The View From Greece On "The Hypocrisy Of Leaders" And Why "There Is A More Insidious Infection That Could Spread"

Tyler Durden's picture

Authored by Nick Malkoutzis, originally in Kathimerini

After Cyprus, eurozone risks transmission failure and running out of road

The Eurogroup’s decision on Friday to impose a one-off tax on depositors in Cyprus may mark a turning point in the euro crisis. Only, the single currency’s decision makers might soon realize that in taking this particular turn, they also ran out of road.

Under pressure from several members of the eurozone – Germany in particular, if reports are accurate – the new Nicosia government agreed that deposits above 100,000 euros would be taxed 9.9 percent and those under 100,000 at a rate of 6.75 percent.

This is an unprecedented decision for a eurozone country. It is also one whose potential consequences reach much further than an island in the eastern Mediterranean. It threatens to cause the transmission system between the economic and financial sectors on one side and the political and social on the other to seize up. Without this, the euro cannot be propelled forward. It cannot function.

The choice to tax depositors has prompted an intense economic debate about whether it was the correct policy or not. Both sides have put forward points worth considering. Those arguing against the decision have pointed, for instance, to the risk of contagion in other eurozone countries that are facing economic problems. Those who defend the Eurogroup’s stance say depositors in Cyprus earned high interest, which gave them profits over the last few years and carried a bigger risk.

Setting these arguments aside, the eurozone ignores at its peril the fact that these decisions do not happen in an economic or financial vacuum. They have political and social consequences that cannot be ignored if the single currency is to have a future. One need only look at the political changes that have taken place in Greece, Ireland, Portugal, Spain, Italy and elsewhere to realize that the euro area is running out of leaders who have the backing needed to implement the decisions being taken.

Cypriot President Nicos Anastasiades, elected just last month, has to clarify to his people why he is adopting a bank deposit tax when he told voters a few weeks ago that he was absolutely opposed to it. Even before Anastasiades had returned from Brussels, his political opponents were demanding a referendum on the deposit tax. Some were even calling for new elections or an exit from the euro.

Anastasiades also has to explain to Cypriots why small-time depositors have to pay a similar levy to the one some eurozone countries supposedly demanded so alleged Russian oligarchs would be forced to pay for bailing out the island’s banking system. Furthermore, he has to inform them why the Cypriot government’s pledge to guarantee deposits up to 100,000 euros - supposedly even in the most extreme circumstances - is not even worth the paper it was written on.

The implications for people’s trust in their government and financial system are obvious. It would be remiss to think that this wariness will be contained just to Cyprus. While many will be watching next week for signs of financial contagion from the Cypriot decision in other parts of the eurozone, with Spaniards or Italians possibly withdrawing savings from their banks, there is a more insidious infection that could spread.

Cypriots will be given equity in their banks in return for the tax but what value will this have when they no longer have faith in the banking system? Cypriots will be told that the deposit tax will stave off further measures but they only have to look to Greece or Portugal to see that promises of no more taxes or cuts have little value. They will be told that there was no alternative but then they will hear about pressure from other single currency members and concerns about the upcoming German elections.

And, all the time, citizens in other troubled eurozone countries will watch and grow warier. They will interpret the policies advocated by the stronger members as punitive for the weaker. They will consider the hypocrisy of leaders who cry foul about money laundering in Cyprus but turn a blind eye if it is happening in Lichtenstein, Switzerland, Luxembourg, the City of London or anywhere else in Europe. They will realize that their government’s promises carry no value when measured against the ideas, motives or obsessions of the single currency’s big players.

This is the point at which the political and social sectors will experience a complete disconnect from the economic and financial. Restoring the connection will be an immense task.

Then, these same citizens will begin to ask themselves where their interests lie, what’s in the euro for them and whether other options would be better. And, as they are mulling over these thoughts, they will look to other parts of Europe and see people like them but also analysts and policy makers wondering what all the fuss is about. They will hear others who have not had to suffer any hardship or financial losses wonder why there is such a negative reaction to wages being slashed, taxes being hiked or deposits being taxed.

This is the point at which the links within the eurozone will begin to pop apart, when citizens will turn to Beppe Grillo-style solutions, to nationalists, extremists or to anyone who promises a different path.

This is the point at which the vehicle stops functioning and the road ends.

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takeaction's picture

When I tell people "This may happen here"  the sheep still look at me with the "Deer in the Headlight look."

