Yanis Varoufakis: While Waiting for Cyprus’ Godot….

By Yanis Varoufakis, Professor of Economics at the University of Athens. Cross posted from his blog.

Here are some unedited thoughts I just shared with the BBC’s Radio 4 on Cyprus while we are all waiting for the new deal to shape up:

Cyprus’ banking sector must shrink. As did Ireland’s, the hard way. What is essential, as every Irishman and woman will tell you, is that the politicians do not load up the weaker citizen’s/taxpayers’ shoulders with enormous debts on behalf of bankers that refuse to wither.

Every bailout agreement, beginning with Greece’s in May 2010, seems less logical and more toxic than the previous one. The culmination was of course Cyprus this past week. Think about it: In one short week, Europe has managed:

  • To put in jeopardy the hitherto sacrosanct concept of state guaranteed deposit insurance
  • The monetary integrity of the Eurozone
  • The European Union’s single market principle according to which capital controls are a no-no.

If only the agreement reached at last June’s EU Summit to de-couple the banking crisis from the public debt crisis had been implemented, we would not be having this conversation now.

The Cyprus debacle is the homage that denial of the systematic nature of the euro crisis pays to a systemic crisis.

Cyprus parliamentarians offered the Eurozone a reprieve from the stupidest and most potentially destructive Eurogroup decision since this Crisis began three years ago. It now remains to be seen whether, scared by the sound of their own NO, they will now succumb to an even less rational deal.

* * *

Lambert here: This is Varoufakis’s BBC audio (via):

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. JGordon

    You know, I was talking to an Albanian police chief earlier today, and he was telling me some stuff about politics around those parts in Europe that would really blow the mind of the average clueless American. I know I was flabbergasted. For example, did you know that the “unofficial” government in Cyprus, i.e. the mafia, (not to mention Italy, Albania and a lot of other places around the mediterranean) is a lot more powerful than the “official” government there? And to use a euphemism of a Russian fellow I was talking with the other day, if the Cyprus legislature failed to do what the Russian mafia instructed it to do, then it would be “cleaned”.

    I think this accounts for the surprising unanimous vote against depositor haircuts they recently had there, and also likely means that any actions going forward by the sock-puppet government of Cyprus will be at the direction of the actual governing institutions of that particular state. Which is not to say that that is necessarily a bad thing; I’m just pointing out that unless you happen to be talking to people who are from the region and are somewhat politically connected, you might not have any idea what is really going on there.

    1. Chris Engel


      This seems incredibly overstated.

      All indicators point to a decline in the this “unofficial mafia” influence in the Mediterranean and Russia.

      Luke Harding, a journalist who experienced the Russian statist neo-mafia (having been expelled from Moscow) wrote:

      ‘They are simply interested in making money. They are, in short, kleptocrats.’

      I don’t think there’s really any “unofficial government”. There’s ample evidence to show that the modern corporatist states of Southern Europe, Eastern Europe and Russia have in fact pushed out the mafia, adopted a lot of their policies and “business methods”, and inflicted the same kind of rule on the people. In effect, the state has become the mafia, and the mafia has become the state.

      I’m not sure how accurate your production of accounts of individuals on the ground in Russia, Europe are. For example, you could pick some guy in the southern US (say, an enthusiast for Tea) who talks about how Obama is a marxist dictator. That wouldn’t be some nugget of “truth” from the inside, that would be an incredibly misleading deluded account of an uneducated tramp. I know lots of people from the Baltic states for example, and they throw around the term “mafia” rather liberally, often to refer to just powerful businessmen who are engaged in standard Western-style corruption. Anyone with economic power is written off as “mafia” by these people.

      1. Wat Tyler

        “the state has become the mafia, and the mafia has become the state”

        Is this not the definition of “State capitalism” which seems to be the future major economies are trending towards?


    2. Chris Engel

      (part 2)

      As for mafia in Italy, the Cosa Nostra’s decline is well documented. This is symbolized by Giovanni Falcone’s brave fight against this corrupt unofficial institution, culminating in his death in 1992, which can only be described as a martyrdom for the Italian people.

      This is fleshed out in great detail by Alexander Stille in his book “Excellent Cadavers”.

