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View Diary: Bank Run in Cyprus, Will it Spread to Southern Europe? (322 comments)

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    •  It is, as usual (65+ / 0-)

      the wealthy and powerful thinking only about themselves. Most of the wealthy people I've known couldn't think their way out of a wet paper sack containing a Swiss army knife. Wealth and intelligence are not correlative and, possibly, the fear of losing wealth is as antagonistic to clear thinking as it appears to be to moral thinking.

    •  It's Blowing Minds This Morning (75+ / 0-)

      In the U.S. financial press. Maybe it won't happen exactly the way it was plotted. The idea that foreign bankers can loot your savings account to pay for the debts of a third party is an an outrage.

      "I'll believe that corporations are people when I see Rick Perry execute one."

      by bink on Sun Mar 17, 2013 at 05:50:36 AM PDT

      [ Parent ]

      •  Does anyone know who authored this plan? (6+ / 0-)

        Oregon: Sure...it's cold. But it's a damp cold.

        by Keith930 on Sun Mar 17, 2013 at 06:21:42 AM PDT

        [ Parent ]

      •  Better start getting used to it. n/t (6+ / 0-)

        Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

        by corvo on Sun Mar 17, 2013 at 06:32:07 AM PDT

        [ Parent ]

        •  It's what the markets want, explicitly: (17+ / 0-)

          (from the NYT, 2 weeks ago)

          With $85 billion in automatic cuts taking effect between now and Sept. 30 as part of the so-called federal budget sequestration, some experts warn that economic growth will be reduced by at least half a percentage point. But although experts estimate that sequestration could cost the country about 700,000 jobs, Wall Street does not expect the cuts to substantially reduce corporate profits — or seriously threaten the recent rally in the stock markets.

          “It’s minimal,” said Savita Subramanian, head of United States equity and quantitative strategy at Bank of America Merrill Lynch. Over all, the sequester could reduce earnings at the biggest companies by just over 1 percent, she said, adding, “the market wants more austerity.”

          It's become a cliche to say "You can't make this shit up," but, really, you can't make this shit up. If you wanted to create financial bad guys for a mega-crime novel, you couldn't do any better than reality.

          "Well, yeah, the Constitution is worth it if you succeed." - Nancy Pelosi // Question: "succeed" at what?

          by nailbender on Sun Mar 17, 2013 at 12:06:04 PM PDT

          [ Parent ]

      •  Eventually this will lead to a global revolt (53+ / 0-)

        against the Too-Big-To-Fail banks.
           Their own greed and theft will cause it.

        The question is how much of our wealth will be stolen before that happens?

        ¡Cállate o despertarás la izquierda! - protest sign in Spain

        by gjohnsit on Sun Mar 17, 2013 at 07:05:05 AM PDT

        [ Parent ]

        •  I think you are correct. Going after personal (17+ / 0-)

          checking/savings account could be the very wake up call needed to break this open and get the banks/financial institutions under control.

        •  According to many here (18+ / 0-)

          A revolt would be akin to committing suicide. That's why the authorities would feel justified in declaring martial law or a bank holiday at the very minimum.

          I really have a hard time with attorneys who argue that the TBTFs should be given a get out of jail free card. But I saw it here in response to my posts. Once we have  attorneys suggest that bypassing the rule of law for financial and political expediency is something that should be done, we have crossed the invisible line that separates us from a third world banana republic. (no Insults to Bananas intended) .

          Said simply: "We believe in a Two tiered system of Justice". Although they will dress it up in other languages.

          Once we have gone that far, then revolt isn't far away once the Govt arbitrarily and capriciously confiscates people's savings to bail out senior bondholders .

          Why should any bank be trusted after this in any country? The excuse they used was beyond belief. We are going after Russian Mob Money as they take 6.9% out of small accounts too. When does it stop and where?

          Once precedent is established , the reaction will be closely monitored. If the reaction falls within acceptable parameters, we can count on this being used everywhere there are banks in troubles. Imagine the BHCs who have brokerage and wealth management accounts. Confiscation could mean 100s of billions here all under the auspices of it being done by private institutions. You know, the same ones many of us here continue to push to have prosecuted.

          “ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

          by Dburn on Sun Mar 17, 2013 at 10:34:32 AM PDT

          [ Parent ]

          •  The "Russian mob money" rationale (9+ / 0-)

            is pathetic. Bad enough to rob people of their savings, but to come up with an excuse like that is adding insult to injury.

          •  I'm with Holder on this. (6+ / 0-)

            The way things are set up, if we attack the banks, we attack the parasite that has insinuated itself into our economy to the point that attacking the parasite is tantamount to suicide. He didn't say that. I did.

            We are shooting at (or holding our fire from) an enemy in a hall of mirrors.

            Seems to be that government is collapsing and that the free market nuts are on their way to a total victory: chaos, no rules, no accountability, a world-wide bizarre full of cheaters, looters and murderers.

