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This is so plainly obvious that it is a bad idea, that one has to wonder: Maybe there is some (difficult to understand) reason to do this? Who stands to benefit? I could see capital flight to Germany, but even so, the potential chaos of a Euro-periphery bank run could be catastrophic to everyone (incl Germany).

I know lunacy is the most obvious explanation, but can anyone try to find a rational perspective on this?

by cagatacos on Sun Mar 17th, 2013 at 01:51:55 PM EST
Malice. You do not reach that level of power while being genuinely this stupid. So they must be deliberately trying to destroy the european economy and the european project.

Fuck.

Saying that makes me feel so very paranoid.

But just because it is paranoid does not mean they are not out to get you.

 I highly suggest looking into the personal finances of the ECB board. Also if they are being blackmailed. Anyone here a reporter or otherwise in a position to investigate this professionally?

by Thomas on Sun Mar 17th, 2013 at 03:06:03 PM EST
[ Parent ]
It's a combination of malice, sociopathy, ignorance, stupidity, willful blindness, short term self-interest, epistemological psychosis, and a rooted inability to cognize reality based on an Economic Model that does not Model the Phenomena.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Sun Mar 17th, 2013 at 03:16:40 PM EST
[ Parent ]
Malice is not needed as an explanation, neither, at this level, stupidity: arrogance and hubris are a much more likely cause. Such willful blindness behavior from those in power has already caused catastrophes throughout human history.

The Greeks and the Romans (poetic justice) had nailed it out yonks ago: Those the gods seek to destroy, first they make mad...

by Bernard on Sun Mar 17th, 2013 at 05:57:31 PM EST
[ Parent ]
Also path-dependency. Once you start following the austerity route, promising "painful but necessary change", you can't change tune, not without losing all your credibility. Because that means saying "I caused you all this pain for no good reason, I was just really stupid".

I think Cameron and the other people in the UK government are starting to understand they have screwed up very badly, but there is no going back any longer. There is no alternative.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun Mar 17th, 2013 at 06:09:07 PM EST
[ Parent ]
And I was fine with that reading of events until they illegally - and this move blatantly is illegal under european law-  destroyed deposit insurance. There are no economic theories they could be operating under that could justify that, not even in their heads.

There were many other options on the table, and all of them - up to and including "Let the Cyprus banks go under, pay out deposit insurance" were much, much less likely to cause bank runs. Obviously so.

So this is a deliberate attempt at causing a bank run. Logically, it has to be. Please, someone explain to me a more likely goal served by this? Because thinking that the central bank is either run by outright villains or alternatively, is in thrall to a hostile power is not a pleasant place to be.

by Thomas on Mon Mar 18th, 2013 at 02:41:52 AM EST
[ Parent ]
A bank run in the periphery will be the likely outcome. So that leads to money flowing to Germany, Switzerland and out from existing banks in the periphery. In addition to profit motives, this weakens the governments in the periphery as bank restructuring is one of those things they can not afford while staying in the eurozone. And leaving the eurozone means quick and painful rebalancing of the current account plus that the previous austerity was for nothing. All of which the governments in the periphery is trying to avoid. So essentially we have a re-start of the eurocrisis.

Now, lets look at the actors. If (and that is a big if) Schäuble is to be believed it was the Cypriotic governemtn, the EC and the ECB that wanted this. The Cypriotic government has not much of a negotiating position, so I think they can be ignored here. Leaves the EC and the ECB, two legs of the Troika. Restarting the crisis and putting more countries under Troika managment will mean that the Troika - and in particular the ECB - will gain in power.

So both class warfare per TBG and an ongoing coup to gather the real power under the ECB fits.

If one wants to put a narrative on it, it is the ECB doubling down after being scared by the Italian election result. They can't attack Italy directly at the moment so they weaken the periphery collectively hoping for bank runs in Italy to scare the politicians there into forming a pro-austerity caolition. But that is just guessing.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Mon Mar 18th, 2013 at 04:11:16 AM EST
[ Parent ]
They can't attack Italy directly at the moment so they weaken the periphery collectively hoping for bank runs in Italy to scare the politicians there into forming a pro-austerity caolition.

Italian parliamentarians are perhaps as likely to be scared into forming a Euro-exit coalition : if we're going to be fucked over, let's do it ourselves rather than being done by the ECB.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Mar 18th, 2013 at 05:55:10 AM EST
[ Parent ]
Politically speaking bailing out Russian gray money in a tax haven is not possible. The German elections are too close. There simply is no majority. If Schäuble's behavior indicates that it is so, it is so. That man is smart.

That would mean risking letting Cyprus drop out of the Euro. They lacked the balls for that either. Hence a compromise that combines all of the disadvantages of the various options with none of the advantages.

by oliver on Mon Mar 18th, 2013 at 04:26:33 AM EST
[ Parent ]
The Russian money is a smokescreen. What's really politically unspeakable is the following: (quoted in the story body)
The ECB is hiding the results of a study about the distribution of financial wealth in the eurozone until after the decision about an aid programme for Cyprus, Frankfurter Allgemeine reports this morning, quoting unnamed central bankers. The intention of the delay is to prevent the data being used to question the programme. The ECB has been running these polls since 2006. Some of the national central banks, including those of Italy, Austria, Luxembourg and Spain, have published their own national results, but others have not. The article says the data contain "politically explosive material". For example, Italy's financial wealth, at a median value of €164,000, lies above that of Austria, at €76,000. While the Bundesbank has not published the data, the German median value is thought to be in a similar range - in other words way below that of Italy.
The German government cannot allow a discussion of wealth inequality and household savings in Germany which would demonstrate that the German working class has not only been shafted over the past decade with the much-touted "competitive reforms", but that they are also being shafted now.

