Hypocrisy in the Round as Germany enforces its 20% solution
Spiegel is reporting in its early online editions that a compromise has been reached between the Troika and Cyprus whereby small depositors are let off a haircut, but the big accounts will have 20% of their funds
confiscated levied. Cyprus has been suitably neutered. And Putin’s enemies have been punished. Somehow it feels like the jigsaw is rapidly falling into place. But behind the spin is revealed a colossal act of bullying hypocrisy by Berlin and the Eurogroup.
This is what Wolfgang Schäuble told the world ten days ago:
“Cyprus lives off a banking sector with low taxes and lax regulation that is completely out of whack. As a result, Cyprus is insolvent and no one outside of Cyprus is responsible for that…We’ve taken measures in all countries to protect ourselves against contagion effects.”
The eurozone is actually entirely responsible for it, as without having their heads shaved by Draghi over Greek bonds, the Cyprus banking system would be just fine.
This is what Jean-Claude Juncker of Luxembourg, head of the Eurogoup, said in January this year about bank debt:
“The euro zone must use its rescue fund to inject money into banks with past debts. I think there must be some degree of retroactivity in the mechanism, otherwise it will lose most of its sense.”
Both men have since said that, at three times the GDP, Cypriot banking has an unbalanced share of the economy there. Both have accused Cyrpus of money maundering and lax controls. They may be right: but let’s see how their record on this holds up.
Recent evaluation reports from the global watchdog FATF (Financial Action Task Force) that assesses money-laundering for all 17 eurozone countries shows that Germany is completely non-compliant in 5 FATF areas, ranking third from last at 14th. The FATF report on Germany says “substantial proceeds of crime are generated in Germany, estimated to be EUR 40 to EUR 60 billion, inclusive of tax evasion, annually.”
Cyprus however is completely compliant in all 12 areas and ranks 7th.
The FATF report continues:
“Cyprus also has the toughest regime in the EU for identification of beneficial ownership, with the obligation to identify ownership kicking in at 10%, instead of the obligation 25% threshold provided for in the 3rd EU anti-money-laundering directive”.
As for being ‘out of whack’, Jean-Claude Juncker’s home system runs at twenty-four times Luxembourg’s GDP.
You will also note that there has been no question here of ESM funds alone being used to achieve a Cypriot bailout at 10% of Greece’s and – to date indirectly – 7% of the money quietly poured into the Spanish banking system by The Invisible Man, Mario Draghi. Juncker ‘justified’ this by saying of the size of Cypriot bank debt last Wednesday,
“I have grave concerns that this will lead to a loss of confidence, not just from the banks, but also from the people.”
What, a €230bn Greek bailout (and counting) is OK, but a €17bn one for Nicosia isn’t? But because this is a particularly dangerous situation, er, we’ll f**k around for ten days and then arrive at where we should’ve started. Well that makes sense then. What we’ll do is steal money from those nasty black marketeers. Just not German or French ones. Take a look at the biggest banks in Luxembourg:
‘In terms of total assets, the five largest banks in 2010 were, in decreasing order, Deutschebank Luxembourg (€87.235 billion), Société Générale Bank & Trust (€42.162 billion), BNP Paribas (€39.347), Banque et Caisse d’epargne de l’etat, Luxembourg(€38.019 billion) and Credit Agricole Bank Luxembourg (€34.775 billion).’
Franco-German deposits there are in total five times larger than the State Bank of Luxembourg.
What do these banks do in such a small country?
‘…..an important activity in the banking sector is private banking….Luxembourg is one of the main jurisdictions for the establishment and distribution of investment funds. As a result, the servicing of investment funds, including custodial services, central administration and also securities trading and the distribution of fund units has developed into a thriving activity for the Luxembourg banking sector…’
So no suspicion of naughtiness there then. Just a ‘thriving’ bank sector 24 times more important than other Luxembourg activities, such as running radio stations and heading the Eurogroup.
There is no graft or money laundering in Brussels, no embezzlement, no over-employment, no German company called Siemens to be called by a Bavarian judge, “the most corrupt company in the world”, no repayments from the Bundesrepublik to Greece for corrupting Greek officials, and no evidence of Germany charging Athens for two submarines, but only ever supplying the one. Noooo, nononononono.
For we Nordeurpeanisches are squeaky clean and hard-working, we have nothing to do with black markets, tax evaders and drug barons. But while we’re talking about Belgium, let’s remember that 73% of everything Belgium does is related to EU administration. So there’s another nicely balanced economy.
As usual, it’s all bollocks, but this time with a whopping great dollop of eurocrat hypocrisy. At some point during today (probably) the Nicosian assembly will be asked to vote on the ‘new’
German eurogroup looting bank bailin proposal. Show this article to your MPs. If you live beyond Cyprus, show it to Cypriots. Tell your MPs to Vote NO.
Meanwhile, for Wolfie Strangelove and Geli ‘Fridge Magnet’ Merkel it looks like mission accomplished: a tough line to scare everyone else, and anti-Putin Russian oligarchs stung for 20% of their cash.
Putin has just seen his enemies’ worth shaved rather dramatically. And in Surrey, England, major Putin opponent Boris Beresovsky lies on a slab, after death by taking a bath.
I wonder if, by any chance, these events might be connected?