monetary

Cyprus: Savage Austerity Measures and Economic Dictatorship

depression

By Jordan Shilton and Chris Marsden

Global Research, March 24, 2013

Cyprus’ fate illustrates how the European Union imposes the dictatorship of the global speculators, banks and corporations on the working class. The EU yesterday continued to demand massive austerity in Cyprus to raise €6 billion ($7.8 billion) in return for a €10 billion bank bailout.

The island country has been the centre of an escalating financial crisis, with its parliament voting Wednesday to reject proposals to raise the necessary funds by taking money from anyone with deposits in Cypriot banks.

A new vote on whether to impose a “haircut” on depositors was delayed until today. The EU and European Central Bank (ECB) dismissed proposals by Cypriot politicians—themselves wholly reactionary—to create a “solidarity fund” to raise the six billion demanded.

Cyprus’s aim was to preserve its financial relations with Russia and force workers to pay the price by nationalising pension funds to pay the debts of the super-rich. Other proposals included seeking contributions from the church and selling gold reserves—all in order to avoid levying a significant one-off levy on major depositors.

However, the EU bluntly dismissed these measures as insufficient. German Chancellor Angela Merkel declared baldly after a parliamentary meeting of the Christian Democratic Union (CDU), “We want Cyprus to remain in the euro zone”, but insisted that its “current business model is dead.”

The ECB has insisted that the levy on investors should be re-imposed—this time with a widely-anticipated penalty of 15 percent on depositors with balances over €100,000, as initially rejected by Nicosia. If not, it was made clear that proposals had been discussed to prepare for and limit the impact of a Cypriot exit from the euro zone. (more…)

Cyprus Banking Crisis for Dummies

Posted on March 18, 2013 by WashingtonsBlog


Bank Customer Trying to Get His Honey Out of His Bank During Cyprus Bank Holiday

Ground Zero of Financial Repression

You’ve heard that the tiny European country Cyprus is threatening to grab between 3 and 13% of bank depositors’ funds in return for a bailout of the country by the European Union.

Zero Hedge reports that Germany’s Finance Minister and the IMF originally demanded that 40% of bank deposits be looted.

Sajiyat Das notes:

Irrespective of the fate of Cyprus, the solution adopted will exacerbate the European debt crisis.

Many commentators note that the deposit grab may cause panic among bank depositors in Spain and other vulnerable countries as well. Indeed, many are asking whether this could be a modern Creditanstalt situation. Another common analogy is that this could be “worse than Lehman” failing.

On the other hand – given that the entire economy of Cyprus is smaller than that of Shreveport, Louisiana, and that Cyprus is mainly a parking spot for hot money from Russian oligarchs and mafia – some say that the whole crisis will quickly blow over.

What’s the bigger picture? Bank deposit grabs may spread to other vulnerable European countries. The New York Times reports:

Jeroen Dijsselbloem, the president of the group of euro area ministers, declined early Saturday to rule out taxes on depositors in countries beyond Cyprus.

And the chief economist of the German Commerzbank has called for private savings accounts in Italyto be similarly plundered:

A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product.

Indeed, Zero Hedge has been warning about this kind of scenario for years.

Why are they doing it? (more…)

Savers across Europe will look on in horror at the Troika’s raid on Cyprus

It’s now become clear: the threat to European savers and banks isn’t anti-austerity parties but the Troika

The GuardianSunday 17 March 2013 17.06 GMT

People withdraw money from a cashpoint machine in the Cyprus capital, Nicosia

Account-holders withdraw money from a cash machine in the Cyprus capital, Nicosia. Photograph: Barbara Laborde/AFP/Getty Images
 

The imposition of a levy on savers in Cypriot banks marks a new turn in the European crisis. Savings of over €100,000 will be subject to a 10% tax, and those under €100,000 one of 6.7%, although it’s reported these levels may change. The raid has been instructed by the “Troika” – the European commission, the IMF and the European Central Bank – as part of a characteristic “take it or leave it” ultimatum to the Cypriot government. The parliament in Nicosia is being pressed to ratify the deal with the threat that without it there will be no bailout funds and the ECB will withdraw all liquidity support to the stricken banks.

The Troika and its supporters have justified the levy by arguing that the state could not support the debt burden of a bank bailout. But this simply means the debt burden has been transferred from the banks, where it properly belongs, to households, who had no part in their lending decisions.

