The Eurozone Crisis Thread

isn't cyprus still occupied by turkey?

northern cyprus is. the rest of cyprus is occupied by drunk british squaddies.

So much dirty money in Cyprus, at the moment, taxing some of it looks superficially attractive but, yes, this seems crazy.

isn't this going to result in panic in italy, greece et al?

that's the plan. get italy used to the rapidly approaching future

the german colonization of europe through non-military means

oh ... kay

maybe that's controversial by suggesting motive but it's an accurate description of what is happening

Colonisation by an elite of ideologues, not "Germans"

ok, and iraq was invaded by an elite of ideologues and not "americans." it's german fiscal policy that is driving this.

this is a good move if it's being done as a purely socialist alternative to crushing austerity measures, especially as cyprus, with its predominantly tourist-driven economy, isn't very affluent, and a great deal of the wealth is held by non-nationals.

the best alternative would be to write off debt but that isn't happening. at least this is a way to alleviate the debt that exists.

cyprus has already been colonised by expat oligarchs, will hold judgement on this new measure until its results are plain. but it seems like a good and surprisingly egalitarian deal.

look at the work-for-free shit we're putting up with in the uk and tell me that some weighted version of this wouldn't be preferable to austerity! obviously there's a totally different economy here and it wouldn't ever come close to happening what with our neocon fucktards at all levels of government and opposition but still. would obviously have to do it first and then announce it to prevent a run on the banks. c'mon, it'd be lolz. vaguely ORWELLIAN lolz.

is german fiscal policy so terrible? surely sustainable economy is far preferable to boom'n'bust at this point

how is this not austerity by different means? 6.7% tax on all deposits under $100k is going to hit an awful lot of middle + lower class ppl

it's a mugging

not that hard

cyprus isn't a very wealthy country. cost of living isn't that high, unless you're living in a gated resort with a spa and a load of native flunkies. this will hit the landowners, hoteliers and other exploiters hardest, which is i'm sure you'd agree the way it should be

why don't you think it will hit lower income ppl with savings?

because they won't, on the whole, be entitled fuckberks about it

unquestioned criticism of austerity is really getting on my tits (where "austerity" = "why cant we live in bubbleland)

austerity fundamentally depresses and doesn't stimulate a recessive economy, which in turn increases debt and austerity measures. it's dumb and it's exploitive. euro bonds are such a better idea.

nothing fundamentally does anything in a x -> y statement in re govt actions/economy

you are wrong

austerity is actually by definition depressive

yeah, all expenditure in an economy is equally recycled and efficient domestically wrt the multiplier effect huh

"austerity" isn't anything more than "what happened?" as it is being used by 90% of ppl atm in europe xp

i don't live in europe & understand that u r taking this position 4 challops/out of exasperation (which i admire) but you're still def wrong

i'll certainly admit that any position i take will be itself overly simplistic- and tbf i realise that ilx isn't hopefully as blanket-lazy about it's use of the word.

but 'austerity' in ireland is nothing more than an attempt to target current spending in an intelligent manner because our deficit is astonishing.

there are of course many ways & means to do this along different political, economical and social theories, and there is of course other such avenues that say you shouldn't be doing it at all. in the absence of any wide-ranging agreement as to how else you plug the gaping streams in individual national budgets (and markets are not rushing in to do so) then here we are.

yes, it'd be great were germany to throw her weight behind measure to put an end to uncertainty in order that the 'short-term' fiscal crisis is eased in a managed way. but the idea that there are not very good reasons that governments across europe should be trying to cut their cloth to measure seems to me to be a far too slavish devotion to kenynesian thought.

this is a good move if it's being done as a purely socialist alternative to crushing austerity measures

it isn't, and the practical effect won't be "purely socialist" either. it's a de facto flat tax, given the "progressive" bit doesn't kick in until you have savings of more than €100,000. flat taxes are not socialist (i.e. not redistributive) even when the beneficiary is the state, but the direct beneficiary here are the bank bondholders who come out unscathed.

look at the work-for-free shit we're putting up with in the uk and tell me that some weighted version of this wouldn't be preferable to austerity!

this is a ludicrous false dichotomy. this has nothing to do with state austerity. cyprus's problems are unusual because their domestic banks (and their debts) are many times the state GDP, which makes the state vulnerable when things go wrong in the banking sector.

maybe my main quibble these days is with the measures we are using to define the success of domestic economies, idk.

