UPDATE Monday 25th March
By Neil Patrick
I've just watched the President of Cyprus announce that a deal has reached with the ECB to bail out Cyprus. Eurozone finance ministers have agreed a 10bn-euro bailout deal for Cyprus to prevent its banking system collapsing and keep the country in the eurozone.
Laiki (Popular) Bank - the country's second-biggest - will be wound down and
deposit-holders with more than 100,000 euros ($130,000; £85,000) will face big
losses. However, all deposits under 100,000 euros will be "fully guaranteed". On the face of it, the better off citizens and corporates will pay, and the less wealthy will be protected. For now.
But think about it - £85,000 isn't a fortune. Plenty of people who have worked hard all their lives and paid their taxes are about to be robbed by their government to pay for the government's errors. It's more than a disgrace, it's a terrifying portent of what we can expect to see repeated again and again in the coming months and years.
I don't see this as a rescue. I see it as a small scale test of a new and very troubling development in the evolution of 'democratic' governments' interpretation of democracy and their legitimate authority.
IMF head Christine Lagarde said the bailout deal agreed was "a comprehensive and credible plan" to help restore trust in the banking system. Cypriot Finance Minister Michalis Sarris said he believed the possibility of bankruptcy had been averted. Christine Lagarde is of course desperately trying to shore up confidence in the Euro, whilst the Cypriot Government have found a scapegoat in their banks; an easy and popluar target to divert the blame to.
Cypriot officials meanwhile have warned the island faces a deep recession with many businesses to shut. The mood of Cypriots seems to be relief that whilst this is bad, things could have been much worse.
By Neil Patrick
I've just watched the President of Cyprus announce that a deal has reached with the ECB to bail out Cyprus. Eurozone finance ministers have agreed a 10bn-euro bailout deal for Cyprus to prevent its banking system collapsing and keep the country in the eurozone.
Since the final shape of this deal has been under discussion for a over a week now, the terms are somewhat different to how they were mooted when I reported below. But the ethical fundamentals are unchanged. The Cyprus government with the ECB holding a gun to its' head, is now robbing its' banks and citizens directly. They have attempted to avoid inciting the mass of the electorate by applying a cap, so that only those with significant sums on deposit pay for the politicians' errors...the people who are the least unlikely to incite civil unrest in other words...
But think about it - £85,000 isn't a fortune. Plenty of people who have worked hard all their lives and paid their taxes are about to be robbed by their government to pay for the government's errors. It's more than a disgrace, it's a terrifying portent of what we can expect to see repeated again and again in the coming months and years.
I don't see this as a rescue. I see it as a small scale test of a new and very troubling development in the evolution of 'democratic' governments' interpretation of democracy and their legitimate authority.
IMF head Christine Lagarde said the bailout deal agreed was "a comprehensive and credible plan" to help restore trust in the banking system. Cypriot Finance Minister Michalis Sarris said he believed the possibility of bankruptcy had been averted. Christine Lagarde is of course desperately trying to shore up confidence in the Euro, whilst the Cypriot Government have found a scapegoat in their banks; an easy and popluar target to divert the blame to.
Cypriot officials meanwhile have warned the island faces a deep recession with many businesses to shut. The mood of Cypriots seems to be relief that whilst this is bad, things could have been much worse.
Give it time...
Meanwhile the content of Stefan Molyneux's video below seems even more relevant and justified now. So if you've not seen it have a look now with the luxury of hindsight...
Meanwhile the content of Stefan Molyneux's video below seems even more relevant and justified now. So if you've not seen it have a look now with the luxury of hindsight...
Once again, my intention to post about the jobs crisis has
been overtaken by news that is so astonishing that I had to report on it
immediately. I have long believed that the populations of western democracies
live under the illusion of freedom. But this isn’t a philosophy blog, so I’ll
not expand that idea here and now.
Something has happened now though that is yet more evidence
of this idea as reality. And it’s a profound and shocking example of what we
can expect to see more of in Europe as the Eurozone farce unravels. Rather than
inflating the currency, which was the pre-EU strategy, the Cypriot government
has decided to adopt a more obvious form of theft by taking money directly from
its citizens’ bank accounts.
A €10 billion EU bailout required a 9.9% tax on anyone with deposits greater than €100,000, and 6.75% on those less than €100,000. Savers who lost money would be compensated by shares in commercial banks, with equity returns guaranteed by future revenues expected from natural gas discoveries.
The president was elected weeks ago partly because he ruled out any kind of wealth tax. According to one report, the IMF and EU were originally demanding a 40% wealth tax on bank account holders in Cyprus.
What is so wrong with Cyprus? Unemployment is half that of Greece and Spain and debt to GDP is 87%. The US has a debt to GDP of well over 100%.This is economic imperialism, a fundamental breach of property rights, dictated to a small country by foreign powers.
The European Central Bank has no money, it's exchanging paper for assets.
Cypriot banks got into trouble after losing €4.5 billion on their Greek government bond holdings after Euro zone leaders decided to write down Greece's debt last year. The Cypriot president said if he hadn't accepted the tax on bank deposits, the European Central Bank would have stopped providing emergency funds to the country's top two lenders which would have led to the collapse of the banking system, the bankruptcy of thousands of small businesses, massive job losses, and ultimately the country's exit from the Euro.
You may well have caught some of this news in the mainstream
media, but as usual, I went looking for a deeper analysis and I am pleased to
share here Stefan Molyneux’s excellent evaluation and commentary.
Stefan Molyneux is the host of Freedomain Radio, the largest
and most popular philosophy show on the web - http://www.freedomainradio.com
No comments:
Post a Comment