And from Zervos in Business Insider (quoted by ARGeezer)

All of us should really take a moment to consider what the governments of Europe have done. To be clear, they initiated a surprise assault on the precautionary savings of their own people. Such a move should send shock waves across the entire population of the developed world.
In "less developed" parts of the world - and I think nobody will be offended if it's pointed out that the rule of law is probably more reliable in Germany than in Cyprus, and that the country is wealthier, people need much smaller "precautionary savings".

What this is doing is, at least in Cyprus, sending people on an "all cash" position (and I mean cash under the mattress, not cash in the bank as "all cash" would be understood by "investors") if not entirely off the Euro, into gold or other currencies.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Mon Mar 18th, 2013 at 05:57:10 AM EST
[ Parent ]
Got myself into a tangle there...
In "less developed" parts of the world—and I think nobody will be offended if it's pointed out that the rule of law is probably more reliable in Germany than in Cyprus, and that the country is wealthier—people need much smallerlarger "precautionary savings".


I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Mar 18th, 2013 at 06:19:23 AM EST
[ Parent ]
One thing that would interest me in these cross-country comparisons of private wealth is the degree to which the differences are accounted for by differences in home ownership patterns. In Ireland for example, home ownership is extremely high, resulting in both hish figures for private wealth and huge figures for private indebtedness.

This is mainly for historical reasons. There is a huge historic antipathy towards renting, because it was always about an Irish tenant class paying rents to a British landed gentry - even during the famine when most people were starving. Owning your own property, be in house or farm, became a key symbol of national and class independence from Britain and the British ruling class.

In more recent times the inadequacy of public pensions and the rapaciousness of the private pensions industry meant that a key way of providing for your old age was to own your own house/farm and perhaps one or two other properties as well from which you could draw a small "pension" or income.

My point is that all of this makes it look like Irish people are relatively wealthy when in fact they are heavily leveraged and reliant on property ownership to provide basic income security. In Germany, I suspect, by way of contrast, there is no comparable insecurity about the reliability and adequacy of public pensions/health provision and thus no need to build up a comparable equity base in property or other assets.

I would be interested in whether a similar phenomenon is at work in Mediterranean countries, and on whether anyone has any hard data on this.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Mar 18th, 2013 at 06:33:02 AM EST
[ Parent ]
 In Germany, I suspect, by way of contrast, there is no comparable insecurity about the reliability and adequacy of public pensions/health provision and thus no need to build up a comparable equity base in property or other assets.

It is also a tenant law thing. Strong laws protecting tenants give them stability and less desire to own. That said with their low homeownership rate germany is rather the exception in europe.

But of course all of this is well known and I see no direcht relation with the cyprus bailout.

And the russian money in Cyprus is real enough.

by IM on Mon Mar 18th, 2013 at 07:14:00 AM EST
[ Parent ]
I was more commenting on the alleged ECB report showing much higher levels of median wealth in Italy than in Germany and how difficult this makes it for Germans to contemplate bailing out allegedly wealthier countries who don't play by the rules.

Also, as an aside,  it is easy to grasp at a narrative alleging vaguely illicit Russian "grey" money when we don't know much about how this is different from trillions of other "investment" money looking for a home all over the world. If the Russians had put their money in senior bonds (like German banks?) rather than into deposits, would this have made it less grey? Is Russian or German money in Swiss banks any less grey?

It seems to me that individuals with some but not a huge amount of wealth are more likely to put their money into deposits rather than bank bonds - which are more the preserve of the seriously rich - but what do I know... this is a different world to the one which I inhabit.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Mar 18th, 2013 at 07:41:41 AM EST
[ Parent ]
Bonds are often traded at big nominal values, say 100 000 euros. You can buy bond funds, but then you have to live with a management fee, and there is also a long waiting period (like three days) to get out of your position, while both bonds and deposits can be liquidated immediately.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Mon Mar 18th, 2013 at 07:46:44 AM EST
[ Parent ]
But of course all of this is well known and I see no direcht relation with the cyprus bailout.
Ahem
The ECB is hiding the results of a study about the distribution of financial wealth in the eurozone until after the decision about an aid programme for Cyprus, Frankfurter Allgemeine reports this morning, quoting unnamed central bankers. The intention of the delay is to prevent the data being used to question the programme.


I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Mar 18th, 2013 at 08:12:11 AM EST
[ Parent ]
That is nonsense. This isn't the first study of this sort. The basic results are well known. Mostly a house owning thing. And there will be resistance to the cyprus bailout anyway.
by IM on Mon Mar 18th, 2013 at 08:25:24 AM EST
[ Parent ]
So the ECB's actions and beliefs as reported by the FAZ are nonsense?

In any case, it might be true that releasing the report int he middle of the Cyprus bailout debate mught have short term political implications. Media narratives, news cycles and all that.

What's extraordinary is that they had been "monitoring the effect of Cyprus on the markets" over 90 days and decided Cyprus posed no contagion risk, while at the same time making decisions about the release of unsurprising economic data based on diffuse fears of BILD Zeitung.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Mon Mar 18th, 2013 at 08:47:55 AM EST
[ Parent ]
I think the politicians were genuinely oblivious to the possibility of causing a bank run. (Yes, despite the European Commission telling them)

Also, it was the Cypriot President that insisted on no deposit haircuts above 10% (for deposits above €100k).

Here are the two most egregious elements of the deal: Schäuble not wanting to touch the senior bondholders, and the Cypriot President willing to renege on the deposit guarantee. Also the ECB saying "we're willing to let your banks fail which will put you on the hook for €30bn in deposit insurance".

So the calculus being presented to the depositors by the ECB is "either you give up €6bn or you lose €30bn", because Germany doesn't want to burn the bondholders and Cyprus doesn't want to burn the oligarchs.

The IMF wanted to leave deposit insurance intact and large losses for senior bonds and uninsured deposits. They also forced the issue because they wouldn't loan to Cyprus if the country's debt-to-GDP would end up above 140%.

