Wednesday, March 20, 2013

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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