Annual Fundraising Appeal
Over the course of 21 years, we’ve published many unflattering stories about Henry Kissinger. We’ve recounted his involvement in the Chilean coup and the illegal bombings of Cambodia and Laos; his hidden role in the Kent State massacre and the genocide in East Timor; his noxious influence peddling in DC and craven work for dictators and repressive regimes around the world. We’ve questioned his ethics, his morals and his intelligence. We’ve called for him to be arrested and tried for war crimes. But nothing we’ve ever published pissed off HK quite like this sequence of photos taken at a conference in Brazil, which appeared in one of the early print editions of CounterPunch.
100716HenryKissingerNosePicking
The publication of those photos, and the story that went with them, 20 years ago earned CounterPunch a global audience in the pre-web days and helped make our reputation as a fearless journal willing to take the fight to the forces of darkness without flinching. Now our future is entirely in your hands. Please donate.

Day12Fixed

Yes, these are dire political times. Many who optimistically hoped for real change have spent nearly five years under the cold downpour of political reality. Here at CounterPunch we’ve always aimed to tell it like it is, without illusions or despair. That’s why so many of you have found a refuge at CounterPunch and made us your homepage. You tell us that you love CounterPunch because the quality of the writing you find here in the original articles we offer every day and because we never flinch under fire. We appreciate the support and are prepared for the fierce battles to come.

Unlike other outfits, we don’t hit you up for money every month … or even every quarter. We ask only once a year. But when we ask, we mean it.

CounterPunch’s website is supported almost entirely by subscribers to the print edition of our magazine. We aren’t on the receiving end of six-figure grants from big foundations. George Soros doesn’t have us on retainer. We don’t sell tickets on cruise liners. We don’t clog our site with deceptive corporate ads.

The continued existence of CounterPunch depends solely on the support and dedication of our readers. We know there are a lot of you. We get thousands of emails from you every day. Our website receives millions of hits and nearly 100,000 readers each day. And we don’t charge you a dime.

Please, use our brand new secure shopping cart to make a tax-deductible donation to CounterPunch today or purchase a subscription our monthly magazine and a gift sub for someone or one of our explosive  books, including the ground-breaking Killing Trayvons. Show a little affection for subversion: consider an automated monthly donation. (We accept checks, credit cards, PayPal and cold-hard cash….)
cp-store

or use
pp1

To contribute by phone you can call Becky or Deva toll free at: 1-800-840-3683

Thank you for your support,

Jeffrey, Joshua, Becky, Deva, and Nathaniel

CounterPunch
 PO Box 228, Petrolia, CA 95558

Cyprus in the Crosshairs

Death by Bailout

by MIKE WHITNEY

It was supposed to be a bailout. It turned out to be a death sentence. Given the checkered and unremarkable history of the Brussels bureaucrats, is anyone really surprised?

Yes, an agreement was reached between Cypriot government officials and the so-called troika (the European Commission, the  European Central Bank, and the International Monetary Fund) in 11th hour wrangling, but at what cost?  If the $10 billion bailout was intended to keep Cyprus in the Eurozone, then the strategy failed. The capital controls that have been put in place to avert a bank run effectively create a second-tier currency, a shadow euro that will be quarantined on the island. Here’s how economist Frances Coppola sums it up on her blog Coppola Comment:

“Once full capital controls are imposed, a Euro in Cyprus will no longer be the same as a Euro anywhere else in the Euro area. It cannot leave the island. The Cyprus Euro will in effect be a new domestic currency. The imposition of capital controls in Cyprus is therefore the end of the single currency in its present form….

