“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Paul Krugman: Treasure Island Trauma

A couple of years ago, the journalist Nicholas Shaxson published a fascinating, chilling book titled “Treasure Islands,” which explained how international tax havens – which are also, as the author pointed out, “secrecy jurisdictions” where many rules don’t apply – undermine economies around the world. Not only do they bleed revenues from cash-strapped governments and enable corruption; they distort the flow of capital, helping to feed ever-bigger financial crises. [..]

So, about Cyprus: You might wonder why anyone cares about a tiny nation with an economy not much bigger than that of metropolitan Scranton, Pa. Cyprus is, however, a member of the euro zone, so events there could trigger contagion (for example, bank runs) in larger nations. And there’s something else: While the Cypriot economy may be tiny, it’s a surprisingly large financial player, with a banking sector four or five times as big as you might expect given the size of its economy.

Mary L. Dudziak: Obama’s Nixonian Precedent

ON March 17, 1969, President Richard M. Nixon began a secret bombing campaign in Cambodia, sending B-52 bombers over the border from South Vietnam. This episode, largely buried in history, resurfaced recently in an unexpected place: the Obama administration’s “white paper” justifying targeted killings of Americans suspected of involvement in terrorism.

President Obama is reportedly considering moving control of the drone program from the Central Intelligence Agency to the Defense Department, as questions about the program’s legality continue to be asked. But this shift would do nothing to confer legitimacy to the drone strikes. The legitimacy problem comes from the secrecy itself – not which entity secretly does the killing. Secrecy has been used to hide presidential overreach – as the Cambodia example shows.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

March 22 is the 81st day of the year (82nd in leap years) in the Gregorian calendar. There are 284 days remaining until the end of the year.

On this day in 1784, the Emerald Buddha is moved with great ceremony to its current place in Wat Phra Kaew, Thailand.

The Emerald Buddha is the palladium of the Kingdom of Thailand, a figurine of the sitting Buddha, made of green jadeite (rather than emerald), clothed in gold, and about 45 cm tall. It is kept in the Temple of the Emerald Buddha (Wat Phra Kaew) on the grounds of the Grand Palace in Bangkok.

According to the legend, the Emerald Buddha was created in India in 43 BC by Nagasena in the city of Pataliputra (today’s Patna). The legends state that after remaining in Pataliputra for three hundred years, it was taken to Sri Lanka to save it from a civil war. In 457, King Anuruth of Burma sent a mission to Ceylon to ask for Buddhist scriptures and the Emerald Buddha, in order to support Buddhism in his country. These requests were granted, but the ship lost its way in a storm during the return voyage and landed in Cambodia. When the Thais captured Angkor Wat in 1432 (following the ravage of the bubonic plague), the Emerald Buddha was taken to Ayutthaya, Kamphaeng Phet, Laos and finally Chiang Rai, where the ruler of the city hid it. Cambodian historians recorded capture of the Buddha statue in their famous Preah Ko Preah Keo legend. However, some art historians describe the Emerald Buddha as belonging to the Chiang Saen Style of the 15th Century AD, which would mean it is actually of Lannathai origin.

Historical sources indicate that the statue surfaced in northern Thailand in the Lannathai kingdom in 1434. One account of its discovery tells that lightning struck a pagoda in a temple in Chiang Rai, after which, something became visible beneath the stucco. The Buddha was dug out, and the people believed the figurine to be made of emerald, hence its name. King Sam Fang Kaen of Lannathai wanted it in his capital, Chiang Mai, but the elephant carrying it insisted, on three separate occasions, on going instead to Lampang. This was taken as a divine sign and the Emerald Buddha stayed in Lampang until 1468, when it was finally moved to Chiang Mai, where it was kept at Wat Chedi Luang.

The Emerald Buddha remained in Chiang Mai until 1552, when it was taken to Luang Prabang, then the capital of the Lao kingdom of Lan Xang. Some years earlier, the crown prince of Lan Xang, Setthathirath, had been invited to occupy the vacant throne of Lannathai. However, Prince Setthathirath also became king of Lan Xang when his father, Photisarath, died. He returned home, taking the revered Buddha figure with him. In 1564, King Setthathirath moved it to his new capital at Vientiane.