            A world-wide crime family.

            If you hate government, don't run for office in that government.

            by Bensdad on Sun Mar 17, 2013 at 12:23:44 PM PDT

            [ Parent ]

          •  Rec x 1000 (4+ / 0-)
            Recommended by:
            northsylvania, RWood, Joieau, Dburn
            I really have a hard time with attorneys who argue that the TBTFs should be given a get out of jail free card. But I saw it here in response to my posts. Once we have  attorneys suggest that bypassing the rule of law for financial and political expediency is something that should be done, we have crossed the invisible line that separates us from a third world banana republic. (no Insults to Bananas intended) .
            Attorneys will represent all parties in this upcoming dispute, and so will benefit no matter what.

            The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

            by ozsea1 on Sun Mar 17, 2013 at 12:31:14 PM PDT

            [ Parent ]

          •  This is why their trial balloon (4+ / 0-)
            Recommended by:
            Dburn, nchristine, jayden, Cliss

            is a nation with just a fraction more than 1.11 million citizens. And probably less than a small handful of Russian and Ukrainian mobsters among them. Taking 6.9% of the average Cypriot's banked wealth isn't going to cure what ails the system, but it is going to be a microcosm of what would happen if the ECB does this across the board. Or just to the southern states.

            IOW, if the population of Cyprus stages a revolt because of this and installs a new government that doesn't recognize membership in the EU and de-couples from the ECB, it's no big loss to the EU and isn't likely to spread like Arab Spring did. Do not overlook the fact that the countries which have undergone popular revolutions were all part of the EU's Euro-Mediterranean Partnership (a.k.a. the Barcelona Process).

            •  I agree, this is as close to an economic lab (3+ / 0-)
              Recommended by:
              Joieau, nchristine, Cliss

              experiment we are going to get. First try it on a small relatively developed country and see what happens. If the bloodletting can be contained then move it on up to a larger country. Do it enough and pretty soon it's policy.

              Don't have the reserve currency to print your way out of trouble, then by God they'll just confiscate your wealth because those German Bondholders have to be protected.

              It doesn't matter that depositors come first in the line of a banks creditors. They cannot and will not force a haircut off the trillions owned by the wealthy if they are enough poor people's asses they can pull it out of.
               

              “ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

              by Dburn on Sun Mar 17, 2013 at 04:13:51 PM PDT

              [ Parent ]

              •  Exactly right. This is just (3+ / 0-)
                Recommended by:
                nchristine, Dburn, Cliss

                Europe's version of the Great Generational Cash-Out that's been going on over here since the turn of the millennium. Only here they've so far limited their takings to real property holdings. Which they can do because in the US home ownership was/is the primary asset of average people, rather than large savings accounts in banks. Other than pensions and 401Ks and such, which have been dinged to death since the fall of 2008. They don't call it a "savings levy" here. They call it raiding the retirement savings of entire generations. Lord knows we're quite used to that.

                Somehow I don't think Europe is going to take it lying down like we have. At least, I hope not.

              •  It is important to remember (5+ / 0-)

                that to the infinitely wealthy Masters of the Universe [MoU's], money is just a tool to be used for specific purposes. In a fiat system like our Fed and the European Central Bank, vast amounts of 'money' - the medium of exchange - can be made to disappear practically overnight [liquidated] and those MoU's will never miss it. It's just entries on a balance sheet by that point.

                There's no real shortage of money and there never will be. It's just tokens (print as many as you like!) being moved around and/or made to disappear into the socio-political equivalent of a black hole, for the purpose of extracting that which is and has always been the only real wealth in this world - property and labor. To whatever end the MoUs have in mind when they engineer such things as mass global impoverishment [a.k.a. worldwide depression].

                IOW, there are indeed reasons why a money supply waxes and wanes, having nothing whatsoever to do with money itself (which is worthless). Those reasons seldom have anything to do with the average person's meager provision for life and death on planet earth, apart from the ability of the MoU's to cash out and start the whole indentured servitude/mass enslavement game over again every generation or two or three.

            •  The biggest money laundering country in the (3+ / 0-)
              Recommended by:
              Joieau, Dburn, Cliss

              eurozone is Luxemborg, and the former PM of Luxemborg until recently ran the eurozone (Juncker). AND, while he was heading it, Lux. and Austria (the two countries other than Cyprus with secretive banking ala Switzerland) both rejected a bill for bank trasnparency.

              There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

              by upstate NY on Sun Mar 17, 2013 at 04:18:41 PM PDT

              [ Parent ]

              •  Yeah but (1+ / 0-)
                Recommended by:
                Cliss

                Luxemborg and Austria haven't yet had to be bailed out by the ECB, and Cyprus has. These countries are part of the core EU operatives. They are not debtor nations on the unstable fringe.

                •  That's not the point. The point is that this (3+ / 0-)
                  Recommended by:
                  Dburn, Joieau, Cliss

                  is an attack on Cyprus's poorer people BECAUSE their banks take part in the same banking practices that are also in the core. None of the other bailout countries were forced to do this.

