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Some bondholders are more equal than others…

Cyprus has a ‘bailout‘ deal blessed by the EU. Certain bondholders face being wiped out.

Now I seem to recall when Ireland got its bailout blessed by the EU, it was expressly forbidden to wipe out bondholders, I am right?

Now if I also recall, many of those bondholders were German, whereas many of the bondholders in Cyprus are Russian.

I am reminded of a certain song

15 comments to Some bondholders are more equal than others…

  • Steven

    Wars have started over less. I suspect the Russians will take the deal and get a Mediterranean port in the process. If that happens, watch for Syria to be cut loose as Moscow will no longer have a reason to back Assad.

    In any event, I’d be shocked if we make it to May before some of the Cypriot ministers have unfortunate accidents courtesy of the Russian mafia type losing their money.

  • I’m sorry you have such poor taste to think of that song, Perry. I was reminded of the Horst-Wessel-Lied myself.

  • Try Tom Lehrer’s “Who’s Next?” The situation is different, but the answer is important in all context.

  • Jaded Voluntaryist

    They shut the banks to stop a run. Now they’re emptying people’s accounts. When they’re finished, the account holders will be allowed access again and can have whatever is left over.

    It’s sickening, and there is functionally no difference whatsoever between this and the behaviour of tribal warlords when they were passing through a village. They could rape and steal from whomsoever they wished, and the only “comfort” was that if you didn’t put up to much of a fight, there just might be a village left when they were done.

  • I’m reminded of a certain Orwellian phrase: ‘Some animals are more equal than others’, in the Big Surveillance State of the EU.

  • Mike Giles

    So. What happens when the Russians use their pull with Putin to cut off the Oil and Gas flowing to Germany?

  • The Pedant-General

    Except that the Irish deal was SPECTACULARLY stupid – “the highwater mark of stupid” as the great Tim Worstall has it.
    Bondholders SHOULD get wiped out. That’s the point if the bank is bust. The previous plan – to punish everyone – was just wrong: this one is nearly almost exactly right. Good banks entirely unaffected, Govt honours deposit guarantee to those <100k in the bad banks, share and bond holders in bad banks get wiped. This is how it's supposed to work.

  • I think you miss my point P-G. I know all that, but I think it is… interesting… that Cyprus, with a distinct lack of German interests at stake, gets the horn, whereas in Ireland with a not insignificant amount of German interests involved gets a breathtakingly different deal.

    Like the title says: Some bondholders are more equal than others…

    That is the only point I am making 😀

  • Laird

    And it’s a fair point, Perry. Still, one can hope that the Powers That Be in Brussels have finally learned from their past mistakes, and this time around took the correct approach. (Or as “correct” as a government can get, anyway.) From where they started a week ago this is a remarkable improvement.

  • veryretired

    So, how are things going in the Pan-Teutonic Greater Prosperity Zone?

    Those of us out here in the hinterlands have a hard time keeping score.

  • So, how are things going in the Pan-Teutonic Greater Prosperity Zone?

    The “Euro Soviet” surely? After all the Cyprus nonsense the mask has slipped right off…

  • veryretired

    At least the founders of the older, now defunct, Asian Co-prosperity Sphere had the courage to wear their swords openly, and kill themselves when it all fell apart.

    I doubt this bunch has nearly that kind of honorable exit in mind, although one can always hope…

  • John K

    This is true. The Irish state assumed responsibility for the debts of Anglo-Irish Bank, at ruinous cost, when it was under no legal or moral obligation to do so. In thus socializing the debts of this bank, the citizens of Ireland were impoverished, and the bondholders who had lent money to the bank were saved, and these bondholders happened to be German banks. I think the EU has been exposed as a German racket for anyone who wants to see it. Mrs Thatcher’s misgivings about German reunification seem to have been right all along. The problem with a united Germany, as shown from 1870 to the present day, is that it is just too damned strong for the rest of Europe to cope with. Any state which stays in the EU, and even more so the Euro-zone, must accept the status of a German economic vassal.

  • Snorri Godhi

    Some of the commenters here have got to German bashing, of the Keynesian sort fashionable in “conservative” circles. Since Perry has pledged allegiance to Austerian economics, i am sure he himself did not mean that. However the post encouraged it with an ambiguity:
    “Now I seem to recall when Ireland got its bailout blessed by the EU, it was expressly forbidden to wipe out bondholders, I am right?”

    I cannto answer the last question, but the 1st question should be: what bailout? the bailout of the Irish banks by the Irish gov. or the bailout of the Irish gov. by the EU?
    If the latter, then it’s a German problem: German taxpayers refunding German bondholders. (Actually it’s more complicated, but i’ll leave it at tht.)

    If the former, then 2 more questions arise:
    was it a free choice of the Irish government to have a bailout (as opposed to it having been subtly imposed on the Irish by ze Germans)?
    and did ze Germans have reason to believe that they’ll ultimately have to pick up the tab, when they authorized the bank bailout?
    It seems to me that only if either or both answers are NO, can one reasonably blame ze Germans for protecting their bondholders.