Haircut

One of the rituals of entering the Marines, or almost any military service, is losing very nearly all one's hair. By that standard, depositors in Cypriot banks are getting just a light trim, but they aren't happy. The problem is that those Cypriot banks made a lot of bad loans - where have we heard this story before? Mostly to Greece. Another problem: there's a lot of money in Cypriot banks from overseas, attracted, I imagine, by the big interest they were getting on those crappy loans.

Let me rephrase the problem: the banks were undercapitalized and lent money not wisely but well...stupidly. The financial powers of the EU (AKA Angela Merkel) decided that the best thing to do would be to divide up the losses among the depositors. According to Matt Yglesias:

A tax of 9.9% on deposits over €100,000 and 6.75% on deposits below that level.

If this were happening in isolation, I would be inclined to say, "good plan." Who better to take the fall than the stockholders and depositors? It's really hard for me to have any sympathy for the international depositors, since they have had plenty of warning that Cyprus was on the financial ropes. I have more sympathy for the locals, but maybe next time they will insist that their government keep a tighter rein on the banks.

Of course this is not happening in isolation, so the real question now becomes what will happen in Spain. Widespread bank runs could kill the Euro dead.

Comments

Post a Comment

Popular posts from this blog

Anti-Libertarian: re-post

The most pointed critique of social security and liberalism in general is the libertarian critique. The problem with libertarians, for a liberal, is that we have too much in common. We both believe in individual rights, tolerance of individual differences, and dislike government prescription of religion. The basic difference, it seems to me, is the different answers we give to Cain's (with thanks to the Captain - my original version had the corpse asking the question!) famous question: "Am I my brother's keeper?" That's not really my basic bitch against the libertarians though. My real complaint is the same as my complaint against most religion - its premise is a fraud. For those who can't stand to wait for the punchline, I believe that trying to implement libertarian principles leads to tyranny or social disintegration. Demonstrating that takes some historical (and pre-historical) context. For all but the last 15,000 or so of the 100,000 years the human spec
Read more

Uneasy Lies The Head

Uneasy lies the head that wears a crown ........... Shakespeare Henry IV, Part II. So it is with us and our slightly distant primate cousins , so it seems. A 9-year study of wild baboons in Kenya by Princeton University and the Institute of Primate Research may turn conventional assumptions of alphas males upside down. The study found that alpha males have high testosterone levels, which allows them to dominate other baboons, get access to more food, and attract better mates. This is expected. Surprisingly, though, the alpha males also have high levels of stress hormone glucocorticoid, which scientists measured from their feces samples. In fact, the stress of alpha baboons was on par with low-ranking baboons. The convention wisdom is that access to food and females provides life security and thus less stress for dominant males. Conversely, weak males who are constantly threatened by starvation and physical violence from stronger males are thought to be more stressed. The st
Read more

We Call it Soccer

The US played its best, and maybe only good game of World Cup, but lost thanks to brilliant goalkeeping by the Swedish keeper and the bizarre method soccer uses to settle ties when three US stars could not put the ball on frame from the 12 yard spot.  At the end it came down to a blocked shot that spun in by maybe a couple of centimeters. Well, that's football - too much like life.   Which brings me to a modest proposal.  Replace the thirty minute overtimes with as many 7-player 15 minute periods as needed to settle it.  Scoring should be much easier with fewer players.
Read more