Recall how improbable it seemed that the tiny nation of Greece might bring down the Euro and cripple the world's financial mechanisms? And, then, the story – if not the danger – seemed to fade away. Well, it now appears that the even more insignificant island of Cyprus may provide the spark. As Liz Alderman reports in the New York Times:

Under an emergency deal reached early Saturday in Brussels, a one-time tax of 9.9 percent is to be levied on Cypriot bank deposits of more than 100,000 euros effective Tuesday, hitting wealthy depositors — mostly Russians who have put vast sums into Cyprus banks in recent years. But even deposits under that amount would be taxed at 6.75 percent, meaning that Cyprus’s creditors will be taking money directly from pensioners, workers and regulator depositors to pay off the bailout tab.

“What the deal reflects is that being an unsecured or even secured depositor in euro area banks is not as safe as it used to be,” said Jacob Kirkegaard, an economist and European specialist at the Peterson Institute for International Economics in Washington. “We are in a new world.”

Great catastrophes can begin in unlikely places. Bismarck famously predicted that the great European war would likely be ignited by "some damned foolish thing in the Balkans."

Could the collapse of the euro and, even, the EU be triggered by the bailout of the banks of some island in the Mediterranean?

Zero Hedge is, predictably, paying close and mordant attention.

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