The crisis that's playing out now in Cyprus may be a world away, but it's affecting investors here at home and it raises an important question about how far a government can go to deal with soaring levels of debt.
After hitting one record high after another, Wall Street was in for a reality check Monday. The Dow falling more than 60 points. Still, not bad considering what's happening at ATMs more than 5,000 miles away.
"Everything was all doom and gloom this morning, but at the end of the day closing down 60 [points] I would take that any day based off that headline we got out of, out of Cyprus," said Jonathan D. Corpina of Meridian Equity Partners.
And that headline out of Cyprus was extraordinary. It is a small Euro-based economy that is saddled with enormous government debt.
The solution there may be to simply confiscate a portion of everyone's bank accounts -- somewhere between about 7 and 10 percent.
Banks had to close, fearing an all-out run.
"I plan to go to the bank and withdraw all the money I have in there and have nothing left in there. You know I can't trust them anymore. It's theft," said a customer.
And with the anger on the streets, important legal questions surrounding the proposal and whether this tax tactic could spread.
"If Cyprus were to disappear, this is not like Germany or France going away," said Phil Orlando of Federated Investors. "The concern is that if they can force this upon the smaller depositors who are supposed to be fully insured, can they do this in other countries and other situations?"
Even though we have rapidly expanding debt here as well, the fear for U.S. markets wasn't so much that a similar tax will happen here anytime soon -- more that this will lead to even more instability in Europe.