                  There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

                  by upstate NY on Sun Mar 17, 2013 at 06:57:02 PM PDT

                  [ Parent ]

                  •  As others have stated, Cyprus is a 'small' country (4+ / 0-)
                    Recommended by:
                    Dburn, Joieau, upstate NY, Cliss

                    and is in the 'hinterlands' of 'society'.  This is a trial balloon.  If the big banks get away with this confiscation, they WILL make this part of the future agreements with other countries.  The big banks have reached the point where they are not going to just take the word of the country gov't that that country will 'grow' out of its economic problems.  The banks are going to want a pound of flesh before giving out an ounce of loan, in addition to the interest on the loans.  I'm reading it as something similar to the mortgage insurance payments that banks require on mortgages that have less than a 20% down payment.

                  •  The other bailout countries (1+ / 0-)
                    Recommended by:
                    Cliss

                    apparently don't operate as offshore laundry facilities for dirty money from the Russian and Ukrainian mafias. Its banks also hold the liquid life savings and income for expats from Britain and elsewhere. And the savings of the slightly over 1 million citizens of the country.

                    I haven't figured out what Cyprus did to get itself into enough debt to Germany to NEED a bailout from the ECB. I mean, the banks have plenty of money. Which is why the ECB has ordered the Cypriot government to seize money out of the people's accounts. If there were no money in the banks and the wealthy citizens had moved theirs to more traditional hiding places (like Switzerland, which you may note is NOT part of the EU/ECB system), then the ECB would simply have ordered austerity imposed on the population just as they did for Greece and Ireland and Spain.

                    At any rate, Cyprus can't be that much in debt. It's holding multi-billions in ill-gotten gains for two of the biggest criminal organizations on the continent. Dirty laundry, so to speak, which should be well more subject to seizure than the savings of the average Cypriot family. The fact that the ECB is aiming at the average family's savings and not at the mobs highlights the trial balloon nature of this move. I guess we'll see how it all works out when the decisions are made.

                    Meanwhile, I'd be moving my money (if I had any) outside the EU/ECB system entirely, right now. I expect there are lots of people all over the EU who are doing that very thing.

                    •  Do you know about Luxembourg (1+ / 0-)
                      Recommended by:
                      Joieau

                      and Austria? How are they different? Both those countries recently killed an EU law for bank transparency. These are regular practices all over Europe.

                      Look at the Luxembourg banking sizes compared to the size of the country.

                      Cyprus is a surplus nation in Europe--it sends more money to the EU than it takes. It is not in great debt. It's problem is that the banks were forced to take 50% haircuts on heavy loans to the banks in the European periphery, and Cyprus, to prevent collapse of these banks, guaranteed their assets. Ie. same story as Spain and Ireland. Countries with low debt and low debt to GDP that were done in by their banks.

                      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

                      by upstate NY on Mon Mar 18, 2013 at 06:52:25 AM PDT

                      [ Parent ]

                      •  So... because Cyprus banks (1+ / 0-)
                        Recommended by:
                        upstate NY

                        are doing so well with all that dirty mob money and the life savings of expats and Cypriots, they're being dinged to cover bailouts to other countries in worse shape?

                        And if so, when can we expect German citizens to have 7-10% of their bank accounts confiscated to cover those bailouts? How about the rest of relatively 'rich' northern Europe?

                        •  I might have misstated something. (0+ / 0-)

                          The bailout is about the gov'ts guarantees to the banks, which sunk gov't finances. In other words, this is like Ireland. Cyprus USED TO BE a surplus country. Until the banking crisis.

                          Spain and Ireland are similar in that they too had low dent to GDP. Spain even had a surplus as well.

                          The bailout covers Cyprus's own bailout of its banks.

                          The irony here is that the Cypriot banks have no senior paper. They simply aren't leveraged that way. They have 100% deposits for all loans that are out, and they don't sell much in bonds. They are clearly simply taking a small % of the outsized deposits, half of them from Russians.

                          All I'm pointing out is that these banks are like the banks in Luxemborg. In that country, which is at the heart of the EU in more ways than one, people make an incredibly high average wage largely because the banks serve as recycling mechanisms for money looking to find a secret home.

                          But the incentive here will also be to have wealthy people looking to deposit funds in core banks.

                          There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

                          by upstate NY on Tue Mar 19, 2013 at 07:18:44 AM PDT

                          [ Parent ]

        •  They will take as much as they can, gjohnsit... (7+ / 0-)

          ...and mark my words...this will galvanize angry people at all points of the ideological spectrum. Once this hits the atmosphere after the weekend, you'll see the outrage across the globe.

          Adequate health care should be a LEGAL RIGHT in the U.S without begging or bankruptcy. Until it is, we should not dare call our society civilized.

          by Love Me Slender on Sun Mar 17, 2013 at 11:10:39 AM PDT

          [ Parent ]

        •  time to channel Teddy Roosevelt and break them up (5+ / 0-)

          TBTF = candidate for fission.

