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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: JohnM who wrote (220146)	3/21/2013 11:09:54 AM
From: Steve Lokness	Read Replies (1) \| Respond to of 542201

<<<<< Krugman on Cyprus. Very helpful.>>>>> How is this piece helpful John? Why not call Cypress what it is - a clearing house for illegal monies from Russia. To lump Cypress with Iceland is idiotic in the extreme. The only - and I mean ONLY thing the two countries have in common is that they are tiny. <<<<< Cyprus is arguably better positioned than Iceland to do an Iceland,>>>>> This is back to the play money idea again. Excessive debt doesn't matter because a country can just manipulate its play money and all will be right again. It is nonsense. Start manipulating the currencies of Europe and no one can even haphazard a guess where it all might lead. This is not "helpful" - it encourages more of what these countries did to get to this point. The solution is not play money - the solution is not living on borrowed money. In the case of Cypress - the money laundered from Russia.

To: JohnM who wrote (220146)	3/21/2013 8:07:06 PM
From: koan	Read Replies (2) \| Respond to of 542201

On Cyprus: Good old Krugman. What would we do without him.

To: JohnM who wrote (220146)	3/21/2013 10:26:46 PM
From: cosmicforce	Read Replies (1) \| Respond to of 542201

A classic play: a rich country subsidizes, matched by an increase in that thing subsidized (in this case banks)... So, by subsiding the banks, we get bank flight to poorer tax havens where they take the subsidy we gave them and move it to the new country to avoid taxation. The rich follow their money, at least part time, only to run up real estate. It becomes trendy due to the wealthy building out high end infrastructure (high end apartments and hotels, restaurants, etc), so movie stars and the marginally rich and famous follow. Trend stalls - becomes uncool as crime rate spirals up due to uptick in the income disparity. Social instability increases. Rich flee - taking money with them. Cycle repeats. This is all very Gatsby-ish.

To: JohnM who wrote (220146)	3/22/2013 7:32:10 AM
From: KyrosL	Read Replies (3) \| Respond to of 542201

Very good article. Some background on Cyprus becoming the Caymans of the Mediterranean. It happened after Turkey invaded Cyprus in 1974, and occupied the best third of the island, kicking out all the Greeks from that part. International banking was used as a way to recover from the loss of the most productive agricultural land and tourist areas in northern Cyprus that are now occupied by Turkey. It worked well, until Cyprus joined the EU, and its banks invested heavily in Greek bonds. Joining the EU was a strategic move designed to pressure Turkey into withdrawing from northern Cyprus. Joining the Eurozone and plunging into Greek bonds in retrospect was a big mistake. The friendship with Russia is because Russia has always been the traditional enemy of Turkey.