And with that good sense comes a corresponding punishment: these nations are the ones footing the bill, by and large, for the bailouts needed by other member-states of the EU. Unsurprisingly--following one bailout or crisis after another--they're getting a little sick and tired of the game. Enter the Cyprus boondoggle. Here, we have a tiny nation--just a little more than one million people live there--whose financial system is going to require some $13 billion at a minimum in order to stave off a complete collapse. That's around $13,000 per capita. Think on that for a moment. If the U.S. needed a similar bailout, it would be--wait for it--in excess of $4 trillion! A similar bailout for Germany would amount to over $1 trillion.
This is why there is anger in some corners of the EU, not over the proposed levy, but over the idea that such a small nation requires such a massive bailout.
But is their anger actually valid? Is the apparent fiscal responsibility in places like Germany and Austria somehow separate from the situation in Cyprus, Greece, and much of the rest of the EU? And is all of this actually separate from the situation in the United States and elsewhere?
We all know that financial markets throughout the world are interdependent to some degree: what happens in one--even one as a small as Cyprus--can have significant repercussions elsewhere. And of course, this is no less true of actions like this levy.
That said, what about the bigger picture, how things got to this point? How did this tiny nation end up in such a hole? I explained the basics of this in my previous bit: the Cypriot banks bet big on EU sovereign debt, especially that of Greece. And the Cypriot government--in making the nation into a Cayman-esque offshore financial center/tax haven--created a situation wherein it could not possibly have the funds to protect its own financial institutions, even as it used its own easy access to that wealth as a means of increasing standards of living there across the board (Cyprus is a high income state, according to the World Bank) despite having limited real economic growth. It's capital city--Nicosia--currently ranks as the 5th richest city in the world, with regard to purchasing power.
This didn't happen because Cyprus was somehow gaming the system. It happened because the system was, in a sense, using Cyprus--along with many other nations--as a means to move capital and actually create wealth in the process.
To put it another way, a lot of people in a lot of countries benefited mightily from what has gone on in Cyprus (chief among these groups being the Russians, no doubt).
Don't misunderstand me: Cypriot banks and the Cypriot government behaved foolishly; there were sensible limits which they purposefully ignored, they are largely responsible for the hole they are now in. Citizens there are responsible, too: they've done well and--like the Greeks--assume their lifestyles are wholly deserved (who doesn't think this way in a wealthy state, really?), they take it as a given that they are now being unfairly targeted. But they could have--if they so desired--surmised that things were not really as they appeared, that their economic growth was an illusion, based on credit in the end, not on real production or industry.
But who wants to do that, look at their lives through such a deeply honest spectrum? It's both depressing and frightening.
Enter the Men in Black, in this case the financial ministers of the EU. The truth is that through various manipulations, crises in various moments are successfully staved off or disguised and most of the time, these manipulations go unnoticed by the vast majority of the world's population. As Kay said in MIB:
There's always an Arquillian Battle Cruiser, or a Corillian Death Ray, or an intergalactic plague that is about to wipe out all life on this miserable little planet, and the only way these people can get on with their happy lives is that they do not know about it!Even now, most people are largely ignorant of what is happening in Cyprus. If the levy goes through and there are no visible consequences outside of the island nation proper, the story will disappear from the collective consciousness in short order.
But sometimes--if not all the time--people need to know, should know, the real basis of their happy lives, when that basis is being threatened, and why the problem or problems arose in the first place.
Wait, what was I saying?