          Happy little moron, Lucky little man.
          I wish I was a moron, MY GOD, Perhaps I am!
          —Spike Milligan

          by polecat on Sun Mar 17, 2013 at 01:56:52 PM PDT

          [ Parent ]

        •  And what happens (1+ / 0-)
          Recommended by:
          Cliss

          after the revolts are quickly and brutally suppressed.

          Ever get the feeling you've been cheated?

          by ActivistGuy on Sun Mar 17, 2013 at 05:57:57 PM PDT

          [ Parent ]

          •  Will they be? (0+ / 0-)

            You could have said the same thing about Arab Spring and you would have been wrong.

             A European Spring is probably right around the corner.

            ¡Cállate o despertarás la izquierda! - protest sign in Spain

            by gjohnsit on Sun Mar 17, 2013 at 06:06:24 PM PDT

            [ Parent ]

      •  Here's hoping (4+ / 0-)

        that the Europeans do to the bankers what they did to Mussolini!

        +++ The law is a weapon used to bludgeon us peasants into submission. It is not to be applied to the monied elite.

        by cybersaur on Sun Mar 17, 2013 at 07:43:05 AM PDT

        [ Parent ]

        •  Careful on that (0+ / 0-)

          Mussolini established the fascist state and was praised by businessmen and politicians worldwide for his and his party's hard line on providing any consideration for the workers, for the poor. But sufficient numbers of Italians accepted their leader -- for more than a decade, in a "legalized" dictatorship. Even though the trains didn't run on time, either. Only when Italy had been invaded by the Allies and was in ruins was Il Duce hung.
          Reagan's Reagan, by my simple view.
          We are in the time of the third coming of Reagan, and there are sufficient numbers to support him, too.

      •  You have to contextualize this in German politics (13+ / 0-)

        The basic facts are something like:

        (a) Germany has had its right-wing government in power the entire economic cycle, and, among other things, German workers have over-performed Danish, Swedish, Swiss, Austrians, etc and under-performed (by a large margin) in wage growth.

        (b) This was an intentional policy to boost exports and savings, with a lot of the resulting cash put into paper from other EZ countries.  Needless to say, people are unhappy with how it went.

        (c) Merkel's coalition has lost basically every local election, quite badly, in the past 1.5 years, and she has another one coming up.

        So, basically, much like GWB with the Iraq War, the current government's whole stack is in the middle of the table on austerity.  Merkel has been talking big about how the bailouts are over, etc.  (e.g., her "Es ist Zeit for ein bisschen Strenge" statement) for a while, and to not put a bit of stick about would not play well with her base.

        •  Something Key Is Missing Here (8+ / 0-)

          And that is a transfer mechanism from Germany to other Euro countries to equalize the trade imbalance within the currency. Without that, Germany just becomes the "sink of wealth" for Europe.

          "I'll believe that corporations are people when I see Rick Perry execute one."

          by bink on Sun Mar 17, 2013 at 08:38:19 AM PDT

          [ Parent ]

          •  The EZ is a kind of uncanny valley (7+ / 0-)

            Which is integrated enough to get into this situation and not integrated enough to get out of it.  If the banking system actually had a single regulator/backstop and labor markets and budgeting processes were truly as free as the capital markets, a unified response would have been easier.

            The present approach isn't working that well, though.  (And, honestly, it is hard to say that the Northern countries that aren't in aren't doing better over the same period.)

          •  Wealth Transfer (8+ / 0-)

            don't forget that germany is footing a very big chunk of the Bill for the EU and a lot of people think that is more then enough

            and if you then have governments who say yes - and turn around and do the complete opposite thing - people tend to do not like that

            The real wages in germany are kind of stagnant since close to 20 years now - in complete opposition to what happened in southern Europe before the crisis and yes people do not forget that as well

            In the end the dangerous thing is that it can build a anti-german mood in Europe and I think that is very wrong because again the people are hold responsible for the government and unfortunately that is also nothing new in Europe

            We really need a new government in Germany in the elections this fall - unfortunately we have even less credible options then you in the US and  that really hurts.

            Merkel should not be in a position to win any election but I'm afraid she will pull it off in september - because the opposition is so weak - and the greatest boulevard newspaper is I think in her corner.

            And as long as they can harp on the people in southern Europe they will have a jolly good time :(

            "How many years since you found yourself staring at an endless sky? " VNV Nation - Endless Skies

            by Kavalor on Sun Mar 17, 2013 at 09:34:39 AM PDT

            [ Parent ]

            •  A Lot of People Think (2+ / 0-)
              Recommended by:
              northsylvania, Just Bob

              Germany may believe that it is footing a enough of the EU bill, but it's not. It's trade imbalance with other EU nations far exceeds the amount that it is sending back in terms of EU payments. It's not enough.