I have 100% given up on this country.  If we make it to 2016…Rand Paul…they will never let him in.  I got into an argument on Facebook last night….Democrats CAN NOT face facts.  I posted some before Obama, and After Obama statistics…and they say they are just ½ truths….and said that “This is not Obama’s fault”.  They still blame Bush…can you believe that.  I am so done with trying to educate people.  Tyler…this Bank Run is a call for the DEER….and Banzai needs to make a cool label or caption that goes under the deer.  We are so fucked.  People say I am a Doom and Gloomer….really??  They just stole your money in Greece fuckers. What are you going to do about it?  When it happens here…what are you going to do…NOTHING…as always!

AnonymousCitizen's picture

The road just got really smooth, right? No more bumps.

Well, maybe one more.

SafelyGraze's picture

was *this* your infection?

The most vulnerable users are those that use a Social Security Numbers as a Taxpayer Identification Number and that “opted in” to public search. 

 When did the security incident take place?
It was reported to GSA on March 8, 2013 and closed on March 10.

 What is GSA doing to prevent this from happening in the future?
Protecting user content is a top priority for GSA


THX 1178's picture

Blaming bush is just like blaming obama-- its an expression of misunderstanding.

DJ Happy Ending's picture

The sheep in Europe will never do anything. 70 years ago they politely stood in line, waiting to board cattle cars.

Element's picture

How old are you? (I'm guessing very young probably extremely ignorant)

DJ Happy Ending's picture

What does my age have to do with the content of my comment?

If you disagree with my statement, please explain.

Element's picture

One of the reasons the EU was formed was to try to moderate the propensity for Europeans to get very violent, and do way too much, too often. They just tend to get ... er ... very regimented and tribal about it when they do finally do something. Or do you suppose the Europeans played no part in the central Eurpopean battles of WWI and WWII (and almost WWIII), and the centuries of wars and revolts etc., prior?

Ask Russia if Europeans will do something in this sort of situation.

DJ Happy Ending's picture

I understand the EU is a response to 500 years of bloodshed and I also know the Russians were on the receiving end of that.

I was commenting on the average people, not TPTB. Correct me if I am wrong but they politely stood in line to be loaded into cattle cars.

Element's picture

The people standing in line to board cattle cars had been warned constantly to leave Europe for years, they had even been offered free expedited passage out of Europe before this. They were not regarded or recognized as native central Europeans at all, they were considered an invasive fifth column of interlopers and infiltrators, who refused to integrate with actual local Europeans, thus remained aloof. Instead it it became understood and was widely perceived these foreigners had undermined and taken control of finance, trade, local and national Govt, media/entertainment and Banking, and taken over State Treasuries, specifically to gain control and power over the locals, which they refused to fully integrate and become one with.

Thus they had ZERO choice about it at that point of getting on to cattle cars, because they were surrounded by professional military with machine guns who were more than willing to use them. Plus were a minority situated deep inside several powerful countries where many of their people were more than willing to lynch the lot of them (as has often also historically been the outcome).

If you don't even know these basic facts from the WWII era, and can't separate your absurd generalization about the actual European local's taking of actions, i.e. the ones who were not getting on cattle cars, but were instead busy loading the NON-Europeans on the cattle cars, then that's a problem of your inadequate education and extraordinarily deep confusion.

Those are the basic facts and what you have said about "Europeans" standing in line to get on cattle cars is a complete distortion and entirely false in numerous ways, and irrelevant bullshit at best.

"Correct me if I am wrong but they politely stood in line to be loaded into cattle cars."

You have been corrected.

DJ Happy Ending's picture

Thanks for the detail. Why did you feel it was necessary to lace all of your retorts with insults?

Element's picture

To bad you don't know what you're talking about when making repeated similar false generalizations in recent days about Europeans, and what they'll potentialy do in the situation they now face.

Let's move on.

DJ Happy Ending's picture

Yeah, let's move on so you can avoid a simple question you have no answer for.

Element's picture

Listen dipshit, I'll insult any dickhead making repeated stupid false and profoundly ignorant comments, get over it shit-for-brains. This is fight-club, toughen up and fight to make sense or piss off like a sniveling sook. Your choice.

DJ Happy Ending's picture

Obviously. I was just curious why you chose to lace your retorts with insults. The most obvious answer is you have a small penis.

