Cyprus: A Moral Dilemma?

The volume of ink and airtime being propelled our way on the country of the week, dissecting and analyzing its past, present, and future, may well catapult the name of a small island at the eastern end of the Mediterranean into a verb.  How long before North Americans get “Cyprussed”?

The details of the Cyprus predicament, such as they are, or such as authorities will allow them to be known, are now burdens of discussions from San Francisco’s Market Street to Paris’ Champs Élysées.

We are spectators to the consequences when a country has surrendered  control over its currency, the final vestige of its sovereignty, to a foreign entity.  As we witness the beginning of an endgame when debt is out of control, we passively observe an inquisition and remain impotent bystanders as the inquisition evolves into an imposition.  On this imposition, there cannot be enough light shed.

Bank depositors are an ideal low hanging fruit and with a government’s help, become easy targets.  Rationalizing the ‘plucking’ is performed with reasonable dexterity, as we are informed that, well, after all, those are corrupt banks who launder cash, and tose deposits are half owned by Russian oligarchs, and other unscrupulous individuals from the Ukraine, or elsewhere across Europe, and we won’t hurt the little depositors too much.  And oh by the way, Russia uses these bank accounts to send arms to Syria.  Of course we shouldn’t here ask why these banks received any bailout money in the first place, or why they will receive more under any conditions, given that they are so fraudulent, . . . no point making the Euro leadership queasy.

We will hear much in the coming days about accelerated ‘restructuring’ of debt and  deleveraging of the worst banks and sovereigns, and we will be told that,  “this is a good thing so don’t worry too much about that ten percent (10%) being stolen outright from depositors. We’re cleaning up bank balance sheets, so we’re charging a small fee. It could be worse, we could let the banks just close their doors and the depositors would really be out tens of billions in cash.”

My personal favorite rationalization is the one that presents this decision by the EU as reducing the need to further tax the overburdened taxpayers, and diminishing reductions to the beneficiaries of public spending.  Sure. No point reducing spending, just go after the rich, especially the corrupt foreign rich holding cash in Cyprus.

All of the once-sovereign nations who adopted the Euro must go along with decisions made on their behalf by bureaucrats in Brussels, which to no-one’s surprise are supported by the IMF and its managing director Christine Lagarde, Ms. Statist Liberal herself.   The bankers are in control of the biggest game on earth and governments will tow the line guided by ideologically entrenched self-righteous and uninformed politicians and bureaucrats.

Brussels may also be tweaking Putin’s ears through these actions, requiring Putin to make a decision.   What could go wrong with that stroke of genius?  Keep in mind that Russian banks have tens of billions on loan to Russian controlled businesses based in Cyprus.  Putin really has no choice.  He could step in with three billion or so to shore up the banks in which he and his comrades have stashed billions, however, if he did so, Cyprus would slide further into the arms of the great bear to the North.  Putin would squeeze drastic concessions (called ‘gas deposits’) from the Cyprus leadership, and Brussels and the Europeans would be presented with a further quandary.  Hmm, make that a worse quandary.

European leadership in Brussels has dictated implementation of a historical decision, very consistent with the general socialist leanings of their governments which says,  Private Property Is NOT Sacrosanct.

Corruption in Cyprus is a side story diversion, and the structure of the final imposition is not relevant.  A decision was made.  The EU did nothing over the years to bring any real pressure to bear on the fraudulent bank practices prevalent in Cyprus, so now that there is a serious problem of debt, “the end justifies the means”?  This rather parallels the inaction of the Justice Department in Washington. Will the outcome also be duplicated here?  Will expropriation become common-place, . . . and justified as long as it’s not ME?  Does the Attorney General know enough, or does he have any will to enforce laws which were abused by senior bankers throughout the ramp-up to the economic implosion?  None that we’ve seen.

We may find it sad, perhaps even humorous in an unsettling way when dictators grab private companies and property in places like Venezuela, or some other foreign lands, but we can’t ignore it when leaders of ‘Western’ nations become convinced that wholesale cash-grabbing from private bank accounts makes any sense.

As if we don’t have enough anxiety, now we have to accept the very real potential which an older generation warned us of – banks and governments cannot be trusted to always do the right thing particularly when under pressure.  This is not a question of “if they can do it to Cyprus, will they do it here?”  They will do it.

Morals and principals have already been subdued by fear and self-interests.  It is now a question of, “when will we get Cyprussed?”   No morals to see here.  Move along.

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Negotiating Over Dinner?

Rand Paul took the rare and risky measure of filibustering in an effort to illicit an answer from the Administration on a critical stray from the Constitution – drone strikes on American citizens in America.  In a show of solidarity with Paul’s historically lengthy (almost 9 hours), and audacious move, twelve Republican Senators went to dinner with President Obama.   Alright, so there may be another term more appropriate than “solidarity” to describe their exit stage left – still, surely they must have wished him well while out dining and pretending to be negotiating spending cuts with Obama.  Or, perhaps they were more inclined to demonstrate solidarity with Obama than with Paul.