As part of that propaganda campaign, the focus has been on Russian oligarchs and tax evaders who have been laundering funds through Cypriot banks. In fact, among those caught in the upper savings bracket are bound to be pensioners for whom this represents their entire life savings, and others who have recently borrowed enough money to buy a modest home. But even if only oligarchs were affectedE, this is surely an admission of guilt by the European and international authorities, who are responsible for the global regulation of banks and co-ordinating anti-money laundering activities. Their own failure can hardly be a justification for expropriating the small savers of Cyprus. (more…)

The dark side of investment agreements

Movements around the world have put the spotlight on bailouts and tax evasion that have enriched the 1% at the expense of the 99% but this is only part of the picture. This popular video animation exposes how international investment agreements are also at the heart of an international economic system that is enriching a small corporate elite at the public expense. This video shows how:
•corporate lawsuits against governments have risen by almost 1200% since 1990 •Argentina’s legal bill for fighting corporate lawsuits has come to US$ 912 million, equivalent to the annual average salary of 140,000 teachers or 75,000 public hospital doctors
• corporate lawyers, based mainly in the UK and US, are earning around $800 dollars an hour encouraging corporations to sue governments

 

 

 

The EU Crisis Pocket Guide

2012 edition

6 November 2012

A useful pocket guide on how a crisis made in Wall Street was made worse by EU policies, how it has enriched the 1% to the detriment of the 99%, and outlining some possible solutions that prioritise people and the environment above corporate profits.

The EU Crisis Pocket Guide has been updated in English (November 2012)

Now also in Italian!

Click here for the Spanish version

Contents

  • How a private debt crisis was turned into a public debt crisis and an excuse for austerity
  • The way the rich and bankers benefited while the vast majority lost out
  • The devastating social consequences of austerity
  • The European Union’s response to the crisis: more austerity, more privatisation, less democracy
  • Map of resistance across the EU in 2012
  • Ten alternatives put forward by civil society groups to put people and the environment before corporate greed
  • Resources for further information

  (more…)

Greece: “A promise from the army has been obtained to not intervene against a civil uprising” Explosive revelations from a former Greek diplomat.

It is always enlightening to hear the frank assessment of a diplomat upon leaving the service, once unshackled from “the patriotic art of lying for one’s country”, as 19th Century American journalist Ambrose Bierce described the craft.

Leonidas Chrysanthopoulos was a career diplomat with the Greek foreign ministry. As a junior officer with the service in the 1970s, he helped assure the then freshly democratic nation’s accession to the European Union (at the time the EEC). He was at different times Athens’ ambassador to Poland, Albania and Canada, and finally the director general of EU Affairs in the ministry.

Last year, he finally resigned as secretary general of the Black Sea Cooperation organisation, and entered the private sector, and now feels free to speak openly about his fury at what he says Europe and international lenders are doing to his country.

“At a certain moment, quite soon, there will be an explosion of social unrest. It will be very unpleasant,” he says, referring to 15 armed incidents in the previous ten days. In the past few weeks, offices of the governing parties have been firebombed as well as the homes of pro-government journalists. The headquarters of the prime minister’s conservative New Democracy party was machine-gunned, and days later a bomb exploded at a shopping mall belonging to the country’s second wealthiest citizen, although no one has been badly injured by the attacks.

“It is an escalation of activities,” he worries, adding that he expects the “explosion” to occur sooner rather than later. He predicts the spark will be when new, retroactive and sizeable tax bills come due in the coming months that people simply cannot pay. “There will be further increases in armed actions. There will be bloody demonstrations.” (more…)

A MERCENARY FORCE TO PROTECT POLITICIANS Excerpts from an interview given by Ambassador Leonidas Chrysanthopoulos to the German TELEPOLIS (Vasilis Asvestopoulos) on February 7, 2013

On the occasion of recent developments in Greece, Telepolis spoke to the Greek Ambassador Leonidas Chrysanthopoulos. The restless diplomat has been involved since some time with EPAM, one of the many organizations that have been fighting against the austerity measures. The leader of EPAM, the economist Dimitris Kazakis speaks on a daily basis on radio broadcasts, providing an analysis of the existing situation, with very high ratings, but has not yet convinced many voters.

Chrysanthopoulos was responsible for an issue that made news in the Greek press last week. In an interview that he gave to the Canadian Electronic Newspaper Millstone, he announced in December 2012,that the Greek Government had signed a contract with the American security firm Blackwater-which has been renamed to Academi, by which it would protect the Government and Parliament against civil unrest. It probably represents the first use of mercenaries outside an official war zone.

Only then did the topic became an issue in Greece. From the blogs it found its way to the printed press. Further Reports are expected in the weekend press as well as in the New Statesman.

What do you have to say about this?

(more…)