Just noted Bruno Waterfield’s comments over at the Daily Telegraph’s ‘Cyprus Bail-Out Live’ blog where Mr Waterfield says there is now ” … ‘open talk’ of Cyprus leaving the euro and the imposition of capital controls to prevent runs on banks, presumably intended across southern Europe. Here lies a risk: bank failure in Cyprus (and the clearly hollow promise of deposit guarantees that can be overridden by levies and are only as good as the sovereign state that makes them) could spark contagion. The cure of capital controls could be as bad as the disease as credit flows stop, a scenario compounded if Cyprus leaves the euro. Can the euro survive if Cyprus leaves? That is the now the question”.
Cyprus’s size doesn’t matter in this. If Cyprus leaves the euro, the euro is stuffed. Why? Because the euro is “irreversible” according to the European Union political elites. They’ve said so, time and again. The only way for the euro is forward. The only direction for European nation states is towards “ever closer union”.
But hang on a minute. If Cyprus exits the euro then the European Union political elites are liars (surely not?). Evidently, the euro currency wouldn’t be “irreversible” at all. So then what? If one euro currency nation – Cyprus – can leave the “irreversible” euro then any other euro currency nation could leave the euro too. After all, democracy has kicked-in in Cyprus and is now causing some difficulties for the masters of the ‘soft dictatorship’ that is the European Union. What if democracy was to start gaining the whip hand in Portugal, or Italy (the Italians are already well on their way to democracy with that comedian bloke stirring things up), or Ireland, or Greece (the Greeks are not averse to taking to the streets of Athens on recent form)?
So, if you hold euros in some form or other, in cash, or bond, or contract or whatever, then all of a sudden your euros are ‘infungible’. In other words, you can’t be 100% certain of the value of the euro currency in the future. Rather like being a Cypriot bank depositor subject to being
robbed levied overnight by the European Union political elites (surely not?), overnight, your holdings of euros could become holdings of New Lira, or New Drachma, or New Punt, or New Peseta … of what value exactly?
So, it’s time to place your bets, folks, on the irreversibility of the “irreversible” euro currency. Do you believe the word of the European Union political elites, or don’t you? Well, do ya punk?
PS I’m a mild-mannered chap and a former, card-carrying member of the British Establishment. However, if I was a Cypriot I’d be on the streets now resorting to the only course of action left to me to demonstrate my irritation at the prospect of being robbed by strangers coming at me from a foreign place (Brussels). In the same way that if I detected somebody entering my home in the middle of the night, I would get out of bed recalling my military training: that the best form of defence is attack.