To quote the article: "This is why The IMF and the ECB has stepped in and bailed out the banks. Rumor has it that without the bailout Cyprus two largest banks would be bankrupt in a matter of days. A situation no economy can survive, especially not one with a disproportionally large banking sector."
I don't see the problem to be honest. We (I live in the Netherlands) are paying a lot of money to help them out, which is okay. But yeah we're asking the inhabitants of Cyprus for a sacrifice too. The 10% tax is a very crude way to implement this, but dire times need dire actions.
I wish you won't ever see the consequence of dire actions against you or your family. You have no idea how it feels like. You have no idea how unfair it is.
In case that you have not realized it, you are not paying any money. You are loaning with loan-shark rates. Have you ever heard of a loan-shark losing money?
Things are much more complicated than black or white.
Greece and Cyprus are not independent countries. Their very existence was built on loan. Loan with a purpose. And this purpose fulfills as we speak.
These countries' sovereignty is more than a joke, more than a century old.
You feel cheated. Greeks (people living in Cyprus are also Greeks) feel cheated. Every single person feels cheated.
Sadly, we live in the dystopian future where international mega-corporations (a.k.a banks) have more power than some countries.
You can however blame the rotten democratic system that we live by. You can blame human kind's greedy nature.
But you can't blame people of being stupid. The society can only be evaluated by the way it treats its weakest members. You can't blame stupid. You must protect them. This is what makes a society virtuous. Protecting its weakest links. Everything else is pure low-level greediness instinct that has driven us from living into caves to the modern world.
If thinking that poor nations had it coming helps you keep your conscious clean, so be it.
But it has always been about survival of the fittest and not survival of everybody and apparently it will keep being this way. Until human kind becomes one. Above races, religions, borders and whatever.
I can't agree with your last sentence. We've all had the profits of having banks providing liquidity (common, all that Russian money into the Cyprian economy has been great for all of Cyprus). Now that system has failed and the big guys aka the banks are just as clueless as the little guys.
Do we need to rethink how our economy works? Yes.
Do we need to help Cyprus, Italy, Spain? Yes. Partially because it is in out best (Dutch) interests, but also because they are European brethren.
Is it okay to ask the locals for a sacrifice themselves? Yes.
I know I'm living in one of the richest countries in the world. I don't mind helping another country. I understand that losing 6.75% of your savings hurts.
Nobody blamed you for being consistent, organized, eager to work more and getting rightfully rewarded for it.
This is the way it's supposed to be.
Also the problem is not losing 6.75 of ours savings. For most Greek people it's 0 * 6.75 anyway.
The problem is that I am poor. My country is poor. My country was born poor. My country was funded from the beginning of its existence because of being born poor. My country has always been and will always be poor.
But now somebody decided that we are not poor enough. And there is nothing that we can do about it.
And while at it, that same somebody is trying to make your life less comfortable and blame me for it.
This is a scheme over personal economics. It escalates at country level. Further above what some countries or even coalitions of countries can cope with.
And let's not get started with black market money in Swiss or wherever banks. Everything is plain pretense.
They were selfish imperialists that built their legacy with wars and slaves.
Even if we could do it again in the present day, personally I wouldn't want it. But there is no other way, is there?
And let's just think about it:
We could build today a monument that it would still be there in 3,000 years. But it would take the lives of 10,000 slaves. Should we do it? Shamelessly exploit people that will die anyway some day, so that we can show off in 3,000 years?
I vote for no.
And by "my country" I refer to the modern version created in the mid 19th century. There is no continuity with the ancient times (at least in political terms). And there was no country in the ancient times to begin with. Only city-states. A few rich and many poor :)
Therefore, I think that my country is definitely poor. Forever and ever.
Good old libertarians - everything is about money and force.
The money isn't being taken by force. Money is a social construct, and the people in charge of taking care of that social construct are fiddling with the numbers. There are no jackbooted thugs going into people's homes and relieving them of physical property, which is what you're alluding to.
Whethere it's morally right or not (or somewhere in-between) is a wholly different question, which isn't helped by hyperbole like you're presenting here.
Well, the euro zone doesn't have to help Cyprus put and just let them collapse. Maybe Greece could sell the other half of Cyprus to turkey to get some extra needed cash...what is a better option?
I'm sure the Cypriots don't want to rot, so why not take the EU bail out? Yes, they lose 6-10%, but that is much better than 100%. And the Russia mafia won't be that angry.
So what was the right solution? Kick Cyprus out of the
EU and let them scavenge for themselves? Letting the banks fail might attract an invasion from Russia, and then it becomes a NATO problem....such a mess.
I hope that country is not Austria (which ran to the the EU like a little girl when shit starting hitting the fan in early 2009, asking for help for Eastern Europe countries so that the latter won't go belly-up, that would have meant Austria going belly-up), the Netherlands or Belgium (both countries with a very high level of private-sector debt, approaching Cyprus, pls see this: https://media.economist.com/sites/default/files/imagecache/2...), to say nothing of France.
The only European country still standing on its feet without any outside help is Germany, but that could end very quickly end once every other country around her begins the slide into depression. For better or worse, we're all in this together.