Now, involving the IMF in loaning Euros to a Eurozone country is one of the most inexplicable things of this whole 3-year "crisis management" but such is life.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Mon Mar 18th, 2013 at 05:47:24 AM EST
[ Parent ]
I think we have to accept that the people at the ECB and EC operate under a different understanding of reality than we, and most economists, do. They are thoroughly influenced and even blinded by their ideology. It's a bit like the Iraq war. We understood it was absolutely stupid, even I who was just 17 at the time understood that, but all these highly educated and intelligent American officials did not.

The ECB+EC people believe that Europe's return of growth is dependent on investor confidence, because if confidence returs investors will invest and create jobs and hence demand, even if ironically don't admit the problem at the moment is a lack of demand.

Krugman has called this the belief in the confidence fairy. If we just behave virtuosly, she will arrive, wave her magic wand and make all the economic problems go away. They also believe that the one thing which scares investors the most is when bondholders have to take haircuts (in spite of the fact that the reason bondholders get higher rates than you get for deposits at the central bank is that they carry higher risk), followed by bondholders being converted to equity, or equity holders being invited to take part in rights issues.

It is unclear why they believe these things, as they are not in any way supported by evidence. According to surveys, investors currently refuse to invest not because they lack confidence (or because taxes are too high and regulations too paralyzing), but because there is not enough demand for their products. Why build a new factory when your old one is operating at half capacity? Further, why should you worry in the least over bond vigilantes when every country with a central bank which is doing its job can borrow at the lowest rates for several centuries?

Because this is ideology. It is belief. This is a world-view which says the world works in this way, and damn the consequences and evidence. This is the why Olli Rehn tells economists to stop researching this subject, because evidence will show that the current policies are not working, which will undermine confidence and hence stop said policies from working. Pointing out that confidence is not the crucial factor will result in the same kind of answer, in this Kafkaesque world of circular arguments.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Mar 18th, 2013 at 07:37:00 AM EST
[ Parent ]
Starvid:
It's a bit like the Iraq war.

The analogy is striking. Untold mayhem and suffering unleashed with cascades of "unforeseeable consequences" (mostly foreseeable), because of a mistaken belief which didn't stand up to serious scrutiny : the existence of WMD.

"Growth through austerity", on the other hand, seems to be much more tenacious as a belief : it only took a few months to deflate the WMD myth, but the ECB are laying waste to one country after another, without comprehending the visible disproof of their doctrine.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Mar 18th, 2013 at 08:57:00 AM EST
[ Parent ]
This read is no longer supportable. Because if belief in confidence was the guiding star, then actions as arbitrary and unforeseeable as illegally bailing in depositories would be unthinkable. It would simply never occur to someone honestly ascribing to such a paradigm to do this.
They are not doing damage because they do not know better. Damage is the point.
by Thomas on Mon Mar 18th, 2013 at 11:40:56 AM EST
[ Parent ]
When they talk about 'confidence' they mean 'investor confidence'. If the 99% are involved in a bank run it is of little consequence as long as 'investors' are 'confident'.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Mar 18th, 2013 at 12:59:23 PM EST
[ Parent ]
The point is the arbitrary and unforeseeable nature of the revocation of the bank guarantee. Why would investors think themselves safe from random and illegal confiscations when the people are not? They cannot. And thus, this move strikes directly at the heart of what they profess to hold most sacred. So they must be liars. The values they profess are not the values they hold, and they are attempting to sow chaos.
by Thomas on Mon Mar 18th, 2013 at 01:11:36 PM EST
[ Parent ]
The Cypriot banking sector was - and is - a cancer. Having a finance sector that pays nine times the interest of everyone else, and is holding assets 8 times your gdp is madness. This move does not end this state of affairs.
It does damage the savings of everyone in Cyprus, makes whole bondholders that should not be made whole, and undermines the faith in deposit guarantees across the continent. It is vile end-to-end. Evil, embodied in accounting.
by Thomas on Mon Mar 18th, 2013 at 01:19:01 PM EST
[ Parent ]
That's what I believe to be at the core of what drives the political classes, especially the German ones. To admit that their wonderful reforms of the German labour market in the previous are at the core of the problem is impossible.
by Colman (colman at eurotrib.com) on Mon Mar 18th, 2013 at 08:10:59 AM EST
[ Parent ]
All the money flees to Germany and Switzerland and probably spikes a rise in bullion?

Why goodness me - whoever could possibly profit from that?

Of course it's deliberate. It's simple profiteering from an easy opportunity.

It's not evidence of idiocy, so much as the Troika being politically and morally out of control by any normal standards of ethical and civilised behaviour.

It's simply the BuBa equivalent of the mortgage thievery in the US, on a national scale.

This is the third time in less than a century that German fascism and greed has destroyed European progress.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Mar 17th, 2013 at 06:18:10 PM EST
[ Parent ]
This is the third time in less than a century that German fascism and greed has destroyed European progress.

For god's sake, stop this nonsense.

by IM on Mon Mar 18th, 2013 at 07:15:35 AM EST
[ Parent ]
Why? It's clear the decision-making at Merkel HQ and BuBa is based on simple greed, contempt for the poor, and racism - all of which add up to as good a definition of financial fascism as you'll find anywhere.

Are you seriously going to pretend that Merkel and her establishment cronies are doing this out of the kindness of their hearts for the good of the poor Cypriots? Just as they trashed Spain for the good of the Spanish, and Ireland for the good of the Irish? (Etc.)

Good luck with that when the famous senior bondholders are basically German banks, with a sizeable French sector and a smattering of other EU and international banks.

There was talk only days ago that they would be the ones taking a haircut.

