Bitter Lemons

From Paul Murphy, writing at the Financial Times Alphaville blog (h/t and lifted bodily from Krugthulu).

Big depositors in Cypriot banks stand to lose circa 40 per cent of their money here, which has drawn plenty of fury and veiled threats from Russia.

Victor_Dubreuil_-_Barrels_on_Money,_c._1897_oil_on_canvas

But what exactly can the Russians do about this? Sell euros? Tear up double taxation agreements? Murder Cypriot bankers? Medvedev and co could not have played a worse hand during this crisis — and it’s not immediately clear why.

Cyprus now has a binary choice: become a gimp state for Russian gangsta finance, or turn fully towards Europe, close down much of its shady banking sector and rebuild its economy on something more sustainable.

The choice is obvious.

Forgive me if I’m just too dense to live, but isn’t this how capitalism is supposed to work?  Yo! Russian travelers:  that citrus you just sucked may be bitter indeed, but you put a bunch of money at in play, and sometimes you lose it.  That has a lot to recommend to our banking sector, of course, but really, if we are ever to have a financial sector that does what it is supposed to do (allocate capital within the real economy and hedge –insure — risk) then we kind bankers to actually bank, and not view themselves as money lenders and casino operators.  I’ve sat in on quant conference tasks (ever want to learn how to trade on derivatives of volatility measures?  Me either), and it’s all fun and games until someone loses an eye.  Cyprus and naughty Russians are just far out enough on the periphery to stand at ocular risk.  But I do think we would be better off if our galtian overlords had just a bit of healthy fear back-crossed into the breed.

Image:  Victor Dubreuil, Barrels of Moneyc. 1897  And yes, I have used this one before.  Works here too.

Explore posts in the same categories: Economic follies, quis custodiet ipsos custodes

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3 Comments on “Bitter Lemons”

  1. Taylor Swift Says:

    I was just thinking it would be nice if asshole pseudoprofs of scams like science journalism had some risk brought back into their lives. having read that piece of shit newton book I can safely say its author would not have written such an unmanageable abstrusely desolate graffiti scrawl of intellectual auto asphyxiation had there been genuine market force at work.Who would write such drivel if they had the scanty thought that the work itself would have to recommend it. Simply put, the career and the writings of Tom Levenson serve no intellectual, academic, cultural, social, or phenomenological purpose. It is only the leveraged brand at work in production and exposure of his pedant swindle. One hopes a leaner and meaner cultural antipathy for tenured banality results in a culling of extrapolated intellectual privilege.

  2. kaleberg Says:

    re: Taylor Swift’s comment – I actually bought and read a copy of your Newton book and greatly enjoyed it. Newton is always a popular topic, but most biographies cover his scientific work, not his day job as it were. You obviously did a lot of research. Have you considered a Sir Isaac Newton Agent of the Exchequer series of period crime novels? (That’s tongue in cheek.)


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