      Additionally, your post is rather contradictory. You say the mafia is in charge and the Russian mafia wouldn’t allow any haircut. But the latest developments show that the people of Cyprus are being accurately represented to stand up against “mafia” deposits. If Cyprus is actively voting against haircuts for small depositors and forcing the big uninsured (Russian) deposits to get a haircut, how is that the will of the mafia being implemented? How is there anyone “being cleaned?”

      I think you should be much more skeptical of what you’re hearing “on the ground”. There are kooks everywhere. You just might be talking to a Russian, Albanian teabagger with absurd theories about societal institutions and geopolitical mechanics.

      1. JGordon

        I did not say that they would not allow a haircut. You seem to be reading things into what I said that I did not say.

        What I did say is that the Cypriots would do as they are told to do, and that the ones who are telling them what to do is probably not Merkel.

    3. from Mexico

      You know, I was talking to a Canadian politilogue, Peter Dale Scott, earlier today, and he was telling me some stuff about politics around those parts in the Americas that would really blow the mind of the average clueless American. I know I was flabbergasted.

      For example, did you know that the “unofficial” government in the United States — the “deep state” (CIA, NRO, NSA, DIA, DEA, NED, USAID, etc.), in collusion with that country’s military sector and the transnational banking cartel, is a lot more powerful than the “official” government there? And to use a euphemism of a Pakistani fellow I was talking with the other day, if the United States legislature failed to do what the triumvirate of US deep state, the US military sector (both private and public), and transnational banking cartel instructed it to do, then it would be “cleaned”. In his own words: “We are heading towards an international new order where the power of the state will be totally in hands of a corrupt mafia, who will usurp all human rights on pretext of controlling terrorism…. The boomerang will come back and as they say the wheel turns !” http://nsnbc.me/2013/02/01/the-volatility-of-gas-geo-politics-and-the-greater-middle-east-an-interview-with-major-agha-h-amin-2/

      I think this accounts for the surprising pattern of unanimous votes there against rank and file Americans that have occurred over the past 35 years, and also likely means that any actions going forward by the sock-puppet government of the United States will be at the direction of the actual governing institutions of that particular state. Which is not to say that that is necessarily a bad thing, at least for the 1%, the neoliberals and neoconservatives. I’m just pointing out that unless you happen to be talking to people who are from the region and are somewhat politically connected, you might not have any idea what is really going on there.

      1. JGordon

        Your analogy is completely off the wall, but I appreciate that you believe that I have enough eloquence to model your own writings on mine.

        Oh yes, and Americans are iredeemably clueless, about their own government and those of others around the world. I can’t deny that at all.

        1. from Mexico

          JGordon says:

          Your analogy is completely off the wall…

          In what way?

          The difference between your “analysis” and mine is that the people I quote have done a great deal of research and investigation into the things of which they speak, and might actually know something about which they speak. Your citations, on the other hand, are from anonymous and un-named sources who offer zilch in the way of documentation.

          1. banger

            I’m off topic here but I would encourage all people to investigate Peter Dale Scott and others about “deep politics” or as I prefer to all it “politics.” So I thank you for bringing him up. Americans are clueless about politics because they’ve banned Machiavelli from any discourse on politics. Deep politics actually looks at real power-relations not the puerile civics-class/”reality”-tv notions of politics as presented in the mainstream media

