No doubt we all remember that kid’s joke: when is a door not a door? Answer, when it’s ajar.
With a tip of the hat to it being April Fool’s Day, I propose my own joke: when is a Euro not a Euro? Answer: when you can’t spend it.
This is a joke brought to you courtesy of the master comedians themselves: the ECB (European Central Banks).
The ECB promised to do “whatever it takes” to save the common currency. I want you to reread that last sentence, and let it sink in. Because there’s a flipside to “whatever it takes”, and that flipside is “regardless of consequences”. Irrespective of their severity.
I said to my dad recently: “they’re at a stage now where whatever they do, it will be the wrong decision”. Why? Because it’s like a fly touching a web; once a sticky globule is touched, from hereon in every movement, every attempt to get free from the web, simply leads to further entanglement.
Although the kernel of the idea is not my own (I don’t remember my source, sorry), I will take the original author’s idea to its logical conclusion: by imposing capital controls on moving money out of Cyprus, the ECB has created a de facto separate currency that also happens to be called a Euro. Politicians just refuse to see it as such. Note that capital controls are in direct contravention of Article 63 TFEU (Treaty on the Functioning of the European Union):
1. Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited.
2. Within the framework of the provisions set out in this Chapter, all restrictions on payments between Member States and between Member States and third countries shall be prohibited.
According to the FT, however:
Article 65, however, reserves the right of member states “to take measures which are justified on grounds of public policy or public security”.
Let’s think about this for a minute. Capital can flow into Cyprus, but who in their right mind would do that? Everyone wants capital to flow out of Cyprus, but that is now blocked.
This is why I say that the Cyprus is a separate currency. In fact, it’s the worst form currency: it’s a…
