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Vanishing Cyprus: banks bailout – the big lie!

One day, it may be necessary for Cyprus to pull out of the euro to regain its social and economic independence as the “one-size-fits-all” policy has not worked for most EU member states.

IF BANKS LOANED money at their own risk, there would be far less reprehensible moneymaking in the world today. Unfortunately that is not the case!

Convinced that the banks had all the answers to the ever-increasing socio-economic problems, governments have endorsed the banking establishment to set up the rules of trade-practice. Consequently, bankers ensured that those rules exonerate them from any social responsibility other than to make money out of nothing. In the final analysis, this powerful super-elite sector of society has become untouchable!

The theory behind those decisions was based on the principle that: if banks make profits they will lend money to companies and individuals in order to purchase homes, goods and services; start new businesses and develop the manufacturing industry, which subsequently will produce many jobs and people can live in comfort and pay their share of taxes to the treasury; the nation will then function efficiently while people can spend the remainder of their hard-earned cash to buy consumer goods to create and generate wealth distribution. Under those terms everyone is a winner… just like magic – prosperity and security for all! The Big Lie!

The result of this “free market principle” sponsored by the banking establishment, it has enabled banks to exercise absolute financial dominance by way of international monetary cartels and monopolization over the supply of credit and money. As Sir Josiah Stamp, – director of the Bank of England 1928-1941 and the 2nd richest man in England – said: “if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit. Take this great power away from them, for then, this world would be a better and happier world to live in.”

In fact, those calculating cartels have blatantly abused the free market principle through sheer greed enhanced by the failure of governments to effectively regulate and hold those companies responsible for their actions. Today, banks not only control governments but they have successfully “colonized” entire continents through debts and virtual loans! They have now become supranational masters of the world!

Gone are the days when coin dealers spread their coins on banca (benches) – hence the word “banks” – to make transactions atop counters covered by green tablecloths! Everything was visible and transparent! If dealers were caught cheating they would be severely punished or lynched!

In modern times, banking institutions operate quite differently; not only they operate without transparency or accountability but they also operate on the borderline of criminality. They have been known to deal with drug-money, money laundering, the financing of weapons (to both warring factions to kill one another) and other dubious transaction activities.

Their greatest financial wizardry ever conceived through deviousness, could be none other than the invention of mortgage, where citizens are enslaved until death to pay off a property loan.  This word is a French law-term meaning “death contract”. It implies that the pledge ends (dies) when either the obligation is fulfilled or the property is repossessed through foreclosure. When an original amount of a loan, ends costing the consumer four or five times as much on interest payments, such a practice can only be considered a legalized extortion. Sir J. Stamp warned: the terms of such a facility can only cause financial slavery!

The Rothschild Group of Bankers such as Goldman Sachs, Neuberger Bergman and others, have played an active role recently in reducing nations to near bankruptcy. Gambling with other peoples’ money has produced amazing profits for them but it has also sparked off economic chaos across the world. The result of this unprecedented financial crisis triggered by speculating on high-risk investments has caused millions of people to lose their homes in the United States and in Europe. Yet, no government has ever held banks responsible for their sleight of hand. On the contrary, they are prepared to bail them out of trouble.

Economically starved governments borrow billions from Troika lenders (IMF, World Bank, ECB) and then hand over those billions directly back to banks, as a gift! Since the borrower needs to compensate the lender, governments in despair have no option but to accept crippling bailout preconditions specified by the Troika lenders. They normally call for the initiation of severe austerity programmes such as tax rises and punitive taxation; reduction of salaries and public spending; cutting down on social services and benefits, raid pension funds as well as layoff of thousands of employees. The result of those cold austere measures – which so far have proven to be ineffective – has caused the ruin of millions of lives across Europe, especially in Greece.

The new buzzword today is: colonial capitalism! This is achieved not through acts of war but from decisions taken behind opulent desks and through virtual loans and virtual capital executed at the click of a button. Those supranational corporations have wittingly established an economic web such no economist can truly unravel how those markets work. They have become so complicated they confuse even the brightest financial wizards.

Wealth creation is meant to be the result of real production of goods and services, and not due to the gambling speculation of freeloading investment bankers. However, their influence on society cannot be underestimated and they certainly play a pivotal role in the free market principle but that power should not be to the detriment of everything else. It is this freedom to: the right to profit through the abuse of privileged power as opposed to; the right profit within the boundaries of fairness in a society that needs to be addressed!

Cyprus has not escaped this dark financial cloud of misery that has fallen upon the nation. Through bad management, today the country is in dire straits and its credit rating has been reduced to junk status B3 making it impossible to borrow money on the international markets. Due to its negative outlook and profound economic difficulties, no lenders are prepared to come to its rescue; hence the ominous Troika invite! Figures as high as 20 billion Euros have been circulating amongst analysts that the government must borrow to bail out the banks and itself out of the crisis.

It is not the responsibility of the taxpayer to bail out failed banks; that is the responsibility of their own shareholders!

Iceland was one of those countries that ignored all banking warnings of “economic doomsday scenarios” and dire straits. She refused to make the public pay the price of a bailout and the Icelandic government let the banks go bust! Nobel Prize-winner US economist Paul Krugman wrote in the New York Times. “Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to manoeuvre”.  He also warned against the notion that adopting the Euro can protect against economic imbalances.

Iceland’s economy and banking system today has recovered and experiences a steady growth due to the fact that it controls its borders, its own krona currency and interest rates. By adopting the euro, Cyprus is trapped and does not have that luxury. One day, it may be necessary to pull out of the euro to regain its social and economic independence. The “one-size-fits-all” policy did not work for most EU member states. In fact it ruined many economies!

It would have been more prudent for Cyprus to follow the Icelandic example and allow the banks to go bust rather impose a stranglehold on the nation and taxing citizens to death. Rising taxation can only add to the crisis and stagnate growth at times where it’s desperately needed the most!  There were other measures at hand to deal with the crisis such as: bank takeover or apply restrictions on the transfer of assets abroad through the imposition of capital control. Iceland, Britain and Cyprus (in the past) have done so with great success. It should have also gone after tax fraudsters; dealt with tax avoidance worth billions; collected the millions from developers owed to the state and explore other available measures.

Unfortunately, for political expediency the government failed to act in time and chose the easy option: to borrow billions from Troika and force the taxpayer to pay for it! In doing so, the next government will inherit the biggest debt ever accrued in the history of Cyprus and will take an economic miracle to ride the storm.

Consequently, it is necessary to re-examine the entire banking system in Cyprus and introduce new strict laws and conditions in support of consumers and not the financial institutions. No bank should have the right to gamble with their depositor’s money and solid guarantees must be put in place to protect depositors and avoid a similar situation from ever happening again.

At the end of the day, which government has the foresight and vision to deal with the banking system… prosecute when necessary and do the right thing?

Author of:
WHO SHALL GOVERN CYPRUS – Brussels or Nicosia? -Political analysis
ANDARTES – a revolutionary riveting novel
PORPHYRA in PURPLE – a metaphysical spellbinding novel

All books are available from: Bookshops, Barnes & Noble, Amazon.co.uk, Amazon.com, Waterstone’s, Kindle and the Internet.

Other articles can be found on Google under “Vanishing Cyprus” or “Andreas C Chrysafis”.

Readers' comments

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  • Odd_Job_Bob says:

    And, while we’re on the subject (and I’m on a bit of a roll: didn’t sleep last night so apologies in advance), I believe that the Cyprus government KNOWS, as does everyone really, that Ireland and Spain, who’ve had a similar kind of property boom and bust (without the 400% LTVs, double-selling, title deeds and corruption angles) will NEVER get out of the hole they’ve dug.

    Simply put: governments can reduce deficits and borrowings by

    1) raising taxes
    2) lowering spending
    3) selling off assets.

    If they lower spending, there are less government and private contractor jobs around. People spend less as they have no jobs, meaning companies fire people as there’s no-one to buy their products. Unemployment grows even more which produces the double effect of lower taxes raised as well as higher unemployment benefit costs.

    So, drastic spending reductions mean 1) goes down, 2) goes up and everyone ends up pinning their hopes on 3). Sound familiar?

    None of this is relevant though as the present (and probably future) administration has no intention of imposing enormous amounts of hardship on the Cypriot people who won’t meekly submit as the Irish have done. It’ll simply take the EU/IMF/ECB money, ignore all austerity measures (which are doomed to fail anyway) and pray for gas and oil.

    This is when things’ll get REALLY serious…

  • Odd_Job_Bob says:

    Very good article and I completely agree with (virtually) everything. The Iceland (and not Finland, as I said in an earlier comment. Sorry!) option is the only sensible one for Cyprus. It’ll be tough, but tough with an end in sight, not tough forever more.

    The only thing I’d add is this: Most of the time, as stated above, we don’t know what the investment banks are up to. They normally make rather a lot of money, in a myriad of ever-complicated ways, which they use to subsidise the operations of their retail arms, which normally lose money but get punters in.

    If an investment bank gambles and loses, it can bring down the retail arm, thus people lose their savings and can’t borrow money for businesses or purchase consumables. The whole society then takes a hit, hence their privileged positions.

    The UK wants to separate investment and retail banks (but it’s like telling a grocer he can only sell bacon, which loses money, but not eggs, which makes money). The guy will shut up shop or move elsewhere.

    Simple solution: Have your own, fully government-owned, loss-making, Savings and Loans bank! Investment banks could then do what they liked and, if they made squillions, they could fund their retail arms and offer great interest rates on savings and loans, plus all sorts of other wonderful free stuff (credit cards, insurances etc). If they lost, there would be no need to bail them out as anyone not willing to take the risk, would have their money with the nice, safe, government bank.

    Why does no-one do this?

    Alistair Darling’s response, when he was Chancellor of the Exchequer, was this: “Er……”.

    I can only presume this “Er” meant: “An annual guaranteed loss on the balance sheet is far worse than a MASSIVE hit every once in a while. Plus, can I have a non-executive directorship on the board of one of those banks please?”

  • Gavin Jones says:

    Andrew & Mike.

    Agree.

    Probably too near the knuckle for governments and the banking establishment but it’s they who’ve got everybody into this situation in the first place.

    I’m reminded of one of the opening sequences in ‘Saving Private Ryan’ when German soldiers come tumbling out of a bunker on fire after they’ve had the flamethrower treatment. An American GI yells to his comrades: “Don’t shoot. Let ’em burn.”

  • Andrew says:

    Great article. Just one other comment on your;
    “Yet, no government has ever held banks responsible for their sleight of hand.” You are being too kind here, ‘thieves and criminals’ more like.

  • Mike says:

    Agree with everything said. Clear, concise and to the point. These are the facts and anyone thinking otherwise is free to do so and believe the perpetuated myth.

    Let the irresponsible Banks fail, those with a sense of social responsibility, morals and ethics will thrive and the taxpayer should not be forced to pay for the reckless irresponsible behaviour of bankers and incompetent ministers. They can go under too.

    Any idiot can gamble with someone else’s money in the knowledge that they will not be held responsible for losses but will be rewarded handsomely for gains.

  • Legion says:

    This is a rant disguised as informed comment.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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