          2. rob

            Yes, I agree.
            firstly, that the analogy of the US ;”in the hands of….”,is what it looks like to me.
            secondly, Peter dale scott.
            He used to write/report for mike rupperts website/s; “From the Wilderness”/”copvcia.com”.Before there was a “Naked Capitalism”, Mike ruppert/peter dale scott and others were “right on”, in the attack upon the whole world that was the war on terror, where the international elite ramped up this “war on freedom”, that all has been intrigue,invasion,drugs,money,banking,hegemony,etc… the totality of all these issues.. is the ruling elites are “all in”.They have to win at this point, or they will hang.
            NC is nothing if not a firm indictment of our political class for the theft of the resources of the people. Our common posterity.The money created in our name,used for our undoing.
            From the wilderness was there before the crimes of 9-11 happened.They exposed the “conspiracy theory” of 9-11.(you know, the one where 19 hijackers from the backwaters of afghanistan hijacked four planes, crashed them, took down the towers, and simultaneously restricted the freedoms americans used to consider a birthright.)
            In the 90’s, a trending complaint was how the drug war was a false game where we had the biggest suppliers being protected/connected to the same gov’ts who supposedly were so commited to the prohibition of these same drugs,that they were willing to comprimise the rights and assets of anyone who was a “user and abuser”…Then they wrote of the police state, “eschelon” “carnivore”, the clinton administration,the militarization of the police and fbi…there was mass concentration and deregulation…of everything wall st/ industrial complex of every kind…And the story was the same. It is nothing new, lets look back at every time, and we see the thread we see today:there.
            AND THEY WERE F*$^ING RIGHT!ruby ridge, waco… oklahoma city…
            Then 9-11 happened… and from the wilderness was a consistant voice, which really did turn out to be “on the right track”The political elite, they created a pretext for the assault on the world. In a hegemonic sense.Everything is on the line, including the money, the power of immunity,infallability,and invisibility.The neocons and the neo-liberals are one and the same… they all sold us out… in a realpolitik kinda way.I think they were hoping for a better outcome, but reality dashed their plans(cause they are really just inbred,arrogant pricks),and the hopeful reinvigoration of their financial system from the windfalls of plunder, just never materialised(again because they are the “stupid” as is foretold in the saying”those who win in rigged games too long get stupid”).Which all leads us to the daily rollcall of shameful realities highlighted by NC,that pertain to the financial side of the swindle.The details are always different, but the game is mostly the same, and the players only change after a while…
            Which is what I think people need to remember.the power elite, be it EU or russian “businessmen”,or turkish are just vying for the “places at the table”with the others from the US<britian and all the other "syndicates".The house of Morgan was called a Syndicate.So was dupont, and rockefeller… and today, the names are changed, the counties of residence may be changing… but it is still those vying to be "the establishment", here to screw the rest of us..
            The reality is ,people are still reeling.Americans were attacked with the help of americans. Those responsible have been protected…
            As far as I know, no skyscraper has ever been brought down by a fire.The odds of it happening once on 9-11 is astronomical. The odds of it happening twice, well so much more so. and the idea of it happening three times.. well what can you say.Three buildings(only two of which were hit by a plane), not only being astronomically inclined to come down, but then the next astronomical chance of any of them actually coming down in its own footprint. So lets remember this also happened three times that morning.And i still wonder if the insurance industry is billing all owners of skyscrapers for the risk to insure the likelyhood of a fire making the whole building fall down.
            Then there was the engine from flight 93, which apparently bounced off the ground and hopped 8 miles after the plane crashed
            (as opposed to this plane being shot down),explaining the debris deposited over an eight mile distance.
            To say people think, "the game is rigged"…well they damn well should.

          3. Chris Engel

            Thanks for the link to the Peter Dale Scott interview.

            Great material, and I need to read more about this Deep State topic. On the hunt for credible authors in this area.

            Just finished Philip Bobbitt’s “Shield of Achilles” which has really changed my perspective on history.

      2. nonclassical


        my thoughts exactly-having perused “Treasure Islands” (Shaxton-who posts here) and “Hot Money”-Naylor, whom Shaxton’s book recommends..

        but also higher ed.-Poly-Sci, and plethora of CIA video-reading materials…most I’m sure have viewed “The Men Who Killed Kennedy part 6″…

        1. Yan

          JGordon, here is a beautiful chart describing rhetological fallacies. You get A for effort!


          “your analogy is completely off the wall”: Relativist Fallacy. I beg you tell me why it is off the wall.
          Firsthand accounts (police chief, russian): Appeal to Anonymous Authority. Same way I could tell you that a police chief had told me that if the mafia had more control over the country those pesky european technocrats would not be confiscating 20% of deposits above € 100.000.

    4. banger

      Generally speaking, and I don’t know the specifics of the region you are speaking of, the mainstream medias of most countries do not understand the actual power-relations going on in most countries. People on the ground know who to go to to get action. Organized crime is a very large part of the international economy if you include not just drugs and the traditional sectors but also money laundering, complex cons, (LIBOR etc), straight out theft and fraud (about one third of all loans made in 06 in the U.S. were fraudulent indicating that a large percentage of the banking and real-estate sector in the U.S. is criminal) and all the illegal insider trading and cheating that goes on in international markets and I haven’t included many other sectors because I don’t have the energy to go on and on. I would say that about one third of all economic activity in the world is probably criminal in some way and half of that, about 15-20% is directly and unambiguously criminal and not just skating the edges of the law. You might look at Misha Glenny’s old TED talk: http://www.ted.com/talks/misha_glenny_investigates_global_crime_networks.html

    5. Susan the other

      …”You can clean some of the people all of the time and all of the people some of the time, but you can’t clean all of the people all of the time.”

