Monday, March 25, 2013
My letter to the Wall Street Journal re: The Cypriot deal solves nothing
Re: Cyprus Gets New Bailout Deal
In addition to being anti-democratic ("The bank restructuring doesn't need approval by the Cypriot Parliament. German Finance Minister Wolfgang Schäuble said Monday that the legislation needed to complete the restructuring of the Cypriot banking system is already in place."), the so-called bailout of Cyrus solves nothing and treats its residents as serfs ("Officials said they believe the country will now need strict controls on money transfers in and out of the economy in the coming weeks or possibly months, cutting off its citizens and companies from much of the rest of the euro zone's financial system."). The cause of the crisis was not the run on the banks but the market's recognition of the reality. The misconstructed euro caused massive malinvestment leading to massive bank losses. So, what has changed to prevent future losses? Nothing! In fact the European Central Bank is pumping out even more money in the foolish belief that it can jump start the economies of its members. All it is doing is causing even MORE malinvestment and making future crises worse. As is standard operation procedure for incompetent and irresponsible bureaucrats everywhere, the people lose their money AND their freedom.