Krugman and WB Agree

8 Comments

Sometimes the stars align:

Krugman

Wolfgang

Will the Eu's latest stunt blow up in it's face? TBD.

But don't miss Matt Yglesias's take.

The real issue here is that your typical middle class Cypriot seems to be getting royally screwed.

The European Union demanded that bank depositors take a haircut here for two reasons. One is simply that Germany would rather spend less money than more money. The second is that a lot of large depositors in Cyrpiot banks are thought to be Russian tax dodgers. That made the politics of a more generous bailout especially unlikely. It's also what specifically made taxing Cypriot bank deposits look attractive rather than some other form of tax. Makes the Russians pay!

So fair enough. That's why you have the 9.9 percent levy on deposits over €100,000. But why the 6.75 percent tax on deposits below €100,000? After all, those are the deposits that had received official FDIC-style insurance. Why break that promise? Most simply, you need the 6.75 percent tax to prevent the levy on large deposits from becoming more confiscatory. But, again, why? The official response seems to be that keeping the tax on large deposits low helps preserve Cyprus' viability as an offshore banking center. As Cypriot President Nicos Anastasiades put it in his official statement, this plan will save "8,000 jobs in the banking sector and thousands of others which would be lost as a corollary of not maintaining the operations of banks."

But will it? I'm not an expert in the psychology of Russian money-launderers, but the 9.9 percent tax seems like enough of a pinch to ruin the party. On the other hand, surely not every single large depositor in a Cypriot bank is Russian. Surely some of them are just wealthy Cypriots. Wealthy Cypriots whose interests the government is protecting at the expense of ordinary depositors.

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

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

The Poverty Paradox: Review

By Mark Robert Rank The titular paradox is poverty in the USA, the largest and one of the richest countries in the world.   Compared to other rich countries the USA has much more and worse poverty than almost any other.   Professor Rank dissects the causes and has some suggestions, few if any of which would fly with the modern Republican Party. Rank proposes what he calls the structural vulnerability hypothesis.   That means that political policies and economic circumstances punish the poor and make it harder to escape poverty.   Bad schools and bad neighborhoods promote poverty and make it hard to escape.   The US ranks high on the inequality scale and low on the social mobility scale. Rank argues that a major driver of poverty in the US is blame the victim thinking, the idea that if persons are poor, it is their own fault.   Much poverty can be traced to lack of social capital: education, other saleable skills, disability, poor health, or access to ...
Read more