  2. TheMomCat

    Al Jazeera is reporting that Cyprus agrees to 20% levy on deposits over $130,000 at the bank of cyprus and 4% at other lenders to help secure an EU-IMF bailout

    1. AbyNormal

      also alj: The state CNA news agency quoted a senior official it did not identify as saying the government was not even close to a deal as talks between Anastasiades, troika representatives and party leaders dragged on until nearly midnight (22:00 GMT) on Saturday.

      The official attributed the deadlock to “the rigid attitude” of the representative of the IMF, whom he said, “every half hour puts forward a new demand”.


      1. TheMomCat

        On other words, the Troila and Merkle want their pound of flesh and nothing less. I would so love to see this blow up in their faces.

      2. TheMomCat

        “Sources in the EU said the 27-nation bloc was ready to eject Cyprus from the eurozone if no deal was reached, to prevent contagion of other debt-hit members such as Greece, Spain and Italy.”

        Do they seriously believe that there won’t be repreussions in either case?

        1. AbyNormal

          from Yves/Lambert and commenter’s further investigations its all leaning towards a strategic military ‘contagion’
          (i warned my kid 5yrs ago this ‘real est. non-contagion’ event would be an atlas changer)

      1. Chris Engel

        i have tried to break up a comment into two parts, posted it in a reply to a comment and to the general article. but it’s all failing!

        good thing i compose longer comments offline to copy/paste, but what gives?

          1. Chris Engel

            when the first part didn’t appear i didn’t bother with the 2nd. now i have added the 2nd.

            but at least three times i tried to add the comment as a whole (i figured, maybe too long? but i’ve seen from Mexico put out really long comments so..)

            you can delete this comment and the other comments for organizational purposes. i’ll keep the link re: comments in mind.

            i learned long ago though to maintain an offline composition of all comments. both to keep track of my own thoughts and expressions and to have a backup in case of failure to post.

          2. from Mexico

            @ Chris Engel

            I too at times have a great deal of trouble posting comments.

            So as frustrating as it might be, it would be a mistake, I believe, to conclude that you have been singled out for different treatment.

  3. The Dork of Cork.

    This is not a mistake.

    Capital controls within the Euro on a island be it Cyprus today or Ireland in the future is a very effective measure for core Euro and chief IMF shareholders ( the banks which control the western treasuries )

    Core Europe needs basic (energy resources).
    If Cypriots or Irish fight for the last Euro in the company store the oil they once burned will flow elsewhere.

    Thats the point of this.

    I have kept saying for some time now.
    The Irish are worth more dead then alive.

    1. from Mexico

      What is it going to take to wake up the rank and file of Ireland, Cyprus, Spain, Portugal, Italy, Greece, etc. to a very simple reality: They’re being colonized? We’ve seen this movie before. It’s what Hannah Arendt called “continental imperialism.”

      And it is all facilitated by a small group of privileged elites who hail from within the colonized nations. The relationship between inside colonizer and outside colonizer that exists in neo-colonialism is explained by Carlos Fuentes as follows:

      In the phase immediately after independence, Britain managed Latin America’s foreign trade; in the latter part of the nineteenth century, the United States came to be the principal partner. However, they employed the same instruments of economic power, namely favorable agreements for their merchants, loans and credits, investment, and the handling of the export economy… A highly privileged local minority served as intermediaries, both for these exports and for the imports of manufacured European and North American goods, which were in demand among the urban population in the interior…

      Large haciendas, intensive exploitation of minerals and cheap labor forces proliferated. Was this what independence was all about — land and mine owners profiting handsomely while the majority remained impoverished?

