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Steve Forbes, of Forbes Magazine, has written an op-ed on the Cyprus bank default entitled “Here’s Why Cyprus Could Be a Disaster for All of Us!” A bit flashy for a headline but probably no worse than what over financial writers have been saying about the situation.  So I figured we are finally going to see some unanimity between the right and the left.  Conservative economists don’t think the Cyprus deposit tax is a good idea. Liberal economists don’t think the Cyprus deposit tax is a good idea.  A significant portion of everyone who have read Milton Friedman and Anna Schwartz’s A Monetary History of the United States don’t think a deposit tax is a good idea.  Maybe, hopefully, we can finally all agree that European austerians are crazy.  So what does Steve Forbes have to say?

What in the world is going through the minds of European officials with their crazy, destructive demands with Cyprus? Seizing a portion of peoples’ bank deposits is the kind of thing one would expect from Argentina or other kleptocratic third-world governments. It sets an awful precedent shredding the rule of law, which is the bedrock of a free and vibrant society. The fact that Cyprus is small is irrelevant. The germane fact is that it was Western Europe, supposedly a strong believer in the rule of law, that engaged in this Hugo Chavez-like move. Now, it’s not inconceivable that President Obama or somebody with a similar ideology could propose seizing and integrating people’s 401K plans into Social Security. And in a panic, Congress would go along.  
Huh, Obama is going to nationalize 401k accounts?  This is the same president who refused to nationalize the banks when he had the chance.  I don’t know about “a similar ideology” but the Daily Kos is a fairly good representation of the American left.  I suppose there might be some poster somewhere on the site with that idea, but if there is he or she isn’t getting any traction.  Does the right really think American Progressives would go in for that form of asinine idea?  Memo to Steve Forbes, we don’t like 401k’es because they provide inferior returns to the average investor than defined benefits plans.  That’s a pretty capitalist critique.

So how does Forbes end his op-ed?

The poor judgment of the political and economical leadership of the West today rivals that of their predecessors of the 1930s and 1970s. Under their misguided policies the wealth-creating private sector is continually squeezed with growth-killing taxes and regulations and the power of Big Government expands. Most countries have made, at best, small reforms when big ones – especially on the tax cutting front – are needed.
Last time I looked the Great Depression stated in 1929 (unless you were a farmer in which case it started about a decade earlier).  I expect Mr. Forbes would be hard pressed to find many growth killing regulations in the Harding, Coolidge or Hoover administrations.  A lack of government intervention, the absence of deposit insurance, caused a collapse of the banking system in the depression.  A default on deposit insurance, the result of austerity overrunning sanity, is the cause of the current Cyprus crisis.  Tax cuts (at least in the sense Mr. Forbes likely means them) are not germane to the situation.

The scary thing is that Steve Forbes is a business leader in a time of economic crisis.  He seems incapable of putting aside domestic political ideology to comment upon a European crisis.


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Comment Preferences

  •  Tip Jar (11+ / 0-) From Dictatorship to Democracy, Guide to Non Violent Protests.

    by sdelear on Tue Mar 19, 2013 at 08:17:08 AM PDT

  •  He *is* incoherent!! (1+ / 0-)
    Recommended by:

    What tipped me off was no mention of the flat tax.

    I thought that was * all * he cared about - so why he's going off on this tangent is anyone's guess.

  •  Steve Forbes "Business Leader" hardly (5+ / 0-)

    I'm not sure he has any business responsibilities. He's another entitled blowhard spending his father's money.

  •  Bankers are middlemen. They take a "cut" of (4+ / 0-)
    Recommended by:
    CFAmick, Blue Collar, SilentBrook, JeffW

    all money exchanges and they think that the accumulation of money constitutes wealth. Ergo, taxes that appear to also take a "cut" of transactions are perceived as in competition with the private sector middlemen. They don't get what the public sector takes. It all makes sense, if one starts from their assumptions.
    The facts are that our main public corporations issues our currency. This is one of the components of the U.S. being a sovereign nation. The countries in the eurozone gave up that element of sovereignty when they signed on to a common currency that's issued by the European Central Bank. We do not have a national bank. We have the Federal Reserve, a sort of hybrid, through which our currency is laundered to create the illusion that the dollar comes from somewhere else and the Treasury has to pay a premium to borrow it back. The only reason banks can charge interest on dollars, over and above what it costs to keep accounts, is because their hoarding and speculation and Congressional rationing have the effect of making the currency scarce.

    So, Forbes has reason to be concerned because, if taxes are levied on money that's hoarded in bank accounts in order to get it moving through the economy, then their effort to make money scarce will be undermined. People will eventually realize that money is worthless and bankers will have to go back to being dull accountants, rather than masters of the universe.

    The difference between what is being proposed for Cyprus to get the money moving and a transaction tax is that the latter is aimed at money that's already moving, even if only inside the financial institutions, while the Cyprus plan is targeting money that is lying idle and not being used for anything except psychic gratification.  

    For evidence that the dollar is not moving, see this chart.

    We organize governments to deliver services and prevent abuse.

    by hannah on Tue Mar 19, 2013 at 09:16:11 AM PDT

  •  Rightwing dog whistle, (1+ / 0-)
    Recommended by:

    derived from a righty email chain that made the rounds a few years ago.  

    Long story short, someone that was a mid-level Obama administration policy person in the PBGC (Teresa Ghilarducci.  She had proposed eliminating the exclusion for 401k contributions and replacing it w/ a sort of expanded social security.

    This was right around the time, I think, that Argentina seized private pensions, and I don't know if she said "attaboy" to that or something, but it all turned into a silly "Obama is coming for your 401k!" idiot parade.

  •  But Stevie Has Always Been Loony (3+ / 0-)
    Recommended by:
    SilentBrook, JeffW, Calamity Jean

    Steve Forbes ran for President on a so-called flat tax agenda. A flat tax is, of course, nothing more than an instrument to hurry the massive government redistribution of wealth from the middle-class to the ultra-rich that started with Reagan in the 1980s.

    Forbes is a plutocrat. Always has been.

    He is the perfect example of the Conservative philosophy: More Money for Me.

    Other mega-millionaires and billionaires will grin, clap and drool at Forbes' pronouncements, but they're horrible for the country in every way.

    A Southerner in Yankeeland

  •   According to this, (0+ / 0-)

    Obama will be seizing the 401(k)s; but not until his third term.  It's ok, though, here's how to profit from it.

     warning:  above link not for the intelligent or squeamish.

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