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The Gods of the Copybook Headings are in Cyprus - We're published in today's American Thinker
Howard Richman, 4/5/2013

Here's is a selection:

[T]he "terrible swift sword" of the Gods of the Copybook Headings is a two-edged sword. It is not only slashing the savings of investors, it is also slashing away at Cypriot employment:

  • Cyprus used to be an international center for banking. The jobs serving foreign depositors died when Cyprus confiscated 37.5% of deposits exceeding 100,000 euros by converting them into nearly worthless bank equity.
  • Many of Cyprus' businesses are now going bankrupt due to a cash crunch. Not only did they lose 37.5% of their bank deposits of over 100,000 euros, but now they only have limited access to their remaining funds.
  • Cyprus's biggest employer, the government, has kept its wages and employment high. But in return for the low interest 10 billion euro loan that will keep it solvent, the Cypriot government will have to move its budget toward balance.

Meanwhile, Cyprus' underlying problem, its huge trade deficit, is not being addressed. From 1995 through 2012 Cyprus averaged a current account deficit (trade deficit) of nearly six percent of GDP. Borrowing that much money from abroad to buy imports makes for huge international vulnerabilities. If the problem goes on too long, the choices become stark. Either the lenders do not get repaid, or someone steps in to pay them. In Cyprus, the lenders did not get repaid.

Countries that run trade deficits do not save; they live on borrowing from abroad. The going is good while the foreign loans are flowing in, partly due to real estate bubbles and stock market bubbles. But eventually, they lose credit. Cyprus has now lost credit.

To read the rest, follow this link:

http://www.americanthinker.com/2013/04/the_gods_of_the_copybook_headings_are_in_cyprus.html

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

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  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]