Quote of the Day: Cyprus and the Euro

Here it is:

"For a small, open economy like Cyprus, euro adoption provides protection from international financial turmoil."

These were the words of Jean-Claude Trichet, then-president of the European Central Bank, on January 18, 2008.  What a difference 5 years make!

You Can't Spell "Cypriot" Without "Riot"

It's been a few days since the news broke, and the angry aftermath has set in.  Protests in Nicosia, the revolt of the Cypriot lawmakers against the bailout proposal, and the prospect of no end to the debt crisis.

I am bemused by how some people/analysts/bureaucrats are calling the proposed "let's grab a chunk of depositors' money" ploy the Orwellian term of "deposit levy" or even "tax."  I'll just quote a piquantly relevant response:

This is not really about Cyprus, of course, but about the precedent that is being set there. In exchange for an infusion of capital into the nation's banks, Cyprus is being asked to impose a "special bank levy" ... This is described as a "wealth tax," except that it's not a tax. A tax is a regular rule that operates uniformly according to a pre-determined formula. A one-time, ad hoc seizure of money isn't a tax. It is confiscation. Or we can use a plainer word for it: theft.

If you want a Puckish application of this whole mess, I give you the incomparable Instapundit, who recently suggested:

... an enterprising GOP member of the House or Senate would introduce a bill immediately to make such shenanigans illegal — and dare the Dems to oppose it.

Put those Dems on the defense.  It's a brilliant idea ... which means establishment GOP leaders and pseudo-cons will be too stupid to adopt it.  Hey, Rand Paul, are you listening?

Quote of the Day: the Bailout Debacle in Cyprus

Have you been watching the nightmare unfolding in Cyprus over the weekend?  It actually took me a couple hours before I could believe what I was seeing.  Imagine waking up and realizing that 6.7% to 9.9%  3%-15% (updated figures) of your savings accounts have been - oh, let's just say it - confiscated.  It might be a way to get back at dodgy Russian oligarchs using Cyprus and possibly money-laundering and whatever, but it's a horrible precedent and plenty of ordinary Cypriots are getting screwed.  This passionate rant gives us the quote of the day:

"The establishment of the principle that a government can, and at times of economic strain must, help itself to your savings, and that this is a legitimate tool of statecraft, ought to provoke riots. I am amazed at the tranquillity with which it has been accepted so far."

Perhaps there aren't any riots yet because everybody is right now busy sprinting to the ATMs.  Hell, I would!  Once folks figure out that they can't get to their money, then I'll expect panic to turn into rage.

Hey, remember all that crazy talk about how cash-strapped governments might start raiding people's retirement accounts?  Doesn't sound so crazy now, does it?  Meanwhile, all those jokes that the Cine-Sib and I used to make about putting your money into your mattress instead of a bank ("Haha, I'm sure my Sealy Posturepedic can give me a better interest rate") now aren't so funny anymore.

Anyway, the thought occurs to me as I watch Cyprus: the leadership in the euro zone could scarcely do a better job of crashing that country if they were trying to do so.  I mean, look at what's been done in the name of "saving it."  When you spark panicked bank runs in the name of saving anything, I think it's fairly safe to say that you've screwed the proverbial pooch.

PS: Interesting (and prescient) anecdote.