Seumas gets it wrong again

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?

15 thoughts on “Seumas gets it wrong again”

  1. Well when their economics “experts” get so much wrong, it’s hardly surprising that their chief terrorist apologist does so too.

  2. @cjcjc

    That’s a bit unfair on the Guardian as Larry Elliot is actually extremely good.

    Unfortunately the Guardian do seem to allow their political columnists to write on economic matters with a staggering level of ignorance and obvious prejudice.

  3. Yes, Larry Elliot is the only Guardian columnist worth listening to on economic matters.. along with the likes of Martin Wolf and Faisal Islam, he helps restore some credibility to leftist economic commentators so damaged by Murphy et al…

  4. Milne, like a number of other Commentators at the Guardian, has never really recovered from the events of 1991, which saw the loss of a significant second source of income on a personal basis, and the total collapse of Socialism as a viable ideology…

  5. What’s odd is that Seaumus should actually be pleased with how the financial crisis is turning out. If he actually read the business pages of the Guardian he might realise that 100,000 investment bankers have lost their jobs in the City over the last three years. That bonuses are a fraction of the levels in the good days and show no signs of recovering in the medium-term. And that stricter compliance and regulatory rules have made the place a much more boring place to work.

    Sure Corney & Barrow might still be full of pin-striped bankers but they’ll be talking about how to afford the school fees not about whether to buy a weekend cottage in Norfolk or Dorset.

  6. Richard Allan: Yes. It’s kind of amazing just HOW badly Seumas got it wrong, and on how many different levels. How do you write a column comparing Cyprus to Iceland and get BOTH sides wrong?

  7. “100,000 investment bankers have lost their jobs in the City over the last three years.” Well, there you go.

    “That bonuses are a fraction of the levels in the good days and show no signs of recovering in the medium-term.” What signs might there be? What should we look out for.

  8. Cody

    “How do you write a column comparing Cyprus to Iceland and get BOTH sides wrong?

    The usual way is first off to ensure that you are totally closed-minded, so that whatever events happen, you’re always able to find an explanation that fits in with your preconceived idea of how the world works. It doesn’t matter how plausible or implausible this explanation is to other people, because over the last 25 years the advance of relativism has made plausibility very much a phenomenon of the last century.

    From here, you go about writing a narrative that describes and analyses the events in question, all the time bearing in mind, however, that there is a precondition that what you write is supportive of your fixed view of the world, and that honesty, reality, balance, fair-play, due process and straightness are only required standards when they support your fixed view, and that when they don’t they need play no part in what you are trying to achieve.

    Those who have become past masters of this art, at a fairly young age, include Johann Hari, Laurie Penny and Owen Jones. Seumas Milne is, of course, somewhat more ancient than these three luminaries.

  9. Surreptitious Evil

    Nah, not in my (unfortunately far too extensive) experience of dis-investment wankers. Short-term is replacing the Porsche …

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