CYPRUS, MOSCOW CAPITULATE, AFTER EURO ULTIMATUM, PLUTOCRATS KAPUT!
Good stuff, that Cyprus accord. I got accused of being a German Nazi, or something like that. Beats a good cup of coffee, anytime. Beware indeed of Franco-Germans bearing a ten billion euro gift to the destitute pirates. A new way of doing away with dogs has been identified: drowning them with euros.
By giving an ultimatum to Cyprus, France and Germany forced Cypriots to reach a higher level of awareness. Namely that moral failure does not pay. Plutocrats are going to have to regurgitate up to 40%, of their ill gotten gains.
[French finance minister Pierre Moscovici on the left, plotting world conquest with his wheelchair bound German colleague Wolfgang Schäuble, and IMF's Christine Lagarde.]
Dixit Wolfgang Schäuble about acerbic critiques of Deutschland: “C’est toujours comme cela, c’est comme dans une classe (à l’école), quand on a parfois de meilleurs résultats, ceux qui ont un peu plus de difficultés sont un peu jaloux” (Translation: laggards are devoured by jealousy).
I used to be highly critical of past “rescue” packages, starting with the Bush-Paulson-Geitner-Pelosi circus of 2008, because modest People, most of the population, the 99.9%, who had nothing to do with the crimes, were punished, instead of the real culprits, who made sure, through their manipulation of the media they own, that they would profit again handesomely. It was joining insult to injury. Squared. But this Cyprus deal is completely different. Indeed, it’s the exact opposite. It’s bringing Milton Friedman, the deregulation beast, and Pluto to kneel.
What is the Cyprus deal? Well the details are far from being worked out said French finance minister Moscovici. The broad lines are known:
1) the European Central Bank has agreed to fork enough money (“liquidity”) so that banks can reopen in Cyprus, after being closed for nearly two weeks. On top of that the Eurozone, with help from IMF, will fork out ten billion euros through the European Stability Mechanism. (But not to recapitalize Laiki and Bank of Cyprus.)
2) Laiki Bank, the country’s second largest, will be dismantled (broken in two first). That should bring more than a billion euros. It’s the first time since the 2008 financial crisis that a deposit bank is purely destroyed. Accounts above 100,000 euros may mostly disappear. Oopss.
3) deposits below 100,000 euros will be removed from Laiki and transferred to other banks. That’s 30 billion euros (more than $40 billion).
4) deposits of Russian mobsters and other malevolent plutocrats above 100,000 euros will be heavily taxed at Bank of Cyprus. Tax rate: 30% to 40%. That should bring 4,2 billion euros.
This way Cyprus will bring in 7 billion euros to add to the ten billion that the German, French, and Peoples of another 15 Eurozone nations, with the IMF, in their magnanimity, consent to send over to the
greedy needy Cypriots. Greedy because they enjoyed for years 5 to 9% on their savings accounts, while everybody else was copiously stolen by their governments with below inflation returns. Needy because, like the proverbial cigale who danced all summer, they are now 17 billions short.
No more laundering, tax on corporations will go from 10% to 12.5% (same as Eire). Transaction and capital control will be set in place to prevent capital flight, maybe for months.
Olli Rehn, the economy commissar in Brussels promised Cypriots a “very difficult proximal future”.
There is the lesson the plutocratic sycophants or those paid by the Czar in Moscow want you to draw. Then there is reality.
Reality is that, since the 2008 financial crash, the plutocrats and their sycophants have made it so that, we the People, made the banksters, mobsters and plutocrats, rich again, using taxes, debt, and the general thievery of extravagantly low interest rates.
There was a serious ethical problem with this:
Those who caused the crisis did not get punished, and thus the perverse system of individuals, tribes, thoughts and emotions they belong to, stay unpunished, as if they were perfect. Not just that, but they profited from it. Thus the criminals were even encouraged, and criminality lauded. Obama, a president of the USA, no less, sang the praises of his “friend” Buffet (who will make zillions from Obamacare) and his “friend” Jamie Dimon (one of the main operators of the 2008 financial mass criminality).
Notice that this rescue of the billionaires was a total violation of free market theory: free market theory says that losers get eaten alive, and that’s very good. So why did the losers at, say, Lehman Brothers, got to keep their billions?
Well, the billionaires are not rescued in Cyprus, they are going to get taxed 40%.
Why did the government give more than 50 billion dollars to Goldman Sachs, when it was down and out? Some (who made lots of money out of Goldman-Sachs, such as Warren Buffet,) will say that the business was viable. No. Free market says that business was dead, and should have been eaten.
A business such as G-S was made viable, because, not only did the government give more than 50 billion to G-S, but then made it so that G-S business would be viable, by keeping on with the derivative machinery, huge money gifts (“Quantitative Easing”) and other plots.
And what of jobs for the People? And what of a sustainable economy? And what of saving the planet? Were not these things more important than rescuing criminals from the very instruments they set up to exploit We the People?
