Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The deposit-confiscation “bailout” of Cyprus reveals much about the Eurozone’s fundamental neocolonial, neofeudal structure.
At long last, Europe’s flimsy facades of State sovereignty, democracy and free-market capitalism have collapsed, and we see the real machinery laid bare: the Eurozone’s political-financial Aristocracy will stripmine every nation’s citizenry to preserve their power and protect the banks and bondholders from absorbing losses.
The deposit-confiscation “bailout” of Cyprus confirms the Eurozone’s fundamental neocolonial, neofeudal structure and the region’s political surrender to financialization.
The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)
Let’s list what Cyprus reveals about the true state of financial-political power in Europe:
1. The Core-Periphery terminology masks the real structure: the E.U. operates on a neocolonial model. In the old Colonialism 1.0 model, the colonizing power conquered or co-opted the Power Elites of the periphery regions, and proceeded to exploit the new colonies’ resources and labor to enrich the Imperial core.
In Neocolonialism, the forces of financialization (debt and leverage controlled by State-enforced banking cartels) are used to indenture the local Elites and populace to the financial core: the peripheral “colonials” borrow money to buy the finished goods manufactured in the core economies, enriching the Imperial Elites with A) the profits made selling goods to the debtors B) interest on credit extended to the peripheral colonies to buy the core economies’ goods and “live large”, and C) the transactional skim of financializing peripheral assets such as real estate and State debt.
In essence, the core banks of the E.U. colonized the peripheral nations via the financializing euro, which enabled a massive expansion of debt and consumption in the periphery. The banks and exporters of the core exacted enormous profits from this expansion of debt and consumption.
Now that the financialization scheme of the euro has run its course, the periphery’s neocolonial standing is starkly revealed: the assets and income of the periphery are flowing to the core as interest on the private and sovereign debts that are owed to the core’s central bank and its crony money-center private banks.
This is not just the perfection of neocolonialism but of neofeudalism as well. The peripheral nations of the E.U. are effectively neocolonial debtors of the core (quasi-Imperial) banks, and the taxpayers of the core nations (now reduced to Germany and The Netherlands) are now feudal serfs whose labor is devoted to making good on any bank loans to the periphery that go bad.
Though we can term the E.U. a plutocracy or oligarchy, the neofeudal structure compels us to distinguish a class of those holding wealth and political power that is not limited to national border: this is an Aristocracy.
Serving the Aristocracy is a well-paid technocrat class of factotums, lackeys, toadies and enforcers. Below this well-compensated caste of technocrats is the larger class of debt-serfs, enslaved to interest payments on either their own debts or the debts of others, and bound by their class powerlessness to protecting banks and bondholders from losses.
Cyprus merely adds an expropriation twist to this well-oiled plunder: deposits will be expropriated directly to insure no Imperial (core) banks or bond holders lose money on their absurdly risky loans to periphery nations and serfs.
2. This is a supranational plunder. While commentators can wile away years debating how much Germany benefited from the euro, the real core is not national, it is supranational banks and the political machinery of the E.U. the banks have effectively captured.
The citizenry of Germany may approve or disapprove of the Cyprus expropriation, but it doesn’t matter either way: their own serfdom to banks and bondholders is simply being masked: the bailouts of periphery nations are transparently bailouts of core banks and bondholders.
The nation-states of the neocolonial periphery are simply convenient propaganda placeholders, useful misdirections aimed at the naive and sentimental, hollowed-out national structures propped up to mask the ugly neocolonial reality of servitude and plunder.
3. Democracy is a fiction when no matter who you vote for, the banks and bondholders win control of the national income stream and private wealth. Democracy in Europe is a travesty of a mockery of a sham, an absurd play which is acted out as a form of blood-sport circus to distract the masses from their powerlessness and debt-serfdom.
Democracy is a fiction when the policies protecting banks and bondholders from losses remain in place regardless of which political party, coalition or politico is nominally in power.
The German taxpayers’ private wealth is being expropriated via taxes to bail out core banks and bondholders; how is this any different from the blatant expropriation of private assets in Cyprus?
It is only a difference in technique; the result is the same: the forced transfer of wealth from those who earned it from their labor to banks and bondholders which in a truly capitalist economy would be immediately forced to absorb the losses of their leveraged, highly risky bets.
4. The ideological fiction of capitalism is dead in Europe. Capitalism is a fiction if capital that is placed at risk for a return cannot be lost.
