Paul Krugman: Treasure Island Trauma

The New York Times has the article Treasure Island Trauma by Paul Krugman.

But it also reflects Cyprus’s own reluctance to accept the end of its money-laundering business; its leaders are still trying to limit losses to foreign depositors in the vain hope that business as usual can resume, and they were so anxious to protect the big money that they tried to limit foreigners’ losses by expropriating small domestic depositors. As it turned out, however, ordinary Cypriots were outraged, the plan was rejected, and, at this point, nobody knows what will happen.
But step back for a minute and consider the incredible fact that tax havens like Cyprus, the Cayman Islands, and many more are still operating pretty much the same way that they did before the global financial crisis. Everyone has seen the damage that runaway bankers can inflict, yet much of the world’s financial business is still routed through jurisdictions that let bankers sidestep even the mild regulations we’ve put in place. Everyone is crying about budget deficits, yet corporations and the wealthy are still freely using tax havens to avoid paying taxes like the little people.

This is the kind of thing that happens when “little people” refuse to take the fall for the “big people.”

If we get Ed Markey as our next Senator, he can work with Elizabeth Warren to start making the “big people” pay the consequences for their greed.  Perhaps this way, we can prevent the destruction of that part of the international banking system that we, the “little people”, depend on.

Thanks to RichardH for sending the link to this article in response to my previous post Cyprus: Has the Next Phase of the Global Crisis Arrived?

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