      — CARLOS FUENTES, The Buried Mirror

      For an excellent contemporary analysis of the same phenomenon there’s Ljubiša Mitrović’s “THE NEW BOURGEOISIE AND ITS PSEUDO-ELITE IN THE SOCIETIES OF PERIPHERAL CAPITALISM”:

      Following the neoliberal ideology and concept of development (characterized by market fundamentalism, monetarist economic policy, privatization, liberalization, deregulation, Washington Agreement), the forces of the global capitalism, whose agents are the leading countries of the world centre and the USA, TNCs and the financial bank bourgeoisie, have imposed the neoliberal ideology of dependent modernization on the countries of the semiperiphery and the periphery.


      Here’s how Mitrović describes the role of the inside colonizers:

      Comprador bourgeoisie is the upper layer of the bourgeois class… It is a tycoon group ruthlessly led by its interests. It posits its own interests over general social ones. It is not national in character and is socially irresponsible. It is a blind servant of foreign capital, ruthless in the exploittaion of the domestic workforce and dictatorial in relation to its fellow countrymen. Its homeland is where its interests are. It is the agent of the megacapital in the function of global economy. It is a “Trojan horse” of the foreign TNCs in Serbia and the region. Its god is the god Mammon, the capital. Its aim is to amass capital, and it puts profit above individuals. It is a predatory class of the nouveau riche and often bon vivant and parasitic upstarts. It is a peculiar jet-set of bandit economy.

      1. banger

        The issue is on two levels. First there is class struggle–the rich want to enslave everyone they can–that’s their interest. Why? Here’s the second level, among themselves they are in copetition–who can be the richest, the most daring, the most hard-assed, the toughest and so on? If they let up, the fall behind their peers and competitors. They enjoy the game the deeper they play it. That’s why the rich are seldom happy to be just rich and be done with it. Their servants, for example, will make conflicts appear where there are not conflicts because they too (the senior management level) are dependent on the envy and greed of the owners to thrive themselves–I can go on and on but I’m sure you get what I mean.

        To put it another way, Cyprus, to the extent it (or any other place) is vulnerable and is in line to get hit, power being what it is and always picking on the powerless first.

      2. Susan the other

        I keep thinkin about Sherman. That’s William Tecumseh Sherman. I sat down with him the other day over a cervesza and I told him I could see history rhyming. He never says anything, but he actually does smile. I told him it was the Indians and the Buffalo all over again. Just an old-fashioned power grab. But this time it was for global control of oil. It was a legalized monopoly. And control of the entire world could be achieved for good or bad. He just stared at me but his eyebrows went up about an inch. I think he understood what I was thinking, but I’m not sure.

      3. gepay

        This has been going on a long time.

        “For in every city these two opposite parties [people vs aristocracy] are to be found, arising from the desire of the populace to avoid oppression of the great, and the desire of the great to command and oppress the people….For when the nobility see that they are unable to resist the people, they unite in exalting one of their number and creating him prince, so as to be able to carry out their own designs under the shadow of his authority.” (Machiavelli, The Prince, ch. IX)

        Then if you read about the Peloponesian War, you would find that when a democractic city was under siege sometimes the local aristocracy would open the gates at night to let the Spartans in.

        1. gepay

          As far as deep politics goes:
          Demaris ‘Captive City’

          From the moment of its incorporation as a city in 1837, Chicago has been systematically seduced, looted, and pilloried by an aeonian horde of venal politicians, mercenary businessmen, and sadistic gangsters. Nothing has changed in more than a century and a half. The same illustrious triumvirate performs the same heinous disservices and the same dedicated newspapers bleat the same inanities. If there has been any change at all, it has been within the triumvirate itself.
          In the beginning, the dominant member was the business tycoon, whether it be in land speculation, railroads, hotels, meat packing, or public utilities, Pirates like Potter Palmer, Phillip Armour, George Pullman, Charles T. Yerkes, and Samuel Insull fed the city with one hand and bled it dry with the other.
          Around the turn of the century, with the population explosion out of control, the politician gained the upper hand over his partners in the coalition. It remained for the gangster to complete the circle in 1933 following the murder of Mayor Cermak. Today it is nearly impossible to differentiate among the partners – the businessman is a politician – the politician is a gangster – the gangster is a businessman…

          “Who is responsible for the powerful Chicago rackets which have blighted business, looted the treasuries of labor unions, padded public contracts, made puppets of policemen, cowed the courts, maimed and murdered with immunity? It is not a dark mystery which cannot be solved. Yet exasperated citizens are repeatedly asking – why are not these rackets smashed and the racketeers put in jail? The answer is that racketeers are useful to certain men favorably situated in business, in politics, a portion of the press, and even in some of the professions. It is only when the racketeer becomes too strong and gets out of hand that the cry is raised by privileged persons that the racketeer must go.”
          Lightnin’ (June 1940)

          And where is our present President from?

