No, not Mitt Romney's 47%. No, this link is found in the upper echelons of personal and corporate wealth. We're talking about tax havens. Cyprus is one of the "treasure islands." Like the Caymans.
Not only do they bleed revenues from cash-strapped governments and enable corruption; they distort the flow of capital, helping to feed ever-bigger financial crises. ...Paul Krugman,NYT
So now breezy warm Cyprus is just another edition of Iceland. Iceland means real trouble.
Officially, 37 percent of the deposits in Cypriot banks come from nonresidents; the true number, once you take into account wealthy expatriates and people who are only nominally resident in Cyprus, is surely much higher. Basically, Cyprus is a place where people, especially but not only Russians, hide their wealth from both the taxmen and the regulators. Whatever gloss you put on it, it’s basically about money-laundering.
And the truth is that much of the wealth never moved at all; it just became invisible. On paper, for example, Cyprus became a huge investor in Russia — much bigger than Germany, whose economy is hundreds of times larger. In reality, of course, this was just “roundtripping” by Russians using the island as a tax shelter.
Unfortunately for the Cypriots, enough real money came in to finance some seriously bad investments, as their banks bought Greek debt and lent into a vast real estate bubble. Sooner or later, things were bound to go wrong. And now they have. ...Krugman, NYT
The beat goes on. There are Icelands and Cypruses the world around. And we're being told by the Republican party that our deficits are the main problem. Is it possible that Republicans are trying to do what they did regularly during the Bush administration: use wars and other crises to keep us from turning our attention to what's really going on? And the real problem is how the top 10% -- not just the top 10% of America's economy but the entire world's economy -- are bleeding the rest of us dry.
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.
So don’t cry for Cyprus; cry for all of us, living in a world whose leaders seem determined not to learn from disaster. ...Krugman,NYT
Being on the ground in Cyprus is not easy these days. Here's a report on what life is like now in Nicosia and beyond.