Sovereign debt bubble thread

[mongers]

Cyprus now has capital controls.

[Crazy_Ivan80]

C'mon silver prices. CLIMB.

silver is not going to climb if gold doesn't climbe too iirc. And gold has been going up and down the past two years. be patient.

[Zanza]

http://www.telegraph.co.uk/news/worldnews/europe/cyprus/9948545/Southern-Europe-lies-prostrate-before-the-German-imperium.html

Southern Europe lies prostrate before the German imperium

[...]

Lord Salisbury, who won control of Cyprus for Britain from Turkey in 1878, once sent an envoy there. People complained that the man knew neither Greek nor Turkish. "Good," said Salisbury, "then he will hear fewer lies."

That is the authentic tone of an imperial power. Today that power is Germany. We have heard enough lies, the Germans are saying haughtily to the Cypriots, now shut up and do what we want. Yesterday, Angela Merkel, the German Chancellor, ordered that "Cyprus must realise that its business model is dead".

[...]

So let us look at this question not from an economic but an imperial point of view. One problem of imperial rule is that it can be worse for the satellites of the empire if the centre is democratic. A benign despot can at least take a long view about the welfare of his fiefdom. Elected rulers usually cannot. Television footage this week has been of weeping, angry crowds in Nicosia and Limassol, but the crowds that matter are the ones that have not taken to the streets in Berlin or Munich or Hamburg. They get their next vote in the German general election in September. They dislike shelling out for what they see as feckless Mediterraneans: they detest the idea of doing so for what they see as crooked Russians. [...]T


It is another feature of democratic regimes that they are instinctively uncomfortable with imperial pretensions; so they seek the moral high ground, like a mountaineer who just keeps climbing higher when he's lost in the fog. We British liked to think that we were bringing civilisation and the rule of law to our colonies. The Americans have tended to deny an imperial role altogether and talk about safeguarding democracy.

Now it is the Germans' turn to exercise an imperium. Their re-entry into the comity of nations has been based on the idea that they are peaceful, law-respecting, internationalist, politically vegetarian. They support an ever-closer European Union because they want to be a "European Germany" to avoid a "German Europe". They are perfectly genuine about wishing to overcome what is euphemistically called "the problem of history". So they are obsessed with the importance of rules, of obeying them and being seen to obey them. They have been good boys, and by doing so, they have prospered mightily.

But as they have grown stronger, their love of rules has turned into an instrument of their power. We are good European citizens, the Germans argue, and we have done well. So the answer is for everyone in the eurozone to behave just like us and they will do well too. One size must fit all, and that size is made in Germany.

[...]

Today, most of southern Europe lies prostrate before Germany.

Mrs Merkel does not see it this way, but if she were to impose upon her own country the levels of unemployment which her eurozone policies inflict upon Spain or Greece or Italy, she would be out of office tomorrow. It is in the nature of imperial power that it is very much slower to feel the pain of those it rules at a distance than that of its own people. That is why its colonial subjects tend to dislike it, even when it is well-intentioned and orderly.

By this point, many people, especially Germans, will be furiously objecting to my line of argument. This is not imperialism, they will say, this is a new concept of doing things called the European Union. The eurozone is on its way, they go on, to the safe harbour of a banking union and a fiscal union, to a United States of Europe in all but name. Then all will have equal rights and equal protection. To get this union right, though, we mustn't have "legacy debts": these problems of transition are tough, but if they are firmly dealt with, all will be well.

And possibly, one distant day, it will be. Possibly, just as people all over the known world could once say "Civis Romanus sum" ("I am a Roman citizen"), so they will be able to say, "I am a European", and know that they are safe and free under the blue flag with its golden stars. It may be for that reason that the eurozone decision-makers decided to make an example of Cyprus. They knew that it was puny. They believed, probably correctly, that it would have to obey. They hoped to show the world, which doubts, that they mean what they say.

But the exertion of such power is a very ugly thing. When you see it exerted you also see who is accorded respect and who isn't. In this case, ordinary depositors have been disrespected and parliamentary processes have been bullied into giving the "right" answer. Cyprus is capitulating not out of euro-patriotism, but out of fear. This is not European "solidarity" but coercion.

[...]

http://blogs.telegraph.co.uk/news/iainmartin1/100208951/margaret-thatcher-had-a-point-about-germany/

Margaret Thatcher had a point about Germany

[...]

When Charles Powell, Thatcher's private secretary, summoned a group of leading historians to Chequers, on 24 March 1990, to discuss the implications of reunification, the news leaked. Powell had prepared a paper for the occasion which summarised the German national characteristics as "angst, aggressiveness, assertiveness, bullying, egotism, inferiority complex (and) sentimentality."

[...]

Conditioned by the aftermath of the Second World War and the Great Power interplay of the decades that followed, Thatcher missed that Germany had become a largely pacifist nation which rejected its martial past. But the idea that unification, followed by European monetary union, would strengthen Germany to the point that it would again dominate the continent looks pretty prescient now.

It is hard to see Cyprus as "plucky little Cyprus". Its political class seems so inept that it makes our lot look like latter-day Bismarcks. No one forced the Cypriots to blow up their banks on such a scale and then bankrupt their country. However, the "rescue" looks like bullying, instigated by the Germans who are determined to keep their single currency together and hang the human cost.

The other countries of the European Union seem so far to have given little thought to how to deal with being under what Charles Moore the other day referred to as the German imperium. The empire is civilian rather than military, but the German power to command is still strong and getting stronger with every euro rescue. In the UK the Eurosceptic response is generally that the single currency will collapse soon under the weight of its own contradictions. Actually, it seems perfectly possible that, barring an asymmetric shock, it won't, and that eventually Germany will sit calling the shots at the centre of an economic empire.

In the face of this some of the non-German leaders prefer wittering brainlessly about European harmony and solidarity, rather than attempting to deal with reality. Germany is becoming too powerful for its own good and ours, again.

The Fourth Reich is upon us apparently.

[Tamas]

Well, the fact that a united Germania would dominate Europe was pretty clear from, what, the early middle ages? There were several major wars over stopping that from happening. I do find it extremely ironical that after utterly destroying themselves to stop the Germans from getting hegemony, Europe now hands power to them willingly, creating the Mitteleuropa the Germans wanted to get in a victorious WW1. One could say that all those 50+ million people died in vain, especially since I sure prefer German overlordship over the self-defeating style of the PIIGS, or the, well, Frenchness of the French. Not to mention Russians.

[Admiral Yi]

What a bunch of silliness from the Telegraph.

Are other countries lining up for the golden opportunity to imperially bail out Cyprus' banks?  Of course not.

[Valmy]

Well, the fact that a united Germania would dominate Europe was pretty clear from, what, the early middle ages? There were several major wars over stopping that from happening. I do find it extremely ironical that after utterly destroying themselves to stop the Germans from getting hegemony, Europe now hands power to them willingly, creating the Mitteleuropa the Germans wanted to get in a victorious WW1. One could say that all those 50+ million people died in vain, especially since I sure prefer German overlordship over the self-defeating style of the PIIGS, or the, well, Frenchness of the French. Not to mention Russians.

Um nobody died to stop Germany from gaining economic dominance.  They pretty much had that already.  But the other main difference between then and now is the power of the US in Euro affairs.

[Razgovory]

What a bunch of silliness from the Telegraph.

Are other countries lining up for the golden opportunity to imperially bail out Cyprus' banks?  Of course not.

Euros seem to throw around the word "imperialism", a lot.

[DGuller]

The Fourth Reich is upon us apparently.

Can you be our Admiral Canaris?

[mongers]

What a bunch of silliness from the Telegraph.

Are other countries lining up for the golden opportunity to imperially bail out Cyprus' banks?  Of course not.

Tamas writes for the Torygraph now ? 

[Jacob]

So I read in a Danish paper that the terms of the Cyprus bailout were distinctly pointed at Russia. German politicians are on record as saying that German tax payers are not going to bail out Russian gangsters.

Apparently 25% of Russian foreign capital flows go (or went) through Cyprus. Putin is, allegedly, displeased.

[DGuller]

I guess the next big natural resource discovery in Cyprus would be polonium, lots of it.

[Zanza]

The ECB shipped five billion Euro cash to Cyprus by air freight. That could have been the heist of a century.

Trucks full of cash:

[mongers]

The ECB shipped five billion Euro cash to Cyprus by air freight. That could have been the heist of a century.

Trucks full of cash:

It's ironic as the aircraft used to air-freight them in were probably Russian made.

[The Brain]

Bye bye money.

[MadImmortalMan]

Look on the bright side. They won't be suffering a liquidity trap.