          1. gepay

            internationally there is deep politics: Turkey for Instance
            Germany, The Re-engineered Ally
            Readiness For Endless War
            Part 1
            By Axel Brot Axel Brot is the pen name for a German defense analyst and former intelligence officer.
            …IThe question, though, is how to make Turkey give up its EU aspirations and fall into line with whatever plans are made for it. And the main problem is, in fact, that Turkey’s most committed Europeanists are to be found in the moderately conservative and moderately religious center-right Justice and Development (AKP) party, the first governing party after World War II which is fairly clean, rather competent economically, and tenaciously digging at the immensely corrupt and criminal “deep state”: the conglomerate of politicians, military intelligence, special police squads, and their legions of cut-outs, cut-throats, and patsies, the Turkish mafia, Grey Wolves (ie, rightwing terrorists), feudal landowners, and associated business ventures. This government is trying to drain a swamp in which German intelligence was up to its knees since the days of its being tasked with chaperoning the “Trident” intelligence coordination between the Turkish, Iranian, and Israeli intelligence services.

            Turkey’s “deep state” has been (and, to some degree, still is) the enabling environment – and with Israel, the Eastern Mediterranean hub – for the interbreeding of intelligence, the security business, terrorist groups for hire, and mafia operations. It has produced the strangest, rather frightening, but most lucrative, hybrids between black operations, subversion, targeted killings and kidnappings, and the whole panoply of the drug, protection, organ harvesting, black medical research and pharmacology, the emigration, slave labor, weapons and technology, counterfeiting, money laundering rackets. Joined to Israel’s netherworld, its reach extends from the Arab countries to Africa, from Russia and the CIS to western and Central Asia, and, of course, to Europe.
            For more specific information, the life of Abdullah Çatli is revealing.

            I wonder if there are connections between gangsters and politicians in Mexico or Columbia. For Belgium look into the Dutroux Affair. In India one doesn’t have to look very deep. And so it goes all over the world.

  4. Sleeper

    I’m afraid that the talk of a mafia is red herring.

    Does a mafia exist ? Sure.
    Are there shadow governments ? Sure.

    Two items continue to amaze.

    First these crisies are often described in moral terms – if only the Southern Europeans weren’t so loose with their money, if only dead beat borrowers didn’t take loans they couldn’t pay for and so on.

    Second the money always goes to the FIRE sector even though this money never really helps ordinary folks.

    1. sufferinsuccotash, moocher

      Helots, serfs, or peons are always immoral. That’s why they are helots, serfs, or peons. The only other explanation is that there’s some extraction going on using non-economic means, which of course is impossible in our Complex Modern Global Economy.
      Anyway, there’s nothing to see here, folks, because it’s only the periphery and what happens in the periphery (read “lesser breeds without the Law”) always stays in the periphery. :)

  5. allcoppedout

    I don’t find the deep politics movement entirely convincing, though history as generally conceived is false to the extent of being trivial on truth. A big problem is clearly that our literature (Books tv, film, internet) is generally inane and repeats many false claims on human nature and in heroic tragedy.
    My guess is that economics has been in a perpetual condition of “Something rotten in the State of Denmark” – I go with Keen, Hudson and Smith on the analysis that financialisation and debt are the big problems, along with criminality – but I also think these are obvious claims.
    Cyprus seems a classic case of “missing money” with little being said on how this has come about. There have been many other cases, from looting via bankruptcy in many companies, to countries forced to at least the brink of default. We never get to see the money trail from these holes to the obvious general pot of the “winners”.

    I don’t know at this stage, on ‘evidence’ put forward, whether Cyprus needs a bailout and where any money levied is going – I suspect to Greek and other nation’s banks who found a way to loot Cyprus by dumping nonperforming “assets” there in order to trigger the bailout in order to re-write balance sheets in a manner in which the Cypriot deposit and EU bailout money is stolen.

