But it\’s savers, not bankers or shareholders, who are taking the 40% hit.
Err, no laddie. Shareholders have taken a 100% hit. Bankers are losing their jobs all over. The problem was that this wasn\’t enough, the two banks were too broke for this to be enough. Thus the non-insured depositors being bailed in.
The Cypriot government should instead have learned from Iceland: taken over the banks, isolated the bad loans, protected deposits, imposed losses on the wealthy, and used a publicly owned banking sector to rebuild the domestic economy.
But this is indeed what Cyprus is doing. The only difference is that Iceland hit depositors by devaluing the currency. Cyprus isn\’t doing that, being in the euro and all, so is hitting depositors more directly. This is a difference of form, not essence.
The deal forced on Cyprus by the German-led Troika at the weekend isn\’t a bailout: it will effectively destroy the island\’s economy. Instead of getting a grip on its grossly inflated banks, it will impose a brutal credit contraction, combined with sweeping cuts and privatisations, wiping out perhaps a quarter of Cyprus\’s national income.
What? But, but….getting a grip on grossly inflated banks is exactly the same thing as a brutal credit contraction! Seriously, they\’re the same fucking thing you flaphead jackanape moron. Shrink the banking sector and you shrink credit….shrink credit and you are by definition shrinking the banking sector.
How do statements like this get through? Is it that Milne knows where Rusbridger\’s mistresses are buried? Or is it that no one on The Guardian actually knows these things?
But across Europe, people are being held to ransom by banks, bondholders and corporations determined to ensure that it\’s not they who bear the costs of the crisis they created – and politicians who regard it as their job to oblige them.
Eh? Banks go bust, bondholders wiped out, corporations lose 40% of their deposits and they\’re not taking the pain? What?