Back in the days of the iron curtain, the East Germans had department stores and they were ‘open’
Open in the sense that the doors were open, but not open in the sense they could discharge their raison d’etre, namely supplying goods people wanted to buy with hard currency. This was not entirely their fault. The East-Mark was a joke currency and whilst people would go in and buy anything that was for sale, it was simply a case of get it whilst it was available, because the supply chain wasn’t exactly efficient either.
Now what has this jaunt down memory lane got to do with contemporary events you ask? Well the media has been reporting that the Cypriot banks are now open. Of course you can’t draw out vey much or cash cheques and quite how the import supply chain is going to work seems to have been missed by everyone*
But what really got my spidey-senses tingling was a talking head on the TV this morning explaining that this was the best possible outcome for Cyprus. Now setting aside the normalcy bias this seemed an astonishing statement. Talking-head explained that if Cyprus left the Euro, their currency might depreciate by more than 40% and really the government was helping its hapless populace (sic). You see, they aren’t criminal looting scum, they are helping. Not Orwellian at all.
So let’s set aside that their banking system will now die. The currency controls aren’t worth a damn because it will just mean a slow death not a fast one. It may allow breathing space for some kind of re-capitalisation, but no-one wants to do that; that’s what started this whole farce in the first place. Let’s set aside that devoid of 40% of their cash, large numbers of businesses will clearly go bust then watch unemployment zoom (and then watch it get ugly). Let’s also set aside that the tourist industry (which I guess is their second biggest industry) will be decimated. Would you go there as a cash rich foreigner? You may as well paint a bulls-eye on your back. Let’s set aside that any kind of major purchases (cars, houses, holidays) are now more or less impossible without government permission (so bye-bye property rights) and this thieving is the kind of nonsense we expect to see in South America.
None of that matters because a new Cypriot pound might depreciate against the Euro by more than 40% so this is the best option ~ apparently. Well of course, it might well depreciate but then, imagine what a weak currency might do for the tourist industry. Perhaps not looting savers in the first place would have protected the existing banks. Even if they went bust (but were not looted) others could set-up, and in a few years the currency might recover. Currency fluctuations are temporary, looting is for life. But no, this is the best option, because the telly-box says so.
* If you can’t take money out of Cyprus, how can you import stuff?