In 1779, the Thai General Chao Phraya Chakri put down an insurrection, captured Vientiane and returned the Emerald Buddha to Siam, taking it with him to Thonburi. After he became King Rama I of Thailand, he moved the Emerald Buddha with great ceremony to its current home in Wat Phra Kaew on March 22, 1784. It is now kept in the main building of the temple, the Ubosoth.

Earlier this week it was leaked to the press by those “anonymous White House sources” that the CIA’s drone program would be gradually transferred to the Pentagon supposedly making oversight by Congress more transparent and according to Daniel Klaidman, who first reported the shift at the Daily Beast it would also toughen the “criteria for drone” strikes and “strengthen the program’s accountability:”

Currently, the government maintains parallel drone programs, one housed in the CIA and the other run by the Department of Defense. The proposed plan would unify the command and control structure of targeted killings and create a uniform set of rules and procedures. The CIA would maintain a role, but the military would have operational control over targeting. Lethal missions would take place under Title 10 of the U.S. Code, which governs military operations, rather than Title 50, which sets out the legal authorities for intelligence activities and covert operations. [..]

Officials anticipate a phased-in transition in which the CIA’s drone operations would be gradually shifted over to the military, a process that could take as little as a year. Others say it might take longer but would occur during President Obama’s second term. [..]

uring that time, CIA and DOD operators would begin to work more closely together to ensure a smooth hand-off. The CIA would remain involved in lethal targeting, at least on the intelligence side, but would not actually control the unmanned aerial vehicles. Officials told The Daily Beast that a potential downside of the agency’s relinquishing control of the program was the loss of a decade of expertise that the CIA has developed since it has been prosecuting its war in Pakistan and beyond. At least for a period of transition, CIA operators would likely work alongside their military counterparts to target suspected terrorists.

Spencer Ackerman at The Wire, doesn’t think that this is much of a change. The CIA will still be involved telling military personnel what and who to target. Nor does Ackerman think that the program will be more transparent:

The congressional reporting requirements for so-called Title 50 programs (stuff CIA does, to be reductive) are more specific than those for Title 10 (stuff the military does, to be reductive). But the armed services committees tend to have unquestioned and broader oversight functions than the intelligence committees enjoy, not to mention better relationships with the committees: Witness the recent anger in the Senate intelligence committee that the CIA lied to it about its torture programs. The military is more likely than the CIA to openly testify about future drone operations, allow knowledgeable congressional staff into closed-door operational briefings and allow members of Congress to take tours of drone airbases.

As, Klaidman pointed out this could lead to even less transparency since there is nothing in the law that requires the military to account for its lethal operations while the CIA is obligated to report its activities.

Sen. Diane Feinstein (D-CA), the chair of the Senate Intelligence Committee which has oversight of the CIA, expressed her concerns

Feinstein told reporters her “mind, certainly, is not made up.” But she quickly added she has reservations about turning over to the military the CIA’s armed drone fleet and the missions they conduct.

   During the last few years, she said, “We’ve watched the intelligence aspect of the drone program: how they function. The quality of the intelligence. Watching the agency exercise patience and discretion,” Feinstein said.

   “The military [armed drone] program has not done that nearly as well,” she said. “That causes me concern. This is a discipline that is learned, that is carried out without infractions…. It’s not a hasty decision that’s made. And I would really have to be convinced that the military would carry it out that way.”

Sen. John McCain (R-AZ) preferred the program be transferred to Defense bringing it under the House and Senate Armed Services Committees:

“I believe the majority of the responsibility for this should rest with the military,” McCain told reporters Tuesday. [..]

“The majority of it can be conducted by the Department of Defense,” McCain said. “It’s not the job of the Central Intelligence Agency. … It’s the military’s job.”

Transferring the program to the Pentagon — and under the auspices of the House and Senate Armed Services committees — would create more “openness” and “oversight” and public hearings about the program, he said.

In reality, the Obama administration would still be running a secretive and questionably legal program.

Rachel Maddow, host of MSNBC’s “The Rachel Maddow Show,” gives a a short history of the CIA and talks with former congressman and now MSNBC contributor, Patrick Murphy, who served on the House Armed Services Committee, about oversight of the drone program.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

New York Times Editorial: The Sequester Hits the Reservation

The Congressional Republicans who brought us the mindless budget cuts known as the sequester have shown remarkable indifference to life-sustaining government services, American jobs and other programs. So what do they make of the country’s commitments to American Indians, its longstanding obligations to tribal governments under the Constitution and treaties dating back centuries? [..]