What were they really doing?  The media is painting a rosy picture of this momentous dinner and sells it as proof of effort from the President, and evidence of how far he is willing to go to make a deal and be accommodating, or reasonable.  Adulation from the Washington Post is typical, “The GOP’s tax orthodoxy remains too strong, and the fear of conservative primary challenges too fresh, for a bit of outreach to wildly change the odds. But at least the president will have done everything he can, and everyone — including many Republicans — will know it.”

Obama goes to dinner with 12 Republicans and this is going to accomplish the goal of an agreement on real spending cuts? Not a chance.

Lindsey Graham SC
Bob Corker TN
Kelly Ayotte NH
John McCain AZ
Richard Burr NC
Saxby Chambliss GA
Dan Coates IN
Mike Johanns NE
Pat Toomey PA
Tom Coburn OK
Ron Johnson WI
John Hoeven ND,  and Barack Obama, WH,

. . . . all collectively accomplished exactly what?

1. A crowd does NOT negotiate anything.
2. A meaningful negotiation is held between two or three, not a baker’s dozen and its entourage.
3. Over dinner  that baker’s dozen might as well be a throng treating itself to a pointless Party on the taxpayer’s dime.
4. A dozen Republicans showing up for dinner shows pandering, not reasonableness in negotiating.
5. A dozen Republicans showing up for dinner gifts the tax-and-spend President the photo op he needs.
6. A dozen Republicans showing up for dinner lets Obama off the hook and out of the corner he’s in, providing him fodder for more tales he can then tell to the media which is more than willing to applaud.

Does anyone really believe this dinner will lift gridlock and move Obama from his ideological stance? . . . . Well, other than the media? It seems more and more of the public is disbelieving.

Dinners are used for stimulating or promoting familiarity.  These 12 don’t know who Obama is yet? Four years and this bunch is still not clear? Serious and meaningful negotiations are done in a boardroom in private, or in a cave in the hills, but not over a lavish dinner with a parade of limousines and security agent Escalades putting on a very public exhibition of extravagance.

ABC views this particular performance as marking a new approach for Obama.  Really?  How insightful is that? Some hard negotiations are mandatory, not just necessary, to bring spending under control.  We shall not hold breaths for fear of turning blue on the outcome of this new outreach.

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China? With friends like this...

For 20 years Canada’s wide, open door immigration policy toward China has buoyed the country's real estate prices, auto sales, and food sales. For Canada’s exporters of raw materials, China has principally been a willing purchaser of low cost wood pulp and byproducts, as well as ores, nickel, copper, slag, ash and potash. Should we ask how much ‘value added’ participated in these exports? No. The answer is an embarrassment.

Canada’s overwhelmingly askewed trade ‘imbalance’ with China was -$23,610,999,607 for the first nine months of 2012. There is very little effort expended, or financial clout brought to bear on the evolution of Canadian ‘value added’. Canada has found it so much easier to sell raw materials, and to perform ‘banking’ tasks, than to manufacture finished, or even semi-finished products and then export them. Canada has for too long enjoyed picking the seemingly very low-hanging fruit.

The senior executives managing the handful of major banks who control Canada’s economic landscape have particularly enjoyed the past two supremely fruitful decades of low-risk real-estate and auto loan businesses to the newcomers. With the support of media such as the CBC, the Toronto Star, and the Globe & Mail, an echo chamber has muffled any and all pushback on anything related to China by members of parliament, or by a majority in the current crop of senior business leaders. Referring to the last Harper/Hu meeting, the CBC described it as, “exciting time.” No sign of critical, or discerning thinking there, but undoubtedly way too much breathless adulation.

Even evidence of surreptitious electronic espionage are dismissed, or muffled, lest they stir politically uncomfortable notions which might impact negatively on an artificial and unsustainably propped-up economy. There are bank bonuses to be cashed, cramped pigeon holes in the sky called condos to be sold, and foreign-made cars to be retailed. Distaste for all things 'politically incorrect', fear of reprisal, and fear of racist accusations have muffled the emergence of facts and realities.

China has fuelled Canada’s growth for two decades, and yet, scarcely a word is spoken or printed of China’s ruthless communist party, or that country's centrally manipulated economy, and the communist party's tight control over foreign asset acquisitions. Is there any real insight offered on the long term impact? Not an article in sight about China’s Princelings, and all those who are connected to them, or their direct impact on the Canadian financial and real estate machines. Reality, however, has a way or eventually floating to the surface, no matter how hard it is repressed. This week a couple of hard slaps to the face are waking us up to the harsh and brutal truth that China is not our friend, not our partner, nor is it our well-wisher. On two fronts, Canada and its real allies received a cold shower.

Yi Gang, the deputy governor of China's central bank threatened a currency war and stated that Beijing was “fully prepared,” for such, and “in terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries." Nothing subtle or quietly diplomatic about this throw-down of the gauntlet. He was not only addressing Japan, which has allowed the yen to slide, but he was delivering a thunderous warning to the West, including Canada which follows dutifully whatever The Fed dictates.

