The outrage was justified, predictable, and immediate. Then, in a move reminiscent of the Great Depression, banks were closed in a government-mandated ‘holiday’ while lawmakers and financial authorities scrambled and tried to figure out what to do next.

Putin’s mad. Observers like Paul Krugman are predicting bank runs in other troubled European countries. There’s only one saving grace for American observers:

It Can’t Happen Here

… Or can it?

The dollar’s still the global currency. The Federal Reserve has an extremely broad set of tools at its disposal (although it’s choosy about where and how to use them). A Cyprus-like incursion on people’s savings seems unlikely here. But if the past several years have taught us anything, it’s to “never say never.”

Whatever happens, the Cyprus story holds important lessons for every economy, including our own: Austerity has failed. So has bank deregulation. The ‘fair share’ principle of progressive taxation, which has guided the tax policies of Western nations for generations, is under assault.