the german colonization of europe through non-military means

― Mordy, Sunday, March 17, 2013 3:46 PM (1 hour ago) Bookmark Flag Post Permalink

maybe that's controversial by suggesting motive but it's an accurate description of what is happening

― Mordy, Sunday, March 17, 2013 4:00 PM (1 hour ago) Bookmark Flag Post Permalink

you sound like marcello. that's not "controversial" by suggesting motive. that's utter bullshit by suggesting motive.

i'd prob allow that germany is wreaking havoc to the eurozone through misguided (?) attempts at self-protection, the idea that the damages caused is an intentional or desired outcome is......silly

i guess my main problem with this is that, in their apparent desire to teach a lesson about moral hazard to the people who aren't the problem (savers at retail banks), isn't it *obviously* going to result in a run on banks in cyprus? and an increase in the risk of that in italy, spain, etc. all for what isn't actually that much money. like as well as being regressive and unjust, etc. is just seems completely fucking stupid.

so what do they get ito equity?

I wonder whether there is an ulterior motive in trying to keep Greece on track. Huge numbers of wealthy and moderately wealthy Greeks shifted their savings to Cypriot banks in the fear that domestic ones would collapse or, more feasibly, that Greece would convert back to the Drachma. This will come add a pretty sharp disincentive to doing that again.

Seems strange not to do this as a wealth tax, rather than simply penalising savers. A million Euro holiday home is left untouched but a million Euro in the bank will be decimated.

Christopher Pissarides, a Nobel Prize-winning economist and chairman of the government’s economic advisory committee, warned that the island’s economy would collapse within “two or three days” if the legislation failed to pass.
“If the law isn’t voted through, what happens will be much worse. There will be many bankruptcies and most Cypriots will lose everything because the banks will not reopen,” he said.

hmm.

Mr Anastasiades explained that Cyprus gave way after the ECB threatened to push the island into a disorderly default by withdrawing liquidity support for Laiki, its second-biggest bank, on Tuesday.
He said Cyprus had a choice between “a catastrophic scenario of disorderly bankruptcy, or a scenario of a painful but controlled management of the crisis”.

oh je.

always a good thing that I roadtest my halfbaked first impressions, ty caek, altho tbf I did concede the false dichotomy point in the original post, along with a clear statement (backed up by y'self) that most of the money in cyprus is held in banks by foreign nationals

it's more socialist than letting the economy fall apart! if indeed that was what would have happened

the point that we have reached in contemporary capitalism: paying for bank bailouts w/ the savings of a country's ppl in order to preserve the rapidly depleting capitalism husk is more socialist than idk communism?

ja, sorry, "ludicrous" a bit strong, but i think it's a pretty confused interpretation of this to consider it socialistic.

cyprus's finance minister 17 days ago:

Cyprus's new finance minister on Friday ruled out a haircut, or imposed losses, on bank deposits to ease a financial bailout from international lenders, now stalled amid worries about debt sustainability.

"Really and categorically - and this doesn't only apply in the case of Cyprus but for the world over and the euro zone - there really couldn't be a more stupid idea," Michael Sarris, who took over his post on Friday, told reporters.

Sarris, a widely respected economist, was the first appointment of new Cypriot President Nicos Anastasiades, who won presidential elections on Feb. 24 on a platform of constructively attempting to seek a deal with lenders.

letting the economy fall apart would not result in communism or anarchism or what I believe may be ideal: localised economies

it would result in exploitation, foreign first-world sharks moving in and buying up land and people, cyprus finally sublimated as luxury mediterranean commodity with no autonomy whatsoever (more so than at present), slave labour and capitalism of a far nasties kind than this bureaucratic fudge

what's the solution? dunno. open table.

first maybe return northern autonomy to cyprus government

what would that do?

all for what isn't actually that much money.

is it really not that much? or is it only considered too much relative to cyprus gdp?

it's not that much from the POV of the ECB

haha this is a clusterfuck

This is so dumb and counterproductive and people at all ends of the political spectrum seem to agree, but whatever this is/was, it certainly isn't socialism.

Some background on the Russian connection:

http://m.bbc.co.uk/news/business-21831943

Lots of that money is filtering through Cyprus to the rest of the EU at the moment. Inflating property prices in London too. A Cypriot agent that acts on behalf of Russian clients offered my mother an insane amount of money for some commercial property she inherited - more than twice the market value, last year.