    Are the bonds we would expect to have been haircut being excluded because they are already ‘pledged’ in Target 2 and taking them not possible without a mega-problem in the wider Euro? If this is the case this is less a Cyprus problem than we’ve been told. I suspect this is the case, but public record seems absent. ‘Down the pub’ the consensus (if there is any ‘knowledge’) is that the Cypriots have overspent and this money if to replace what they have ‘pissed up the wall’ – a bit like taking an overdraft to fund a drinking binge. Yet Cyprus government debt to GDP is lower than the EU average. I guess on viable real version of this is that the Cypriots took interest at much higher rates from their banks than the nominal positive we get across the rest of the world. One doubts this would amount, if true, to the 25% deposit lifts being suggested.

    In almost any organisational behaviour I know the truth is very different when one can get secret cameras in or a proper police enquiry done – it is this transparency we lack.

    We can say Cyprus is no tax haven – yet is this really just that the new label is ‘low tax economy’? Personal investigations in marine insurance suggest this is the case to me.

    Bernard Connelly’s ‘Rotten Heart of Europe’ went into risk premiums in detail long before this crisis and I too see many similarities between the EU and USSR even if I disagree the politics of the book almost entirely. We know the Neumann-Morgenstern utility function – yet we seem to take ‘I invested in Greek bonds and lost the lot’ at face value, rather than the statement of a crook that requires investigation. For that matter, assumptions that the periphery would be allowed to catch up (why in this world of competitive advantage?) and ratings agency “gullibility” seem reprehensible.

    It’s just possible a Cyprus default is a nuclear option on the basis of mega contagion on the “capital” supporting the Euro itself. I have a feeling we may come to know at the end of this sage that we have never had democracy and to understand we never will without an open source spreadsheet of economics.

    1. banger

      Just on Deep Politics: I can understand why you might not find it entirely convincing but I think about it a little differently. All that DP attests to is what was once called “politics”, i.e., the politics that Machiavelli and other classically influenced people know and love. I was, early in life, exposed to the classics and find Livy and other historians both informative and entertaining–politicians have always used all kinds of conspiracies, false-flag operations, misdirection and so on to get what they want. How people have come to believe that because we have “democracies” that political heavies have suddenly been defanged I will never understand.

      I submit to you that all kinds of nasty dealings are in play. And why not? Do human beings suddenly change in just a handful of generations? The evidence solidly points to “no.”

      1. allcoppedout

        I certainly go that far Banger. Michael Hudson’s comments on what has happened in higher education meet my experience as an academic and Bill Black’s of when I was a cop etc. I haven’t been able to vote for policies I think important for 30 years in the UK. I’m inclined, as a scientist, to think economics is based in Bacon’s Idols rather than any exclusion of them. When people put up models of virtue, deontological and non-deontological ethics I worry when I see no sign in the effort to recognise a 3,000 year history of failure. I worry too when homo economicus is replaced by an individual based onvery old school biology models of the triune brain, or see neuroeconomics in the hands of people who still think excellence and kwality are neat.
        Power always seems to prevent the kind of enquiry and public scrutiny that would reveal the establishment to us. The establishment wins if we can’t do this – how long have we known many equally powerful arguments on a topic can be made – it’s in Sextus Empiricus? I’ll have that the planet is run by rubber skin coated aliens as a fair metaphor, but expect no success in court with this one!

        1. banger

          Witty stuff. I don’t think we have had 3k years of failure–I think we kind of ran in place for awhile and now we are going through a phase change with utterly unpredictable results but I do believe that there will be a marriage of heaven and hell and deontological and non-deontological ethics and the rebirth, as a result, of good old-fashioned American pragmatism which I see as a conceptual foundation of whatever emerges as a new mythological framework.

          Never believed in the homo economicus because that’s a convenient abstract model of humanity that the managerial class feels comfortable with but that has no reality, to me at any rate. I don’t believe in “economics” only politics. We’ve been tricked into believing “it’s the economy, stupid.” It’s not–it’s, generally, all about raw power both in the trenches of war and money as well as in the realm of the imagination–hearts and minds, PR, propaganda, mind-control and so on.

  6. briansays

    for all the talk if nothing does happen and no extension the opening monday might be interesting?

  7. George Phillies

    The EU has no mechanism for ejecting a member. One might expect that if they were to try this that Cyprus would cancel its sovereign debts to places in the Eurozone.

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