The western world continues on a totally unnecessary suicidal path. What was once common sense is no more. Everywhere one looks, the insanity is evident: The refusal to deal with real issues and the insistence on taking up marginal or even totally extraneous issues instead is stunning. Here in the USA, our economy remains stagnated for no logical reason. Instead, for example, of freeing up the exploitation of our vast fossil fuel resources, we continue to push money at phony green industries, throw road blocks in the way of our private sector's ability to get those fuels, block importation of fuel from our friends in Canada, and blather on and on about discredited, voodoo science global warming. Our
And Europe? Ah, yes, Europe. What can we say about the "cradle" of our civilization? Not much positive. For at least the past 250 years or so, the Europeans have seen their collective insanity grow at an exponential rate. They seem determined, even more so than we, particularly in the past fifty years, to erase all vestiges of western civilization and principles from their quaint, colorful and increasingly irrelevant little countries. This motley collection of has-been, never-were, and never-will-be states goes from one lunacy to another. Some of the latest, of course, being the combination of anti-natalist policies and open immigration policies. This lethal cocktail has changed the nature of Europe's society, and turned parts of European cities into "no go" zones resembling the urban nightmares of some third world countries--and Detroit, but then I repeat myself. The phrase Old World is now a literal description of Europe--if, that is, one leaves aside the booming Muslim population. The self-destructive continent that brought us Communism, Fascism, Nazism, two world wars, the Holocaust, the cold war, and a colonial legacy that continues to create problems throughout the world, also has brought us the ultimate "social-democrat," supra-national nanny state, the EU. This weird Marxist-Fascist attempt to destroy what was left of Europe with bureaucracy, taxation, and "homogenization" has been wildly successful. Europe likely will never recover from the ravages of the EU and its obsession with replacing the dollar with the euro.
I have written before about Cyprus, and before that on the euro. I won't repeat all that. I just want to note that the situation is even worse than what I had thought initially. While it seemed that depositors with more than $130,000 in Cypriot banks would lose about 40% of their money, the percentage keeps climbing. It now seems it will be for some over 60%. The latest scheme has depositors forced to accept bank bonds valued at 37% of the value of their deposits in excess of $130,000. In essence, the banking system in Cyprus has been put to death. I don't know whether the banks there were good or bad. Perhaps they were run by cruel, heartless overlords so vile that they oppose gay marriage, smoke cigarettes, love fast cars, eat red meat, and refuse to believe Al Gore. Hard to believe anybody could be that evil, but perhaps. Was this the depositors fault?
Interesting also, and almost ignored in the press, is that the proximate cause of the Cyprus crisis/bail-out was the way the Greek crisis/bail-out was handled. Let me explain.
The politically driven creation of the euro ensured shady bookkeeping. There was no way that countries such as Greece, Spain, Portugal, and Italy (even France) were going to meet the budgetary requirements ostensibly demanded by membership in the euro. Everybody involved in the project knew that, but for political reasons they accepted the phony accounts as real and put on a brave Bernie Madoff front in public. You can do that for so long until the world economy goes into a recession--sparked, truth be told, by certain pronounced levels of economic insanity in the United States. The phony accounts came to light and--presto!--crisis. Making matters worse was that the political leaders decided that at all costs they had to save the euro. Instead of allowing countries to return to their own currencies and establish market dictated values for those currencies and their economies, the rush was on to keep the euro alive. I have previously written about the Greek bailout but just want to draw attention to the fact that persons and institutions who held Greek bonds, in other words those who had lent the Greeks money in the belief that the EU sanctioned national accounts were accurate, were forced by the bail out provisions to take a huge "haircut." The value of their bonds was slashed by fiat. Guess who held a big chunk of Greek bonds? Yes, my friends, the banks of Cyprus. Wonder why they then went into crisis, hmmm? I guess they deserve it for believing EU politicians and statistics.
We have in other words, rolling crises. The manner in which a crisis is handled in one place, produces a new crisis in another. The manner in which the Cyprus crisis is being handled is going to produce other crises. In Cyprus, we see restrictions put on the movement of money. So, therefore, while in theory the euro is an international currency, in practice euros in Cyprus are restricted to the island. So if you are an account holder who already has seen the EU take about 60% of your dough, you find that you cannot take out what's left. We now see rumblings in Spain and Italy of politicians there looking at a similar wealth grab. France's hapless government will not be far behind as President Hollande tries desperately to come up with new and creative ways to grab more revenue for France's collapsing public sector.
All this goes to show that perhaps it takes a pillage to wake up people to the cold hard economic facts. Those facts are the same as they always have been:
1) You cannot indefinitely spend more than you have;
2) If you squeeze the goose that lays the golden eggs too hard, you will kill it.
Not difficult to understand, unless you are a politician.
Thank goodness that in the USA, we are not trying to emulate Europe. We would never come up with some crazy socialized medicine scheme that would completely bankrupt our public sector. Nah, that could never happen here.