“We loiter in winter
while it is already spring. In a pleasant spring morning, all men’s
sins are forgiven.”
— Henry David Thoreau
As I write this, I’m
loitering: The snow is still falling, my golden daffodils are
buried, it’s too cold to be called “pleasant.” Furthermore, too many
sins have piled up since Thoreau was chronicling the advent of
spring at Walden Pond. Forgiven or not by a loving God, we are going
to have to pay for them.
One word, as the sun
crosses the equator: Cyprus.
A group of Eurozone
finance ministers in Brussels agreed last Saturday to give Cyprus’
government a $13 billion bailout, but demanded that depositors in
the island’s banks pay between 6.75 and 9.9 percent of their bank
deposits as their share of the bailout cost.
At first, that didn’t
seem like much; as I did my own taxes last weekend, I had to add my
interest to my other income and under $200 to my taxes. But wait!:
The proposed Cyprus tax isn’t on the interest, it’s on the entire
amount of money in the account! And the government, on behalf of the
European central bank, would seize it directly. The Cyprus
Parliament has to vote on this plan, but if it’s rejected, the
country will not be able to pay its bills, will financially
collapse.
Imagine being told that
the government is going directly to your bank account and
immediately, electronically, extracting 7 percent of your checking
and savings accounts. You might be tempted to get your money out of
the bank before the government gets there, though where you’d put
it, I can’t imagine. As Cypriots considered this defensive action,
the government closed the banks so they couldn’t withdraw anything.
Meanwhile, as
depositors in other debt-ridden European countries became concerned,
investors everywhere began to worry about runs on those nations’
banks.
What makes Cyprus
somewhat different is that its banks are utilized by Russian
oligarchs to stash their money in secret accounts; Russian President
Vladimir Putin’s angry response may reflect the fact that some of
the money about to be taxed is his. But one Russian billionaire got
it right when he referred to the action as a “Pandora’s box.”
Cypriot banks are invested heavily in Greece’s recently restructured
government bonds. Portugal, Spain, Italy and others are living on
the edge.
Can’t blame Germans and
other EU members for resisting bailing out these fiscally
irresponsible countries without demanding that their citizen/voters
share the cost. Who elects these socialist tax-borrow-and-spend
governments anyhow?
Here in the USA, we
also have to wonder what our government will do as its own debt
reaches unsustainable heights. Imagine China demanding part of every
American’s personal savings accounts in return for yet another
Chinese loan to cover what our country spends beyond its revenues.
Of course, our own central bank, the Federal Reserve, also eats up
the value of our savings by inflating our currency.
Suddenly, Congressman
Paul Ryan’s new budget, that begins to address our deficit, may not
seem quite so dramatic to its knee-jerk opponents.
Nah. I know what most Americans think if they see a reference to
this crisis:
Where’s Cyprus?
I happen to know
because I lived in Greece soon after Cyprus became an independent
nation, with major internal dispute between Greek and Turkish
Cypriots. It was part of the Cold War, as the Soviet Union had
influence there — and apparently still does, though in a different
way!
Because of my past
interest, my ears perked up when someone at a party last Sunday
mentioned the new crisis and recommended we all watch the European
markets when they opened on Monday. I was busy in 2008 and almost
missed the banking crisis/fiscal meltdown as it almost happened,
didn’t want to miss this one!
Well, I’m not feeling
smug about my geographical knowledge; I discovered last week that I
didn’t know where North Korea was. As it threatened us with nuclear
weapons, I wondered why we were deploying our nuclear defense system
to Alaska: I’ve always pictured Korea situated off the southern part
of China, a peninsula sticking into the South China Sea near the
Philippines.
Not anywhere near.
North Korea stretches along the northeastern China coast and, at
its tip, touches Russia!
I had felt somewhat
smug in 2008 knowing Sarah Palin was right when she said one can see
Russia from Alaska; so many allegedly smart Americans made fun of
her. North Korea doesn’t touch that Bering Strait part of Russia,
but it’s too close for comfort if it ever gets a decent delivery
system.
Putin probably isn’t
thrilled about a nuclear missile flying over Russia either, guided
by a technologically deficient Third World government. Maybe he and
Obama shouldn’t have celebrated the cuts in Reagan’s Strategic
Defense Initiative; it would be nice if North Korea knew any threat
to nuke America will always be useless.
So, as you read this,
spring is officially here. But the sins of fiscal irresponsibility
and poor prioritization will eventually come home to roost with
spring chickens. We won’t deserve to be forgiven until we atone for
our ongoing inattention to the political consequences of our
election decisions.
