Alt Press Pick of the Week: Is Cyprus the Beginning of Another Economic Collapse?

Alternative Press Center

Massive bailouts in response to bank failures have created a two-tiered Euro--worth less in Cyprus than in Germany. (Karl-Ludwig G. Poggemann/Flickr/Creative Commons)
If you’ve ever played Super Mario Brothers, you’ve been to a world built in and on the clouds, mysteriously suspended in mid-air. You’ve also no doubt gone tumbling out of those clouds. That’s a good metaphor for the economic recovery, which is built on the equally tenuous ground of cheap government loans to the very banks whose speculation brought us to crisis in the first place, and could have us in for another precipitous tumble. Jack Rasmus offers a succinct explanation in Cyprus and Global Banking Instability” over at Z Communications. He argues that instead of reinvigorating the economy, the bank bailouts on both sides of the Atlantic have fueled a new wave of airy speculation, which led to the crisis in Cyprus.
Rasmus writes: The creaky scaffolding of the global for-profit banking system has been buttressed for nearly six years now by massive (tens of trillions of dollars and foreign currency equivalents) government central bank liquidity injections in the form of virtually free interest loans to banks, plus trillions more of direct purchases by central banks of collapsed mortgage bonds and other securities from institutional and individual investors in quantitative easing (QE). … The consequence of this historic flood of free money and cash subsidies to banks and wealthy investors has not been to stimulate the real economy of goods and services. Rather, its main impact has been to accelerate speculation and securities prices (and thus profits) in equity (stock), junk bonds, U.S. farm real estate, foreign currency exchange, and some unknown volume of derivatives trading (unknown since the latter is not recorded on public exchanges). … The continual infusion of free money and subsidized purchases by the Fed and other central banks have not resulted in the patient recovering. It has only succeeded, temporarily, in preventing the patient’s total demise. And that’s where Cyprus comes in. Rasmus says that the EU’s response to the failure of this bailout strategy in Cyprus has been to employ an even more precarious strategy. The new plan to buttress banks by taxing depositors, he warns, could fuel a contagion” of distrust among depositors across Europe and even in the United States, with catastrophic consequences. Read the rest at Z Communications. 
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Democratic Rep. Summer Lee, who at the time was a candidate for the state House, at a demonstration in Pittsburgh for Antwon Rose, who was killed by police, in 2018. Lee recently defeated her 2024 primary challenger.
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