Man I almost hate being right all the time, not really I just want to wallow in the giant display of correct predictions I have consistently made. Okay, I’m done for now, on to the main event. Apparently Merkel has been paying attention to the currency hawks in her country. You know, weakening Germany at the expense of other nations. I guess multiculturalism only goes so far once it starts to damage you economically. Once that happens nationalism raises its head, and since we’re talking about Germany to clarify I mean patriotism and loyalty to one’s country not Nazism. This has been disconcerting for Merkel and the other strong EU heads; so much so that Cyprus has been given an ultimatum for a bailout from the EU. What is it you ask, oh nothing too totalitarian, just the seizure of 10% of all the savings in the country….personal savings that is.
So while the 10 Billion Euro bailout package was under discussion the Cypriots (no really, people of Cyprus are Cypriots) were busy going all 1930’s on their banks, pretty much wiping out every ATM machine in Cyprus I imagine trying to get their hard saved money into their hands before the government stuck their fingers into it. Cyprus had to call a bank holiday for today which will probably go into tomorrow, it is a Great Depression kind of run on the banks. Cyprus is the fourth of 17 eurozone states to be granted a bailout by its EU partners and the IMF, after Greece, Ireland and Portugal. Spain has been given EU assistance to rescue its banks but has so far avoided asking for a full sovereign bailout. When your economic model has 1/4 of its participants failing economically you might want to re-think that model, especially since Spain needed assistance and Italy isn’t far behind. But can you suggest such draconian measures like seizing the wealth of the people?
Well golly gosh, it looks like the Cypriots don’t want to play fair, they want to keep their money and get the bailout. It’s hard to play in a good little socialist model when you want to keep what you earn, as country after country is finding out. It seems this equality model has only worked out for the bigger, more industrial countries and the little countries in the EU are taking a financial beating. (You can’t count San Marino and the Vatican because even though they are both small nation states, they are rich beyond measure, that is why they can afford to be nation states).
Now Merkel is left standing there wondering just what went wrong. The Cypriots are hardly going to stand for such bailout measures and the Euro has been irreparably damaged by the suggestion that in order to receive a bailout you need to seize citizen assets. The Euro will weaken or continue to weaken as the case may be and that is not bad news for the dollar, but it isn’t great news for the plethora of small countries in the EU.
I’ve got news for you. The Euro is dying. As the smaller countries are inevitably locked into a spiraling pattern of debt there are very few routes out. They can ask for a bailout, but what is the benefit when they don’t produce enough domestically or for export to remain in competition with their bigger brothers in the EU. Sharing is not going equal across the countries. The wealth is by in large going to the producers, which is how it works in a capitalist society. The other choice is to be absorbed into one of the larger countries, and no one will stand for that. I suppose there is a third choice which would be to form a splinter group of countries and form a new currency, but that will just cause another weak country cycle. No, the Euro has seen its height and is now crashing back down. Makes you wonder why Britain said they wouldn’t play monetarily. You thought at the time it was all because of nationalistic pride instead it turns out it was to protect the integrity of their banking system.