Streetwise Professor

March 19, 2013

Can They Really Be This Stupid?

Filed under: Economics,Financial Crisis II,Politics — The Professor @ 2:46 pm

I’m talking about the Brussels Bozos, so the post title is a completely rhetorical question.

What I’m referring to specifically is that the Eurocrats were supposedly “blind-sided” by the opposition to the depositor bail-in in Cyprus, and the impending defeat of the proposal in the legislature.

What, did they think that Cyprus would roll over and sheepishly-and I do mean sheepishly-comply with the EU’s dictates?  Did they really think that local politics wouldn’t rear its ugly head, and disrupt their orderly little world?

The sad thing is that I think the answers to those questions is “yes.”  Or, more accurately, “YES!”  The EU is an elite project and the elites presume that the hoi polloi will slavishly adhere to their master’s dictates.  That’s probably true on small matters.  Even medium-sized matters.  Perhaps many big matters.  But to Cyprus, this is an existential matter.  What does Cyprus have to lose?  Yes, the EU-and the Cypriot government-are telling horror stories about the nasties that await if they reject the monster mash bailout/bail-in, but the consequences of the monster mash are bad enough that it is perfectly understandable-to normal, sentient people, anyways-if the hoi polloi are willing to take a roll of the dice.  What’s more, such a reaction to a dictate from afar is more than perfectly understandable.  Human beings being human beings, damn them, will often refuse to take their medicine just because they are being forced to.  But I guess I am expecting way too much when I suggest that the Eurotards should actually condition their policies on an understanding of human nature in its fallen, tragic state.

The Euros choices were two: bailout Cyprus completely, or do the monster mash of bailout and bail-in.  Helluva choice.  Either alternative would have pernicious consequences in Spain, Italy, etc.   Encourage runs, or encourage moral hazard and brinksmanship.  And the fact that those are the choices is exactly why the Eurozone and the EU are beyond absurd.

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  1. Yes, they are that stupid. They sought to prevent bank runs by doing the exact thing that causes bank runs. By the way, I made my way through Gorton’s book as you recommended. Very instructive. Perhaps you should send a copy to Brussels.

    Comment by Highgamma — March 19, 2013 @ 3:24 pm

  2. @Highgamma. Glad you liked the book. Sadly, it would be totally lost on them. Totally. Elitists without a clue.

    I like your formulation: “[seeking to] prevent bank runs by doing the exact thing that causes bank runs.” Spot on. Mind if I expropriate that? 🙂

    The ProfessorComment by The Professor — March 19, 2013 @ 3:32 pm

  3. Good stuff SWP. EU is dumb & crazy.

    Cyprus is a small country, much smaller than Greece. Maybe small enough for Russia to be able to save.

    What type of people are giddy over confiscating “Russian billions?” Some of the usual suspects are not. You are not. I think Latynina is not.

    One person on my Twitter feed who is is Edward Lucas. Just sayin’.

    Comment by colleen — March 19, 2013 @ 5:07 pm

  4. Expropriate away! (Perhaps on a sliding scale.)

    Comment by Highgamma — March 19, 2013 @ 7:15 pm

  5. The good news is this replaces the sequestration as the dumbest government financial/budgetary move for March 2013.

    Comment by Armed with Inkstick — March 19, 2013 @ 7:53 pm

  6. @Armed. Beware the Ides of March. Hell, beware March period.

    The ProfessorComment by The Professor — March 19, 2013 @ 8:38 pm

  7. Then who is Caesar? Putin? Merkel? Draghi? The Eurotards don’t have the courage to murder.

    Comment by scott — March 20, 2013 @ 7:08 am

  8. I thought people might get a kick out of this image of a bank robbery – the banksters, including the EU holding a big gun, robbing depositors

    Bank robbery, Cyprus style:

    As has been mentioned, Cyprus, among other locations, is a tax evasion haven for Russian, Ukrainian and other oligarchs. It developed from tax treaties with Cyprus that existed even during sovok union times.

    Big money involved. Big, big money.

    The kind that Obummer says ought to “pay a fair share.”0

    Comment by elmer — March 20, 2013 @ 7:35 am

  9. “Mind if I expropriate that? ”

    We saw what you did there.

    Comment by Green ad Grass — March 20, 2013 @ 9:13 am

  10. “The EU is an elite project and the elites presume that the hoi polloi will slavishly adhere to their master’s dictates.”

    Absolutely – and in general they are right. The question becomes when will someone in Europe have a “Popeye” moment: I have had all I can stands ‘cause I can’t stands no more. The Greeks have done an excellent job of extorting cash by playing on “Popular” unrest, and it looks like our Cypriot cousins are trying the same. That the Eurotards are working hard to make the US economic policy look good is not the way to look at it.

    Rather The EUwws’ are working from a belief system that, to put it kindly, is not empirically based. Thus they are blindly, desperately or obliviously (pick your word) working from one crisis to another to keep the game rolling. Each solution or fix is phenomenological – each stands on its own, there is no past an future, just an attempt to keep the EU dream/nightmare alive. The problem is that the financial system as a whole is an integrated system that deals with nasty things like emotions, sense of ownership, entitlement, etc. and is deeply tied to “irrational” thinking (Kindleberger, et al). Tie that in with the constraints imposed by the EU’s religious mania/paradigm and we have a land mine that makes Aetna seem small.

    Each fix is an exercise in what the IE’s would call the sub optimization problem: take a system, optimize each individual part of it separately, and the whole thing will collapse. To change this behavior is nearly impossible: it would require the bien pensants to change everything they believe in.

    It is ironic that the only thing that differentiates us is that our thinkers (Obama, etc. are such second raters that they have not been able to construct such a completely delusional way of thinking – they are too stupid to make truly heroic errors on the European scale. Not to fear, however, they will increment us to death too, if given a chance. It simply will simply take longer and lack the coherences and logic of the EUrotards’ delusional structure.

    Comment by sotos — March 20, 2013 @ 10:05 am

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