Rethinking this. If it pisses enough people off to bring about mass redeployment of funds into credit unions, it'll have been an inadvertent success. Otherwise, it's enforced chipping-in where what is chipped into is most probably a reloading gun

oh ... kay.

Cyprus may drop tax for small savers

Cyprus now says bank depositors with savings under $26,000 would be exempt from a levy, amid continuing outrage over a bailout plan.

Better. Exponential curve, Cyprus!

every article i've read about it is a mixture of bafflement and anger. the ft seemed kind of amused at the incompetence this morning, implying that basically what happened was all the negotiators were very tired and got confused over the weekend. shops, hotels, etc. refusing credit cards apparently.

My point was less about him in particular and more about how a more practical solution to what they perceive as a problem would be to have large families, without having to do anything about the already-rather-meager legal immigration to Europe.

rethink this one maybe

'Europe is more colonized today than it has ever colonized Africa'

Does this man have any idea how the European colonization of Africa operated?

He thinks it was good lol

It was armed robbery on a continental scale.

I think everyone (well almost) itt is aware that France in Africa was bad - though never as bad as Belgium. God!

Belgium still had a Human Zoo in the late 50's, but still not as bad as the UK's 60's gulags in Kenya, where lots of ww2 veterans who fought Rommel in N Africa on a zero pay - only rations deal ended up.

Assume these far right fascists are getting ready for the brown skinned climate refugees that are coming in the upcoming decades.

make this work u fux

https://www.theguardian.com/world/2019/sep/10/italy-pm-conte-left-leaning-coalition-vote-of-confidence

I know it's Goodwin but EU is showing itself to be utterly inadequate.

New poll in Italy hints at the possible political effects of #coronavirus if EU does not get its act together

88% of Italians say "EU is not helping us"

% who say "EU membership is advantage" has dropped 16 pts to 21%. "EU membership is disadvantage" up 20 pts to 67% pic.twitter.com/o0b7U0I2wq

— Matthew Goodwin (@GoodwinMJ) March 15, 2020

What would be adequacy in this regard?

I don't know but this isn't it.

https://www.theguardian.com/world/2020/mar/12/ecbs-plan-to-support-eurozone-banks-is-underwhelming

Also lack of co-ordinated action beyond market stability. Italy might need further funds. It will be interesting to see how the EU react (although maybe they should be proactive).

Just noting the silence.

Agreed, I just don't think a poll about "are they doing enough or not" this early in the crisis, asking Italians at this point, is unlikely to show a different result imo. They can't rest on their laurels like they have done until now, I'm def with you on that.

Xxp So you’re basically asking for more integration and coordination at EU level?
I don’t see how a poll shows anything about efficiency of EU response. Real problem right now is haphazard and uncoordinated measures from Member States

Yes, and while it's just one poll it could be a sign of things to come.

It's interesting that while the EU sets all kinds of regulatory standards on any and everything it has basically let member states do what they want in this public health crisis.

it has basically let member states do what they want in this public health crisis.

― xyzzzz__, Monday, March 16, 2020 12:15 PM (six minutes ago) bookmarkflaglink

It doesn't have any authority to do otherwise. And why should they want to? Leaving this to the individual countries is the best (least worse) option here imo. If only because "EU said so" makes swathes of people do the opposite these days.

It's about leadership and coordination of activity across sectors. The EU has no problems dictating to member states when it wants to. It has done so in the past when the markets demanded so it definitely has authority.

But again it's not about imposing so much as getting countries together to coordinate a plan of cross-border action. That kind of thing.

In the case of Italy it's also showing solidarity with the most affected. It's recession will be deep, they will need a lot of financial assistance.

I do think this could turn into an existential crisis for the EU. Would it survive Italy going under? It would be so, so much worse than the Greek crisis.

A shitty piece of axe-grinding from Matthew Goodwin is a terrible pretext for starting this discussion and it doesn't feel like it's progressing from a place of either good faith or any real knowledge of what is and isn't happening.

great news everyone: you can completely ignore matthew goodwin forever and there's no downside

This couldn't have come at a worse time for Italy though, which is heavily indebted and hasn't seen any growth for a decade or more. Once the health crisis abates and the economic one kicks in, it's going to be pretty brutal

Unless there is a very public aid effort to Italy from the EU, and not along similar terms to what happened with Greece, then the likelihood of Italy just voting to leave the EU feels almost inevitable?