Yes, the Eurogroup will claim that it is “business as usual” in the Euro area. Draghi will continue to claim that the Euro is “irreversible”. Eurostat will continue to produce statistics for E17 and E27 including Cyprus. But the reality will be that the Euro will be broken in two. There will be the Cyprus Euro, and the “mainland” Euro (if we can call it that).” (“The Broken Euro”, Coppola Comment)

Naturally, the Cypriot euro will be of less value than the mainland euro which will make it more difficult for the government to meet its deficit targets. (So, they’ll never pay back the loan) Also, it will create a two-tiered system at-odds with the EU’s original masterplan. Here’s Coppola again:

“The European Union was founded on “four freedoms”: free movement of goods, free movement of services, free movement of capital and free movement of people. Capital controls are direct prevention of free movement of capital. In fact it is worse than that, because strict capital controls also severely curtail free movement of goods and services and free movement of people – the other founding principles. Will other countries want to trade with Cyprus, if it is difficult to get money out of the island? How can anything other than subsistence-level trade within the island operate, if payments can only be made in cash?… In effect, Cyprus is no longer a full member of the European Union.”

You can see what a mess this is and how the troika has made a hash of the bailout.  Eventually, the people of Cyprus will begin trading in other currencies for convenience. (Probably British pounds or USDs) I would expect the “all cash” black-market deals to become the new mode of conducting business, just as I would expect the banking system to eventually collapse as depositors steadily withdraw their money in protest and businesses boycott the system altogether. Let’s face it, without blanket guarantees on deposits, there’s no reason to keep your money in a bank.  A mattress will do just fine. The troika doesn’t seem to grasp this simple point.

What was the troika trying to achieve with their ham handed bailout? Were they trying to destroy the tiny island’s economy or send a message that profligate banking will not go unpunished? Whatever the motive was, their actions have condemned the entire population to a long-term slump that will probably lead to political upheaval and a formal exit from the euro. Here’s a blurb from an analysis by Society General via zero hedge aptly titled “Depression for Cyprus”:

“Our Cypriot GDP forecast entails a drop of just over 20% in real GDP by 2017.This forecast had already factored in much what was agreed, but did not account for the additional uncertainty shock generated by the past week’s appalling political mess. Risks are clearly on the downside and Cyprus will in all likelihood require additional financial assistance further down the road.” (SocGen, zero hedge)

Cyprus is toast. Capital inflows have been cut off, uninsured depositors, bank shareholders and bond holders have been wiped out,  (insured depositors up to 100K euros will be spared), and Cyprus’s offshore banking model is kaput. The country has been destroyed for a measly $10B in loans from the EU, less than the ECB hands out on a daily-basis via its many bank-friendly liquidity facilities. Now take a look at some of the new rules that are being imposed on Cyprus’s banks. This is from the Prodigal Greek via naked capitalism:

“Restrictions in daily withdrawals

Ban on premature termination of time savings deposits

Compulsory renewal of all time savings deposits upon maturity

Conversion of current accounts to time deposits

Ban or restrictions on non cash transactions

Restrictions on use of debit, credit or prepaid debit cards

Ban or restriction on cashing in checks

Restrictions on domestic interbank transfers or transfers within the same bank.

Restrictions on the interactions/transactions of the public with credit institutions.

Restrictions on movements of capital, payments, transfers

Any other measure which the Finance Minister or the Governor of Cyprus Central Bank see necessary for reasons of public order and safety…” (“Will Cyprus be contained”, naked capitalism)

So the confiscation of deposits is just the beginning of the hassles. It’s also going to be nearly impossible to get whatever is left of  your money out of the banks. Good luck, with that!

And just think of how these restrictions are going to crush local business. These businesses are in no better position to get their money out of the banks than the average working guy. They’re both screwed. Think of what that’s going to do to unemployment? And what about tourism? You won’t be able to access your money from a bank, so you’d better arrive with a briefcase full of euros, otherwise, you’re out of luck. The whole thing is a farce. This has got to be the most flubbed up, screwball bailout of all time.  Greek economist Yanis Varoufakis summed it up best in an interview on Friday with the BBC. He said:

“The way the European union has handled this dream-turned-nightmare is remarkable. Think of it, in one, short week, we put in jeopardy the sacrosanct concept of state-guaranteed deposit insurance, the monetary integrity of the Eurozone, and we now have a European union whose single market principal is under threat by capital controls. It is quite unprecedented.”

“Unprecedented” is an understatement. The troika is putting a gun to Cyprus’s head and demanding that its people pay for the criminal excesses of its bank oligarchs. That’s not a bailout. It’s blackmail.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.