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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsPaul Krugman: Cyprus Bailout Will Push Europeans To Stage A Run On Their Banks
European leaders are essentially inviting their fellow countrymen to make a run on the banks, according to Paul Krugman.
The Nobel Prize-winning economist and New York Times columnist wrote in a blog post Sunday that the proposed bailout of the Cyprus banking system, which requires a tax on bank deposits, will push other Europeans to run to their banks in a panicked race to withdraw their money out of fear they'll face a similar tax.
The Cyprus bailout is the first time European leaders have required depositors share the burden of rescuing a crisis-plagued European nation, which could open the door to including the requirement for bailouts of bigger countries like Spain, Italy or Greece.
Its as if the Europeans are holding up a neon sign, written in Greek and Italian, saying time to stage a run on your banks! Krugman wrote in the blog post.
MORE...
http://www.huffingtonpost.com/2013/03/17/paul-krugman-cyprus-bailout_n_2896945.html?utm_hp_ref=business
BootinUp
(47,144 posts)last thing we need is more financial market instability/bank solvency scares
magellan
(13,257 posts)I don't think Krugman is saying anything that Europeans in other troubled EU countries aren't thinking. I don't know who the genius was behind the idea of taxing Cypriot bank deposits or why they felt this was their only option, but I'd have to say they can't be very familiar with human nature if they thought this wouldn't spread some panic.
Benton D Struckcheon
(2,347 posts)I can't figure it out.
dkf
(37,305 posts)Keep in mind the Russians have been using Cyprus banks to launder their money. Thus the Germans aren't enthused about bailing out the Russian mafia.
To through these sources and you'll get the full picture.
http://www.businessinsider.com/twitter-beats-the-sell-side-after-cyprus-bailout-2013-3
Benton D Struckcheon
(2,347 posts)Most interesting thing I see so far is that Pawel guy's bit about sending a msg that peripheral country debt is safer than putting it in a peripheral bank. John Dizard, a columnist for the FT, said a week or two back that the hedgies were in Cypriot debt because they knew that would be good money. Looks like he, and the hedgies, were right.
The opening of the currency markets is going to be major fun. Yeesh.
dkf
(37,305 posts)Cerridwen
(13,258 posts)What a great saying that is. It justifies all kinds of wondrous and profitable moves by our betters. Just think what it must be like to treat people and their money as nothing more than pawns in the great capitalistic game of markets with invisible hands.
"It's just business; nothing personal."
Coool! Isn't it?
Oh, and for the sarcasm impaired, I have a present.
rhett o rick
(55,981 posts)consciences. Those that try most often get eaten alive. The sole goal of a business is to make a profit. They will push the regulations to get a jump on competition. It's up to us to keep them in check. They exist at our pleasure and we need to control them. Expecting businesses to act morally is distracting from our job to regulate them.
HereSince1628
(36,063 posts)When a facade is constructed as a palisade, a barrier to keep out the rabble, it's called a castle.
When the primary occupation of the resident of a castle is to direct wealth transfer, such establishments are the Great Halls of robber barons.
They need to be checked, but the ediface of business provides them protective walls.
Some among us have noticed that the robber barons have used their resources and influence for the specific purpose of minimizing our capacity to do that. They have achieved a noble status mostly beyond our reach.
The pirate princes control government and direct militarized police forces against any who would even clamor about the abuses following from 'business decisions' made behind the insulating walls of the facade.
rhett o rick
(55,981 posts)MidwestTransplant
(8,015 posts)The citizens of the next country that gets in trouble and needs a bailout (Spain, Italy or Greece again), will have a run on the banks once there is speculation it is coming. In reality 10% was a small price to pay because if they had their Euro denominated deposits paid back in a new currency at 1 for 1, they would have been in far worse condition than being down 10% but how this will play out in the psyche of people is another matter.
hobbit709
(41,694 posts)the rest of my money would be in a lockbox at home.
malaise
(268,980 posts)so that the fugging international banks can rip them off.
Whatthefuck ever happened to representative government? Who do they represent - certainly not ordinary citizens.
The IMF has told the Jamaican government to remove billions (JA dollars) from our National Housing Trust.