Here lies a little-noticed example of moral abdication. The biggest federal health and safety-net programs – Social Security, Medicaid, the Children’s Health Insurance Program, the Supplemental Nutrition Assistance Program, Supplemental Security Income, and veterans’ compensation and health benefits – are all exempt from sequestration. But the Indian Health Service is not.

Sen. Sanders: The Grand Bargain Could be Grand Sellout

The media appear fixated about when and if a so-called “grand bargain” on our economy will be reached. Wrong question! The question we should be asking is: What should be in a “grand bargain” that works for the average American?

At a time when the middle class is disappearing, 46 million Americans are living in poverty and the gap between the very rich and everyone else is growing wider, we need a “grand bargain” that protects struggling working families, not billionaires. [..]

A federal budget is not just a set of numbers. It is a value statement of what we, as a nation, stand for. We must fight for a grand bargain that stands for justice, opportunity and the needs of our middle class. We must reject any approach that continues the economic assault on working families.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

March 21 is the 80th day of the year (81st in leap years) in the Gregorian calendar. There are 285 days remaining until the end of the year.

March 21st is the common date of the March equinox (although astronomically the equinox is more likely to fall on March 20 in all but the most easterly longitudes). In astrology, the day of the equinox is the first full day of the sign of Aries. It is also the traditional first day of the astrological year.

On this day in 1804, the Napoleonic Code approved in France.

After four years of debate and planning, French Emperor Napoleon Bonaparte enacts a new legal framework for France, known as the “Napoleonic Code.” The civil code gave post-revolutionary France its first coherent set of laws concerning property, colonial affairs, the family, and individual rights.

In 1800, General Napoleon Bonaparte, as the new dictator of France, began the arduous task of revising France’s outdated and muddled legal system. He established a special commission, led by J.J. Cambaceres, which met more than 80 times to discuss the revolutionary legal revisions, and Napoleon presided over nearly half of these sessions. In March 1804, the Napoleonic Code was finally approved.

The Napoleonic Code, or Code Napoléon (originally, the Code civil des Français), is the French civil code, established under Napoléon I in 1804. The code forbade privileges based on birth, allowed freedom of religion, and specified that government jobs go to the most qualified. It was drafted rapidly by a commission of four eminent jurists and entered into force on March 21, 1804. The Napoleonic Code was not the first legal code to be established in a European country with a civil legal system, it was preceded by the Codex Maximilianeus bavaricus civilis (Bavaria, 1756), the Allgemeines Landrecht (Prussia, 1794) and the West Galician Code, (Galicia, then part of Austria, 1797). It was, however, the first modern legal code to be adopted with a pan-European scope and it strongly influenced the law of many of the countries formed during and after the Napoleonic Wars. The Code, with its stress on clearly written and accessible law, was a major step in replacing the previous patchwork of feudal laws. Historian Robert Holtman regards it as one of the few documents that have influenced the whole world.

Contents of the Code

The preliminary article of the Code established certain important provisions regarding the rule of law. Laws could be applied only if they had been duly promulgated, and only if they had been published officially (including provisions for publishing delays, given the means of communication available at the time); thus no secret laws were authorized. It prohibited ex post facto laws (i.e., laws that apply to events that occurred before them). The code also prohibited judges from refusing justice on grounds of insufficiency of the law-therefore encouraging them to interpret the law. On the other hand, it prohibited judges from passing general judgments of a legislative value (see above).

With regard to family, the Code established the supremacy of the husband with respect to the wife and children; this was the general legal situation in Europe at the time. It did, however, allow divorce on liberal basis compared to other European countries, including divorce by mutual consent.

On MSNBC’s the “Last Word, Lawrence O’Donnell looked back at many of the voices who where for and against the invasion of Iraq. He said that those who were advocating for the war got it “wrong.” Well, Lawrence O’Donnell got it wrong because Pres. George W. Bush, Vice Pres. Dick Cheney, Secretary of State Donald Rumsfeld, at the time National Security Advisor Condoleeza Rice and Secretary of State Colin Powell weren’t “wrong,” they lied. They lied to Congress, the press, the world and us.