Look at Eire (Ireland): private banks failed, the government stepped in, replaced all the lost money, while taking giant debts. Basically the pain and suffering got displaced from plutocrats, very rich people, shareholders, wealthy creditors, to most of society which could afford it the less, and all the less as the criminals had already sent their jobs, and most capital, overseas.
The same phenomenon is on-going in Spain. In Spain giant banks, which were in conspiracy with all sorts of well fed plutocrats are now failing. The Spanish government has stepped in to rescue those worthies, with the money of the poor, putting Spain in a terrible “sovereign” crisis. Why? Well, look at the symbols. The young son in law of the Spanish king, that is a good looking, if brainless, basket ball player, and suspected criminal, owns a ten million euros mansion in Barcelona.
Plutos and their sycophants expect that the Spanish “sovereign”, that is the Spanish People, will come to the rescue, some more, backed up by European taxpayers, those suckers in France and Germany.
However, there is now a socialist government in total control of France, and, differently from the plutophile abuser of the elderly, Sarkozy his name, they can’t justify to tax the French citizenry to save the king of Spain and his hyper wealthy son in law, a vulgar basketball player. That logic convinced Merkel and Schäuble.
Indeed there is another way If You Want To Save The World, Default. This is the strategy adopted in Cyprus. It should be adopted all over. When the hyper rich and their servants get demolished by their own instruments, step aside, and let them be devoured by their own monstrosities, so they can explore the horror of their deviant souls.
Don’t expect Krugman to draw the same lesson. Would that kill his business, influence, career model? Would nobody want to share caviar toast with him in Manhattan? Far from him those terrible thoughts! Instead all he got is that:
…a crisis of confidence that would collapse a country’s banks… Cyprus is there: closed banks, capital controls. In an important sense it’s already off the euro;
[link of Krugman to a completely stupid article by a presumably respected USA economist explaining why a "Cypriot euro" is worth less than a "French euro", meaning those American economists understand nothing important]
Here is dear Paul, pursuing with this anti-European illogic: [Cyprus]… it has an inconvertible currency, the Cypriot euro, that just happens to be pegged to the other euro at a parity of 1. Why, exactly, should this parity be sacrosanct?
… Cyprus is now very overvalued — not only have the big capital inflows of yore dried up, a major export industry — offshore banking — has just died.
OK, there are still some considerations: access to ECB lending, possibly anti-inflation credibility, and general relations with the European Union. But Cyprus is now almost surely facing the prospect, not of recession, but of deep depression. Is this worth it?
Of course, it’s worth it. First look at the ten billions. Ten billion euros for one million people, that’s a lot of money. in absolute numbers, that’s more than four times the financial support of the USA for Israel (and that’s for 8 million people, not just one million).
More fundamentally, think. OK, thinking is hard. The Obama administration just announced anti-ballistic missiles missiles would be boosted by 50% in California, consecutive to Mr. Kim the terrorizing plutocrat in North Korea, who threatened repeatedly to make a pre-emptive nuclear strike on the USA.
No less. That, per se, should be viewed as a war crime, by the way: threat of mass murder, mass terrorism from a government, certainly falls under the Geneva Convention! Time to crack down on those venomous critters. The simple fact that they are so loudly Hitler-like is world-destabilizing.
Thus American economists, learn this, if you can. There are considerations more important than the economic ones. You can’t have an economy, if you don’t have a territory. France and Britain guarantee Cyprus’ security (to keep all Turks unwilling to think the unthinkable invasion of the 60% of the island they did not invade yet).
The military aspect is the fundamental reason why Cyprus is in the European Union. Being in the EU does not just protect Cyprus. It could come in handy in case of all out conflict in the region: the French Air Force could use Cyprus, as it did Crete and Sicily against Libya. Clearly some in France are itching to unleash Rafales against the Syrian Air Force, once Al Qaeda has been annihilated in Mali, and an international force can be fully installed to keep the peace. (And then, of course, there is the little question of Israel, which does not have a single friend in the region… but for Cyprus, with whom it shares an offshore gas field.)
And what of the Czar in all this? Did he recover from his bout of rage, when he found out that his laundry gig in Cyprus was up? Putin and Medvedev were told something in no uncertain terms, because they suddenly fell silent about Cyprus. While they were brought to heel, strangely, Boris Berezovsky, a billionaire, an authentic plutocrat who brought Putin to power (he said through secret, illegal financing), before they got bitterly estranged, was found mysteriously hanged in London. Knowing that some of Putin’s advisers pretend to be proud to be no smarter than bragging street thugs, and that rage operates in futile ways, this is eerie.
Morality is not just about the purity of heavens. In the fullness of time, morality is also about sheer survival, it’s a very basic notion. The economy has to reflect the most basic notions. Good to see Cyprus eventually turned away from the Dark Side. A democratic economy always beats a gangsta economy.