The banking Oligarchs have a way of making the Tea Bagger nutters look like Nobel prize candidates. And it couldn't be displayed better than the world economy threatening crises that is unwinding in Cyprus.
The crises started when the Cypriot Oligarchs and the German masters came up with the brilliant plan to take some of the savings people had in the Cypriot banks and use them to bail out those banks. Well that went over like a Tofu dinner at a Texas beef rancher convention.
With that plan begging for a run on the banks when they reopen, the Cypriot government ran to the Russian Oligarchs who typically launder their cash through the Cypriot banks, and they tried to strike a deal to let them get access to Cypriot natural gas.
"It might be possible for part of this loan to be convertible over time to equity in Cypriot assets, such as privatized state assets and hydrocarbon rights," Jacob Nell, a Moscow-based economist, said.
"There are precedents in Belarus and Ukraine for similar deals involving Russia," said Nell, referring to deals with Russia's ex-Soviet neighbors in which debts owed to state gas export monopoly Gazprom were swapped for assets.
Nice idea to sell your future to Russian energy Oligarchs in exchange for bailing out those same Oligarchs that are filtering their rubles for Euros through your banks. Except for one little detail.
You see, Cyprus is a bit of an unusual country. It's one of those north south things, like Korea and Ireland ... that helps keep 2 separate groups from going crazy and start shooting each other. They did a lot of that in the 60's and 70's. The northern part of Cyprus are Turkish Cypriots, while the southern part are Greek Cypriots. So, if you're going to sell off your energy future to a bunch of Oligarchs, you're going to have to have a lot of agreement between a bunch of people who don't have a lot of trust for each other.
Well that plan doesn't look to promising.
"This resource belongs to two communities, and the future of this resource can't be subject to the will of southern Cyprus alone. (We) may act against such initiatives if necessary," one of the Turkish officials told Reuters.
"The exclusive use of this resource ... by Southern Cyprus is out of question ... and unacceptable."
On to plan, C or is it D, oh whatever. Now you gotta wonder, what could be more crazy than taking peoples savings out of their savings accounts so you can bail out the banks that have the savings? Well, they were able to top that idea with an even
better idea. Let's take the money from the pensions of the government workers!
Before concrete details emerged, German leaders made it clear they would not back a deal that involved nationalizing the state-owned companies’ pensions, a measure that is rejected in Berlin as more socially dangerous than even the original plan to tax smaller savings.
“When you consider that there was massive resistance against involving the savings, then it is not easy to see how tapping the pension funds, which we view as socially a much more drastic step, is a very good idea,” Steffen Seiber, Ms. Merkel’s spokesman, told reporters.
Now we've got the entire weekend to see how many crazy plans the bankers and the Cypriot government can come up with. It ought to be pretty entertaining, except there really aren't any good solutions. Either the people of Cyprus are going to lose some of their savings, or the Cypriot banks are going to go bust. The reason the banks are in trouble in the first place is because they made bad investments in a
housing bubble and Greece. And if the banks go under, we're going to find out how many European/American banks made bad investments in Cyprus.