They knew they were lying. They knew there were no weapons of mass destruction, no nuclear program, no connection to 9/11, Osama bin Laden or Al Qaeda. They exposed a CIA agent and her operation that was tracking Iran’s nuclear program in order to discredit her husband who said there was no evidence of a nuclear program. We will never know what happened to the people who were working with her in that operation.

They have gotten away with the worst war crime of the 21st century and, perhaps, in the history of this country. Shame on them, shame on Congress and the Justice Department for not doing its due diligence and shame on us for not demanding they be held accountable.

I’m not ready to make nice

Warning: The video below the fold in this article contains very disturbing pictures that may be difficult for many to watch.

It is now ten years since the the United States launched its illegal invasion of Iraq based on a string of lies about non-existent weapons of mass destruction and wild accusations of Sadaam Hussein’s connection to Al Qaeda, Osama bin Laden and 9/11, all for control of Iraq’s oil riches by one evil man, Richard “Dick” Cheney. What the US has left behind is a devastated country:

Ten years ago, Iraqis, even if they had originally opposed them, hoped that the US invasion and occupation would at least bring an end to the suffering they had endured under UN sanctions and other disasters stemming from defeat in the first Gulf War in 1991. Today, people in Baghdad complain that they still live in a permanent state of crisis because of sectarian and criminal violence, pervasive corruption, a broken infrastructure and a dysfunctional government. Many Iraqis say that what they want in 2013 is the same as what they wanted in 2003, which is a visa enabling them to move to another country, where they can get a job.

But even worse, the US left a health care crisis that will last for generations, not just the lack of care and hospitals but a legacy of horrific birth defects and cancer that has been caused by depleted uranium (DU) contamination. DU, along with lead and mercury, was contained in the armor plating and ammunition used in attacks in Iraq and Afghanistan. The high rates of double and triple cancers, as well as miscarriages, still births and bizarre birth defects, in the cities of Basra and Falluja, have been blamed on DU by researchers. A study published in the Bulletin of Environmental Contamination and Toxicology (pdf) that focused on maternity hospitals in the cities of Basra and Fallujah opens with this stunning paragraph:

Between October 1994 and October 1995, the number of birth defects per 1,000 live births in Al Basrah Maternity Hospital was 1.37. In 2003, the number of birth defects in Al Basrah Maternity Hospital was 23 per 1,000 livebirths. Within less than a decade, the occurrence of congenital birth defects increased by an astonishing 17-fold in the same hospital.  A yearly account of the occurrence and types of birth defects, between 2003 and 2011, in Al Basrah Maternity Hospital, was reported. Metal levels in hair, toe-nail, and tooth samples of residents of Al Basrah were also provided. The enamel portion of the deciduous tooth from a child with birth defects from Al Basrah (4.19 lg/g) had nearly three times higher lead than the whole teeth of children living in unimpacted areas. Lead was 1.4 times higher in the tooth enamel of parents of children with birth defects (2,497± 1,400 lg/g, mean±SD) compared to parents of

normal children (1,826± 1,819 lg/g).

The article concludes:

Present knowledge on the effects of prenatal exposure to metals, combined with our results, suggests that the bombardment of Al Basrah and Fallujah may have exacerbated public exposure to metals, possibly culminating in the current epidemic of birth defects. Large-scale epidemiological studies are necessary to identify at-risk populations in Iraq. The recognition that birth defects reported from Iraq are mainly folate-dependent offers possible treatment options to protect at-risk populations.

From Mike Ludwig at Truthout, there are currently over 300 contaminated sites that are in need of decontamination.

In 2012, European researchers visited a scrap metal site in Al Zubayr, an area near Basrah in southern Iraq. A local police officer told them that the site had at one time held military scrap metal from the bloody battles waged during the American invasion. A local guard told the researchers that children had been seen playing on the scrap during that time, and both adults and children had worked disassembling the military leftovers. At one point, the guard said, members of an international organization with equipment and white suits showed up, told guards that the site was very dangerous and “quickly ran off.” [..]

There are between 300 and 365 sites where depleted uranium contamination was identified by Iraqi authorities the years following the 2003 US invasion, with an estimated cleanup cost of $30 million to $45 million, according to a report recently released by IKV Pax Christi. Iraqi authorities are currently cleaning up the sites, mostly located in the Basrah region, and 30 to 35 sites still need to be decontaminated.