              If Germans fear anti-German sentiment, they should change their government from one that is predatory to one that believes in stable cooperation with other European states.

              "I'll believe that corporations are people when I see Rick Perry execute one."

              by bink on Sun Mar 17, 2013 at 12:20:50 PM PDT

              [ Parent ]

              •  Why not just eliminate the Euro? (3+ / 0-)
                Recommended by:
                mmacdDE, isabelle hayes, Joieau

                I'm surprised that so many Kossacks who would otherwise condemn such an anti-democratic institution known as the EuroZone, continue to support it.

                This is the mentality of the Eurozone architects in Brussels.

                We don't care what the people think.  Germans and Italians who oppose the Euro are too ignorant to know what's good for them.  
                Many similarities between the GOP and the architects of the Eurozone in Brussels.

                Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

                by PatriciaVa on Sun Mar 17, 2013 at 12:59:53 PM PDT

                [ Parent ]

                •  Euro (5+ / 0-)

                  the Problem with the Euro is not its existence itsthe democratic control behind it. And the taxation/socoalsystems.
                  I personally live outside of germany (first in Ireland, now in czech republic which does not have the Euro)

                  On a personal level I find it very convenient to pay with the same money in most of Europe without having to think about exchange rates and such.

                  Before the Euro - and IIRC that were just the 12 original states - someone calculated that if you  travel around with 100 DM and visit every country without spending it - just exchange into the local currency - you had less then half of it left when your back home. And this is just fees.  Also in an so tightly woven economy if you need accounting in more then one currency - just imagine you live in california and need to pay with a different currency in New York and with another currency in Texas and in lots of states in between.  As a businesss you need to keep track of exchange rates and such if you want to do business outside of california.
                  That is actually what the purpose of the Eure ideally should be . The problem is that the states still have the last word on everything - f.e ragrading taxation . Just imagin ethat thefederal government would like to raise the income tax and Alabama could say no - just because.
                  The ECB is basically modelled after the Fed - as politically independent. But with the head of the ECB part of the political games thats not worth much .

                  I'm a big fan of the european thought and i like the states to come together even more - with all the different cultures and different religions. But weneed democratic control and as long as that does not happen and the national government s take all the credit and shift all the blame to the european level you do not need to wonder why more and more people have negative thoughts about the EU.

                  "How many years since you found yourself staring at an endless sky? " VNV Nation - Endless Skies

                  by Kavalor on Sun Mar 17, 2013 at 02:24:45 PM PDT

                  [ Parent ]

                •  Because it is a huge win (1+ / 0-)
                  Recommended by:
                  Jeffersonian Democrat

                  Integration has a lot of upsides that people aren't excited to throw away.  The costs of blowing up every contract, the liberalized labor markets, etc. would be large.  Putting in a more unified budgeting and borrowing system seems more likely.

              •  change of government (4+ / 0-)

                its so easy to change a government if you have 2 major parties who are basically following the same principles of economic policys if they ar ein power . One slightly more radical - but as did the US under Clinton it were the social democrats who introduced welfare reform in Germany in the early parts of the last decade - to prove that they are sufficiently market liberal .

                The workers paid for it.

                And with the tax policies which for example Ireland pursued (and I lived there for 5 years) . Pretty much every major project in the country was financed by the EU - and at the same time the government kept the taxes low to lure companies into the country.  

                And regarding the budget - Germany pays more then 20% of the EU Budget - a big net contribution every year.

                http://en.wikipedia.org/...

                How much do you think would be enough . Our people just want to work and we do this quite efficient . Our industy profits  a lot from the EU - I know that . But it is not the peoples fault that we lived austerity for 20 years on a certain level (and still have no balanced budget)  . And no most people would be fine if the money was spent to effect. But the money is wasted (especially in cartain parts of Southern Europe) and the country who pays a lot of the bills gets blamed for every single negative thing which happens - and all positive effect are caused by  the local polititians . And that is a dangerous game .  
                In the US parts of the county also finances the south - and is repaid by laxer labour laws and lower taxes because certain states don't need to pay all their bills themselves but the tab is picked up by the federal government.
                In the EU its pretty much the same - with the major difference that it is a lot of different cultures with lot of different languages and not that far removed form a certainly violent history. And everybody who does not take that into consideration plays with fire.

                If I follow your argument I would need to conclude that every american is responsible for the wars in Afghanistan and Iraq because you elected GWB . Not sure you like that either.

                "How many years since you found yourself staring at an endless sky? " VNV Nation - Endless Skies

                by Kavalor on Sun Mar 17, 2013 at 01:19:14 PM PDT

                [ Parent ]

              •  You are a little confused (4+ / 0-)

                Kavalor is trying to explain what is really true: the average German on the street has been played for a sucker.  Despite the high productivity, wages are a lot lower than in peer countries and the austerians have convinced ordinary people to accept this and also a high savings rate that got pumped into paper from the other EZ countries and, incidentally, shitty US mortgages.

