Lessons from Cyprus

[umbertino]

Sunday 17 March 2013

Both George Osborne and William Hague are attempting to use the situation in Cyprus to justify their pig-headed commitment to the government's austerity agenda.

"It's a lesson in a way to everyone who says that this country can just take on more debt rather than paying down our debts," said Hague, bidding to discredit increasingly widespread calls for government investment for growth.

Osborne said that the problems in Cyprus arose from its inability to show the world that it can pay its way, which is why it is essential for Britain "to retain the confidence of world markets."

By world markets he means the international banking system and the various parasitic growths attached to it.

The main similarity between the economic situations in Britain and Cyprus is that both were precipitated by the actions of the same private finance sector to which Osborne demands subservience.

Banks in Cyprus were undermined by financial failure in Greece, with which the island has strong links, losing about €4.5 billion in last year's restructuring of Greek sovereign debt.

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The decision of the "troika" of the European Central Bank, European Union and International Monetary Fund to impose a levy on individual depositors rather than on state creditors or bondholders, which could raise up to €5.8bn towards the €10bn troika loan, is a novel proposal.

It breaks new ground in the field of banking bailouts. None of the previous four has included a levy on depositors.

There have been suggestions that this condition, which was pushed strongly by Germany, was driven by the understanding that many Cypriot bank accounts affected are owned by Russian and Chinese individuals.

Whatever the truth of that, the fact remains that, if any bank collapses prior to Cypriot parliamentary approval of this latest troika "haircut," all depositors with less than €100,000 in their accounts would be insured by the state against loss.

The Cyprus parliament was due to debate the deal negotiated by President Nicos Anastasiades and Finance Minister Michalis Sarris today, but this has been postponed until tomorrow and its passage is far from certain.

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President Anastasiades of the right-wing DISY party has only just taken office, having defeated the independent candidate Stavros Malas, supported by the island's powerful communist party AKEL to succeed its own member Demetris Christofias, in last month's presidential election.

AKEL leader Andros Kyprianou has made clear that his party will not support any bailout that includes privatisation, any sell-off of the island's natural wealth or an austerity programme.

Given that DISY holds just 20 seats in the 59-seat parliament against 19 for AKEL, tomorrow's voting will be interesting and could well reflect inordinate arm twisting from outside Cyprus.

The banks and employers' organisations in Cyprus have, like their equivalents in Britain, consistently demanded speedy and savage cuts in government spending.

Far from the plight of Cyprus representing a vindication of our conservative coalition's austerity agenda, it indicates that the finance sector will always prioritise its own interests over those of working people and that neoliberal political parties can be relied on to champion that selfish agenda.

The troika and its EU officials trampling over Cypriot people's savings accounts see themselves as secure in their bullying because of the island's tiny size.

However, the succession of EU bailouts that have safeguarded the banks and robbed the people could still provoke yet unforeseen consequences.



http://www.morningstaronline.co.uk/news/content/view/full/130681

[parmenio]

Truth of the matter is quite simple and finite. The communist Cypriot government of Christofias, which had been recently

replaced overspent and the EU did nothing to prevent it. In fact they were accomplaces and turned their heads while

allowing entitlement programs to run rampant. Europe was the testing ground for socialism for the rest of the world.

SOCIALISM is a failure and it will take decades to reset the world economic pictue back on the right footing! Meanwhile

we have a president in the US who is driving this country off the same financial cliff and his lemmings continue to

give him blind support!

Edited March 18, 2013 by parmenio

[Rockymtnhi]

This is blatant thievery.  I don't doubt for a second that OBummer would allow this to happen here should the desire arise.  He is currently punishing us with his sequestration like a little kid. 

 

Innocent people in Cyprus had 6.5 to 10% robbed from their bank accounts with no recourse. The people pay never the robber barrons. 

 

Makes me want to take every dime out of my bank and buy gold/silver.  Look at what Argentina just did to their people with their recent gigantic currency devaluation.    You can trust your govt to do one thing and that is to steal every dollar from you they can.