I'd have a lot more faith in Eat The Book Guy if he didn't feel so much more like an active and gleeful participant than an academic observer. The fact that he's so clearly partisan diminishes the value of his research even when it's throwing up insights that people need to pay attention to.

Also what's happening to Italy will almost happen to several more nations before this is over and it won't just affect the poorer ones.

I did put in the caveat as to whom that tweet was from but I also did link that piece from Elliott last week. Both are no fans of the EU.

Only putting that in because what the EU are doing or not has been under-reported.

Who's Eat The Book guy?

I think there will be a big support for Italy tbf, and other countries hit by this hard. Just think it might be a bit too early to already go Eu DoEs NoThInG!1 We're still at this being the most urgent now. I'm sure it will be followed by funding soon, but first things first?

"Eu DoEs NoThInG!1"

People have seen the spread of the virus in East Asia at the beginning of the year. It's surely right to question whether Public Officials -- who are paid to monitor and be ahead of the curve -- have been sitting and hoping it wouldn't spread or were actually coordinating any kind of action.

Who's Eat The Book guy?

Matthew Goodwin. I am sure the video of him eating a book on TV is still up.

I know someone who does emergency planning for manchester council. all worst case scenario stuff but these contingency plans def exist in some vague form.

Ah I see, ty.

Re: EU, of course it's right to question that. Just wondering what measures could Italy not feel let down right now.

xp

Not sure where this theoretical EU pot of gold is supposed to come from - it's the Member States holding the money and EU competence in area of public health is close to nil. I guess you'll be comparing the situation to the financial crisis- but in this instance, there were mechanisms already in place to put together financial packages. So ultimately the question is basically whether Germany and France will agree to inject massive sums to save Italy, which I guess is unlikely for the time being since they will have to reckon wih their own crisis. So maybe your overall point holds, in situations of widespread crisis, cross-border solidarity goes out the window (cf. export bans of medical masks by some countries)

As long as we don't have an EU-wide health system (yes I know about the EHIC), this isn't to be managed at the EU level.

I think France and Germany will inject massive sums into Italy, yes. The ECB can print euros as needed. nb I am a philosopher not an economist.

https://ftalphaville.ft.com/2020/03/18/1584528247000/The-ECB-is-under-pressure-to-act-fast--/

Acting now..

😷😷😷

Italian bond yields jump as EU leaders fail to reach agreement
The failure to reach an EU deal is causing investors to worry about the eurozone, with Italian borrowing costs rising. Talks have been suspended until tomorrow.

Eurogroup chairman Mario Centeno said on Wednesday morning:

After 16 hours of discussions we came close to a deal but we are not there yet. I suspended the Eurogroup and (we will) continue tomorrow.”

Failure to share the financial risks between hard-hit countries such as Italy and Spain and wealthier nations such as the Netherlands and Germany could endanger the eurozone response to the pandemic, so investors are watching closely.

Via Reuters:

The 10-year Italian yield rose 20 basis points to 1.799% in early European trading, hitting its highest since March 19. Two-year bonds yields were up 22 basis points [0.22 percentage points] on the day at 0.79%, the highest in three weeks.

The gap between German and Italian 10-year bond yields also widened to 213 basis points [2.13 percentage points], up 29 basis points [0.29 percentage points] on the day.

#Italy bonds rally w/10y risk spread over Germany plunges to 235bps as Moody’s hints that it could hold off downgrading Italy to junk. Moody’s currently ranks Italy as Baa3, its lowest investment grade, w/review scheduled for May8. S&P will review Italy rating this evening. pic.twitter.com/OhBuMKIS85

— Holger Zschaepitz (@Schuldensuehner) April 24, 2020

https://www.independent.co.uk/news/world/europe/coronavirus-europe-economy-recovery-france-germany-grants-macron-merkel-a9520566.html

Breaking: Apple and Ireland have won their appeal against the European Commission's €13.1 billion ruling:

The General Court of the European Union annuls the decision taken by the
Commission regarding the Irish tax rulings in favour of Apple

— Tony Connelly (@tconnellyRTE) July 15, 2020

Seems bad. Potentially no impediment to Eurozone countries setting an effective 0.005% tax rate on international companies afaict, though it will be appealed.

ffffs

If Berlusconi somehow ends up as PM that will be another pretty good indication of where 2021 is headed https://t.co/sQYdfqxzmu

— Populism Updates (@PopulismUpdates) January 12, 2021

No, grazie.