Surprise! Max Hastings Gets It Wrong on Cyprus!
MAX Hasting on Cyprus:
People who rob old ladies in the street, or hold up security vans, are branded as thieves. Yet when Germany presides over a heist of billions of pounds from private savers’ Cyprus bank accounts, to ‘save the euro’ for the hundredth time, this is claimed as high statesmanship.
It is nothing of the sort. The deal to secure a €10 billion German bailout of the bankrupt Mediterranean island is one of the nastiest and most immoral political acts of modern times.
It was a great deal this. People who invested in a bankrupt business lost their money. Rather than, say, the German taxpayers having to pay off people who invested their money in a bankrupt business.
Some people seem to be having great problems with this idea. Banks are a business. When you make a deposit in a bank you are lending money to that bank. If a business goes bust the people who have lent it money lose some to all of their money. Thus when a bank goes bust the depositors lose some or all of their money.
Now, we do have deposit insurance for small depositors. That’s fine: but the big boys are thought to be smart enough to keep an eye on whether a bank is dodgy or not. In which sense they are just like the banks themselves. If a bank lends money to T Worstall Industries Ltd and T Worstall Industries goes bust then the bank loses some or all of its money. So too if T Worstall Industries lends a couple of million to a bank.
This isn’t a nasty or immoral act: this is just the way the system is supposed to work.
Posted: 26th, March 2013 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink