Cost of Cyprus bailout 'rises to 23bn euros'

[the2real4mafol]

Kasz216 said:

the2real4mafol said:

I haven't see any benefits from bailing the banks or any of these countries. A bailout is like a blackhole, it just sucks up the money that could be used to invest in our weak economies. My problem with bailouts, especially EU bailouts is that strings are attached. Stuff like austerity is forced onto the people. Elected governments become puppets of the EU and Germany in particular and a downward cycle begins. Mass unemployment, falling quality of life, breakdown and disillusion of society and it just gets worse and worse. This is because of austerity, a key part of the bailout. If money from bailouts went to something which would help to fix the economy and so that countries like Cyprus don't become dependent on bailouts, I would be for it but i haven't seen the evidence for that yet. I see this only ending in revolution, especially in Greece (fascists)  and possibly Spain (splitting up of regions like Catalonia) and Italy (which can't even form a government now!)  where over 1/4 of the population is unemployed. And such countries end up borrowing so much that they end never paying it back and we know this already. It's depressing but it's like the 30's all over again. Also, as a British citizen i'm not happy to see more money go to a failed state, as i'm sure the French and Germans and others aren't either, when it could help us help ourselves first and then help them help theirselves. We need a responsible capitalist system on all sides to stop boom and bust, austerity and all the other bullshit wrong with Neo-liberal Capitalism. 

 

You seem to be lacking sevre perspective here.  Lets start off with the bolded because it's where hypocricy is at it's highest.  Britain used to be one of those failed states that needed bailout money.  Who took over and "helped themselves" and stopped England from needing constant IMF bailouts?

Margret Thatcher.   What she did is exactly how a nation helps itself out of being a failed state economically.  You deride England for having to go through it instead of being  bailed out, and yet want other countries to go through that without getting YOUR money?  Austerity is how you get out of faied state status when your failing is "we don't have enough money to buy what we are buying."  

The result of "No Bailout" is "Austerity greater then what would of happened under a bailout."

Additionaly... Boom and Bust isn't a part of Neo-Liberal Capitalism...   Neo-Liberal Capitalism actually focuses on ways to STOP the Boom and the Bust by setting down simple unchanging rules in a market place that do not change and preventing extremely low interest rates.  Therefore preventing bubbles from occuring by preventing the shifts in value in markets caused by price distortion and by creating a bunch of "free" money used to cause booms.  

Stimulus economics is the economics of boom and bust.  Specifically that we should allow booms from which we save (which governments never do be that conservative or liberal) and use that boom to pay off the future bust.   On the logic that the economic growth we get now, will give us more then enough savings to pay off future issues.   Except government never does save... and instead redoubles it's money in the economy... as do people.  Leading to the bust wiping out all the money meant to pay for it.

 

 

Now as for Cyprus in particular... Their banking system is 8 times the size of their GDP .   How exactly do you expect Cyprus to stimulate their way out of that?  Essentially they're entire economy would be destroyed and it would be impossible for anybody to get loans.

They'd probably have to print MASSIVE amounts of money just to make sure the average Cyrpiot citizen doesn't lose all of their money when the banks collapse. (Since these were basically the only banks the average citizen uses.)

So Cyprus without a bailout would become a country with no banks, where everybody has at most 100,000 euro in savings... where NOBODY could get a loan, and where the government would either have to cut social services down to nothing... or run deficits that would quickly eclipse GDP.

 

Which means they would cause a lot of inflation in their currency.

 

Which by the way... is the Euro.  So... no, I don't think those other countries would agree with you.  Since there money would be losing value anyway.  The difference however is...  inflation will hit EVERYONE in Europe even those too poor to pay taxes.

 

Big countries can afford their banks to fail.  Medium countries can afford to let their banks fail.  Tiny nations who baically rely on their banking networks for their economy?   They NEED bailouts, or they'll be forced into third world level austerity.

I can see there isn't a simply solution but we have tried this austerity for 5 years and nothing has improved. I see only investment as a way out of this. Something, people won't do because of falling credit in many countries like Cyprus and Greece, it's just a cycle of decline and complete choas. You could say Iceland is small country, as only 300,000 live there but that let it's banks collapse in 2008 and yet today would you believe, it's growing... albeit, not much but more than america or europe. 

As for the Euro, that was always going to be a failure, i don't lnow how they expect 13 or so countries with huge differences in economy and economic interests to share the same currency, it's crazy. I'm glad the UK never joined the currency. It would only work if there was a superstate in the Eurozone, not separate countries.

As for boom and bust, it must stop. Thats all i can say