Much of the money you have in the fiscally responsible countries is the debt of the less fiscally responsible countries. If they default you will see your bank account haircut too. One bank went under in the Netherlands so far this year, but the state bailed it out (so taxes will go up). Many German banks are not well capitalised, same with Danish banks and so on.
During the boom so much credit aka money was created from what is now nothing but people assume they will get to keep this "wealth".
I don't see the problem to be honest. We (I live in the Netherlands) are paying a lot of money to help them out, which is okay. But yeah we're asking the inhabitants of Cyprus for a sacrifice too. The 10% tax is a very crude way to implement this, but dire times need dire actions.
I don't think it's hyperbole to suggest that this sort of action could lead to pan-european war in the next decade.
It radically undermines trust in the banking system, in the social contract, and in democratic government. If you undermine the social contract and rule by fiat, as the EU has in Greece and Cyprus, it leads to extremism, break down of social order, an ever more polarised political situation, and ultimately revolution and/or dictatorship (see France late 1780s, Russia 1900-1917, Germany 1920-30s). That's not a Europe I want to see and this can happen quite quickly even in an apparently stable society when the foundations are weakened progressively.
The EU was founded to avoid precisely this sort of escalation of conflict and blaming of others by sharing the wealth of nations and promoting ever closer union. They could easily afford to support Cyprus through these hard times against the banks, in fact they're a big enough trading block to simply default wholesale against their creditors and start again, but they have chosen instead the road of muddy compromise, where they end up defaulting piecemeal (as in Greece, which effectively defaulted), but by stealth and in secret and with draconian conditions attached, and which hurts the poorer people of the EU disproportionately by forcing through massive cuts which don't actually solve the problem. Is Greece doing better than Iceland at the moment, is the austerity working? How will paying this bill help Cyprus?
They're undermining trust in the entire EU and EUR project, and there may come a time when governments are overthrown and countries leave the union because of it, and even (and I sincerely hope not) where countries go to war over it. It's fascinating and a little sad to see the same mistakes being made all over again.
> If you undermine the social contract and rule by fiat, as the EU has in Greece and Cyprus, it leads to extremism, break down of social order, an ever more polarised political situation, and ultimately revolution and/or dictatorship
Mostly unrelated and that kid was really stupid, but just the other day a 20-year old Greek footballer used the Nazi salute after scoring a goal for his team (http://www.bbc.co.uk/news/world-europe-21822165). Like I said, that kid is beyond stupid, but I think it shows that some sort of extremism (right-wing, left-wing) is slowly making its way onto the front scene.
> If you undermine the social contract and rule by fiat, as the EU has in Greece and Cyprus, it leads to extremism, break down of social order, an ever more polarised political situation, and ultimately revolution and/or dictatorship (see France late 1780s, Russia 1900-1917, Germany 1920-30s).
Hopefully irrelevant factoid: Cyprus is the 6th country in the world in number of guns per capita [1].
You have it the wrong way. You are paying exactly nothing to "help them out". Money is being borrowed through the EFSF and EFSM and being lent to Ireland et al. This money goes directly to the bondholders of the defunct banks. These bondholders are the major German, Dutch and French banks. Deutsche Bank would have defaulted if the Irish or Spanish banking system went under.
In essence, The Irish have bailed out Germany and the rest of Europe. In the case of Ireland, they are now sitting on 80+ billions of Euros of debt that they have to pay back.
And remember: There was no haircut for the bondholders.
"Funny" how nearly everybody from each Euro country seems to think that _they_ are bearing the major burden. I hear it from the Germans, the English, the French, the Greek, the Irish...
The blaming and hating is growing. The EU received the Nobel peace prize just in time, could be too late some years later.
The thing is, your country signed an agreement to help them if they need it. You don't get to punish them for the fact that you are upset to have to meet your obligations.
We're helping them and meeting our obligations. In what way are we punishing them? Yeah, it's not nice to lose 6.75% of what you have in savings (the 9.9% is only for those who have more than 100.000 euro in their bank account), but the alternative would be much worse for the Cyprians.
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And yeah, this is a very crude way to raise the money. Given more time, a better way is probably possible. But I think time is at a premium now.
They could have made the bank bond holders (rich foreign banks) take losses without affecting the normal depositors.
How can you think getting a bigger loan to pay current loan is a good strategy. It will work only if the economy improves. If the economy tanks, it is not going to work. It is only going to increase the losses for the lenders ultimately.
There were no foreign rich bond holders to punish. Cyprus took more money in then it could possibly ever use (as haven like Iceland), and then bought Greek bonds with it. The only creditors here are depositors. So...
"They" signed an agreement to be honest in reporting their situation and meeting their obligations.
Instead, "they" lied and cheated, and effectively nullified any mutual agreement. The only reason why they're still getting the help is because the alternative would be much worse.
I don't see the problem to be honest. We (I live in the Netherlands) are paying a lot of money to help them out, which is okay. But yeah we're asking the inhabitants of Cyprus for a sacrifice too. The 10% tax is a very crude way to implement this, but dire times need dire actions.