Or in other words, it won’t happen in a million years which is the very first thing **Simplicio **said.
Then what’s the point of writing about it? Wanking?
Oh, this is why. Because even though there are perfectly understandable political reasons why Cypriots might not care to have half their island annexed by Turkey, it’s nonetheless stupid for them to feel that way, because we have this perfectly clever and efficient solution just sitting there that Matt Yglesias vomited forth after five minutes of glib reflection.
Its an interesting example of how a symbolic political fight stands in the way of a solution that would make a lot of peoples lives materially better. And (in my view, I don’t know about Yglesias) its sort of a smaller model of the Eurozone problem as a whole. In a better world politicians would be using the crisis to implement some longer term solutions to long standing problems (establish a Zone wide banking system in exchange for insuring deposits, regulate against islands being used as banking havens, formally settle the Cyprus issue, etc), but instead they keep coming up with short-sighted, politically expedient solutions that merely manage to kick cans down the road.
Its not stupid for Cypriots not to want half their island annexed. Its stupid to pretend that it hasn’t been annexed some 40 years after said annexation. Turkey is going to keep their half of the island whether Greek Cyprus recognizes it or not. The only question is whether or not Cypriots will keep living in denial of the fact even to their own detriment.
I don’t think the Cypriots believe their position is merely symbolic, and I don’t think you or Matt Yglesias are in any position to judge them. And in what way would it make the lives of the people materially better? By what standard? I would think the Yglesias “solution” would make most Cypriots very unhappy.
What you and Yglesias don’t seem to understand is that the politics didn’t develop in a vacuum. Do you think they prefer resorting to short-sighted, politically expedient solutions, or is the political reality imposing these choices? A tidier solution that bound everyone in Europe together in a stronger monetary union like the United States has would introduce problems of its own, problems I am confident the various peoples of Europe have considered. Maybe, just maybe, that’s why the politics are the way they are, because deep down maybe Europe doesn’t really want to be in a monetary union.
Regardless, you can’t ignore the politics while deeming them stupid for not embracing solutions which you deem rational, but which actually reflect subjective preferences, i.e. the Eurozone economies would work more efficiently if their monetary union was structured more like the United States, and achieving that should take precedence over any local concern.
Things change.
Banks are apparently closed until next Tuesday. Heard it on the twitter.
There’s a breakdown of Cyprus bank depositors in the 3:43 pm update of the crisis here.. Some interesting points:
*37% of the 68 billion euro deposits in Cyprus’ banks are owned by foreign depositors, about 25 million euro.
*42% of bank deposits (by number, not value) have more than 500,000 euros in them.
*Cyprus Gdp in 2012 was just under 18 billion euro. So the Cyprus banks hold 138% of GDP in foreign deposits! That’d be like the US banks having $22 trillion of foreign deposits.
:eek:
I’m sure they don’t think its symbolic. They’re wrong. Northern Cyprus is in fact an autonomous state controlled by Turkey. Its been that way for forty years. Not recognizing it is in fact purely symbolic. The “position” needed to find this out is having read a newspaper.
See my first post. Did you read the post your objecting to? You seem really vague on its contents. First you miss the first sentence, now your asking how I think recognizing North Cyprus would materially benefit benefit them, when the post you originally responded to was largely devoted to my saying how it would benefit them. If you disagree with what I said there, that’s fine, say that, but its silly to ask the question again as if I hadn’t already addressed it.
Then they should stop being in a monetary union. I’m not prescribing any particular solution, just that they should choose one and then implement it, not sit and vacillate for five years.
Well, given their solution was defeated in the Cypriot parliament, it seems a little silly to say it was imposed by political reality. It was defeated by political reality.
Actually I think I’ve read the table wrong - it’s 42% of deposits by value, so not quite so eek worthy. Still big chunks of change just sitting in bank deposits though.
It is final, 30% haircut for acounts over 100K, no haircut for those below 100K.
But according to some, this signals a new stance against banks (translated from Greek):
[QUOTE=http://www.tovima.gr/politics/article/?aid=504302]
Bankers and politicians sense that we are seeing fundamental changes that will alter the operating rules of economies across the continent. They see clearly that in the future, states would not bail out banks in crisis, will not provide the funds needed to recapitalize them, but rather pass the buck to shareholders and bank customers.
In other words, depositors will no longer be treated as insured savers, but are recognized as investors that take risk and are solely responsible of their choices.
Essentially in Cyprus we have the first rehearsal of applying these new principles and rules that tend to prevail in the European economy. Hence the hardness of the measures and the weight of the test reserved for the island.
[/QUOTE]
If the banks are currently not in default or in danger of default then it would be simpler to padlock savings accounts for a specified length of time allowing the banks to retire debt naturally. That preserves the sanctity of the institutions instead of turning them into a sales force for future mattress sales.
Despite a deal being struck, the Cypriot Banks remain closed, and look to remain so until after Easter. And there will be currency controls implemented, so overseas depositors won’t be able to repatriate their savings when the banks do finally open then anyway.
And the best news is this apparently the blueprint for future bank rescues according to the head of the Eurogroup. Push the losses on to the depositors rather than the general taxpayers I guess.
So what’s the big attraction (of Cyprus) for Russian yuppies? Lax banking regulations? warm climate? freedom from surveillence? Cyprus has (obviously) benefitted from Russian money-is there any evidence that thye “haircut” will send the russians packing?
The Cyprus Economic Plan has basically been to be a No Questions Asked Low Tax haven for Russian criminals. Now it has blown up in their faces and the Russians are going to get 40% of their looted fortunes looted off them.
This is me.
Crying a river.
If that’s the case then Euro banks are going to see a run on their deposits which may trigger a much larger banking crisis. That river of tears is going to cause flooding in low lying economic areas.
When? Its been pretty obvious for a week now that depositors in Cypriot banks are going to take a loss of one sort or another. This hasn’t, in fact, caused a run on banks in other European countries.
What is playing out here is what happens when governments give up the customary method of exacting wealth through inflation and instead opt for an all out money grab. If Cyprus had its own currency it would simply print money to pay for a bailout and taxpayers wouldn’t feel the confiscation of wealth.
It’s also been only about a week or so. I also expect that there’s a certain “they couldn’t really be that stupid…could they?” reaction slowing down any such run.