deals by the banks.
"What they've done in Cyprus is they have closed and frozen the bank accounts. They have taken the bank accounts, frozen them. Anybody who had $130,000 or 100,000 Euros in the bank, they have now frozen those assets and they are only going to take 30 to 40%, they believe, 30 to 40% of those assets to pay down the debt," Glenn said.
"As we told you last week or ten days ago, this was the beginning. This was the Petri dish. And as soon as they got it through Cyprus, they would do it in other countries," he explained.
"Well, they announced today...they were thinking about doing this now in Spain, in Greece, in France, and where was the other one, Stu? Italy."
Glenn explained that when the European Union started, people concerned with national sovereignty were concerned because they were giving up their self-rule. But critics shouted them down.
"Remember the guy who started the Euro, the guy who dreamt this up. He said, 'Look, we're going to start the Euro and everybody will, you know, they will still retain some of their sovereignty until there's a national emergency, until there is a banking crisis. And then we will cobble everybody together and we'll collapse it and then restart as one nation.' So I mean, this was the plan from the very beginning. That's the plan as stated by them," Glenn said.
"This is one of those things where conservatives and people who actually care about their nation's sovereignty looked like maniacs when this thing was started and complained and complained and complained that they were giving up their sovereignty and then years later when it happens, no one remembers," Stu added.
Glenn asked the audience to consider what they would do if these practices spread beyond Europe.
"So what are you going to do? When they come and they just take 50% of your 401(k), your life savings, what are you going to do?" he asked.