5. Cyprus is a test to see how blatant the expropriation of private assets can become without triggering overthrow and revolution. If the furor dies down soon enough, then the same technique of expropriation will be imposed elsewhere. If the reaction is sustained and threatening to the Aristocracy, other less blatant expropriations will be tested in other neocolonies.
6. Divide and conquer is the propaganda order of the day. The Power Elites are attempting to set the serfs of the periphery against the serfs of the core, the goal being to keep both sets of serfs from realizing they are equally indentured to the core’s pathological political-financial Aristocracy.
ecliptix543 says:
My theory, one which had only one part but now has two: “The Cypress Job” is a trial balloon for testing the resolve of the citizenry in Europe against blatant thievery, exactly as the largely unexplained run up in fuel prices in 2008 was a trial balloon to test the point of tangible societal resistance to inflation.
In 2008, the Spaniards, if I remember correctly, were the loudest and most active protesters of gas and diesel prices, striking in the railroad, over-land trucking, and fishing industries. Americans mostly just bitched about it, though for the first time driving and discretionary shopping habits changed (some of those changes becoming permanent). Were the Spaniards punished then? No, because the world was watching. What about now? Godawful unemployment and talk of secession, along with relentless depressionary conditions pervade Spain. This is their punishment for rising up in ’08.
Now that we’re largely back to the gas prices of 2008, one might expect to see similar reactions amongst the foreign and domestic peasantry, but no. This time, the prices were ramped over the course of a couple of years instead of months – the economic damage done is the same, sans strikes and protests of course but as the article involving withdrawals of 401k funds shows, the impact of this inflation theft IS occurring. The Cypriots are merely getting their short-duration crisis this week. Look for the larger and more insidious gross theft to begin shortly.
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18th March 2013 at 2:37 pm
Stucky says:
Pretty friggin amazing how such a small place can possibly cause the Euro to collapse.
Population —– 1.1 million
Size —- 140 miles by 60 miles … (half as big as Connecticut)
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18th March 2013 at 3:04 pm
ecliptix543 says:
Stucky, half of that island is under Turkish control, is it not? So, cut your land area figures in half…
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18th March 2013 at 3:08 pm
ThePessimisticChemist says:
Stucky,
The Euro was already standing on the precipice, this is just the final straw. The only way this doesn’t turn into a full run on the Euro banks is if the people of Greece/Spain/Italy/Portugal believe the lies that it couldn’t happen to them.
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18th March 2013 at 3:08 pm
card802 says:
When the Euro fails, TPTB can’t blame the failure on the ECB, blame Cypress, blame the Greeks, blame……..
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18th March 2013 at 3:21 pm
ecliptix543 says:
My favourite recent image and the one I wish to send to all the scattered peoples of Southern Europe…
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18th March 2013 at 3:35 pm
AWD says:
The Sun Just Set On The German Empire In Cyprus As Locals Tear Down German Flag
While images of burning flags in the middle-east are not unusual and we have become numb to visions of angry mobs stomping over Western flags, the sight in the clip below of the typically calm and serene Mediterraneans turned Cypriot mob climbing atop the German Embassy in Cyprus and tearing down the German flag may well be a glimpse of what is to come in the next few days as the government nears their voting deadline and banks near their re-opening…
Video:
http://www.youtube.com/watch?v=L-YF1PZjNGg&feature=player_embedded
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18th March 2013 at 3:44 pm
Administrator says:
Cyprus Update – The Calm Before the Storm – One Europe?
I am sure you are aware of the events unfolding in Cyprus, at least if you follow the financial news and the internet.
The vote in the Cyprus Parliament has been postponed until Tuesday, most likely because the votes were not there to pass a resolution that was acceptable to the EU.
The bank holiday has been extended to Thursday, and it is doubtful they will reopen until the Parliament has sorted out a plan of action. The shutting of the banks while the politicians wrangle over the details of the confiscation is not designed to heighten confidence.
As you may recall, the President of Cyprus, Nicos Anastasiades, a member of the conservative Democratic Rally (DISY) party, was elected in February of this year with about 58% of the vote. He is known as a blunt, chain-smoking ‘strong man’ with strong ties to the right wing politicians of Europe. Indeed, these connections and his promise of a solution favorable to Cyprus were strong factors in his recent electoral victory.
