The Panorama Coffee Shop is situated in Keilor Road, Niddrie, a fairly typical shopping strip in Melbourne's suburbs. The coffee shop is run by a hardworking Greek woman from Cyprus named Soula. It has great cakes, good coffee but it is very hard work. Last year, a branch of the Bank of Cyprus opened down the street. I cautioned Soula against depositing her hard earned money there. Late last year, the Bank Of Cyprus's Australian operation was taken over by the Bendigo and Adelaide Bank and rebadged.
You didn't exactly have to be a financial genius to realise that Cyprus's banking system, based on shonky Russian depositors, was not long for this world. Cyprus is also a safe haven for Israelis who don't want the government of the Jewish state taking too close an interest in their affairs.
Now, what is the difference between Switzerland, which runs a very similar operation, and Cyprus? The difference is Switzerland is run by Swiss and Cyprus is run by Cypriots, or to be more exact, Greeks.
The EU has chopped off the head of the Cyprus chicken to warn other bigger operators that neither the IMF or the EU will bail them out if they get into trouble. Moreover, they are getting everything they deserve. The Cyprus banking system simply grew too big for the underlying economy. The government of Cyprus couldn't bail out the Cypriot banking system even if it wanted to. The banking system was simply too big to be saved. The same applies to other European states -- Switzerland, Luxembourg among other so called "tax havens" that have no economic base apart from manipulating the international tax system. This could even be said of the City of London. EU countries such as France and Germany regard the Cyprus crisis as a chance to get revenge on tax havens that have been siphoning off their tax revenues.
Should Cyprus have ever been part of the "European project?" Probably not. But the EU is like the Hotel California: you can't leave, you can only check out. Or as they used to say in Vietnam about "hearts and minds" operations -- "if you have them by the balls, their hearts and minds will surely follow." And Angela Merkel has Cyprus by the balls.
Do I feel sorry for the Cypriots? Not at all. Notwithstanding the fact that I have little say in the matter, I do pay my taxes. My surplus capital is invested in stocks listed on the Australian Stock Exchange, not sitting in a tax haven bank account, although I could quite easily do this. As for the Russians who stand to lose a substantial part of their deposits, I do, strangely enough, have a degree of sympathy. If someone wants to keep some their hard earned money out of the hands of Putin's kleptocrat Mafia state, I think that is simply being prudent.
Just to clarify my headline, the phrase to "kill a chicken to frighten a tiger (or sometimes, monkey)" is an ancient Chinese saying about demonstrating to the relevant party the desirability of following a certain course of action by inflicting harm on a lesser, usually related, victim.
Cyprus is a small, pathetic victim -- a prime example of someone getting in over their head. The Cypriots will be suffering from their naivete for a long, long time.
Tuesday 2 April 2013
Great questions of our age
My wife is Chinese. She is from Taiwan, but her parents were from mainland China. As a husband, I am only required to produce two things -- a pay packet and children. Between us, we have produced three children, all of whom could be described as outstanding scholars. That part is OK.
The pay packet is the problem. I am a writer. Writers do not get pay packets. Writers are, by definition, self employed. You might have a job as a professor at a good university which requires you to publish the occasional short story or journal article and teach about six hours a week for 20 weeks of the year. For this you will get a very handsome salary and a job from which you are effectively unsackable. I do not regard such a person as being a writer. Or you may get a gig (increasingly rare) on one of the Sun King's flagship publications that Uncle Rupert doesn't require to produce one of those vulgar things called a profit. Such publications are about as rare as a sober Irishman on St Patrick's Day, but they do exist. I do not call such a person a professional writer.
I call a professional writer someone who makes average weekly earnings plus 25% to allow for lack of holidays and so on. That would mean approximately $90,000 gross, not allowing for the great many tax deductions any resourceful self employed person can find. That is, an average sort of income. I know many
writers. I don't know of any, including the famous ones, who earn even this modest income. I estimate, and others agree, that there are about ten professional writers in Australia who have met and overcome this financial hurdle consistently for ten years. One of my friends, who I consider to be one of Australia's outstanding literary stylists, asked me how much the Adam Smith Club Newsletter paid its contributors. I am not usually so crass as to burst out laughing in my friends' faces, but this time I couldn't help myself.
I have one very good friend who I have known for many years who could reasonably be described as internationally famous. He likes to project an image of prosperity but when he gets a decent cheque he blows it on an overseas trip or something similar and he is returned to poverty.
My wife is contemptuous of the fee I get from the main publication I write for, News Weekly. News Weekly is vaguely associated with the Catholic Church and has a degree of influence, but all she is interested in is the pay packet, which unfortunately News Weekly is unable to produce. That's better than when I started writing for them. I was paid nothing until the late B A Santamaria, founder of the National Civic Council, decided it was unfair for me to be paid nothing when I was writing every fortnight. It was a small amount, but it was useful.
No-one in my family has any interest in my writing at all. My daughter, who is a self-described feminist, is offended by News Weekly's pro-life stance. Our family is half Irish Catholic. Unfortunately, my mother doesn't like Catholics -- she comes from the Protestant side of the family. My mother is a millionaire but she is unwilling to spend the $25 or so to subscribe to News Weekly. My mother's logic regarding money is best seen in the following example. Last August was my mother's 90th birthday. I paid for a ticket from Melbourne to Perth for her party, which cost me over $400. I also paid for my two youngest children, who flew Qantas, which cost more, as their elder brother, who is a mergers and acquisitions banker, decide to fly Qantas. When, after the "cosy" family dinner at an expensive restaurant, I exploded and said I'd paid $400 out of my own pocket to attend her party, she replied that without my sister's loyalty card, the dinner would have cost her OVER $400!
To return to the great questions of our age. We were at the supermarket. My wife had finally decided to spend $8 on a bottle of Brown Bothers Moscato at Coles. I had just finished writing an article speculating on the possibility of armed conflict between China and Australia, including its allies, such as the US. My wife told me to stop talking nonsense, as she had her mind on important things -- she had two overripe zucchinis in the fridge. Should should she by some eggs and make zucchini slice, or buy a can of tomatoes and make ratatouille?
The pay packet is the problem. I am a writer. Writers do not get pay packets. Writers are, by definition, self employed. You might have a job as a professor at a good university which requires you to publish the occasional short story or journal article and teach about six hours a week for 20 weeks of the year. For this you will get a very handsome salary and a job from which you are effectively unsackable. I do not regard such a person as being a writer. Or you may get a gig (increasingly rare) on one of the Sun King's flagship publications that Uncle Rupert doesn't require to produce one of those vulgar things called a profit. Such publications are about as rare as a sober Irishman on St Patrick's Day, but they do exist. I do not call such a person a professional writer.
I call a professional writer someone who makes average weekly earnings plus 25% to allow for lack of holidays and so on. That would mean approximately $90,000 gross, not allowing for the great many tax deductions any resourceful self employed person can find. That is, an average sort of income. I know many
writers. I don't know of any, including the famous ones, who earn even this modest income. I estimate, and others agree, that there are about ten professional writers in Australia who have met and overcome this financial hurdle consistently for ten years. One of my friends, who I consider to be one of Australia's outstanding literary stylists, asked me how much the Adam Smith Club Newsletter paid its contributors. I am not usually so crass as to burst out laughing in my friends' faces, but this time I couldn't help myself.
I have one very good friend who I have known for many years who could reasonably be described as internationally famous. He likes to project an image of prosperity but when he gets a decent cheque he blows it on an overseas trip or something similar and he is returned to poverty.
My wife is contemptuous of the fee I get from the main publication I write for, News Weekly. News Weekly is vaguely associated with the Catholic Church and has a degree of influence, but all she is interested in is the pay packet, which unfortunately News Weekly is unable to produce. That's better than when I started writing for them. I was paid nothing until the late B A Santamaria, founder of the National Civic Council, decided it was unfair for me to be paid nothing when I was writing every fortnight. It was a small amount, but it was useful.
No-one in my family has any interest in my writing at all. My daughter, who is a self-described feminist, is offended by News Weekly's pro-life stance. Our family is half Irish Catholic. Unfortunately, my mother doesn't like Catholics -- she comes from the Protestant side of the family. My mother is a millionaire but she is unwilling to spend the $25 or so to subscribe to News Weekly. My mother's logic regarding money is best seen in the following example. Last August was my mother's 90th birthday. I paid for a ticket from Melbourne to Perth for her party, which cost me over $400. I also paid for my two youngest children, who flew Qantas, which cost more, as their elder brother, who is a mergers and acquisitions banker, decide to fly Qantas. When, after the "cosy" family dinner at an expensive restaurant, I exploded and said I'd paid $400 out of my own pocket to attend her party, she replied that without my sister's loyalty card, the dinner would have cost her OVER $400!
To return to the great questions of our age. We were at the supermarket. My wife had finally decided to spend $8 on a bottle of Brown Bothers Moscato at Coles. I had just finished writing an article speculating on the possibility of armed conflict between China and Australia, including its allies, such as the US. My wife told me to stop talking nonsense, as she had her mind on important things -- she had two overripe zucchinis in the fridge. Should should she by some eggs and make zucchini slice, or buy a can of tomatoes and make ratatouille?
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