by Tyler Cowen
on March 20, 2013 at 1:22 am
in Current Affairs
The central bank chief Panicos Demetriades has raised concerns that 10% of deposits – that’s 80% of GDP – could flee.
Here is more, from Pawel Morski.
If he thinks it’s only 10% he’s waaay underestimating.
Panicos is worried about a panic?
I also wondered if he may want to change his name: http://andreasmoser.wordpress.com/2013/03/29/panicos-demetriades/
It is interesting to see the reaction of everyone that I tell of this situation. First, I have yet to meet someone who knows what has happened, I’m in canada, and it isn’t all over the news. Second, the reaction is first silence as the person digests it, then either a ‘you are kidding’, or some variation on Wilie Sutton, or ‘this is just the beginning’.
Is it relevant that Cyprus accounts for a ~ 0.001 fraction of EU GDP?
Maybe there is a good reason Canadians don’t care? (Assuming I got my math right!)
One would have thought Franz Ferdinand is also pretty irrelevant, huh? 🙂
Well, except for the reality that Franz Ferdinand was the heir to the throne of an polity that was a great power of its time.
Not exactly a case of a needing a nail, since in this case, the prince was murdered directly, and the war led to the end of the empire (among others, of course).
Right, but it’s not like he “caused” the war. Very much a straw that broke a camel’s back. Cyprus can destabilize an already fragile Europe. So no, not nearly the same extent but any resulting crisis would (hopefully) not be as bad as WWI, either.
Fair enough – we have pretty much decided that Franz Ferdinand’s public death is the start of WWI.
Personally, I would say the real cause of WWI was this – http://en.wikipedia.org/wiki/Mobilization#Mobilization_in_World_War_I
And if we ever have a breakdown of the MAD doctrine, we will probably pinpoint the nuclear (or other, for that matter – we have pretty much reached the point that MAD could also apply to biological weapons of various types) war on the events immediately preceding it, without recognizing that MAD itself ensures nuclear war (or equally devastating warfare), in the sense of both sides being prepared to wage it. Actually, being required to wage it effectively, if MAD is to be taken as reasonable policy.
Which is the problem with how WWI started – everyone was prepared to wage it.
Just another example of complete – and bloody – European insanity.
@prior_approval, I think we can all agree that a world in which no one was mobilized for war would be optimal. The problem, however, is that only one side needs to be prepared to wage war. Therefore, choosing not to mobilize your side is not necessarily a good way to prevent war. In fact, it may increase the likelihood of war.
I also would prefer not to have nuclear weapons exist, but given that they were being developed by multiple countries and were certainly going to exist, is it better or worse for one’s own country to also have them? So far your thesis that “MAD itself ensures nuclear war” has not been shown to be true, and indeed there haven’t been any conventional wars between major powers, either.
prior_approval – in 1945 one country had nuclear weapons and one didn’t. Remember the result?
‘prior_approval – in 1945 one country had nuclear weapons and one didn’t. Remember the result?’
Sure -the Russians detonated their first nuclear weapon far more quickly than any American policy maker had anticipated, and until the present, both the U.S. and the Soviet/Russian polity have focused thousands of nuclear weapons against each other, though in theory, the response time to a MAD attack has been reduced enough to ensure that MAD is less likely than it was during the Reagan era. However, neither country has abandoned MAD as policy against the other, unsurprisingly.
This policy most certainly bankrupted the Soviets, even if the Russians are following the poor man’s version of it (seemingly, the Chinese have an even more restrained concept – 20 or 30 citiies in the U.S. or Russia seem to be adequate to deter any serious attack against China, as the Chinese possess a pauper’s number of ICBMs with accompanying warheads – good enough for megadeaths, however, regardless of how the wind blows).
It may even be that this policy will be the cause for the eventual bankruptcy of the U.S. However, these days, no one seems to be manufacturing much tritium, which might be a hopeful sign, right?
Your point being?
‘So far your thesis that “MAD itself ensures nuclear war” has not been shown to be true’
Bet on India and Pakistan – though the U.S. has been involved since at least 1989 – we have basically told both sides that a first nuclear strike against one earns an American nuclear strike in return, a sort of third hand MAD. Well, if news reports and a bit of personal information from a family member of the man that delivered that American message back then counts.
Admittedly, I don’t have that sort of direct information any more – but if the U.S. isn’t keeping the lid on the subcontinent, then my recommendation becomes even closer to a sure bet.
I was thinking of August 1945, not later. Japan, not the Soviet Union. The point being that having an advantage in weapons often leads to their use, which was dan1111’s point.
‘I was thinking of August 1945, not later.’
Fair enough, though the people that made the Manhattan project successful always believed their work would be used against the Germans. They never assumed that their work would turn into the world of MAD which Stalin ensured became the focus of American strategy in the 50s.
The Russians are coming, the Russians are coming ….
Well, at least that is the latest apparent hope for Cyprus, since the EU is just too much a big meanie to save the banks without inflicting pain on somebody.
Though there is the perspective of the EU becoming ‘erpressbar,’ as Spiegel puts it here, if the EU doesn’t maintain its position – http://www.spiegel.de/wirtschaft/soziales/zypern-machtprobe-zwischen-euro-zone-und-inselrepublik-a-889859.html
Also according to the Spiegel, the British are flying in euros to Cyprus to ensure their soldiers and dependents have enough money in the case of ongoing bank problems. Which is, so far, the only concrete action anyone has actually taken in regards to practical effects of anyone living on Cyprus – http://www.spiegel.de/wirtschaft/briten-fliegen-bargeld-per-hubschrauber-nach-zypern-a-889840.html
Panicos? Really? Should someone with that name be in charge of a bank?
I wonder how many times a day he hears that.
It always comes down to leverage.
Is the 80% of GDP that’s going to flee the portion that’s likely to make a big difference to the lives of Cypriots who don’t work in the banking sector? Or, have Cypriots heretofore been deriving a great deal of benefit from the huge portion of GDP that’s made up by the banking sector?
Well, no worries, Mr Shitshispants and Miss Scaredbyfleas are coming in to save the day.
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