Now we see what happens when that kind of lèse-majesté is considered.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 18th, 2013 at 07:55:07 AM EST
[ Parent ]
decision-making at Merkel HQ and BuBa is based on simple greed, contempt for the poor, and racism

I don't agree with this, at all. I'd rather say it's a mix of holier-than-thou-ness, misplaced pride in German economic success, warped ideology and a complete misunderstanding of macroeconomics. Possibly flavoured with a little sado-masochism.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Mar 18th, 2013 at 07:59:47 AM EST
[ Parent ]
You forgot a strong belief in their own virtue and the redeeming power of (other peoples') suffering.

Fascism is a bit strong, since it sounds like you're evoking the Nazi regime, but in the sense of government by the corporations for the corporations (which didn't really fit WWII Germany, did it?) it's not that far off.

by Colman (colman at eurotrib.com) on Mon Mar 18th, 2013 at 08:01:44 AM EST
[ Parent ]
Well - people forget that in fascism corporatocracy comes first. Militarism and a cult of physical violence are optional. (Although very popular.)

Nazism was very much a corporate creation, funded by financial and industrial interests in Germany and the US. Without that funding, Hitler would have remained an eccentric extremist.

Of course, some industrialists - Thyssen particularly - discovered trying to buy a creature like Hitler was an expensive mistake.

Other backers did quite well out of WWII.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 18th, 2013 at 09:39:25 AM EST
[ Parent ]
Fine, let me be blunt: Cyprus is basically Ireland². A fucking neoliberal casino/tax haven that is now bust.

The plug should have been pulled much earlier and your new rich friends should lose anything and not just 10% or 15%.

If you think defending that is antifascism you are nuts.

One of the opposition complained that the finance center Cyprus is being destroyed; if only.

If you think defending that is antifascism you are nuts.

by IM on Mon Mar 18th, 2013 at 08:13:33 AM EST
[ Parent ]
Why on earth do you think these people are my friends, or that I'd have anything to do with them?

And you clearly don't understand what fascism is, where it comes from, who it affects, or how damaging it is.

It's fine to write off Ireland and Cyprus as tax havens if you want to. But if they're bust - which is arguable in the case of Cyprus, given its alleged resources - I doubt it's because widows and orphans were spending money they couldn't afford.

I'd be perfectly happy to see the senior bond holders scalped in Cyprus. Unfortunately the senior bond holders seem to believe that one of the benefits of running a country as a tax haven is that the population is on the hook for risky investments the population doesn't profit from.

The ECB - which seems to believe Europe is a German financial colony - agrees with them.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 18th, 2013 at 09:48:40 AM EST
[ Parent ]
"Why on earth do you think these people are my friends, or that I'd have anything to do with them?"

Because you are watching about their interests, and smear the most harmless efforts to let them bear the results of their misguided investments.

And you clearly don't understand what fascism is, where it comes from, who it affects, or how damaging it is.

Oh come on. Compared to your primitive "uh huh corporations" nonsense even Dimitroff had a good fascism theory. No, your fascism is anything I dom't like rhetoric hides perfectly any knpwledge you might have.

"It's fine to write off Ireland and Cyprus as tax havens if you want to."

But that was and is exactly their economic strategy of the last decade, if not longer.

"But if they're bust - which is arguable in the case of Cyprus, given its alleged resources -"

Oh, in this case they can save their banks themselves.

"I doubt it's because widows and orphans were spending money they couldn't afford."

What the hell are you talking about? I didn't say anything about widows and orphans.

 I'd be perfectly happy to see the senior bond holders scalped in Cyprus.

The way I see it we are talking about on ore two insolvent banks. It would be right to pay out the amounts guaranteed by the deposit insurance and let all other creditors - junior bondholders, senior bondholders, depositors, other creditors, suffer the consequences of an insolvency. In other words you get 23.5% of your money

Now an actual insolvency isn't possible because an insolvency of any bank of some size would be to damaging. Then Cyprus should make a law that creditors of rescued but insolvent banks should be treated as if an insolvency has has happened. So losses being borne first by share-holders, then by junior bond-holders, then equally by senior bond-holders and depositors. So that the bigger depositors would get 23.5% in the end. (or 33.6% or 0.2% or whatever)

Now you may call that fascism. I think that is quite just.

Now ECB, EU and the cypriots, being not fascist at all but rather much to soft, will let escape the creditors with 90.1% instead of 34.5% or whatever of their money.  

That the protected smaller depositors are hit too seems to be mostly the fault of the cypriot government, being like you to soft on big creditors.  

 

by IM on Mon Mar 18th, 2013 at 12:17:03 PM EST
[ Parent ]
What on earth are you talking about? And how on earth did you decide that I'm being soft on big creditors when I've said no such thing and have been arguing the opposite?

You're saying that stealing money from that majority of un-wealthy depositors who keep meagre savings in their high street banks is 'harmless'?

Then Cyprus should make a law that creditors of rescued but insolvent banks should be treated as if an insolvency has has happened. So losses being borne first by share-holders, then by junior bond-holders, then equally by senior bond-holders and depositors. So that the bigger depositors would get 23.5% in the end. (or 33.6% or 0.2% or whatever)

Yes of course. As long as smaller depositors are fully protected. (Is there really no independent deposit insurance in Cyprus?)

Now - let me know when someone from the German financial establishment suggests this is the way to solve the problem.

In the meantime there's nothing 'soft' about nuking a cornerstone of modern banking and destroying both investor and depositor confidence in order to backstop the risky investments of financial professionals.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 18th, 2013 at 02:56:18 PM EST
[ Parent ]
>You're saying that stealing money from that majority of un-wealthy depositors who keep meagre savings in their high street banks is 'harmless'?<

Where exactly have I said that?

