The deepening crisis in Cyprus , where every single MP voted
against plans to steal a portion of people’s savings, has thrown eurozone
leaders into turmoil. Clearly the snail pace of parliamentary processes forcing
through austerity is proving too slow for Europe ’s
ruling elites.
Cypriot MPs effectively rejecting the blackmail letter drawn
up by Berlin
and sent via the dreaded Troika of European Union, European Central Bank and
the International Monetary Fund.
Buoyed up by the huge anger uniting its people and to
everyone’s surprise, not even the MPs of the right-wing government voted in
favour of the ‘deal’ which would have seen the EU dipping its hands into every
bank account to extract 10% of any money they can find.
In saying ‘No’, the MPs joined the growing resistance across
Europe – from Italy , to Spain and Greece – to austerity measures that
are designed to rescue a capitalist system that is drowning in debt.
The attack on savings – while leaving bank creditors out of
the frame – is a new tactic designed to extract tribute for the sovereign debt
monster affecting so many countries blown up in the wake of the Great Global
Crash of 2007-8.
Even the Church
of Cyprus Cyprus 's
third-largest domestic lender, Hellenic Bank
Banks and the stock market remain closed. No one knows when
(or should that be if?) they will reopen. The 1.1 million population of the
small island, as well as the bevy of foreign tax-avoiders are denied access to
their funds. But the threat of a Europe-wide bank run contagion is very real.
People everywhere are eyeing up the security of their savings. Those that have
any.
The fragile peace engineered by the co-conspirators of the
Troika in the form of a Europe-wide banking union has been shattered. In a sign
of nervousness in other eurozone countries, Spain ’s finance minister declared
savings accounts in his country
“sacred”, adding Cyprus was “special and unique”.
Wishful thinking.
But as Cypriot finance minister Michael Sarris flew to Moscow seeking help, much
to the consternation of EU officials, the problems mounted. Even if Russia granted
an extension of an existing loan and reduced the interest rate, it wouldn’t
make a difference. Cyprus
may even offer newly-discovered gas resources could also be on offer.
Wolfgang Schäuble, German finance minister, is insisting
that the Troika’s plan prevails.
After the vote in Cyprus ,
he said: “Cyprus is living
with a banking sector with low taxes and favourable laws that is completely
overdrawn and that makes Cyprus
bankrupt. This business model is not sustainable.”
With the two big Cypriot banks living off emergency
liquidity from the central bank, the real possibility is that the country will
be ejected from the euro, plunging the single currency into a downward spiral.
Inflation is rising just as manufacturing is declining. With
only the faintest signs of life in the US economy, investors have now
begun to assess the likelihood - and catastrophic consequences - of an end to
the years of historically low interest rates.
Ben Bernanke, chairman of the US Federal Reserve ominously
began a speech with these words: ‘Why are long-term interest rates so low in
the United States
and in other major industrial countries?’ Later today, he’s expected to give
his views on the end of quantitative easing.
With these new developments in an increasingly desperate
situation, our attention must turn from just resisting austerity to replacing
the bankrupt system altogether. A global network of peoples’ assemblies has to
take control of the banks and the financial networks. Then they could be
converted into a democratically run not-for-profit service to co-operative
enterprises producing for need.
Gerry Gold
Economics editor
No comments:
Post a Comment