Question of the Day: Is Cyprus Unique?

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From Megan McArdle, on the supposedly unique nature of yesterday’s bailout of Cyprus’s banking system:

The problem is, Europe seems to be chock full of unique, one time problems with its banking system.

Roger that. Cyprus was basically an offshore banking haven for Russian plutocrats, so it grew to gargantuan proportions compared to the size of the country. If it had failed, the entire country would have imploded. That’s bad. On the other hand, no one really felt like spending a trainload of EU taxpayer money to prop up a bunch of Russian oligarchs. That would be bad too. So the EU’s politicos wanted to make the oligarchs pay a price for being rescued.

How about, say, a one-time tax of 10 percent of their deposits? Sold! But then the EU went further, imposing a one-time tax of 6.75 percent even on small accounts. Small insured accounts. This means that having an insured bank account no longer means bupkis in the EU.

So now the question becomes: Is Cyprus unique? Or, more precisely, can ordinary depositors and big investors be persuaded that Cyprus is unique? Because if they can’t, then they’re going to start pulling their money out of Spanish and Greek and Italian and Portuguese banks. And that would be very, very bad. It would turn the slow-motion bank runs of the past few years into the honest-to-God, high-speed, economy-ruining kind of bank runs.

And it all depends on whether everyone can be hypnotized into thinking that Cyprus really is unique. Tune in tomorrow to find out.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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