>Is there really no independent deposit insurance in Cyprus?)<

 >in order to backstop the risky investments of financial professionals.>

As long as you demand that every depositor - deposit one euro, one million euro, a billion euro - is paid out in full you are demanding the backstop.

by IM on Mon Mar 18th, 2013 at 03:32:50 PM EST
[ Parent ]
IM:
That the protected smaller depositors are hit too seems to be mostly the fault of the cypriot government

If our only source here is Schäuble, what he said was:

Germany would have protected insured deposits: Schaeuble | Reuters

"But those who did not want a bail-in were the Cypriot government, also the European Commission and the ECB, they decided on this solution and they now must explain this to the Cypriot people."

And considering it was ECB that set the time table on this, they are a far more important player. So even if we believe Schäuble here, reducing his list to the cypriot government is not very accurate.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Mon Mar 18th, 2013 at 02:59:06 PM EST
[ Parent ]
If our only source here is Schäuble, what he said was:

And you assume that why?

by IM on Mon Mar 18th, 2013 at 03:38:03 PM EST
[ Parent ]
Well, do you have a better source?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Mar 18th, 2013 at 05:02:19 PM EST
[ Parent ]
Look, I understand that this sub-thread has got a bit of tension in it. Still, I don't think why I assume something is likely to carry the discussion forward. But sure I can answer the question: I assume that because he is a source quoted numerous times in this thread.

Now, do we have another source to who pushed what? And more importantly for my remark, do we have any source pointing out the Cypriotic government rather then the EC or ECB as the main agent behind the bail-in for deposits under 100k euros?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Mar 19th, 2013 at 07:50:56 AM EST
[ Parent ]
http://www.eurotrib.com/comments/2013/3/17/908/97754/254#254

Let's see:

"Cyprus could have offered full protection to those with insured deposits up to 100,000 euros and still reached the 5.8 billion euro target by taxing uninsured deposits at a rate above 15 percent.

 ...

 But when the plans were presented to Anastasiades, several participants said, he balked at any suggestion that uninsured depositors should pay more than 10 percent."

I assume they base their reporting on sources other then Schäuble.

"And more importantly for my remark, do we have any source pointing out the Cypriotic government rather then the EC or ECB as the main agent behind the bail-in for deposits under 100k euros?"

We do. Now you could say the other governments want to shift the blame to Cyprus, but it is not just Schäuble.

by IM on Tue Mar 19th, 2013 at 08:06:43 AM EST
[ Parent ]
"And more importantly for my remark, do we have any source pointing out the Cypriotic government rather then the EC or ECB as the main agent behind the bail-in for deposits under 100k euros?"
Let's review some of the sources linked in this thread...

Cyprus Rescue Risks Backlash (WSJ)

Mr. Rehn was the first to make a specific proposal. To raise funds, Cyprus should impose a special levy on deposits, taxing accounts of less than €100,000 at 3%, those up to €500,000 at 5% and those above at 7%. Such a "solidarity levy "--the brainchild of Thomas Wieser, an Austrian who chairs technical discussion among euro-zone finance officials, and Mr. Asmussen-- could avoid a straight "haircut" on deposits, which they feared could be too destabilizing for Cyprus and the rest of Europe. The tax would be applied to all Cypriot banks, not just the two in deep trouble.
CYPRUS DISASTER: Open dissent in Merkel's CDU as Schäuble's attempt to avoid responsibility for Cyprus depositors dismissed as "bare-faced lie". (The Slog. 3-D bollocks deconstruction)
Says a well-placed Berlin source, "It is completely ridiculous for [Schäuble] to suggest that his was a dissenting vote on the question of small customers in Cyprus. In fact, he was from the start enthusiastic when Brussels came up with this `tax levy' scheme as a way round the EU's deposit guarantee. Every German MP will recognise this as classic Wolfgang Schäuble behaviour. The high esteem in which he is held by the German people is in no way reflected inside the Bundestag."


guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Tue Mar 19th, 2013 at 08:18:26 AM EST
[ Parent ]
See also an update on The Slog:

But even as Schäuble continued to defend his position, claiming "The levy on deposits under €100,000 was not an invention of the German government", the Eurogroup begged to differ. Although last Sunday in an interview on public tv ARD, Schäuble directly blamed the European Central Bank, the European Commission and the Cypriot government for involving tax small savers (anyone but him, basically) ECB board member Joerg Asmussen rejected Schäuble's accusations.

He countered: "In the last days it was not the ECB that pushed for this special structure that was chosen, it was the result of the negotiations in Brussels." And pushing hard for 40% in that meeting (with no transcript record of anyone batting for the little guy) was....Wolfgang Schäuble.

Then again, it seems Mr Asmussen himself is being economical with the truth: "One should not, through the wrong actions in Cyprus, put in risk what has been achieved at high political and financial risk in the eurozone in recent years," Asmussen pronounced pompously. But the WSJ writes this morning that Asmussen was the one who, in the early hours of Saturday threatened to cut off Cyprus' two largest banks from the ECB's emergency funding if a deal was not achieved.

Are these meetings really not minuted?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Mar 19th, 2013 at 08:36:46 AM EST
[ Parent ]
If there are minutes they will be released in 50 years' time...

Now seriously, the secrecy of Council deliberations (and even of the results of votes in the Council, given that Governments have made a habit of blamit "Brussels" for decisions they voted for at Council) has been a sticking point for a long time, given the legislative function of the Council.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

by Migeru (migeru at eurotrib dot com) on Tue Mar 19th, 2013 at 10:05:58 AM EST
[ Parent ]
Since the important negotations happened in smaller circles anyway, minutes of the big official meetings wouldn't have helped much.

According to this report titled a scapegoat named Schäuble - it happened this way:

http://www.sueddeutsche.de/wirtschaft/belastung-von-kleinsparern-in-zypern-ein-schwarzer-peter-namen s-schaeuble-1.1627975

  • the commission proposed  a tax of 3% up to 100,000 euro, up to 500,000 5%, above that 7%. Netting two-three billion euro

  • Largarde proposed to take 30-40% from accounts higher then 100,000 euro. Same with senior bonds. That would have resulted in seven billion euro.