The extenuanting factors here are that Cyprus is viewed as a bellwether for Italy and Spain. There are many who would dispute this, and point to the particularities of the size and structure of the Cyprus banking sector. But there is a widespread perception that the heavy hand of Germany is running the EU these days, and prior pledges and principles cannot be trusted if the central rulers of the EU are willing to confiscate the insured deposits of private citizens, no matter how they try to rationalize it.
I tend to view this as the overall progress in the foregone drama of an inherently unstable European Union that has fallen into a financial plutocracy. Any actions they take now are merely delaying the inevitable. And the consequences for the global financial sector are profound.
The EU and the Fed may be able to paper over the problems and achieve an uneasy stability that could last a year or two, but without profound changes to the European financial arrangements that include transfer payments, a single currency spanning such diverse national economies is inherently unstable. It is the child of the overreach of bureaucratic arrogance and economic fairy tales.
This *could* be a rather clever move to force at least a portion of Europe into a single political government of twelve or fifteen members, but I hate to give the plutocrats that much credit for planning.
I know there is and has been talk for quite some time of dividing the world into five or six major spheres of political influence, including North America and a few South American client states, Europe, Russia, China, and Japan. The particularities of southeast Asia and the Pacific are very much in play, along with the status of various economic colonies in the Third World including Africa. India and Australia are major outliers. The UK has been particularly troubled by its relatively minor role, and aspires to be the financial center and interface to the world for the rest of Europe.
Whether any of this happens or not is very much open to question. But the establishment of a ‘new order’ in the world has quite a few globally powerful adherents who are willing to work for this in the long term. It should be remembered that the fashions of ‘centralization and decentralization’ of power have their swings, seemingly like a natural ebb and flow over time, quite similar to what we often see in the corporate world.
Posted by Jesse
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18th March 2013 at 5:08 pm
Novista says:
“travesty of a mockery of a sham”
Damn, I’m taking that.
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18th March 2013 at 10:48 pm
Makati1 says:
NOTHING is beyond the reach of government/banksters.
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18th March 2013 at 12:17 am
Administrator says:
From Smoldering Ashes Comes Good News of Reality
It’s easy enough to focus on the smoldering ashes of the politically and economically insane move in Cyprus by the heavy-handed bureaucrats in Brussels and Germany.
Instead, I suggest we focus on the bright side, and there is plenty to be found.
1.The nannycrats have been permanently exposed as liars
2.Trust is gone
3.Everyone can now clearly see that deposit guarantees were a lie
4.Realization has set in that in spite of nannycrat denial, this will happen again
5.The move in Cyprus will strengthen the Five Star Movement in Italy
6.The move in Cyprus will embolden the separatists in Spain
7.The move in Cyprus will strengthen UKIP in Great Britain
8.The move in Cyprus is even likely to strengthen Alternative für Deutschland (AfD)
9.Eurobonds and joint budgets are exposed as dead
10.In Germany, Merkel is likely to have won a Pyrrhic victory (if indeed she won anything at all)
11.Sensible people now realize all this talk of European solidarity is a gigantic lie
12.Even ardent supporters of the eurozone are now starting to question its existence
That is one heck of a lot of good things for the bargain basement price of a mere €5.8 billion.
If Europe could not come together to scrape up a mere €5.8 billion to rescue tiny Cyprus, what exactly can they come up with? The answer of course is nothing.
Philosophically speaking, Northern and Southern Europe could not possibly be wider apart.
No Union, Only Dreams
There is no union, only foolish dreams of one. There is no solidarity, only talk.
Yet the talk has changed. I was wondering exactly what it would take to light a fire in Telegraph columnist Ambrose-Evans Pritchard and we now have the answer.
Pritchard says Daylight robbery in Cyprus will come to haunt EMU. But so have two-dozen others. What struck me was these paragraphs.
They [EU creditor States] have demonstrated that the rhetoric of EMU solidarity is just hot air, that they will not force their own taxpayers to share a single cent of clean-up costs for the great joint venture of monetary union.
The sooner this is made clear, the better. The sooner they take the proper course of withdrawing from EMU and organise the break-up the euro in the least disruptive way, the sooner Europe can recover.
America and China must crush Germany into submission
Please compare the above paragraphs with an article Pritchard wrote on November 9, 2011: America and China must crush Germany into submission
As we watch Italy’s 10-year bond yields near 7.5pc and threaten to detonate the explosive charge on €1.9 trillion of debt, it is time for the world to reimpose order.
