Question of the Day: Is Cyprus Unique?

Fight disinformation. Get a daily recap of the facts that matter. Sign up for the free Mother Jones newsletter.


From Megan McArdle, on the supposedly unique nature of yesterday’s bailout of Cyprus’s banking system:

The problem is, Europe seems to be chock full of unique, one time problems with its banking system.

Roger that. Cyprus was basically an offshore banking haven for Russian plutocrats, so it grew to gargantuan proportions compared to the size of the country. If it had failed, the entire country would have imploded. That’s bad. On the other hand, no one really felt like spending a trainload of EU taxpayer money to prop up a bunch of Russian oligarchs. That would be bad too. So the EU’s politicos wanted to make the oligarchs pay a price for being rescued.

How about, say, a one-time tax of 10 percent of their deposits? Sold! But then the EU went further, imposing a one-time tax of 6.75 percent even on small accounts. Small insured accounts. This means that having an insured bank account no longer means bupkis in the EU.

So now the question becomes: Is Cyprus unique? Or, more precisely, can ordinary depositors and big investors be persuaded that Cyprus is unique? Because if they can’t, then they’re going to start pulling their money out of Spanish and Greek and Italian and Portuguese banks. And that would be very, very bad. It would turn the slow-motion bank runs of the past few years into the honest-to-God, high-speed, economy-ruining kind of bank runs.

And it all depends on whether everyone can be hypnotized into thinking that Cyprus really is unique. Tune in tomorrow to find out.

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you'll agree is worth supporting.

payment methods

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you’ll agree is worth supporting.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate