By Robert Romano — A recent post on Mish’s Global Economic Analysis, “Merkel needs opposition party votes to pass Cyprus bailout,” tells the story of how German Chancellor Angela Merkel required the votes from the Social Democrats and Greens in order to approve the so-called “bailout” of Cyprus (where citizens there are having their savings confiscated).
Really, it’s a bailout of banks in Cyprus that bet poorly on Greek sovereign debt — at the expense of depositors in Cyprus and German taxpayers.
Merkel could not get enough votes from her own coalition because members were against the bailout. So she had to go across the aisle to her political opponents for help. It reminded me of the muddying of the differences between established political parties here in the U.S., particularly on issues of high financial significance.
Former Reagan Office of Management and Budget Director David Stockman recently wrote his chronicle, “The Great Deformation” largely in response to the bipartisan bank bailouts of 2008. Wrote Stockman, “When the courageous House Republicans who voted [the bailout] down were forced to walk the plank a second time in betrayal of their principled stand, my sense of disbelief turned into a not-inconsiderable outrage.”
Without votes from members of both parties, the bailouts would not have passed.
There are other examples of instances where the legislative fix is in. Americans for Limited Government’s Bill Wilson noted that since Republicans took the majority of the House of Representatives in 2011, “one struggles to find a single vote of significance — legislation that became law — that House Republicans did not need Democrats in order to pass.”
Wilson pointed to votes on the tax deal at the end of 2012 and the hurricane disaster relief bill, which a majority of Republicans voted against, but passed with substantial Democrat support. Also, the latest continuing resolution, the debt ceiling being suspended until May 19, the continuing resolution before that, and the 2011 debt ceiling increase deal all depended on Democrat support in order to pass.
There are many other examples abound overseas .
In Greece, both the conservative and socialist parties had to band together to support keeping that country in the Eurozone even though the single currency is destroying the domestic economy there.
In Italy, Silvio Berlusconi was deposed when his party coalition failed to implement European Union-approved policies to address that country’s mounting debt problems. He was replaced by a more technocratic prime minister, Mario Monti, who, with support from the left- and right-wing parties, was willing play along with abrogation of Italian fiscal policies to Brussels.
Now, with the re-election of Italian President Giorgio Napolitano, the only way to form a government there is once again for the two major parties to team up in broad coalition.
In Cyprus, when the parliament there voted against the confiscatory savings deposit tax, financial markets tanked globally on fears that the country there would leave the Eurozone. So, the government of Cyprus simply implemented the savings confiscation by restructuring the banks, resulting in the banks defaulting on their obligations to depositors.
Now, the attorney general of Cyprus, in an act of pure patriotism, has declared that such a scheme violates the country’s constitution. Now, the assembly there will again have a say on the deposit tax. Again, markets are in a tizzy over the prospect that the bank bailout may not be approved.
That the people might actually have a say in this process.
On one hand this all underscores just how woefully undercapitalized banks around the world really are, and how dependent they are on government support.
But no one should be surprised if magically, despite overwhelming public opposition to the proposal to confiscate savings, that the establishment in Cyprus finds the votes to approve the bailout after all.
Which makes all these “votes” on bank bailouts nothing more than a democratic façade. The idea that the people’s representatives have any power may just be an illusion. One is left to wonder if voting Republican or Democrat, conservative or liberal, libertarian or socialist makes any difference whatsoever.
But maybe it does. Perhaps the representatives of Cyprus will be the exception to the rule and reject the imposition of these foreign financial interests on their sovereignty. And prove that perhaps democracy is not mere window-dressing for these elite plutocrats who really make the decisions.
Robert Romano is the Senior Editor of Americans for Limited Government.