Schäuble supported Largarde because he wanted the seven billion.

In the end Schäuble did go down to something like higher then 18%.

And then they compromised on the commission proposal just with higher rates, getting the famous 5.8 billion

 

by IM on Tue Mar 19th, 2013 at 10:43:05 AM EST
[ Parent ]
IM, the problem is that the victims in Cyprus had almost no agency in creating the problem. That was done by a political elite who probably had little understanding of what they were doing, but those who voted for them mostly had none. My understanding is the reason the bond holders are being exempt is that they are largely banks in core EMU countries, chiefly Germany. It is for that reason that I would like to see Cyprus reject the bailout. If Russia wants to make German and French bankers whole in return for sparing the Cypriots misery and if the Cypriots agree that would seem fair.

My own preference would be for Russia to not only give tax avoiders hiding in Cypriot banks a huge haircut but also to wipe out the bond holders. If the ECB objected, Russia could offer Cyprus solvency in rubles as a stepping stone to reintroduction of their own currency. But if the ECB isn't coming up with any money what authority do they have to dictate how the banking insolvency is resolved. Converting bond holders to stock holders is traditional. Perhaps Russia could offer the new stock holders rubles for their stock.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 05:54:21 PM EST
[ Parent ]
The reason bondholders are exempt is that senior bondholders represent such a small amount (0.5 bn) so "burning" them would have brought little money and (another) worrying precedent. Given the amount, that seems like a plausible argument, even if the overall package makes it an appallingly bad-looking one.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Mon Mar 18th, 2013 at 06:19:28 PM EST
[ Parent ]
Are there any bondholders other than 'senior' bondholders?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 08:10:29 PM EST
[ Parent ]
From the story linked by Jerome in a top-level comment: Levy plan `bleak day for banking union' (FT.com, March 18, 2013)
There is an added irony to the situation in the fact that, to the casual observer, the Cypriot banking system looked like a model for others to follow in the wake of the financial crisis. The island's banks have about €68bn of deposits, which they use to fund their lending, with only minimal reliance - less than €3bn - on so-called wholesale funding in the bond markets.

People who defend the Cypriot plan say the funding structure was the reason why there was no alternative to hitting depositors - junior bonds, which are being wiped out, amounted to just €2.5bn, while the €0.2bn of senior unsecured bonds have been left alone, on the grounds that to give them a haircut would generate a negligible economic contribution but undermine investor sentiment.

Since Lehman Brothers collapsed more than four years ago, deposit-funded balance sheets like Cyprus's have been the envy of many banks around the world. Burnt by the realisation that in times of crisis bond markets dry up, leaving long-term lending commitments potentially unfunded, banks have frantically shrunk non-essential lending and tried to boost deposits as their core funding mechanism.



guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Mon Mar 18th, 2013 at 08:17:44 PM EST
[ Parent ]
Er - how did the banks lose €68bn in deposits?

Is there a breakdown of lending and other payments anywhere?

And I suppose it's worth pointing out that only two banks are in trouble, but the Troika appear to have decided that for some reason this means the entire economy of Cyprus is in danger of total collapse.

It would be a bit like the Bank of England taking money from all domestic British depositors because Northern Rock was in trouble.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Mar 19th, 2013 at 08:42:18 AM EST
[ Parent ]
Er - how did the banks lose €68bn in deposits?
Just because the banks have €68bn in deposit liabilities doesn't mean they have €68bn in cash assets on their balance sheet.

The main cause of the current troubles is the large losses sustained by the Cypriot banks on their large stock of Greek sovereign bonds. Which, by the way, makes sense if you have a large number of Greek nonresident depositors. You owe the Greek citizens and the Greek government owes you.

eKathimerini: Cyprus deposits yielded more than German ones (March 18, 2013)

"Banks in countries like Cyprus and Greece can pay higher interest rates as they also earn more on loans," Dirk Becker, head of banking industry research at Kepler Capital Markets in Frankfurt, said by phone. "In addition, Cyprus banks invested a lot in high-yielding Greek debt in the past."


guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Tue Mar 19th, 2013 at 10:11:28 AM EST
[ Parent ]
Yes, there are usually unsecured bondholders. Not sure how much they amount to in this case.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Mon Mar 18th, 2013 at 08:27:30 PM EST
[ Parent ]
"Are you seriously going to pretend that Merkel and her establishment cronies are doing this out of the kindness of their hearts for the good of the poor Cypriots?"

As a definition of fascism "everything that isn't done out of the kindness of their hearts" is a tad too simplistic. As a method to heat up a thread it's just fine, of course.

by Katrin on Mon Mar 18th, 2013 at 08:37:36 AM EST
[ Parent ]
It might be if I actually said that.

But you seem to have skipped the rather more important part about greed, etc.

Never mind.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 18th, 2013 at 09:25:30 AM EST
[ Parent ]
It is important to note that the word used here is 'fascism', not Nazism. It is not necessary to fulfill the definition of being a Nazi in order to be a fascist. See Mussolini and Franco and consider the current situation in the USA. When powerful corporations control the selection of the candidates for the presidency, either control or can deadlock the House and Senate and have acquired a majority on the Supreme Court, when we have a domestic surveillance state that puts to shame anything from the first half of the 20th century and when we spend more on 'defense' than all of the rest of the world combined does it really matter that the shot callers have refrained from overtly exercising their power?  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 12:48:59 PM EST
[ Parent ]
That, of course, makes 'our' NATO allies fascist client states.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 12:50:32 PM EST
[ Parent ]
So Germany fascist -> ally Finland fascist client state

USA fascist -> Germany, UK, France etc. fascist client states.

Well and this started with Nixon or what?