Element's picture

Ha! ... now you're getting it. lol

Matt's picture

You think the ordinary citizens just took up arms and invaded other countries all on their own? I don't think that has happened in Europe since the Crusades.

The wars were caused by the leadership. The people follow orders.

Element's picture

They were Europeans acting!

They didn't sit around on their arse, nor lope off to board cattle-cars, they fought -- rightly or wrongly -- for some cause. The point of the article is to point out that the European periphery is going in that direction again, and the core is ignoring this and and failing to understand that it is occurring, it is real, and will bring the EU unravelled.

To say Europeans will do nothing is utterly absurd, hence my comment.

Lmo Mutton's picture

OOOO!  OOOOO!!  Pick me!  Pick ME!!

Can i ride in the caboose??

Fist full of CDOs's picture

Could happen here? 

- Gold confiscations

- QE? 

- Negative interest rates (in real terms)? 

dontgoforit's picture

It is happening here.  Been going on for some time now as I see it.  Bailouts and buying up $85 billion/month of bad paper.  If that isn't theft, what is it?  Those $$ are our money being spent for us without the people having any say in it.  That's theft of a far craftier methodology.  Bankster's really are gangsters.

TheGardener's picture

"when citizens will turn to Beppe Grillo-style solutions, to nationalists, extremists "

So Beppe is an extremist you imply ?

And trying to protect ones god given human right of
financial privacy or economically fully legitimate capital
flight is "money laundering" in your sick imagination ?

magpie's picture

Funny, today the smear job against the German anti Euro party started...but the Neonazi NPD was back in legality...go figure, need to split that populist vote a little.

slightlyskeptical's picture

You are on Facebook and bitching about the "sheep" in this country. No offense meant, but you are just a "sheep" of a different color.

escargot's picture

"I am so done with trying to educate people."

Dude, or Dudette, you'd better start educating yourself if you're sitting there thinking that Bush/Republicans aren't just as guilty of fucking everything up as Obama/Democrats.  Wake up.  You're right to blame Obama, and the other sheep are right to blame Bush.  That's what you people need to get through your brainwashed heads.

Meremortal's picture


You are still worrying about who to blame rather than what to do, which means you are no better off than your compatriot who (according to you) hasn't put enough people into his "blame bucket".

Or will everything be somehow ameliorated once we figure just who to blame?

Well, perhaps. If you then take up arms, rally the citizenry, and burn some witches. But you aren't even close to that, you are still sitting at your computer blathering. Hint for you, burning past Presidents wont' change a thing, it's the current PTB that must be taken down. And that will only happen one way.

Got guns? Balls? A redoubt in the country where you can live off the grid?

Nothing else will change what is about to happen.




Stoploss's picture

I wouldn't fret too much.

You get the opportunity to watch them starve before your eyes.

Lil Ms.Homesteader's picture

Rand Paul is not interested in saving anyone but Rand Paul, and no one is going to come and help us, lead us out of this mess, or save us from the ultimate consequences, including Rand Paul. The dems and republicans are on the same team, as far as outcome, so look beyond the bs that they spew. We need to move beyond this left/right paradigm that has been created, to see that it matters not, it's all a deception. Everything is a lie; our history, our money, statistics, msm, the courts, legislators, legislation, and on and on, and that's the only thing we do know for sure. Take care of yourself, that's all you can do.

trollin4sukrz's picture

MAY happen here? Look what is happening in Detroit. Copy paste...


What is taking place in Detroit has national and international significance. The Financial Times of London cited one person involved in the discussions on the imposition of a financial manager as saying, “This will be the best case study of what it means to restructure a city.” In an editorial, the newspaper called for “radical—and unpopular—action” to address Detroit’s financial woes, a position shared by virtually every mass circulation newspaper in the US.


The “restructuring” of Detroit is a euphemism for a slash and burn policy of destroying city jobs, cutting wages and pensions, gutting social services from sanitation and firefighting to health care and education, and handing over city assets to private bankers and speculators. The very social forces responsible for the city’s present state are utilizing the crisis of their own making to step up their plundering of public resources and further redistribute the wealth from the bottom to the top.


see? It is always the fvkin banksters lining their pockets.. THIS shit has to stop.FVK!!!

spine001's picture

Guys, Gals, do not trust me, just look it up in Google: ARGENTINA, this movie has already been played there. In Argentina this same thing happened many years ago, they imposed a 0.5% to 2% wealth tax on all your wealth, deposits, real state, cars, boats, anything. And you have to declare all the items that make up your wealth, under oath once a year and go in jail if you lie.

