Defaulting on those obligations, including coupon payments to bond holders, would cause severe hardship for the US economy.

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Interest on those bonds are paid back to the bond holders through the unlimited taxing powers of the US government, which is what makes them AAA rated.

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Such larger depositors and bond holders would of course be bailed in: they would now own the equity of those Cypriot banks.

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Those with more than that were not so covered: nor were the shareholders in the banks, the bond holders or anyone else.

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