Cyrus banks will remain closed until Tuesday as the government of Pres. Nicos Anastasiades struggles to find away to avert a banking failure and withdrawal from the euro.

Crisis talks among the political leadership in Nicosia are set to resume on Thursday after late-night meetings to discuss a “Plan B” broke up on Wednesday without result.

EU officials voiced frustration but little sympathy for an ambitious but now bust banking system that extended itself well beyond the island; Russia, whose citizens have billions to lose in those Cypriot banks, called the EU a “bull in a china shop”. [..]

Finance Minister Michael Sarris extended a stay in Moscow, where Russian officials said he asked for a further 5 billion euros on top of a five-year extension and lower interest on an existing 2.5-billion euro loan from Moscow.

According to Yves Smith at naked capitalism not all of Cyprus’ banks are in the same shape and “the back story is complicated”

It’s key to understand that this crisis was created by the Troika. Cyprus asked for a bailout nine months ago and the deadline is a bond payment this June. And while it has become fashionable to pin the blame for this mess on Cyprus, the backstory is more complicated. From Cyprus.com:

   Not all the banks are in the same condition.

   (a) Cyprus has two money-center type banks: Laiki (Popular) Bank and Bank of Cyprus.

   (b) Laiki was purchased by a Greek vehicle (Marfin Investment Group) backed by Gulf money. Marfin’s purchase of Laiki took Laiki from being a fairly conservative local bank to being highly exposed to Greece. Laiki is definitely insolvent and needs to be restructured.

   (c) Bank of Cyprus has been more conservative vis-a-vis Greece, but still has meaningful exposure. It is conceivable that, given time, Bank of Cyprus could survive.

   (d) Beyond the main two banks, there is Hellenic Bank (a much smaller bank with much less Greek exposure), Cyprus Development Bank (no Greek exposure), the Co-ops (no Greek exposure) and the Cyprus subsidiaries of foreign banks (aka, Russian, English, etc banks), also with no Greek exposure.

   (e) All the local oriented banks (BoC, Laiki, Hellenic, Coops) have exposure to the local real estate market that went through a bubble during the 2000-2009 period. This exposure however is not short-term and could be resolved over the period of years. It is a problem, not a crisis, and is offset by the fact that the two main banks have quasi-monopolistic earnings power locally. Given the time and some financial represssion (a la the United States) and the local issues would be manageable.

In other words, the bank that is the epicenter of the problem was driven into the ditch by foreign buyers. Now admittedly, the local bank supervisors did nothing to stop that, but can you point to a single national bank regulator (ex the Canadians) that put much in the way of constraints on their banks prior to the crisis.

Paul Krugman’s take on this:

Still trying to wrap my head around the Cyprus situation; what makes it so interesting (as in “may you live in interesting times”) is the role of the island as a tax, regulation, and law enforcement haven.

It’s not just about the Russian connection, but that connection is really huge. Here’s another metric: Cyprus is, according to official figures, the largest single foreign direct investor in Russia – this from an economy roughly the same size as metropolitan Scranton PA. What’s that about? The FT explained it a while back: [..]

And a key aspect of the current mess is that the Cypriot government isn’t willing to give up this business. That’s why solutions like converting large deposits into CDs haven’t been on the table; once round-tripping Russians know that they can find their money trapped for long periods, they’ll go find another treasure island.

Stay tuned for more to come.

Last week the House of Representatives killed a proposal that would have raised the minimum wage tp $10.10 an hour over two years. It failed with not one Republican vote in favor and six Democrats voting against it, as well. In an article for the Los Angeles Times, David Horsey says that while both Democratic and Republican politicians express concern for the middle class, they have failed miserably to address the growing class divide in the Unites States.

As politicians in Washington slam one another over competing budget priorities, most avoid facing up to the disturbing question behind all the numbers: Is the American Dream temporarily stalled or permanently kaput? [..]

This is not the country we like to think we are and it is not the country our political leaders are willing to admit they have helped create. Thirty years of catering to Wall Street, big business and the U.S. Chamber of Commerce has not boosted the American economy the way it was meant to do. Yes, the financial industry and giant corporations are awash in wealth, but they are not hiring more workers, they are not paying better pay, they are not enhancing benefits, they are not sharing the wealth. On the contrary, the typical American is working much harder for worse compensation. He or she is paying a bigger share of the healthcare bill and has no pension plan waiting at the end of the line.