Also thunderous, though perhaps more troubling, was the news that Chinese anti-aircraft, heat-seeking missiles have been discovered in an Iranian shipment of arms heading for rebels in Northern Yemen. What could possibly go wrong when a cargo of Chinese missiles, 316,000 Kalashnikov cartridges, 63,000 PK machine gun cartridges, 12,000 cartridges for 12.7 millimeter DShK machine guns and 95 RPG-7 launchers, and 17,000 blocks of Iranian-made C-4 plastic explosives are introduced into the region? What could go wrong with such serious weaponry in the hands of terrorist?

Everything could go wrong. Flying cities known as commercial aircraft are particularly uncomfortable when heat-seeking missiles are heading in their general direction. Yes, what could go wrong when China-armed-Iran-armed terrorists come to your neighborhood?

In its own best interest, Canada should be more forthright with the realities presented by China and its communist government, and we should be reminded that Canada has an important international role to play in the support of its real allies, rather than bending just a little too far, suppliantly, to those who blow an ill wind.

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In The Bubble of Stupidity

The brilliant and colourful English Lit professor and occasional philosopher Marshall McLuhan presciently wrote, “Politics will eventually be replaced by imagery. The Politician will be only too happy to abdicate in favour of his image, because the image will be much more powerful than he could ever be.”

 McLuhan passed away in December of 1980, yet he seems to have had the capacity to perceive so many vacuous celebrity politicians which today fill our electoral landscape – empty vessels which float to re-election on electoral carpets of wishful thinking and ignorance. With an uninquisitive media abstaining from accurate reporting, the misinformed public remains in the dark.

No-where is that ignorance of “imagery” politicians in more glorious display than on all matters economic. Politicians may not hold forth on brain surgery or Mars landings, but they certainly expound profusely on the economy and its forces.  This week we were treated to a rather typical display of incomprehensible idiocy by none other than a Ranking Member of the House Financial Services Committee. Perhaps we should underline “Financial Services Committee.”

Congresswoman Maxine Waters made the following statement,“Yesterday we did have Mr. Bernanke in our committee and he came to tell us what he’s doing with quantitative easing and that is trying to stimulate the economy with the bond purchases that he’s been doing because he’s trying to keep the interest rates low and create jobs–and he said that if sequestration takes place, that’s going to be a great setback. We don’t need to be having something like sequestration that’s going to cause these jobs losses, over 170 million jobs that could be lost–and so he made it very clear he’s not opposed to cuts but cuts must be done over a long period of time and in a very planned way rather than this blunt cutting that will be done by sequestration. . . . . And so, we are here today, one more time, talking about women and children and families and how we can protect our women, children, and families and have a decent quality of life–sequestration will set us back. All of the gains that we have made will be lost with sequestration.”

So there you have it from very near the top of the Nation’s political hierarchy – a statement providing clear insight into the frightening lack of comprehension with which the country’s financial affairs are supervised.  Let’s ignore the absurd claim, “170 million jobs that could be lost,” since there are only 141,614,000 jobs as of January 2013 in total – and well, anyone can make a mistake when making a supposedly critical statement to the Nation. No?

Of greater import is Waters’ description and characterization of Bernanke’s presentation to her Committee?  Does she, or any other member of her Committee understand enough of what Bernanke is doing, or why?  She states,  “he came to tell us what he’s doing with quantitative easing and that is trying to stimulate the economy with the bond purchases that he’s been doing because he’s trying to keep the interest rates low and create jobs.”  Huh?  Does anyone ask her how her brain connects all those dots? That would be embarrassing, since the dots don’t connect.   They don’t and they can’t.  Did anyone on her committee ask Bernanke to connect those dots?

Her statement demonstrates that this “imagery” politician is lost and baffled by economic matters and realities, but she is evidently confident of achieving a successful outcome for herself through the spewing of unintelligible gibberish as long as it is followed by a comment about the sky falling on single women and children.  Pretend to somehow be protecting single women and children, which is even better than championing motherhood and apple pies, and Walters succeeds in propping her own statue another day.

Waters is simply another fear-mongering politician ignorant of the fact that the Fiscal Cliff is only reducing some of the planned increases in discretionary spending.  Almost nothing will be cut from mandatory entitlement programs – Social Security, and Medicare, or from debt interest payments.  The Nation’s financial problems rests primarily on mandatory expenditures and their looming explosion.  Should someone point that out?

With the quality of economic acuity we are subject to, as demonstrated by politicians of the Waters caliber, it is hardly surprising that nothing is being done to bring spending and debt under control.  Nothing is being done to restrain the excessive growth of government.  The complexity is too difficult for uninformed and uncreative minds of the “imagery” politicians to confront. It is so much easier to ignore a complicated reality, particularly when doing so might throw shadows on their ideology.

Let's take another prod from Marshall McLuhan’s stimulative mind, in which he prophetically defined mindsets of the current leadership in Washington, “I wouldn’t have seen it if I hadn’t believed it.”

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