But then this crisis didn't change anything anyway.

by IM on Mon Mar 18th, 2013 at 12:58:37 PM EST
[ Parent ]
Well, Eisenhower understood the problem of the Military Industrial Complex and spoke about it in one of his last speeches as President, and then there is the remaining question about why Kennedy was assissinated and LBJ's escalation in Vietnam before we even get to Nixon's presidency, which was brought down.

I see the '70s as the dividing line. It was then that conservative, libertarian billionaires, working through think tanks and owned media, escalated the economic propaganda to make NCE our economic frame. That was sufficiently successful that Democrat Jimmy Carter was the one who began deregulation. Then Reagan was elected and these same interests had a true believer in the White House who advocated a strong version of deregulation and under whom the looting by the financial sector really became airborne.

Better yet, Ronnie knew how to hit his marks and deliver his message as he had been doing since "Death Valley Days" while being only too happy to delegate the messy details to cabinet members such as Ed Meese, ("watch what we do, not what we say",  and Casper Weinberger and the 'Star Wars' Boys, while laying on the "Evil Empire" rhetoric with regard to the Soviets. It was only when Reagan's more human sentiments intruded that he produced problems, as during the infamous Reykjavík summit with Gorbachev, when he was ready to completely eliminate nuclear weapons before others talked him down.

Bush 41 was certainly a 'national defense' insider and allied with corporate power while publicly speaking about the 'invisible hand' of economics and Clinton learned how to be a proper servant of wealth, as demonstrated by his choice of Robert Rubin as Sec. Treasury, Larry Summers as Chairman of the Council of Economic Advisers and his re-appointment of Greenspan to the Fed, as well as by signing off on the repeal of Glass-Steagall and the Futures Trading Modernization Act. The extreme libertarians and the fundamentalists might have hated Clinton but Wall Street certainly did not. (Aspects that thankfully have not become an integral part of the bi-partisan US corporatocracy are white racism and Christian Fundamentalism - yet.)

My own view is that the US REALLY became, effectively, a fascist state after 911. The national security legislation, the invasion of Iraq, the blatant lies served up by Cheney, et al. the trashing of the FBI's program to investigate mortgage lending fraud by reassigning all the agents to 'national security' duties and Rove's overreach in thinking he could make the Republican Party the permanent governing party are all factors.

And the fact that Obama has doubled down on so much of what Bush 43 put in place and refuses to countenance the enforcement of the law against Wall Street fraudsters are indicators that the USA is now a very different country than it was in 1960, when I graduated from high school. I don't like knowing I am living in a fascist state any more than you like being accused of living in a fascist client state, but I like the pretense that this is not the case even less.

I am over 70 and have no job from which I can be fired for saying unpopular things, so it is my duty to be honest about what I see.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 02:39:40 PM EST
[ Parent ]
That doesn't matter. Fascist has a meaning, at least a rough meaning too. Was in your opinion FDR a fascist? Some of his measures in 1933 were legally dubious and violated property rights.

In one of my old school books there was map showing democratic and non-democratic states in europe in 1929 and 1933. You imagine what happened: everything east of the Rhine and south of them mountains switched to dictatorship. And all right-wing dictatorship. But that doesn't means fascist. There were only two fascist states: Germany and Italy.

Now Hungary was traveling down the road to fascism in the mid-thirties and you can quibble about other countries.

But a definition that would have subsumed Germany and Latvia or Estonia as both fascist in the thirties is obviously meaningless.

So yes, fascism is an italian invention and doesn't needs to have all the defining traits of nazism.
But still the term has a meaning and shouldn't be used as term for anything someone doesn't likes.

by IM on Mon Mar 18th, 2013 at 01:10:55 PM EST
[ Parent ]
Property rights are not the issue.

In practical terms, fascism is simply the political wing of social darwinism - hence contempt for the weak and marginalised, and the overt glorification of expansionist narcissism on various spurious racial, financial, or religious grounds.

(There's also a rather obvious urge to self-destruction, but that's something I'll leave to the psychologists.)

So... stealing money is not fascism.

Stealing money from poor people while justifying it on the grounds of one's own specialness and ability to hover disdainfully over normal civilised norms certainly is - with extra points for blaming the weak while abusing them.

Interestingly, it seems that Schäuble's account of himself as a bulwark of reasonableness against the perfidy of the Cypriot establishment may be less than totally candid.

Is this true? Who knows.

Is it plausible? Unfortunately so.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 18th, 2013 at 02:42:07 PM EST
[ Parent ]
No one is talking anymore how much fascism was a reaction to communism. And perhaps a very deliberate, synthetic reaction: national-socialism as a substitute for Marxist socialism, funding of fascist parties... Of course, the same package will be convenient in modern circumstances as well.
by das monde on Mon Mar 18th, 2013 at 02:55:25 PM EST
[ Parent ]
<Stealing money from poor people while justifying it on the grounds of one's own specialness and ability to hover disdainfully over normal civilised norms certainly is - with extra points for blaming the weak while abusing them.<<p> Looks like a goods working definition of most organized religion.
by IM on Mon Mar 18th, 2013 at 03:27:16 PM EST
[ Parent ]
Was in your opinion FDR a fascist? Some of his measures in 1933 were legally dubious and violated property rights.

No, FDR was an opponent of the excessive power of Wall Street over government policy. And he was never overtly anti-democratic in the USA. He signed the Wagoner's National Labor Relations act, which was the foundation for the flourishing of the labor movement in the USA. His opponents, such as the leaders of The Businessman's Plot in 1933 were also supporters of Hitler who they admired because of the effective way in which he dealt with labor. The plot came to light because they attempted to recruit Gen. Smedley Butler, who, instead, went to Congress and denounced the plot and attempted coup.