This is an all-American crisis bigger than the deficit or the war on terrorism, but no one seems ready to take it on.

Mr. Horsey notes a rundown of the facts about today’s American economy by economics columnist Jon Talton:

• Worker productivity has increased nearly 23% since 2000, but hourly wages rose a pitiful 0.5% in that period.

• Taking a longer view back to 1973, productivity is up 80% between now and then, but pay is up only 11%.

• People at the bottom of the wage scale are earning less now than similar workers in 1979.

• Employees in the middle of the wage scale are getting 6% more than in 1979, but all that increase happened in the 1990s.

• High earners, meanwhile, are making 37% more than back in the 1970s, and the much-talked-about folks in the top 1% have enjoyed a 131% increase in earnings.

In his article, Mr. Talton furthers concludes:

This reality is at complete odds of our self-image as the Land of Opportunity. It is also a change from a previous America. We’ve been losing ground. Some reasons are obvious, others are complex. Many are familiar to readers of this column, and a few are the subject of sharp debate.

Globalization, offshoring and technology have decimated the old blue-collar middle class. The economy has shifted to service jobs that not only tend to pay less but are increasingly part time and temporary. [..]

Whatever the causes, little is being done to correct our trajectory into historic high inequality that is greater than other advanced nations.

Things may have to get worse before change happens. One thing is clear: Our situation is unsustainable and un-American.

Economist Richard Wolff joins Bill to shine light on the disaster left behind in capitalism’s wake, and to discuss the fight for economic justice, including a fair minimum wage. A Professor of Economics Emeritus at the University of Massachusetts, and currently Visiting Professor in the Graduate Program in International Affairs of the New School. [..]

“We have this disparity getting wider and wider between those for whom capitalism continues to deliver the goods by all means, [and] a growing majority in this society facing harder and harder times,” Wolff tells Bill. “And that’s what provokes some of us to begin to say it’s a systemic problem.”

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Katrina vanden Heuvel: Progressives’ budget merits a closer look

On Wednesday, the Congressional Progressive Caucus (CPC) unveiled its own offering in the budget debate: The Back to Work Budget. It’s a detailed plan to create nearly 7 million jobs while bringing down the deficit by $4.4 trillion over a decade. It does this the right way: higher taxes on the wealthiest (including a 49 percent rate on incomes over a billion – yes, billion – dollars); a financial transaction tax that would discourage reckless speculation; a long-awaited end to tax advantages for outsourcers and corporate jets; a forward-looking carbon tax; a public option for health insurance; sensible military cuts; and investment in infrastructure, school construction, child care, and putting teachers and firefighters back to work. [..]

As blogger Bill Scher argues, “the Progressive Caucus holds an unfair advantage: It includes policies the public actually supports.” In a sane world, that would be enough to earn the Back to Work Budget equal time with Ryan’s latest slash-fest. Instead, if past is prologue, the Progressive Caucus alternative will be covered as an afterthought at best.

Maria Margaronis: Why Cyprus Matters: The Eurozone Strikes Again

The kaleidoscope spins again; the shards are rearranged; this time, the fragment at the centre is Cyprus. Faced with yet another country needing an urgent bailout (and with the German election looming in September), Eurozone leaders and the IMF have come up with a new wheeze: make savers pay to rescue the banks that were meant to look after their money, in exchange for a bailout of 10 billion euros. [..]

Why does all this matter? One, because this is the first time the EU and IMF have decided to take money directly from people’s pockets rather than through the messy process of cutting wages and pensions and putting taxes up. You could perhaps read this as a tacit acknowledgment that austerity has failed, economically as well as politically: it’s messy, it’s unreliable, and it makes people vote for leaders who won’t play the game, like Italy’s Beppe Grillo. You could certainly read it as a sign of how profoundly Europe’s leaders have lost the plot. Though the market meltdown predicted over the weekend hasn’t materialized, howls of derision have issued from bankers and business leaders as well as Cypriot indignados: if guarantees on bank deposits aren’t worth the paper they’re printed on, if people’s savings can be siphoned off by fiat, then the world as we know it, or at least the banking system, will come to an end.