                So, basically, Merkel (or the other parties to some extent, except maybe the Pirates) really can't come out and just announce this.  If she wants to win reelection against a weak opponent, either the paper will perform or she'll put a beatdown on the working class in the South, just to keep the base happy and in line.  (It is not that different than American pols and high house prices or wars.)

                This is, clearly, not a practical solution, but, honestly Germany's major parties are a little short on leadership of the type that will take Europe to the next step.  Merkel, in particular, is a kind of weak player who starts with big talk and then eventually gets backed down into the situation that was supposedly was "impossible".  Cyprus is, however, too weak to do much.  So here we go.

                The problem with a lot of the comments is that they are ignoring the path-dependent politics in the EZ.  Different governments, with different commitments, would probably do something different.  But they aren't.

                (A running joke is members of her party being forced to resign because of bogus PhD theses, after Merkel backs them and expresses confidence.  To me, this is basically a decent summary of her skills.)

            •  absolutely (1+ / 0-)
              Recommended by:
              theran

              because Spitzkandidate "the chancellor deserves a bigger paycheck" Steinbrück (SPD) is just the neo-liberal to carry this shit even further

              what happened with the SPD is a variation of what happened with DLC US Democrats

              Don't be a dick, be a Democrat! Oppose CPI cuts! Support Social Security and Veteran Benefits!

              by Jeffersonian Democrat on Mon Mar 18, 2013 at 04:19:34 AM PDT

              [ Parent ]

          •  Why should Germans transfer wealth? (1+ / 0-)
            Recommended by:
            DeeDee001

            Isn't Germany a sovereign country?

            Moreover, 41% of Germans own their own homes.

            82% of Italians do.

            Bink, you want Germany to transfer resources to the South.

            Should Italians transfer their housing stock directly to middle-class Germans?

            I have a better idea.

            Why not have each country revert to their legacy currency?

            Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

            by PatriciaVa on Sun Mar 17, 2013 at 12:55:21 PM PDT

            [ Parent ]

            •  Properties (6+ / 0-)

              Patricia , yes in germany not that many people own homes . My parents never did and I don't as well . And tbh its pretty dangerous to do it .
              There is difference in the laws for example.

              In the US if you cannot pay your mortgage you walk away - the bank forecloses and you have a bad credit rating but no further debt from that house - please correct me if I'm wrong .

              In Germany you can't get rid of the debt that way. If the bank takes the house - the sell it in an auction - the proceeds (minus fees) will be applied to your debt and you still owe the rest.

              On the other hand ourrecent welfare laws - once you get the so called "Hartz 4 " - they will force you to sell any property you have andlive from the proceeds before you get any help from the state - so even if you save and buy a home and you lose your job - you have no chance to keep it. Same in retirement - if your pension is to low and you live below the minimal standard which is not that uncommon and will just get worse with the current low wages - the states pays you the difference between your pension and the welfare level - once you own nothing of value anymore.

              The one thing i really abhore about my country is that we still do not have a minimum wage law on the books. It was introduced for certain branches of the economy but not generally. This is a big part of the issue - because the government subsidisies cheap companies - and then pays the difference what someone earns and the minimum existence level - once you do not own anything of value anymore.
              So we have several millions of people who are so called "Aufstocker" - people who receive welfare despite a full time job .
              I have to admit that we as a culture are way to compliant with this. We should take a little bit of France - they throw a general strike every few months (not always with good cause). I can't remember that there wa sone in germany in the last decades .

              "How many years since you found yourself staring at an endless sky? " VNV Nation - Endless Skies

              by Kavalor on Sun Mar 17, 2013 at 01:56:02 PM PDT

              [ Parent ]

              •  You can not "walk away" in the US (0+ / 0-)

                If the bank forecloses on you or even if you negotiate a short sale in which the lender agrees to let you sell the house for less then the outstanding mortgage the lender can still get a  deficiency judgment for the money owned. Unless the homeowner has zero assets and no income or files bankruptcy (something that is now hard to do) they can be pursued essentially forever for the money.

                The one big advantage the US has is that your Primary residence can not be seized for unpaid debt. So some homeowners have decided to buy another house and default on their underwater home because the bank can't go after their new home. Of course this doesn't stop the banks from going after every other asset and the "clever" defaulter might end up in a very bad financial situation with no ability to borrow any more money.

            •  You may want to let this go (1+ / 0-)
              Recommended by:
              Jeffersonian Democrat

              Since you seem a little weak on certain market dynamics.  Mortgages are a lot worse of a deal in Germany, but there is also rent control and unlimited term leases, so owning is less of a win as well.  (Since you are protected from rent inflation, and anyway, inflation is tightly controlled...)