1.02*1.02*1.02*1.02*1.02 or 5 years of this tax and you have a 10% confiscation!

This has been going on for a lot longer in Argentina.

From what I hear the outcome has been that Uruguay has lots of undeclared Argentinian's money and so does New Zealand and who know who else. People create legal structures that shield people from the wealth tax, all of course legally. But guess what, who can pay the cost of these structures? the middle class? NOT Guess again...

I insist if you want to see how the future will unfold, not only for Cyprus but for the world, look at Argentina where this experiment has already been conducted and is in its phase IV where a pseudo-populist government is using people's anger (the Grillo thing already happened here in 2001, 10 Presidents in a few months; furthermore the Italians took the sayings of the people here) to benefit themselves and their chronies shifting the wealth from the previous upper class (read bankers here and now) to them.

That is why the election of a Jesuit Pope of Argentinean origin is so significant. He does indeed know exactly what is going on and why. What will he do about it, that is another question...

Until next tiime,


machineh's picture

It is called Impuesto Sobre Los Beines Personales.

But guess what? Many U.S. states impose personal property taxes too:

Not to mention real estate taxes, which can easily exceed 2% of property value.

Arguably, wealth taxes bite the U.S. middle class (at least in the blue state tax hells) harder than Argentina's taxes do.

MayIMommaDogFace2theBananaPatch's picture

Someone really smart once said that "if you make a habit of arguing with fools, innocent bystanders may not be able to tell the difference."

I truly wish I could remember that when I REALLY NEED IT -- which is exactly when it is furthest from my mind.

Things that go bump's picture

There is no Democrat or Republican; only Zool. The current President, as with the last one, is only the public face worn by those who actually make the decisions. That is why this presidency is so very similar to the last. While the appearance of our government was left intact it has been fully subsumed, and I believe we must consider all of our elected representatives as puppets. If Rand Paul were any different you can rest assured that he will not be one of the two fully veted and suitably attractive candidates that will be offered up to give us the illusion we still have any choice.  

Shooting Shark's picture

Or, consider the opposite.  This may actually STRENGTHEN the hand of the Eurocrats by demonstrating the perfidy and incompetence of Cyprus' (and Greece's) leaders, while forcing the nations to grovel happily or unhappily at the hand of the EU.  Remember that in the end, this is still a wealth transfer into Cyprus, and those whose pensions are being bailed out, *who have no savings*, will know which side of this toast is buttered.

waterwitch's picture

Just let them try it in Italy or Spain and see what happens next.

dontgoforit's picture

I remember the Cypriot uprising of the '50's - wasn't over money so much as political, but yeah, Italy and/or Spain would become a mess in a hurry if they do this there.  They oughta just shoot the moon and do it on the Swiss banks!  Get it all done at once.

GraveyardSpiral's picture

The EU shoulda bought the same model of HP printer that the Bernank is using....why didn't they just print some more Euros instead of stealing the ones that were printed back in December of 2011?   I guess the freshly printed ones are worth less?

spine001's picture

The answer is easy, the GERMANS do not want to pay for it and if you dilute everybody with printing then everybody pays!!!!!!

That is the main difference between EU and USA

Until next time,


CrashisOptimistic's picture

Outrage this and outrage that.

It's the social equivalent of threatening to send a strongly worded note to the bothersome country's ambassador.  And if you keep it up, we'll send another note!

Outrage that manifests by walking in a street and talking loudly doesn't even warrant a yawn from a banker.

Only bullets get attention.

dontgoforit's picture

Sad; but so true.  And usually it takes more than just a little blood to get them really motivated.

Things that go bump's picture

If a significant percentage took out their money and then they called a general strike it might get their attention.

magpie's picture

Think of it this way...there is no "one" Eurozone, unless the levy is repeated in Italy and Germany.

ThunderingTurd's picture

The fact after the 'theft' of fellow European assets there are no bank sprints going on is truly mind boggling. I find myself completely numb to the reaction of the people of Europe.  Imagine if the governor of California instituted a 'wealth tax' to California pensions.  What would the people of America do?  Would they be just as complacent?  Astonishing.

Antifederalist's picture

Give it a little time....we are not even through the first day.  Europeans may surprise us.  A small leak in the dam can grow into a large problem.