Yes, this means mobilizing the full-firepower of the ECB – with a pledge to change EU Treaty law and the bank’s mandate – and perhaps some form of quantum leap towards a fiscal and debt union.
The EU Project has become both dangerous and insane.
Two days later, on November 11, 2011, I wrote a rebuttal: We Must Crush Ambrose Evans-Pritchard, Nouriel Roubini, Martin Wolf, the Army of Krugmanites into Submission; Reflections on “Dangerous and Insane”
Reflections on “Dangerous and Insane”
•What’s dangerous and insane is economists like Prichard demanding treaties be tossed to the wind to test poorly thought out economic ideas.
•What’s dangerous and insane is economic theory that says printing presses are the answer. It has never worked in history and will not work now.
•What’s dangerous and insane is more leverage. Didn’t Lehman and LTCM prove that? How many more times do we have to prove that before it sinks in?
•What’s dangerous and insane is the idea is that central banks can impose their will on the world.
•What’s dangerous and insane is doing the same damn thing over and over and over again hoping for a different result
•What’s dangerous and insane is the moral hazard policy of time-and-time-again forcing the 99% to bail out the 1%.
The world will not end if banks fail. Forcing the 1% (banks and bank bondholders) to take a hit will not cause the world to end either, nor will it cause lending to cease.
In my rebuttal, I also wrote “Widespread debt restructuring and partial break-up of the eurozone is where we are headed, and the debate ought to be how to do that correctly instead of how to achieve the impossible.”
As you can see, Pritchard finally has it correct. Given that he was one of the original eurosceptics, I knew he would eventually come around.
It’s one thing for eurosceptics to finally get back on the right track, but it’s another thing indeed for dyed in the wool euro supporters to begin questioning the euro itself.
Wolfgang Münchau, founder of Eurointelligence and columnist on the Financial Times is one such euro supporter.
The Failure of the Euro-Politicians
Please consider Münchau’s recent column on Der Spiegel Expropriation in Cyprus: The Failure of the Euro-politicians.
The euro finance ministers will partially expropriate bank customers in Cyprus. This decision is the worst accident in the monetary union. Anyone now trusting his savings to a southern-European bank must be pretty naive.
It was by far the most stupid and dangerous decision the politicians in the euro zone have made. Europe’s finance ministers have knitted the Cyprus package with hot needle – and triggered a fire storm.
The fatal mistake was to try to overturn deposit insurance for savers. What’s important is not the formal legal nature of the guarantee but its credibility in Cyprus and elsewhere. In the euro zone deposits are insured up to 100,000 euros. If now the government comes and says: we’ll take money by a property tax, then the trust is gone. This action constitutes theft.
When Tanks Are Needed
Reader Bernd translated the final two paragraphs as follows …
“Readers of my column know, that I have always defended the Euro, including the instruments (tools) needed to make it a success. However, there comes a point when it is no longer morally acceptable to uphold a currency if Governments and Parliaments do not have the will and the insight to manage it properly.
The day approaches when the Euro can only be defended with tanks. When that happens, the Euro will no longer be worth defending”
And so here we are, at long last, with ardent supporters finally questioning whether this experiment can work. The answer should now be obvious to all: it can’t.
So we finally need to do what I suggested long ago, start frank discussions on how to break up the eurozone in the least disruptive manner
Read more at http://globaleconomicanalysis.blogspot.com/#hkScBjZi7WLgJ1ed.99
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18th March 2013 at 9:21 am
chen says:
wasn’t this the whole point of the iraq war? to defeat the euro? it’s going to disappear. in that case the dollar will be back to world currency status and the dollar will strengthen. too bad the only people holding dollars are bankers.
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18th March 2013 at 9:21 pm
juan says:
two thumbs down because i leapfrogged over the subject at hand and surmised the fall of the euro might be the purpose of the usa printing press and nobody says why i am wrong.
i understand we have a lot of dollars printed recently. so what? they printed boatloads of dollars to send to iraq. couldn’t the vacuum left by the euro absorb the toilet paper sized rolls of greenbacks?
1. domino theory: if cyprus falls, the whole world falls
2. fight or flight: bring out the guillotines
3. sheeple theory: proceed to your assigned holding pen
4. conspiracy theory: hitler is alive and has been orchestrating a comeback
5. TBP theory: prep or die, pissant, you ain’t taking mine
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18th March 2013 at 10:51 am