            •  What transfer of wealth are you referring to? (0+ / 0-)

              By last count, Germany had contributed 20% of the bailout money for Greece. It received back $5 billion. While this was going on, its banks were recapitalized on Greek debt from owning 50% of it to 5%, am amount that dwarfed the German input. This means that the European taxpayer--not the German taxpayer--is footing the bailout which largely benefits German and French banks (since Greece has a primary surplus).

              All of this also neglects what happened in the past when Germany owed everyone else a ton of money. Their debts were forgiven. That too was a wealth transfer.

              There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

              by upstate NY on Sun Mar 17, 2013 at 04:21:39 PM PDT

              [ Parent ]

        •  key comment (5+ / 0-)

          explains the situation quite well.

          There was hope until recently in Germany that the Merkel period could be ended in the upcoming elections, and an SPD chancellor could team up with Hollande to reinject a bit keynesianism into european politics. But the SPD chose a candidate that has stumbled from gaffe to gaffe and frankly its now not too likely that the conservative hold on european politics will be weakened. Italy fell just short of what was needed.

           

          •  You're forgetting that there isn't a US of Europe (0+ / 0-)

            And you're not the only one.

            Let's recall the bargain between the ECB and the German voters.

            The ECB would NEVER EVER resort to the type of monetization that you are encouraging.

            You want the ECB to embrace a Bernanke-like acquisition of assets?

            Let's have the citizens of the countries in northern Europe vote on it.

            That is, unless some believe (like the Euro architects in Brussels) the people are too ignorant to know what's good for them.

            Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

            by PatriciaVa on Sun Mar 17, 2013 at 01:03:04 PM PDT

            [ Parent ]

            •  Inflation (4+ / 0-)

              patricia ,

              a lot of people in Germany (especially the older generation) have really a fear of inflation . This usually comes from bad experience . My grandparents lost basically everything the had 3 times in 30 years - and that is the experience of most of their generation.

              Twice from war and once from the Hyper Inflation  

              http://en.wikipedia.org/...

              So yes money stability is a psychological concern in Germany.  And every government who will work openly with the printing press (not that they can) would suffer for it.

              And there is another point of blame Europe - people say that everything got more expansive , just the wages stayed the same. And it  is true that a lot of things cost now the same in Euro then what it cost in German Marks 12 years ago.  But the reason for that is notthe Euro itself, its the the businesses which exploited the currency change for profit gains - 2002 was not for not without cause a year of record profits.
              Out at that time social democratic government just asked the business world to promise not to raise prices , when they did the did not issue a law regulating it. Other countries in the EU did - they were freezing the prices for 2 three month until the biggest confusion about the new numbers was over.  

              "How many years since you found yourself staring at an endless sky? " VNV Nation - Endless Skies

              by Kavalor on Sun Mar 17, 2013 at 02:43:04 PM PDT

              [ Parent ]

              •  Except that wages did not stagnate in all of EZ (0+ / 0-)

                In Spain, for instance, wages increased dramatically since 1999.

                Kavalor, if the citizens of each country want to cede local control to Brussels/Berlin, I'd have no problem with the EZ.

                But, today, a German and Greek feels even more German and Greek than two decades ago, not less.  This dream of an Italian feeling more European than Italian hasn't happened.

                And I don't think it will.  Twenty years from today, we'll have more countries represented in the UN, not fewer.

                I believe that the Euro was a bad bet made against the viability of the nation state.

                And now that so many Greeks, Italians and Germans continue to "cling" to their mother country, the overpaid Eurocrats in Brussels have no choice except to (a) admit defeat and unwind the EZ, or (b) insist on the EZ at the expense of democracy.

                Regrettably, they have chosen (b).

                Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

                by PatriciaVa on Sun Mar 17, 2013 at 02:55:25 PM PDT

                [ Parent ]

                •  But (0+ / 0-)

                  the wage increase in Spain and Greece is part of the prolems this country have because it wa sonly made possible with the cheap interest rates and basicallylimitless amount of credit - I mean no really economic changes necessary - everything will take care of itself.

                  So at one point I definitely agree with you. The lack of democratic control in Europe is an issue , but its not caused by the bureaucrats themselves. Its cause dby the national governments who have absolutely no interest in a democratically legitimit Europe which would be able to tell them what to do.

                  The EU (or EC as it was known pre-93 ) was always a economic project and it was businesses who wanted the Euro most. Every step to a democratisation has to be fought hard about.
                  The original contract about the Euro viewed it as just one step in a process - it was commonly acknowledged that it would require adjustments in taxation and social systems all over Europe, but the political will to touch this topics was not there in fear of the Voter.

                  That lobbyist pressured for it as soon as possible is a complete different topic. Even the watered down stability pact was not really wanted by most Governments but without Germany the Euro would not have happened.

                  And if you look further back in History the first steps (European Coal and Steel Community) which regulated the production of coal and steel and the EURATOM /which regulted the nuclear research and production ) were mainly done to prevent war (and a resurgence of an independent germany) which at that time was completely understandable.

                  Not a lotof people know that already in 1954 a proposal of a military/economic Union with common taxation and a common currency was proposed and basically agreed to with the original 6 members (BENELUX/FRA/ITA/WESTGERMANY) but DeGaulle pulled out at the last minute .

                  http://www.economypoint.org/...

                  http://en.wikipedia.org/...

                  So yes the lack of democratic control was built in flaw and all attempts to correct it are mainly  blocked by the national governments.

                  I don't personally think that the majority of people wants back to completely independent nations, and if then mainly because it is promised to be much better but no one has a clue what it would mean .
                  For me it would mean a disaster as well politically as also economically and people would regret it soon - i'm convinced of that. But if it happens we will , as always , find someone else to blame :(

                  "How many years since you found yourself staring at an endless sky? " VNV Nation - Endless Skies

                  by Kavalor on Sun Mar 17, 2013 at 03:34:17 PM PDT

                  [ Parent ]

                  •  "commonly acknowledged"??? (1+ / 0-)
                    Recommended by:
                    Cliss

                    I doubt it was "commonly acknowledged" in Germany that the EZ would necessitate fiscal transfers from rich "states" to poor "states", in the same way that California sends money to Georgia.

                    And I would also dispute the following statement.

                    The lack of democratic control in Europe is an issue , but its not caused by the bureaucrats themselves. Its cause dby the national governments who have absolutely no interest in a democratically legitimit Europe which would be able to tell them what to do.
                    I would argue that most national governments, especially in southern Europe, care more about their standing in Brussels than domestically.  Monti, for instance, couldn't care less about how he was perceived in Italy.  His focus was always on Brussels.  Same in Greece, where the current ruling class cares more about future jobs in Brussels than ensuring the dignity of the Greek people.

                    Who wants more democracy in southern Europe?  I would point to brave and courageous pols like Alexis Tsipras in Greece or the Grillo movement in Italy.

                    Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

                    by PatriciaVa on Sun Mar 17, 2013 at 04:45:51 PM PDT

                    [ Parent ]

      •  That's the Eurozone in a nutshell: (3+ / 0-)
        Recommended by:
        dfe, Jane Lew, Cliss

        "The idea that foreign bankers can loot your savings account to pay for the debts of a third party is an an outrage."

        Well said. The Euro must be destroyed, it has centralized bank power, made politicians and countries subservient to central bankers' looting, has destroyed autonomy and self governance. It has cratered economies and prevented growth and investment, all for the games of the banksters.

        It is inevitable that the Euro will be destroyed, just a matter of time.

    •  There is one small error in this diary (51+ / 0-)
      not because of anything done in Cyprus
       That actually isn't quite right, but there is a whole 'nuther story behind that. I made a diary about it nearly a year ago (that got mostly overlooked.
         10% of the Cyprus economy was destroyed in a single explosion caused by their assistance with America's War on Iran.

      ¡Cállate o despertarás la izquierda! - protest sign in Spain

      by gjohnsit on Sun Mar 17, 2013 at 06:42:10 AM PDT

      [ Parent ]

    •  "Smart money" is frequently amazingly stupid (28+ / 0-)

      My blood is boiling over this story.  Bondholders --who are lenders--are not subject to a levy, but small savers--who are also lenders whose deposits are loaned to the bank--are penalized?

      Stupid, stupid, stupid.  Also, evil, evil, evil.

      We need a world in which the rich can fall without the poor sharing their suffering.

    •  Trying to get rid of Russian money laundering (3+ / 0-)

      I'm not an expert, but they do need to find a way to make it happen. The US (and the Vatican) have a similar problem.

      This doesn't sound like a good solution, so how can they purge the money laundering from the system?

      It is an old strategy of tyrants to delude their victims into fighting their battles for them. FDR

      by Betty Pinson on Sun Mar 17, 2013 at 11:33:47 AM PDT

      [ Parent ]

      •  Interesting, (1+ / 0-)
        Recommended by:
        Cliss

        but that means drawing a line between the deserving and undeserving rich, just like those in authority draw a line between the deserving and undeserving poor. The point is, where do you draw the line? Are all Russian oligarchs undeserving? What about Steve Jobs, who used what amounts to slave labour to make his pile? What should be done with his billions? How about HSBC, who were actually found guilty of enabling drug lords?

        "We are monkeys with money and guns". Tom Waits

        by northsylvania on Sun Mar 17, 2013 at 02:47:50 PM PDT

        [ Parent ]

    •  There has to be some way to stop the abuse (3+ / 0-)
      Recommended by:
      DRo, nchristine, Cliss

      of everyday people around the world by the banking systems.

      They are literally out of control and intent on forcing the privatization of practically everything in order to enrich themselves.

      "The law is meant to be my servant and not my master, still less my torturer and my murderer." -- James Baldwin. July 11, 1966.

      by YucatanMan on Sun Mar 17, 2013 at 02:41:51 PM PDT

      [ Parent ]

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