FDR did tolerate vicious dictatorships in client states and noted of Somoza that 'he might be an SOB, but he was our SOB', and he was tolerant of white racism in the South as he wanted to retain 'The Solid South'. But, had he wished, he could have broken some of the leaders of  major corporations over the Businessman's Plot, but didn't. And DuPont, IBM, Ford, etc. continued to do business with Hitler even after Pearl Harbor, though they at least had the grace to disguise their participation. Prescott Bush, father of GHW Bush, through Brown Harriman Bank, and the Dulles brothers Allen and John Foster, who went on to be CIA Director and Secretary of State, through Sullivan and Cromwell were both heavily involved in legal aspects of US corporations trading with Germany. Many of these relationships helped Germany and harmed the USA during WW II. Much of the leadership and sponsorship of the Republican Party from the 20s through the 50s were, during Hitler's time, tacitly pro-Nazi. They were FDR's political opponents.


"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 04:47:30 PM EST
[ Parent ]
This is silly. There is an entire academic sub-discipline which works on nothing but the definition of fascism, the "fascist minimum" (a number of things which have to be fullfiled for a regime or movement to qualify for fascism, see Griffin et al.).

A fascist is not just some right-wing authoritarian guy you don't like. This use of the word is a Soviet hold-over, as the Stalinists hardly could call the Nazis National Socialists (uh-oh) so instead they called them Fascists. They still do that in Russia.

Anyway, after the war many European hard left parties were more or less remote-controlled from Moscow, and their exposure to Soviet propaganda influenced the words they used. Nazis became fascists, missiles became rockets, and atomic never changed into nuclear. Hence you could hear people in the so-called peace movement of the 80's protesting against the deployment of "atomic rockets".

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Mar 18th, 2013 at 04:52:59 PM EST
[ Parent ]
This casts a very interesting light on Sara Palin's name. (From the Griffin link):

Palingenetic ultranationalism is a theory concerning generic fascism formulated by British political theorist Roger Griffin.[1][2] The key elements are that fascism can be defined by its core myth, namely that of "national rebirth" -- palingenesis.[1][2] Griffin argues that the unique synthesis of palingenesis and ultranationalism differentiates fascism from para-fascism and other authoritarian nationalist ideologies.

For me the more generic aspect of fascism is the state's appropriation of the right to define everything to its satisfaction and use force to insure compliance. It is sort of an abstraction from Hannah Arendt's The Origins of Totalitarianism as remembered from my grad school days. One of Mig's sig lines highlights this in terms of the operational attitude of most police organizations.

I will have to more carefully read Griffin before I can say whether his definition is more intended to demonstrate who is vs. who is not a fascist. (I.E. 'Not us, certainly!')

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 06:18:20 PM EST
[ Parent ]
You mean this one?

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Mon Mar 18th, 2013 at 06:23:25 PM EST
[ Parent ]
Yes.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 07:25:53 PM EST
[ Parent ]
For me the more generic aspect of fascism is the state's appropriation of the right to define everything to its satisfaction and use force to insure compliance.

Using this definition, even communism becomes fascism. This might be useful in some ways (like when you want to say that you don't like commies ("they're fascists!" (thus ironically using a Soviet-communist nomenclatura...)), but it's certainly not very stringent.

Your definition of fascism is pretty close to what I would just call "totalitarianism". Fascism is totalitarian, but not all totalitarianism is fascism.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Mar 18th, 2013 at 07:00:42 PM EST
[ Parent ]
The term 'fascism' comes from the fascies, or bindings, that held together the bundle of rods around the headmans's axe that the fascista carried. Those bindings also symbolized those that bound together the community in a common morality. But the modern useage more commonly gives priority to corporatism as the guiding principle - what ever the corporatists want. But, historically, the fascist government gets away from the control of the corporatists even as it continues to serve their interests, at least in the view of the state.

A more polite description is that the USA is run by a commercial oligarchy, per Lewis Lapham:

As was true in the early years of the Republic the country is governed by a commercial oligarchy. And a citizen who cannot afford the luxury of a contrary opinion learns of necessity to dance the beggars waltz.

What has changed is that significant elements of that oligarchy, through their financial support of the electoral process, have come to be self consciously above the reach of laws that should affect how the operate their businesses. The government has come to be the instrument through which they control the country to their benefit and that government has developed practical omniscience concerning the activities of the citizens which is turned against those citizens who challenge their actions, even when those challenges are of the nature of a conscientious objection. The Bradley Mannings and Aaron Schwartz's of the contemporary scene have the full power of the state turned against them with massively disproportionate charges being filed as an example to others.  
 

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 08:07:55 PM EST
[ Parent ]
Daily Kos: Oh, F*ck No - He Did Not Just Make A Joke About Rape

To a certain extent, the culture of obedience being focused on compliance -- i.e. the desired result -- distracts us from the fact that exacting obedience is coercive and, indeed, the very essence of abuse. Moreover, people who assume that other people exist to be useful to them don't even know what abuse means. It doesn't occur to them that people exist to be respected, not exploited.

Mostly, I suspect, the people who fall into the category of exploiters do so because, other than the gift of gab, they are bereft of practical talents whose fruits they might offer in exchange for what they need from others. It's even possible that the whole "science" of economics was developed by such people in an effort to provide a rational excuse for their own behavior. Why else start from the assumption that the economy is driven by demand? Why not, instead, suggest that trade and exchange are driven by surplus and a desire not to have it go to waste? Because the latter scenario does not comport with the experience of people whose hands are hinged backwards and whose understanding of process is nil.

Dominators coerce. Maybe they're just acting on instinct and don't know what they do. Germans have a saying that encapsulates the attitude: "If you're not compliant, I'll have to use force."  Thus, the cause of the use of force is ascribed to the victim. Compliance (obedience) is presumed to be a virtue. It's not. If humans have rights, then coerced obedience is abuse.

interesting comment that somewhat pertains, perhaps.


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Mar 18th, 2013 at 03:05:39 PM EST
[ Parent ]

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